NET PRODUCTION

Net Production as a Percentage of Production

If you work in an urban or suburban practice, PPO’s and discount plans are a necessary component of your business model.  They require you to accept 20 to 40 percent less than your usual and customary fee. Guess where that discount comes from?  That’s right, directly from your bottom line.  That $300 discounted rate for a crown came right out of your profit margin. 

Are you willing to work for less for more volume of patients?  Probably not, but there is a bright side. Those patients on plans may present with a comprehensive treatment plan and if you hadn’t participated in the plan, you would have never had the opportunity to present comprehensive treatment or esthetic options to this patient. Plan maximums have hardly increased in the last twenty years, so most treatment plans exceed the maximum amount anyway.  Much better to present to a patient sitting in your office than wasting your marketing dollars.  How would you advertise anyway for those patients who require comprehensive treatment?  (IV sedation comes to mind!)

Practice Hawk tracks this metric to make sure that you aren't giving away too much of your services.  One Doctor using our program discovered that his net production was only 56%.  He was only collecting a little less than half of what he produced!  As a sidenote, this dentist ended up in bankruptcy. 

Perhaps the best approach is to join multiple plans early in the development phase of your practice and as you gain a reputation and begin to see nice volume of patient referrals and solid revenue, you then drop your participation in the weaker PPO’s and discount plans.