Measure your Dental Practice against metrics & benchmarks
CFO Corner: How to Measure Your Practice Against Your Competition
How does your practice compare to your competitors, both in the present and in the past? When it comes to achieving your long-term goals for your practice, quantitatively measuring your current direction relative to your competition is a key component of creating a big picture strategy.
When you can measure your practice against your competition, you:
- Gain a better understanding of the health of your practice
- Identify areas for growth and set realistic goals
- Acquire perspective to better manage your business relationships
- Notice market trends and anticipate how they’ll affect you
What to measure
Helpful industry benchmarks include both financial metrics and measurable operational information. Here are a few examples of common benchmarks for dental, medical, and veterinary practices:
- Number of procedures performed per month
- Patient retention rate
- Payroll statistics such as wages and overtime, per practitioner
- Accounts receivable – time to collection and net collection rates
Metrics like these make it easy for your practice to quantify your successes and pursue opportunities, and it’s important to compare as many as possible in order to get a big picture idea of how your practice measures up.
For example, let’s say you want to improve your patient retention rate, but a benchmark analysis shows that your retention rate actually matches up with top performing competitors. However, you discover that your accounts receivable is 18% slower than the industry average. This might be a signal that focusing on accounts receivable would be a more cost-effective way to help your practice in the long-term.
Or, if your practice struggles to retain employees or attract the level of skill you want—how do your salaries and benefits compare with other practices in your area?
How to measure your own practice
Gathering accurate, detailed data is a fundamental step towards long-term success. This is a situation where the technology and processes you use make a big difference. Ideally, your practice management and financial accounting solution should make it easy to accurately gather data about your daily operations, then quickly analyze, visualize, and compare.
Although the raw numbers themselves can be helpful, it can be much easier to understand and share your analysis if you use helpful visuals. For example, at PBA, we create dashboards so business owners and CFOs can easily monitor their performance and make solid decisions for the future. Visuals like color-coded charts and graphs make a huge difference by allowing you to understand trends and changes in just a glance, rather than pouring over a spreadsheet of raw data.
Of course, the simple act of comparison doesn’t mean you’ll improve. That requires thoughtful analysis, strategic changes, and sustainable planning. Benchmarking simply gives you an idea of what’s possible, how things are changing, and what to pursue.
Want help establishing the right benchmarks?
Successful benchmarking can provide transformative information for medical, dental, and veterinary practices, but it requires some work. You need accurate data collection, frequent check-ins, and strong internal controls to transform metrics into goals and, in turn, results. If you’d like to know how your practice compares to others, and have the toolset you need to turn this information into action, PBA can help. Contact us today to talk to a CFO advisor.
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We can help you transform your practice and simplify your life. Your partnership with us begins with an introductory meeting to work with you to determine if our services are a good fit and—if they are—set up an accounting assessment.