What Gets Measured Gets Managed
The power of business data should never be underestimated. Historically, dentists have seldom needed to master their key performance indicators (KPIs). The profit margins used to be so substantial that the business owner didn’t need to worry. However, in today’s dental economy, excellent clinical skills are not sufficient to guarantee you or your business’ financial success. If you are not analyzing your practice’s KPIs, then you are jeopardizing your financial health and the value of your business.
According to the American Dental Education Association (ADEA), the average debt for a graduating senior in 2017 was $287,331. At the Direct PLUS rate of 7 percent (fixed for the 2018 academic year), a borrower with this debt faces a payment of $3,316 per month for 10 years after graduation — on top of an estimated $200,000 in lost income (opportunity cost) as a result of attending dental school. Opportunity cost is defined as the loss of potential gain from other alternatives when one alternative is chosen over another. Often, dental schools are ill-prepared to teach students the value of acquiring sufficient business skills, and they often fail to include adequate practice management skills to prepare new dentists to lead a team and operate a business successfully. The Journal of Dental Education reports that only 15 percent of new graduates feel confident in practice management topics. Learning by trial and error can cause personal and professional stress, stress that could be avoided with adequate business training.
Properly monitored data can alert a business owner when they may be headed for trouble. A simple example is an annual budget which includes your financial goals. If you are not monitoring your KPIs, you are taking a substantial risk with your financial health. Successful companies understand the value of managing by the numbers, and the dental business owner should, too. When we graduate dental school, we take an oath to “do no harm.” Just as we serve the health of our patients, we must also serve the financial health of our practice.
Commit today to acquiring the skillset you need to operate a financially secure five-star business that that you can be proud of. Spend the same time and energy on your business education as you do on your clinical continuing education. The return on investment will be the greatest you ever experience. Learning to work on your business instead of in your business is the first step in developing a highly successful practice.