Dental Practice Efficiency vs Productivity

What’s more important – Dental Practice Efficiency or Productivity?

Your dental practice is full of data. New patient numbers, gross revenue, net revenue, retention calculations, gross collections, net collections, staff expenses, hygiene production, case acceptance, etc…

Data is powerful. Metrics today are used to choose baseball players, guide artificial intelligence, select stocks, guide massive marketing campaigns, and all grocery shelves.

The challenge of a practice leader is to sort through the data to determine what numbers provide actionable intelligence. What numbers help you make decisions? What numbers guide course correction? What numbers reflect real growth? What numbers provide a warning?

In my experience, there are two important measurements that sit at the top of every practice. Knowing these numbers is critical to understanding how your practice is operating.

1. Productivity

How much does your practice produce? This is a common question used to measure the size of a practice. Productivity is the total amount of revenue you produce. Typically, we speak of productivity in annual terms – a one million dollar practice or a three million dollar practice. We are referring to the total gross production for that year. In comparison, we say a two million dollar practice is more productive than a one million dollar practice.

Practices typically break that down to months, weeks, and days. If you work 16 days a month and produce $160,000 a month, your practice produces on average about $10,000 a day. In comparison, a practice producing $10,000 a day is more productive than a practice that produces $5,000 a day.

On their own, productivity measurements allow us to see the big picture of how hard you and your team are working. However, high productivity does not necessarily mean everything is running efficiently. Efficiency is what separates good practices from great practices.

2. Efficiency

In simplistic terms, productivity measures hard work and efficiency measures smart work. While productivity reflects your total output during the hours you work, efficiency reveals how effectively you are using the hours in which you work.

Here’s a simple calculation: Efficiency = Productivity divided by time

Let’s compare the efficiency of two practices.

Practice #1

Dr. Smith works very hard. In fact, he is the hardest working dentist he knows. Always pushing his team, they produce an average of $10,000 of dentistry every day. To meet his daily production goals, the doors to his practice are open 12 hours a day. Though he and his team members tend to look a little tired, they meet their goals every month.

Practice #2

Dr. Lee also works very hard, but she has a different approach. With a $10,000 daily production goal, she and her team have to make the most of the 6 hours they are open every day. Highly focused on efficiency, last year they produced $10,000 a day in only 6 hours a day. Full of energy, she and her team brighten the day of every patient they have the privilege of serving.

Though Dr. Smith and Dr. Lee share the same level of productivity, Dr. Lee’s practice is twice as efficient as Dr. Smith’s practice. Her team produces the same $10,000 a day in half the time. When hard work meets smart work the result is an efficient practice.

Efficiency is where the game is won or lost. One could say that efficiency and profitability share the same track. Higher efficiency results in higher profit. Total productivity is important, but getting the most out of every moment your doors are open is what leads to a thriving practice. Seek efficiency and watch your profits climb.