Benchmarks Part II

In our Silkin Management Group blog posted February 5th on our blogsite www.silkinmanagementgrp.com we discussed the idea of having and knowing benchmarks for various areas of a health care practice. This is important information for any practice owner to know so that he/she can compare how they are presently doing against basic productivity benchmarks that should be able to be easily achieved. We work with our clients on all of these areas and, where they are falling short of these benchmarks, we help them figure out why and implement the proper actions to achieve them.

In Part 1 we went over benchmarks for Production in a health care office, specifically for dentists, veterinarians and optometrists. In today’s blog we will go over benchmarks for Net and Collections percentages.

Net

Obviously, you don’t want to get your gross production into a higher range and then find out that you aren’t taking home a commensurate amount of money. Producing more without netting more is not the way to go! So, here are the minimal net benchmarks for you to know and what we work with Silkin Management Group clients to minimally achieve.

1. Dentists should be netting 40%


2. Veterinarians’ net should be at least 30-35%


3. Optometrists should be taking home 30-35%

Collections

Collections follow production and result in actual income to your practice. But if you aren’t collecting a very high percentage of your production, you are throwing money away. The basic benchmark for collections percentage is 98% of your production. That can and should be achieved. It is not hard to do.

Many of our new clients aren’t aware of how much money can slip between the cracks. A change of just 2% in your collection rate can equal thousands and thousands of dollars in your pocket (or out of your pocket if the collection rate goes down).
To give you a dollars and cents reality on what this can mean, let’s take a typical example. Say your practice is producing at a $50,000 a month level. Every 1% change in your collection percentage equates to $500. So if your collection percent goes down 1%, you lose $500 and if it goes up 1% you make an extra $500. Simple, right? If you are collecting at a 95% rate, 3% below the benchmark mentioned above, you are losing $1,500 per month. Most doctors feel that 95% is good. But the reality is you are losing $1500 a month which is $18,000 a year, straight out of your pocket. That is net income money as it doesn’t cost you any more to collect that extra 3% as long as you have the proper systems in place and trained staff. What if your collection rate was 93% (which many of our new clients are very happy with when they walk in our door). They are losing $2500 a month or $30,000 a year in net income at a $50,000 a month production level. We all can easily imagine what to do with $30,000. A new car? Pay off some bills? School tuition? Retirement funding?
You can do the math using your collection percentage with your level of production compared to the 98% benchmark. Try it and you might find it eye opening.

Silkin Management Group can provide you with all the tools to increase your gross, net and collections to the benchmarks presented. If you are interested in finding out how, call us at 800-695-0257 or email us at: info@silkinmanagementgroup.com. If you’d like to visit our website, check here: www.silkinmanagementgroup.com

Lyn Ribisi
Appointment Coordinator
Silkin Management Group