Hidden Treasures
It is well established that orthodontists' expenses are rising faster than gross income, with the result that net income, according to the 1989 JCO Orthodontic Practice Study, is not rising enough to keep up with inflation. Net income in the average practice rose 2 percent between the 1987 and 1989 studies, while inflation rose about 9 percent in the same period.
There are only two ways to increase net income. One is to decrease expenses and the other is to increase gross income. Except for practices that are overstaffed or extravagant, reducing expenses is likely to be ineffectual or even counterproductive. It costs money to make money. There is far greater potential to increase net income by increasing gross income.
There are a number of ways to increase gross income, but the most promising one is close at hand, ready and waiting within every practice. It is referrals that are not converted to starts. Information from various sources indicates that the case acceptance rate in the average practice stands at about 65 percent or less. In such practices, there is room to improve that percentage relatively easily.
Let's put some numbers on it. The average practice sees 230 referrals a year, and is probably starting 60-65 percent of them. With appropriate effort, the average practice could start perhaps 80-85 percent of its referrals or more. Every additional 5 percent started equals 11-12 patients. At the current average fee of $2,800, 11-12 new patients could bring an additional $32,000 of gross income over the next two to three years. A 10 percent increase in case starts would mean 23 additional patients, and $64,000 of additional gross income over a similar time period. A 20 percent increase in case starts, from a 60-65 percent acceptance rate to an 80-85 percent acceptance rate, would mean 46 additional patients and $106,000 additional gross income. It may be no coincidence that the average practice consistently reports that it could see an additional 50 patients without adding to staff or facilities. Well, those patients have already been in the office. They just have not been converted to starts.
It seems obvious that to increase one's case acceptance rate, something different must be done between the time the referred patient calls for an appointment and the time the patient makes a decision to start or not start. It is also obvious that increasing the number of referrals while maintaining or increasing one's case acceptance rate will also result in increased case starts, but let us limit this discussion to the case acceptance rate.
Before a case acceptance rate can be said to increase, it is necessary to know what it presently is. Since only 34 percent of respondents to the 1989 JCO Orthodontic Practice Study reported measuring their case acceptance rates, there is immediate room for improvement in a majority of practices. But what case acceptance rate do you measure? There is just one true measure of case acceptance-- the percentage of referrals that is converted to case starts.
The only problem with this measurement is the number of referrals that are placed on observation to start or not start at a later date. Since some patients may remain on observation for a long time, a true picture of case acceptance can be had only if the log of case acceptance is kept long enough to account for a couple of turnovers of observation patients. This can be accomplished by going back in time and recreating such a log for the past several years. Otherwise, one would have to omit all but patients who had a case presentation, or make an invalid assumption that all observation patients eventually start.
Recreating a case acceptance model is easier if records have been kept of the disposition of every referral in a practice. This information is essential. If it is not available from the past, the best one can do is begin to track it as soon as possible. Here are the minimum information requirements for such a log:
1. Consultation-- broken or cancelled, no reschedule
2. Consultation-- no treatment recommended
3. Consultation-- recommend observation
4. Consultation-- refused to continue
5. Diagnostic records-- broken or cancelled, no reschedule
6. Diagnostic records-- recommend observation
7. Diagnostic records-- no treatment recommended
8. Diagnostic records-- refused to continue
9. Case presentation-- broken or cancelled, no reschedule
10. Case presentation-- no treatment recommended
11. Case presentation-- recommend observation
12. Case presentation-- refused to continue
13. First treatment visit-- broken or cancelled, no reschedule
14. Observation-- broken or cancelled, no reschedule
15. Observation-- no treatment recommended
16. Observation-- refused to continue
Knowing what the case acceptance rate in a practice really is, one can now investigate what happened to the percentage of referrals that did not become active patients in the practice. What might have been done to increase the percentage of acceptance? Where did the non-starts fall through the cracks, and why?
Much has been written about the importance of the reception of new patients, both at the initial telephone call and at the initial entry to the office. Patients who have not been to your office form a first impression from the quality of their first contact. They must substitute intangibles for tangibles. It pays to have an employee to answer the first phone call and to receive the new patients at the first visit who is an attractive person, who is comfortable with people, and who genuinely likes people. Similarly, the appearance of the office and its environment are intangibles that affect people's perception.
Presenting a lay person with an orthodontic diagnosis and fee without establishing a basis for either one places too much faith in the strength of the referral and the readiness of the prospective patient to accept anything and everything the orthodontist says. It may be a major cause of dropouts in many practices.
Some child patients come to the first visit with only one parent, usually the mother. Many mothers may not feel able to make a decision to proceed without checking with the father. Don't wait too long for a call-back. Such people should be contacted from a list that indicates who they are and the dates they should be called.
An effort should be made to interview every non-starting patient to determine the reason for the non-start. Was it poor patient relations, was it inconvenient location or hours, was it financial, was it inadequate information, was it the diagnosis, was it something else? Whatever the reason, could it have been accommodated?
It is important to keep separate account of case aceptance by young children, adolescent children, young adults, and older adults. A conspicuously low case acceptance rate among adults may indicate a number of causes. Do you really not like to treat adults, and do you consciously or unconsciously discourage them? Are your office location and hours not convenient for adult patients? Is the office environment unsuitable for adult tastes? Do you mix children and adults in the open-bay operatory? Have you asked prospective adult patients whether they would prefer privacy? What might you do to increase case acceptance in each patient group?
It is also important to log case acceptance by source of referral. If case acceptance is low among the dentist-referred group, consider what could be done to improve relations with referring dentists and to strengthen their referrals. A general dentist who is referring every patient to three orthodontists might be persuaded to change that policy.
In this issue of JCO, Dr. George Nadler describes his survey of 500 referrals, what he found out about his case acceptance, and what he learned that may help him increase his case acceptance rate. Every office should follow his example in recording the history of case acceptance from referral to start or non-start separately for child, adolescent, and adult referrals, and for the major sources of referral.