The Data Driven Dental Practice Mark Costes, DDS American Academy of Dental Group Practice Las Vegas, NV February 1, 2018

Text “Freebook” to 42828

The Roach Coach

Costes Inc. Flagship Dental Group- 14 Practices: Currently 10 in AZ and CA Dental Success Institute Horizon Schools of Dental Assisting 180+ locations Book #1 : Pillars of Dental Success Book #2 : Systems Driven Dental Practice The Dentalpreneur Podcast

The Age of Really Big Information Every day we create 2.5 Quintillion bytes of data. (That’s 18 zeroes) 25,000,000,000,000,000,000

This amount of data would fill 10 million blu-ray disks, the height of if stacked, would measure the height of four Eiffel Towers on top of one another.

The Information-Execution Gap

My Fantastic Four

Moneyball 2001 Oakland A’s and manager Billy Beane lose to Yankees in the playoffs and lose their three biggest stars to free agency (Jason Giambi, Johnny Damon and Jason Isringhausen) Beane’s even bigger challenge: his budget is 1/3rd of richer teams in the league How’s is he going to rebuild his team without his stars and without a budget?

Bean’s Solution… Data and Statistical Analysis Hires Yale grad and statistical genius Peter Brand Their hypothesis: standard agreed upon metrics in baseball aren’t the only predictors of success (RBI,BA,SB) They recognized that more important stats were (OBA,SP)

The Plan They hired a bunch of “Over the Hillers” and unknowns who were unwanted and hugely undervalued Result: The team won the AL Championship, 20 consecutive games and made it to the playoffs in ‘02, ‘03

Mining for Data Most dentists measure their practice’s success by tracking a limited number of metrics (Prod, Coll, NP) Expanding the statistics that are tracked and measured increases clarity in the decision making process and facilitates growth and management opportunities

How to Play Dental Moneyball Additional Metrics to Track: Case Acceptance % Production per hour Missed Appointment % Attrition Rate Reappointment Rate Active Patient Hygiene Percentage Incompleted Treatment Total

Overhead/Expenses Average in the United States: 68-72%

Overhead Numbers to Know Payroll 30% Lab Fees 9% Dental Supplies 5% Facility and Equipment 9% 30-30-30-10 Rule (Phase I) 60% 30-25-30-15 (Phase II) 55% 25-25-30-20 (Phase III) 50%

A Tale of Two Practices Practice #1

Phase 1: 30-30-30-10 30 - Total Payroll 30 - Total Expenses (Fixed and Variable) 30 - Doctor’s Pay 10 - Profit 31.6 - 54.4 - 32.9 - (-18.9)

A Tale of Two Practices Practice #2

Phase 2: 30-25-30-15 30 - Total Payroll 25 - Total Expenses (Fixed and Variable) 30 - Doctor’s Pay 15 – Profit 22.5 – 26.5 – 25.7 – 25.3

Tale of Two: Practice Comparison Practice 1 Practice 2 Collections= $194,979 - Collections $114,100 Expenses = $168,452 - Expenses = $55,968 Overhead = 86% - Overhead = 49% Net Profit = -$15,834 - Net Profit= $35,674 Debt Service= $18,730 - Debt Service = $6,400 Available Funds = -$34,564 - Available Funds= +$29,274

Tale of Two: Analysis $766,116 Annual Differential P1 out-collected P2 by: $80,879 P1 Overhead 86% vs. P2 Overhead 49% = 37% difference P1 Available Funds = -$34,564 P2 Available Funds = +$29,279 In comparison to P1, P2 has a +$63,843 cash flow swing per month $766,116 Annual Differential

Lowering Overhead and Increasing Available Funds Decreasing Variable Expenses Overall Awareness of Profit and Loss Statements Calculating cost-per-procedure expenses Inventory control Negotiating and shopping for supply savings Negotiating with vendors and labs

Lowering Overhead and Increasing Available Funds Decreasing Fixed Expenses **Increase Revenue** Negotiate PPO reimbursement Increase service volume Increase price per procedure Increase case acceptance Increase clinical suite

The Flagship Concept When to expand Centralization Executive Team Organizational Chart The Role of the CEO