Q: How do I analyze production when buying a dental practice?
A: When reviewing office production, look into three categories: ratio of collections to production, hygiene production, and procedure production.
- Ratio of Production to Collections
Essentially, this approach looks at how much is actually paid for the work that is completed.
The benchmark for a healthy, effective office is around 95%. Meaning, the office should collect about 95% of what they produce.
Any number lower than that needs an understandable explanation.
This may also be helpful if you’re concerned about staff costs. If you have a well-paid office manager who is responsible for collecting payments and the ratio is sub-par, it’s fair to conclude that this employee is likely not worth the expense.
- Hygiene Production
The success of the practice can be predicted by the strength of the hygiene department, which is the lifeblood of the office. So make sure it’s strong.
The hygiene department is credited with retaining patients and making sales. A struggling hygiene department means that you may be pulling the last drops of water from a drying up well.
I strongly recommend looking for practices where hygiene is 25% (or higher) of production. Anything between 20-25% is considered “fair”. Anything less than 20% is a red flag.
- Production by Procedure
Finally, take a look at the top 10 procedures performed in the practice. Not procedure by category but the actual, individual ADA procedure codes.
This breakdown, though seemingly simple, speaks a lot to your future in the practice and how well it aligns with your skillset.
Though it’s wise to avoid practices performing procedures that you have no interest in or you’re unable to keep up with, an office that only does bread and butter treatment may be a huge opportunity to grow the practice’s collections.
- How to Estimated Hygiene Production WITHOUT a Production Report
- 3 Simple Things to DEMAND of Your Hygiene Department