Profit in Dentistry … are you sitting comfortably?
I wanted to make my first blog post about something I am obsessed with.
It's not stylish, or sexy, or even that simple...
...Chair Occupancy- what is it, and why does it matter?
Every business has a working hours capacity and (simply put) chair occupancy is a measure of the percentage of that capacity that you're currently using.
Using an example... Harry owns a Dental Practice with 4 chairs, which is open for 40 hours a week, for 50 weeks of the year. By my maths that gives Harry a maximum of 8000 hours of clinical time (presuming he doesn't extend opening hours).
Harry has some part time dentists; dentists also take holidays and the diaries are not always full. Harry realises that out of 8000 maximum clinical hours available, he is filling only 4000 of those hours- giving a 'real' chair occupancy of only 50%. Put another way, Harry has 4000 hours of 'down time' where his team could be helping patients. This is what I find in most Practices on my first visit.
Excluding staff costs, Harry incurs a number of fixed costs for his Practice, which are payable regardless of part time hours, holidays or shift working. These include:
- rent/ mortgage
- Utilities (you still have to heat reception and waiting room areas for only 1 operational surgery)
- CQC subscriptions
- IT provision
- Surgery & Buildings insurance.....
- .... the list goes on
These (rising) fixed costs are being borne by only half of the maximum possible surgery space, so many Principals find that they are earning less as an owner than they did as an associate.
How can this happen?
Most Dental or Medical Practices have software which (reassuringly) tells them that their chair occupancy is at 90%, and so it isn't made a priority. This software is (unintentionally) MISLEADING. This only calculates the % of 'open' diary time that is being filled; it takes NO ACCOUNT AT ALL of 'closed' diary time due to holidays or operator working patterns.
What changes can I make to maximise chair occupancy? (Many of these aren't easy to do, but they are achievable with a little investment of focus and energy)
- Review operator & nursing working hours/ schedule to make sure it's right for your business- I can't stress enough how important this is- but it has to be done with the right consultation and support.
- (If you need additional patients to fill additional surgeries) ensure you have a robust marketing strategy in place to attract new patients, or look at diversifying into areas such as facial aesthetics.
- Consider working with a small number of ad hoc hygienists and therapists who can fill surgeries when dentists are on holiday
- If you are a Principal, consider your own working schedule... how can you adapt your hours to fit the needs of the Practice e.g. if you and another associate both work mornings and she can't change, can you work the afternoon instead?
- Consider your nursing staffing levels and holiday planning... if you have 5 nurses and they each have 4 weeks holiday then that's 20 weeks a year where you can't resource a surgery- maybe you need to hire additional staff?
Why bother maximising the 'real & underlying' chair occupancy?
- Using the example above, Harry's huge list of fixed costs is being borne by the equivalent of only 2 surgeries.
- Apart from the additional variable costs (staffing/ materials/ lab costs etc), there are NO additional fixed costs for using that extra 50% of free surgery space, so the profit margin is much higher on these 'additional' hours
Is it realistic to expect every surgery to be full every day?
- Yes... over 90% 'real' chair occupancy is realistic and achievable, giving your Practice more clinical time to help patients.
'This all sounds great but I can't see it working in my Practice.'
I have worked with many of my clients (and indeed within my own 8 chair Practice) on maximising 'real' chair occupancy. IT IS ACHIEVABLE, and it will have a significant positive impact on your bottom line.
If you'd like to discuss 'real' chair occupancy, and how to calculate then maximise it in YOUR Practice, do get in touch.