In Episode Six of the Best of Cash is King, AADGP President Dr. Brent Barta, Vince Cardillo, Founder & CEO of Maeva Dental Advisors and George Radigan, former VP of North American Dental discuss the what metrics each practice should be looking to develop and evaluate on the income side of the practice.
Dr. Brent Barta
I’m curious if you guys would speak to what metrics you might use to evaluate the health on the income side? If you’re looking at a group, what one or two metrics would you put forth as maybe the best benchmarks, that a group could refer to when they’re evaluating their success and on the income side. Either event, once you speak to that, I’m sure you look at this daily.
Yeah, so I mean, we break up our, you know, our I’m that tricks at the business operation. When clinical, right businesses, your financial statements operations, are your your metrics of new patients and treatment plan acceptance?
And then clinical is just around clinical, quality of care, hygiene perio, percentages of people doing chart audits on each other, would be important. So are you, are you speaking more of the financial statement, ones, or I’m speaking more of maybe a couple data points that would give a practice an indication of how healthy their ability to collect is something like receivables, average days and receivable any other I mean, average days outstanding is is real important, right?
And understanding how quick it’s taken for us to get that cash and, you know, then it goes to true and plan acceptance and then it goes to what are we collecting of the treatment plan? So a lot of practices, that are very successful, do present full treatments and they might say, hey, look, this is a 10,000 dollar case we could get you on Care. Credit. If not, we’ll do is we’ll collect half now and then half at the end. So what happens is? They’ve got 10,000 today, but they’ve only done a thousand of work and they’re ahead of the curve. So we’ve seen that be real successful.
So it’s all I think it’s all on that. What do you front that systems on how you presenting the treatment and what you getting the patient to commit to and how you getting them to commit to it?
Yeah, I’d also add in there. I mean 99.9% of you know, single practice or small group practices on cash basis accounting, right? So you can see what your monthly cash flow is, right? So I know the the new Buzz is, you know, what’s my EBITDA? What’s my EBITDA? You know, that’s just a fancy acronym for cash flow.
So what you know, what are you putting in the bank on, on a monthly basis? And what is that percentage of your of your overall gross production that production from an AR perspective, you know, there’s there’s a little bit of a little bit of confusion in the AR, right?
So a month month and a half of outstanding AR is typically a healthy practice, but I would also encourage all practices to run a credit balance report. This is this also happens on literally every single integration.
partnership that we do where you’ll have a family account and you’ll have a thousand dollar balance allocated to the husband when it’s the wife’s and the husband shows a credit and wife shows outstanding AR and then you think you only have a hundred thousand dollars a day are but that full a, our AG report is fully encompassing of all the credits and then you run a credit balance report and you have fifty thousand dollars of credit sitting on the book.
So you really have a hundred fifty thousand dollars a day are not, not a hundred thousand dollars a day are and so making Sure that you’re properly allocating procedures to the appropriate party within that account, that is key because it’s still garbage in garbage out naturally, but just managing managing the cash flow.
According to, you know, what you have perceived overhead and what your overhead goals and attributes are Good. And Brent, one of the, you know, one of the things that we use during trainings, are if there’s a practice that’s having problems collecting, you know, from a daily perspective. We, you know, we show a an analysis of hey, today, you should have collected two thousand, one hundred dollars.
You collected 1,000. Okay, where was the breakdown, would happen and take that individually each time. So if you have a problem, you the It’s good to answer to something like that or do it all the time.
We have some, some practices that, you know, right, some, you know, manage some tight controls and they’re doing that every day, which is great. So, that’s a little work, but They don’t have much and they are right so different that work up front, but they don’t have to do later.
So, you know when we are working with managers, it’s like look guys. I know you don’t like to do a are then you need to get someone else to do it. And on top of it, if we just collect it. We don’t have to worry about.
Dr. Brent Barta
Amen, right? It’s easier. said than done, though. for some reason, it is. But yeah, having that daily expectation. That your front office. People have a goal for their over-the-counter collections is huge. So, I totally agree with that again, preaching to the choir here.