The Best KPIs For Dental Practice Financial Management

Measuring your business performance is the key to success as a dental practice owner.

It helps you keep track of your progress towards goals and highlights areas that could be more profitable.

One way to measure your business performance is through Key Performance Indicators (KPIs).

KPIs are insightful metrics that help you track, analyze, and understand various aspects of your business.

Here’s our list of the top ten KPIs for dental practices.

KPI #1: Cancellation Rate

Cancellation rate refers to the percentage of appointments that are canceled by patients.

This KPI is calculated by dividing the number of canceled appointments by the total number of appointments.

A high cancellation rate (above 1%) contributes to decreased revenue and is a sign of lower patient satisfaction.

How to improve cancellation rates:

• Confirm appointments in advance – this reduces the likelihood of patients forgetting about their appointment or canceling at the last minute
  
• Optimize staff scheduling – ensure there are no gaps in the schedule, which makes it easier for your patients to book appointments at their preferred time
  
• Minimize customer wait times – this helps reduce customer frustration and improves patient satisfaction

KPI #2: Collections Ratio

Collections ratio is the percentage of outstanding accounts receivable that a dental business collects.

This KPI is calculated by dividing the total amount collected by the total amount of outstanding accounts receivable.

If you’re not collecting at least 97% of your fees, your policies may need to be reviewed to avoid cash flow issues.

How to improve collections ratios:

• Implement clear payment policies – this reduces confusion and ensures that patients are aware of their payment obligations
  

• Follow up on overdue accounts each week – this helps ensure that customer payments are collected in a timely manner

KPI #3: Case Acceptance Rate

Case acceptance rate is the percentage of treatment plans that are accepted by patients.

This KPI is calculated by dividing the number of accepted treatment plans by the total number of presented treatment plans.

If your case acceptance rate is below 90%, you may need to review your client communication and treatment offers.

How to improve case acceptance rate:

• Improve communication about the treatments – helping your patients understand their recommended treatment options and the benefits / costs of each option
• Offer financing options – if price is an issue for your patients, you can offer an affordable solution via a monthly repayment scheme

KPI #4: New Patients Per Month

This is the number of new patients that you onboard in your dental practice each month.

This KPI is calculated by dividing the total number of new patients per year by the number of months.

Low new patient numbers can slow your dental practice growth, and lead to decreased revenue. This KPI should be increasing 10-15% per year.

How to improve new patient numbers: 

• Implement a referral program – offering your existing patients an incentive encourages them to recommend your business to their friends and family. Does at least 50% of new business come from referrals?
• Ask your current clients for reviews – adding reviews to your website or Google listing can help attract new patients
• Optimize marketing strategies – you can target new patients through organic or paid advertising with a strategic message

KPI #5: Patient Retention Rate

Patient retention rate is a KPI that measures the percentage of patients who return to your dental practice for ongoing care.

It is calculated by dividing the number of patients who return for follow-up appointments by the total number of patients seen during a given period.

Returning patients are more likely to accept treatment plans, refer new patients, and leave positive reviews.

How to improve patient retention rates:

• Improving patient communication – following up with patients after their appointments, sending appointment reminders, and addressing patient concerns promptly
• Providing excellent customer service – offering additional treatments and financing options can encourage patients to return for ongoing care

Dental hygienists also play a critical role in patient retention.

They are responsible for scheduling recall appointments. Dental hygienists also help educate patients on the importance of regular hygiene appointments, which increases practice revenue.

KPI #6: Phone Answer Rate

Phone answer rate refers to the percentage of incoming calls that are answered during the day by your dental practice staff.

To calculate this KPI, divide the number of calls answered by the total number of calls made to your practice, including missed calls.

It’s important to ensure enough call coverage so that calls don’t get missed during high volume times of the day.

Most dental practices lose 50% of incoming calls without even knowing it, which is a huge problem that leads to lost revenue and dissatisfied clients.

How to improve phone answer rates:

• Implement a 3rd-party software – using a 3rd-party software like Patient Prism can help your dental practice track call data and measure this KPI
• Consult with your administration staff – if calls are frequently getting missed, discuss the issue with your admin staff. You might need to hire another staff member or implement a phone script to reduce call times

KPI #7: Total Practice Production

Total practice production is the total amount of revenue generated by a dental practice in a given period.

To calculate your total practice production, check your accounting software and compare the total revenue across each day, week, month and year.

Alternatively, you can multiply the number of procedures performed by their average fee for an estimate.

How to improve total practice production:

• Offer new services that are in demand – this helps increase revenue and patient retention through innovation
• Optimize treatment planning – this increases productivity and revenue per appointment
• Optimize staff resources – cross-training employees and delegating tasks helps improve efficiency and productivity

KPI #8: Recall Appointments

Recall appointments are where patients return for regular hygiene appointments or other treatments.

To calculate recall appointments, divide the number of recall appointments scheduled by the number of active patients.

If less than 98% of your patients are scheduled for their next appointment, this can impact cash flow and profitability.

How to improve recall appointments: 

• Book follow-up appointments in advance – this ensures your hygiene team is productive and efficient. It also makes it easy for your customers to return for appointments
• Automated reminders – confirm customer appointments via phone, email, or text message
  
• Educate patients about hygiene appointments  – make sure they know the benefits / costs of hygiene services
• Offering incentives or discounts for rebooking can also help.

KPI #9: Active Patients vs Inactive Patients

Active patients are those who have visited a practice in a given period, while inactive patients are those who haven’t visited in that same period.

This KPI is important for dental businesses because it highlights patient satisfaction, loyalty, and profitability.

To calculate active patients vs inactive patients, divide the number of active patients by the total number of patients over a certain period.

How to improve active patient rates:

• Request feedback from patients – this helps identify ways to improve the customer experience
• Address customer concerns – this improves patient satisfaction and builds rapport and strong relationships with your customers

KPI #10: Profit

Profit is the amount that remains after all expenses have been paid. 

This KPI is important for dental practices because it directly impacts profitability and practice growth.

To calculate your profit margin, subtract total expenses from total revenue and divide the result by total revenue.

How to improve profit margins:

• Negotiate prices with suppliers – review high volume products and negotiate lower prices for dental supplies
• Reduce overhead costs – review costs every few months, especially payroll expenses, rent, and utilities
• Optimize pricing strategies – determine the best pricing structure that will attract customers and maximize sales

Conclusion

KPIs are insightful measures that can improve your profitability as a dental practice owner.

However, calculating the numbers is only the first step. To maximize results, we recommend analyzing your KPIs each week or month.

Over time, you’ll rapidly identify key areas for growth and improvement and see what’s working in your dental practice.

Then you can implement marketing ideas, expense reduction, and sales scripts as needed.

DrillDown Solution is a team of expert dental CPAs who can help set and analyze KPIs for your dental practice to maximize profitability.

Contact us today to find out more.

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