For the second in these deeper delves into the finance of dental practice, I want to touch on another absolutely fundamental key metric: average daily yield.
If you were reading this or discovering this for the first time, it would be useful to jump backwards and read about operating surgery costs per day, OSCPD, as it ties in fundamentally to the average daily yield discussion.
Average daily yield is effectively what the dentist turns over in patient costs in the treatment room that day.
It's what we call in the United Kingdom, 'the gross' divided into a daily basis.
It's obviously possible to do average daily yield per hour, but it's often more effective to do average daily yield per day.
Just for the record, I was introduced to this about 10 or 15 years ago with the premise that all dentists sit between bands of average daily yield.
In the United Kingdom in pound sterling, these are dentists under £1000 a day, dentists under £2000 a day, and dentists over £2000 a day (there are super dentists who earn considerably over £2000 a day, the highest I've ever come across is someone doing £10,000 per day).
This is important because understanding the average daily yield of a clinician allows you to budget for the turnover of your business extremely effectively.
The average daily yield of clinicians (because they sit within these bands regularly) is fundamentally very predictable. One person's ADY from the previous year will be very similar to the ADY this year (perhaps only increasing with the percentage price rise that's going on to your practice costs).
Once you're able to look at this, you can decide how many holiday days and days out of the practice your associate is likely to have (and you're likely to have) and then figure out exactly what your likely turnover is, provided you have the patience to provide it.
Once you understand your average daily yield, you can start to look at average daily yield and look at operating surgery costs per day and begin to calculate the profit of individual associates (and even individual treatment items), making your practice much more transparent and visible and showing you the areas that need to be worked on to make a more effective, efficient and economically viable business.
Average daily yield forms a critical part of the standard spreadsheet that we provide on our dental business courses. This is something that can easily be populated by a member of the team monthly, together with your operating surgery cost per day and the other key performing indices, which then allows you to produce a very, very powerful scheme of managerial accounts which will enable you the opportunity to deep dive into your practice and improve the outcomes of your financial performance over and over again.
Understanding these aspects of dental finance is something that's rarely, if ever, taught at dental school and is usually up to individuals to figure out by themselves as they move along.
Understanding this early on allows you to get a lifetime value from the knowledge it gives over and over again in your career.