How Expansion Can Improve Patient Service and Your Bottom Line

Key Takeaways:
  • If new or existing patients face long wait times, it’s a sign your practice may need to expand to meet demand.
  • Consistently exceeding production and collection goals signals it may be time to grow your services or space.
  • A thorough practice analysis can guide smart, financially sound expansion decisions that improve both patient care and profitability.

 

A thriving dental practice that is financially strong while serving a growing patient population is a satisfying result of a dentist’s hard work. But too much success suggests it is time to expand the practice. If your practice is having difficulty scheduling patient appointments promptly, or is encountering other growing pains, you may already be experiencing “too much success.”

Understanding a few key performance indicators (KPI) in a dental practice and how they reveal that it is time to expand is the first step in the growth process.

Capacity to Serve New and Existing Patients

The first KPI is capacity. It is great when a potential new patient contacts your practice for an initial appointment. It means your word-of-mouth referrals and marketing are successful. But if that new patient cannot be scheduled an appointment within four weeks of their initial contact, the wait time may be unacceptable, and the patient will go elsewhere.

Similarly, if an existing patient must wait longer than seven to nine months for a necessary follow-up visit, you are experiencing a capacity problem. Some patients need to be seen every three to four months, and if they cannot get the care they need at your practice, they may leave.

Nationally, thriving dental practices located in medium to large metropolitan areas bring in 20 to 30 new patients per month, on average. In smaller cities, 15 to 20 new patients per month is the sign of a healthy, growing practice. If your practice is at or beyond these numbers, it is time to explore the idea of expanding.

Financial Considerations

Dental practice owners should have written goals for production – which is income from procedures patients are billed for – and collections. Production and collection levels that consistently exceed their goals – for three to six months, at a minimum – are another indicator that it is time to consider expanding the practice. If you do not have written goals for these metrics, it is time to start setting goals based on your practice’s recent history. It would be wise to consult with your accountant to ensure you are setting realistic, achievable goals.

This is a good time to evaluate the practice’s service offerings and realization. A successful dental practice generates substantial revenue by offering a wide range of services, including high-fee procedures such as dental implants, crowns, bridges, and cosmetic treatments. If your practice is overly reliant on basic services such as regular checkups, cleanings, and filling cavities, it may be wise to identify opportunities to upgrade the services you offer and improve your production.

First Step: A Practice Analysis

Now that you have evaluated your capacity issues and financial performance, it is time to take the first actionable step toward expanding your dental practice.

Contact your CPA to discuss your plan and request a dental practice analysis. The practice analysis will help you determine if now is the right time for expansion and will give you the numbers you can take to the bank for financing.

A practice analysis is not a financial statement audit. Rather, it will include a profit and loss statement covering the past two to three years – which the bank will require – as well as standard reports about financial position, production and collections, and other metrics that your practice management software can produce.

The practice analysis is the most important document that is produced in the expansion process. Even if you are not quite ready to start an expansion today, the analysis can help you identify areas of the practice that need improvement, such as upgrades to equipment or technology.

Your CPA can work with you to build an improvement plan based on the findings of the practice analysis. It is possible that you could be ready six to twelve months from now by sticking with the plan.

Types of Expansion

The practice analysis, together with the bank’s financing conditions, can help you determine the type of expansion that will best serve your practice. You may want to expand in place, enlarging the space you currently occupy and hiring more staff. Or you may want to establish a second office in a nearby area that lacks dental services.

  • Expanding in place – If you decide to remain in your existing office and expand the space, you will need to contact an architect and a construction contractor to obtain plans and information about cost and the timeframe. Expanding an existing space could take a bit longer than obtaining a second location, and you should plan on at least a six-month buildout period before any delays. Designing the new space will depend on the size of the expansion. If you are planning to add one hygienist, the construction should include one more operatory (exam room). But if you are planning to add another dentist to the practice, you will need two more operatories. The current building layout will have to be considered to determine if the space exists for your desired expansion.
  • Expanding by adding a location – In rural areas, it is often a long drive to reach a dentist’s office. Many dentists find that they can expand their practices most efficiently by opening a second location within, perhaps, a 45-mile radius of their main location. This may involve hiring another dentist and hygienist to staff the new location. Alternatively, some dentists fill in the one or two weekdays they would normally take off by traveling to their second locations.

If adding a second location appeals to you, your first call will be to a real estate agent to find out where appropriate space is available. Do not overlook the relationships you have with dental suppliers and reps. They are good resources who know which dentists have retired recently and where dental space may be available.

Technology

Technology plays a critical role in dental practices today, and chances are that a practice that is growing rapidly is already sophisticated in its application of the latest dental technology. Your managed service provider should be involved in the buildout process since technology must be considered at every stage.

  • Where will the computers and monitors go in the operatories?
  • Will I have televisions at patient chairs?
  • Where do the network outlets need to be installed?
  • What is the status of the internet and Wi-Fi service at the location?
  • Where will my panoramic X-ray machine go? These are huge, and there are regulations governing where they can go and how much space must separate them from any nearby people when they are operating.
  • How will the security profile be built out – firewalls, malware prevention tools, data protection, etc.?

Technology and security cannot be an afterthought when building out a dental practice or any health care facility. It needs to be considered one of the highest priorities since you have confidential patient information that must, by law, be adequately protected.

Marketing

You want to be able to hit the ground running the day your expanded space or your second location opens. The best way to do that is to invest funds into marketing during the buildout phase.

Let your existing patients know about your expansion and how it will benefit them. Maybe they live closer to your new location than to your original office and will want to make future appointments there. Or perhaps your expansion will enable them to get in to see you more quickly when they need an appointment.

To ensure that your marketing efforts hit the mark:

  • Work with a professional marketing team who can build an information campaign to reach your existing patients and potential new patients through direct mail, direct email and social media channels.
  • Send a professionally designed oversized postcard to your current patients informing them of the expansion.
  • Create a script for your appointment scheduler that informs callers that your practice is expanding, and, as of the expected opening date, they can schedule their appointments either at your existing facility or at the new location.

Do not forget about the power of word-of-mouth advertising! In all marketing materials, ask your patients to recommend your practice to their friends and family.

Questions?

Planning an expansion of your dental practice is an exciting project, and a tribute to the hard work you have put in to build the practice. You can help ensure your future success by basing the expansion on solid data and strong financial footing.

If you would like to discuss ideas for expanding your dental practice, contact an Adams Brown advisor.