Mark Costes, DDS The Profitability Accelerator:

1. Mark Costes, DDS The Profitability Accelerator: How to Create a Sophisticated Data Driven Dental Practice Mark Costes, DDS

2. Phase 1 Overview • Phase 1- Focus is Business Awareness, Systemization and Overhead Control Expenses and Overhead targets: 30-30-30-10 (Payroll-Expenses-Dr. Pay-Profit)

3. Phase 2 Overview • Phase 2- Focus is increased revenue and patient flow. • Further emphasis on increasing hygiene production percentage • Team Incentives • Increased Data Analysis • Internal and External Marketing (ROI) • Expenses and Overhead targets: 30-25-30-15 (Payroll-Expenses-Dr. Pay-Profit)

4. Phase 3 Overview • Phase 3- Focus is further revenue increase and overhead decrease. • Increased clinical suite • Increased capacity • Increased providers • Specialty services • Expenses and Overhead targets: 25-25-30-20 (Payroll-expenses-Dr. Pay-Profit)

5. Ideal Expense Ratios Payroll – Expenses – Dr. Pay - Profit • PHASE I: 30-30-30-10 - 60% Overhead • PHASE II: 30-25-30-15 - 55% Overhead • PHASE III: 25-25-30-20 - 50% Overhead

8. “There’s an epidemic failure within the game to find out what is really happening.” “Baseball thinking is medieval, they’re asking all of the wrong questions.”- Peter Brand • How does this apply to the profession of dentistry and which analytics are we failing to consider? • Where is the opportunity for those of us in dentistry who study analytics?

9. 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?

11. 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)

12. 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 2002,2003

13. Mining for Data • Most dentists measure their practice’s success by tracking a limited number of metrics • Expanding the statistics that are tracked and measured and analyzed increases clarity in the decision making process and facilitates growth and management opportunities

14. Data Silos

15. Playing Dental Moneyball:Data Silos • Silo #1: Fixed and Variable Expenses- • P and L/ Balance Sheet/Scorecard • Cost per Procedure • Silo #2: Practice Management Software- Practice Analytics Software • Silo #3: Departmental Data: Turning non-producers into Producers • Front Office • Back Office • Hygiene • Billing Department • Marketing

16. Data Silo #1: Fixed and Variable Expenses • Payroll 30% • Lab Fees 9% • Dental Supplies 5% • Facility and Equipment 9%

17. Practice #1 • The Traditional Baseball Practice, the Battle cry- “Drive Production…”

20. 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)

21. Practice #2 • The Moneyball Practice…

24. 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

25. Data Silo #1: Cost per Procedure How much does it cost to provide each procedure in your office? What is the average and desired adjusted production per hour per doctor? What is the average and desired adjusted production per hour per hygienist? What is the average and desired overhead per operatory per hour?

29. Data Silo #2: Practice Management and Analytics Software • Additional Metrics to Track: • Case Acceptance % • Production per hour • Missed Appointment % • Attrition Rate • Reappointment Rate • Active Patient Hygiene Percentage • Incompleted Treatment Total

32. Data Silo #3: Departmental Data- Front Office • Front Office as Producers: • New Patient Closing Percentage • Patient Reviews • Case Acceptance

33. Data Silo #3: Departmental Data-Back Office • Back Office as Producers: • Same Day Treatment • Pre-Selling/Co-Diagnosis • Patient Reviews • Case Acceptance

36. Data Silo #3: Hygiene • Adjusted Production Benchmarks • 30% Total office production as a department • 3.0-3.3X Hourly Wage • Percentage of Active Patients Active in Hygiene • Overall Perio Percentage • Adjunct services benchmarks • Pre-Selling/Co-Diagnosis • Case Acceptance • Patient Reviews

38. Data Silo #3: Billing Department • Total Adjusted Production/Collections Ratio should equal 97-100% • Total AR should not exceed average one month collections • AR Breakdown: • 0-60 days should be less than 80% of total AR • 60-90 days should be less than 8% • Greater than 90 days should not exceed 12%

39. Data Silo: Marketing Dept • Define monthly marketing budget depending on the life cycle of the practice • Unique tracking numbers for each lead source • Calculate ROI for each lead source

41. Metrics Reporting, Tracking and Accountabilty • Cadence of Accountability(4DX) • Morning Huddle format • Weekly Growth (WIG) Meetings • Weekly OM/Supervisors Meetings • Monthly Team Reviews • Quarterly Calibration Meetings