Cliff's Notes

Dental Business Analytics, The Story Unfolds!

In 2018 every business is talking about analytics and reading the numbers. If you’re a sports fan, especially baseball, you know that Billy Bean, the GM of the Los Angeles Angels, started using it years ago, they called it “Billy Ball”. The program got the team into the playoffs for several consecutive years because the numbers worked. Hollywood told the story in the movie Money Ball.

Money Ball … By analyzing statistics the Angles were able to position their players for the best average match-up against their opponents. Averages played out more than 50% of the time so the team succeeded. In the real world Billy Bean was not a genus, he was just very smart and trusted business like statistics as a tool to achieve his goal. The business of dentistry is not different, statistics tell the story.

The Story … By knowing what you have, what you spend, and what statistical averages are you can maximize your production and minimize liabilities. Most dental practices have no control of consumables, even if they think they do, and spend too much production time trying to save money on line items. That’s a consumer mentality and if it describes a practice you know I guarantee there is a lot left on the table. The ADA estimates that the average dental practice in the United States spends a certain percentage of their gross production on the different categories of business operations. There are some regional adjustments due to local economies but the average percentages have been consistent for years. Your numbers are found on your profit & loss statement and should be vetted for accuracy before you start studying analytical data to tighten up the ship.

Vetting for accuracy … To properly analyze consumables within an organization, payable invoices need to be categorized correctly. For example, if you use an in-office milling system all of the supplies, including blocks, should be considered lab supplies, not clinical supplies. Once all consumables are properly categorized you will begin creating accurate data that would lead to practical quarterly category budgets.

Consumable budgets … every business has someone that orders consumable items that are needed to function. In some cases there are several. Each buyer needs a budget to stay within but that number needs to coordinate with practice growth. Question, how do you know how much you need? Answer, Analytics and a targeted percentage of the practices gross production. That may sound easy but it isn’t, you need to change your mind-set and focus on production. You need to trust that the percentages will play out and all you will have to do is adjust for growth. You will need software and data entry or you can outsource the analysis.

The Analysis … How much junk do you have on your shelves? How many different brands of product do you have that do the same thing? How much lost inventory do you have? Operating lean and strong is a process. Get started now because in 5 years it may be too late.. Please feel free to contact me with any questions or concerns.

June 24, 2018 - Posted by Cliff's Notes Blog | Uncategorized