Dr Phillip Palmer, August 2014
One of the greatest assets of a real estate agency is the rental properties that they are managing (called the rent roll).
While an agency will generate much larger invoices from property sales, these are usually one-off, not-repeated pieces of work. Managing a rent roll is often considered the lifeblood of an agency as it represents a regular, ongoing relationship with regular ongoing invoicing. An agency that has a large rent roll has predictable income that they can count on every month.
A real estate’s relationship with its rent roll is actually very similar to a dental practice’s relationship with its six-monthly check-ups.
Dentists’ focus is often distracted wanting to do as much high end, lucrative work as possible. It isn’t uncommon to see dentists advertising heavily trying to find patients that need all-on-fours, implants and high end cosmetic treatment. Patients that just need a home for their six-monthly check-ups are usually undervalued by dentists and seen as necessary but boring, low income producing work.
However they should really be seen as the lifeblood of any successful dental practice. Why?
1. Big cases are one off acceptances of work that can’t be counted on to cover fixed overheads.
2. A practice that has a large percentage of patients coming in for six-monthly checkups have a larger percentage and amount of predictable income.
3. There are more chances to diagnose more comprehensive clinical work from a patient base that comes in every 6 months.
4. Patients who attend their dentist regularly are generally better referrers. There are several reasons why this might be the case:
a. People who visit the dentist regularly value their oral hygiene and dentist more and can talk about why.
b. People who visit the dentist regularly have more opportunities to tell their friends and family where they are going when they have an appointment, and why.
c. Not many people talk about their dentist when they aren’t going to him/her.
5. There will be a higher percentage of case acceptance for comprehensive work diagnosed on patients that come in regularly because there will be stronger relationships with them.
6. An intermittent patient is more likely to be very price sensitive because in the absence of a relationship, how else do you judge a practice?
7. Patients who come in regularly are less likely to need emergency treatment at inconvenient times as small clinical issues get solved before they become bigger.
8. The clinical work done in six-monthly checkups is usually not specialised and is easily transferable between clinicians in the practice ( Note – if there is a dentist with the relationship, they should make an effort to spend time with the patient visiting)
9. There is less need to spend money on advertising if you have predictable busy-ness and income from existing patients.
10. It isn’t a stretch to imagine that a patient that comes in for six-monthly visits over 20 years is more likely to refer other patients.
11. It makes your practice more attractive to a buyer. More patients in a practice obviously makes it more saleable.
12. Financially it’s very beneficial.
Let’s say that the fees for a 6 month visit are averaged at: $180 (scale and clean, application of fluoride, oral examination),
Plus x-rays every 2 years ($80 divide by 4 for 6 month value) = $20
Total six-monthly check-up fee: $200
The average single dentist working 5 days a week will have approximately 1500 active patients (defined as unique patients that have visited the practice in the last 18 months – check your figure in your dental software). If all of them were regular six-monthly visitors of the practice you would have $600,000 (1500x200x2) per year.
That’s $600,000 per year without:
- Any major work like ortho, implants, endo, extractions, crowns etc
- Any minor work like splints, mouthguards, being done.
- Any restorative dentistry happening. It’s not hard to imagine that each patient will need some fillings, or other restorative work at some stage.
- The extra value generated from your patient if they refer another patient to your practice from time to time.
- Any advertising or marketing dollars being spent.
When a dental practice is looking to improve their practice production much focus is usually placed on improving marketing/advertising for new patients and case presentation. There is no doubt that improving your skills in both of these areas will no doubt lift your practice performance. However it is too easy to lose sight of the bread and butter work that keeps the business humming.
Regularly when we check practices “rent roll” we see only 20-40% of the active patient base having attended in the last 6 months. A practice won’t ever be able to get 100% of a patient base attending for regular check-ups but with the right technique and training and focus a realistic goal for most practices should be 80%.
Understanding the value of your practice’s rent roll can mean a shift in focus for many practices. If dental practices focus a little more on building the importance of the regular ‘checkup’ with the existing patient base, building their perception of the value of six-monthly check-ups and the percentage of patients participating in it, they probably won’t need to spend as much money on advertising.. There would already be more patients in the practice and they would be accepting treatment more readily.