Management by Objectives (MBO), is a well-established method for setting business goals, monitoring performance and achieving desired results. Developed by Peter Drucker decades ago, even today it is still very much in use by businesses. As your dental practice is a business, there is no reason why you cannot benefit from MBO’s guiding principles as well. This blog presents a modified version of MBO specifically for dentistry, which we will correspondingly refer to as Practice Management by Objectives (PMBO).
Using PMBO methodology, six common practice objectives are identified along with relevant Key Performance Indicators (KPIs) – measurable, statistical representations of the degree to which each objective is being achieved. Many of the KPIs identified can be produced from your dental software’s reporting function but in some cases, additional manual calculations may be required to derive the final result. Some other desired KPI’s may only be produced through manual tracking and calculations of data when the software itself does not store the necessary data.
The benefits of PMBO include:
- Helping dental practices stay focused on what will make them more successful
- Objective measurement of practice performance and monitoring for better decision making
- Identification of administrative efficiencies that result in increased practice productivity
- Better return on investment from practice management software since it is the repository for the data used to track results
OBJECTIVE 1: ACHIEVE FINANCIAL TARGETS
To ensure a financially successful practice we need to monitor and measure the performance of the following dental practice areas:
- Overall Practice Production
- Average Revenue per patient
- Accounts Receivable/Collections
- Practice Expenses
In a previous blog, I provide a guide on choosing the appropriate KPI’s to use for each practice area and common dental industry benchmarks to aspire to.
OBJECTIVE 2: INCREASE HYGIENE AND TREATMENT PLAN ACCEPTANCE
Patients may recognize the wisdom of a practice’s dental health recommendations, yet many patients will not take the initiative to follow through on them. As a result, recommended but unscheduled treatment can end up lost in clinical charts and practice management systems if not properly managed and pursued by the practice. I recently wrote about how to uncover this unscheduled treatment and turn it into new profits.
To gauge how well you are doing in scheduling and completing required treatment here’s an ideal list of things you should know:
- The success of your hygiene program
- How efficient your hygiene program is at identifying new treatment opportunities
- Which patients have outstanding treatment plans or other unfulfilled treatment
- How successful the practice is in scheduling the identified recommended treatment
- Patients that are good candidates to fill last minute openings
Specific KPIs that address the above so that you can make appropriate operational adjustments include:
Stay tuned for Part 2 where we cover Objective 3 (Grow and Retain a Loyal Patient Base) and Objective 4 (Optimized Appointment Scheduling and Resource Utilization).