Many of us entered the world of dentistry to change lives by improving the dental health of patients. However, once in the profession, we learned that owning or working in a practice means we must also operate a business. If we can’t run a business effectively, we won’t be able to stay open, support our families, and continue to serve the patients we love.
Like any business, working in a practice means keeping track of numbers. Many numbers. We track so many numbers, many of us don’t even realize we’re doing so. For example, in the last month, how many phone calls were made by your front desk team members? How many patients were no-shows or broken appointments? How many sick days did team members take? If you don’t know the answer to questions like those, you aren’t keeping track of numbers that could make or break your practice.
Numbers like these are known as key performance indicators, or KPIs. We must track KPIs to know the health of our practices. While we have many KPIs to keep track of, they generally fall into two categories: “lagging indicators” and “leading indicators.”
So, what are they? And why do they matter? Here’s what you need to know.
Lagging indicators are numbers that are the results of things that happened in the past. In other words, the numbers follow the action. They’re indicators of past performance. If past performance was good, the lagging indicators look good. If past performance was poor, lagging indicators are poor. The most known lagging indicator is profit. Profit is the money left from past revenue after paying past expenses. Other lagging indicators include revenue and appointments scheduled.
Tracking lagging indicators is important because it gives you an opportunity to assess past performance. If profit is high, look backward and identify what you did to get there. If your schedule is full, ask yourself what led to that. Did you start a new marketing campaign or attend local events? Did your team call patients with unscheduled treatment?
Similarly, if you are unhappy with how much you’re spending on supplies. Setting a goal to reduce your expenditure by 10% will require you to look for alternative sources. Do you need to find new distributors? Do you need to take advantage of discount opportunities, like the deals Glenn Vo shares in the Nifty Thrifty Dentists Facebook group?
By tracking lagging indicators and assessing what happened to achieve those results, you and your team will have a better idea of what to do in the future to improve.
Leading indicators are things we can do—and measure—today that impact future results. For example, if we know that one out of every three dental implant patient leads schedules an appointment, a leading indicator of future implant patients is the number of leads generated. Thus, if we want to increase the number of implants we place, we can invest more in dental implant patient lead generation.
Leading indicators in dentistry, include:
- How many calls you make to patients with unscheduled treatment—leading to scheduled treatments.
- The number of appointments made—leading to future production numbers.
- How many patients you treated—leading to future revenue.
- The number of no-shows—leading to negative future production.
Leading indicators are most helpful when paired with a future goal, such as increasing the number of implants placed. So, after you set goals for your dental practice, list the actions you can take—and measure—today that lead to the results you want to achieve. Those are your leading indicators.
Are you keeping track of leading and lagging indicators?
If you aren’t keeping track of leading and lagging indicators, the bad news is that you probably are not achieving the best results in your practice. But the good news is that you have a lot of room for improvement. Tracking and taking action based on key leading and lagging indicators might be all you need to unlock your full potential.
If you’re interested in more content like this, or if you’re interested in getting the best deals for your dental practice, join the Nifty Thrifty Facebook group or the Dental Hub 360 Facebook group today!