Understanding and Evaluating Associateship Opportunities
Business Parameters and Systems

Course Author(s): David G. Dunning, MA, PhD;Robert D. Madden, DDS, MBA

Business Parameters and Systems

  1. What are the key performance indicators (KPI) being routinely targeted for goal setting and measured in the practice? Many potential variables are involved here, including these with ranges of recommended targets.7,44-45
    • Business overhead (55-70%)
    • Collection/production ratio (98%+/-)
    • Third-party involvement in practice (no more than 30 to 50% of total gross production, depending on market conditions)
    • Accounts receivable as a fraction of average monthly collections (1.0+/-)
    • New patients per month (15 to 20 per dentist)
    • Dental hygiene maintenance/recall % (total due/total seen) per month (90% or higher)
    • Utilization of chair as a % of time/appointments available (90% or higher)
    • Dental hygiene as a percentage of overall production (25% to 33%)

    Leading experts may have varying opinions about what these and other KPI numbers should be. The pivotal question is: are goals/targets being set for these variables and are they being routinely tracked in the practice?
  2. Practices typically need to be generating ~$900K to $1 million in total revenue for a one-dentist office in order for an associate to earn a living in situations where the other dentist plans to keep working at previous levels. If the other dentist will by contract reduce hours, the revenue may be proportionally reduced. Further, overhead plays a major role in evaluating needed revenue per dentist. The higher the overhead, the higher revenue is necessary.
  3. What business systems are in place for sound practice management? Included here would be scheduling, internal marketing, external marketing (especially a sophisticated website), customer service, financial arrangements for patients, morning huddle/business meeting. Practices with sophisticated management systems will have implemented scripted conversational strategies aimed to achieve results.
  4. An associate candidate should get credentialed by all third-party carriers involved in the dental practice prior to starting work. And this appears to be an increasingly difficult task to achieve. So, it is best to start the credentialing process as early as possible.