Boil it down to numbers

Asking a vague question like “should I add 3 more operatories” is hard to answer.  It’s difficult because there are so many subjective variables to consider and the answer may be based more upon theory rather than objective measurements.  What I do is break it down into specific numbers. 

For example, I will start with the assumption that 3 operatories will be added.  Then I calculate the cost of putting those rooms in.  Each room costs about $40,000 when considering the chair, light, delivery unit, computer, x-ray unit, other smaller equipment and supplies.  The three-chair expansion will cost $120,000.  Assume the bank will lend the money for 5 years at 6.5%.  The monthly payment is $2347.94.  Let’s also assume the additional 3 rooms will require 1 assistant and 1 hygienist.  The estimated monthly payroll for these extra staff will be about $7,500.  Therefore, the estimated monthly costs of the addition will be $9,847.94.  These costs will need to be paid out of profits not just production.  If the current overhead of the office is 75% then the needed production will be 4 X 9,847.94 = $39,391.76 (round up to $40,000).  So now the question is “can the office produce more than $40,000 if 3 more rooms are added?”  This is a more specific question and one that you and your staff can more accurately measure. 

Let’s take this same example one step further.  We’ll assume the one room designated for hygiene will produce $18,000 per month.  That leaves the other two rooms from which $22,000 will need to be produced to make it worthwhile. Now the question becomes “can the existing doctors produce $22,000 per month with the addition of 2 rooms and 1 assistant?”

If the office is open 20 days per month then the daily restorative production would be $1,100.  Ask your staff, especially those who do the scheduling, if they could book an additional $1,100 per day for the doctors.  They are keenly aware of the office’s ability to get the rooms filled.  They know how long patients are getting scheduled out and how many times they tell patients everyday that they just can’t get them in due to lack of space.  Of course the doctors have to be confident they could actually work the rooms in addition to their current schedule.  Perhaps one room could be for same day treatment while the other is for “spill over” if the schedule gets behind.  Can the same-day column generate $1,100 in production?  These are the specific questions one must arrive at to make a decision. 

See the difference between “should I add 3 more operatories for $120,000” vs. “can we fill a hygiene column and an extra $1,100 per day in restorative production by adding 3 rooms?”  By boiling down the numbers one still has to make a subjective decision but it’s made to a more specific question.  When adding rooms, equipment, staff and associate take the time to “crunch the numbers.”  It will yield a forecast that you can more easily use.