Ep. 66: 4 Ways to Increase Your Average Transaction Value
Want to increase your collections without increasing your expenses? One of the most important metrics you can use for this is your Average Transaction Value (ATV). This metric plays a prominent role in most businesses, but in dentistry it often gets overlooked. So this week, Jeff discusses how to calculate your ATV and how to increase it while keeping the focus on doing what’s right for patients and having a standard of care.
Topics:
1:12 – What is your ATV? And how should you calculate it?
7:03 – Four ways to increase your ATV (without over-diagnosing or pressuring your patients)
Links:
New Patient Intake Form - https://www.mgeonline.com/np-intake-form
The MGE Communication & Sales Seminars - https://www.mgeonline.com/abc
Free PPO Exit Strategy Session - https://www.mgeonline.com/ppo-exit-strategy
Full Mouth Restorative Course - https://www.ddsclinical.com
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Questions From This Episode
Why does Jeff recommend tracking "average collections per patient encounter" instead of a standard retail-style average transaction value in a dental practice?
Standard ATV only counts visits where a patient actually pays, so it misses no-charge visits like crown deliveries and can mask real problems, like poor conversion, that wouldn't show up in the number at all. He recommends a simpler, three-part version instead, tracked separately for hygiene, the doctor's schedule, and the combined practice, as a cleaner read on where a practice actually stands.
What example does Jeff give of how five or ten extra minutes of conversation can dramatically change a case's value?
He describes a patient needing six crowns who initially only agrees to the two insurance covers, planning to space the rest out over the following two years. With the sales skill to help them genuinely understand why all six matter now, that same conversation, roughly five to ten minutes longer, can turn a $2,000 to $2,800 case into one worth $6,000 or more.
How does Jeff recommend adjusting fee survey numbers to account for inflation?
He notes that most fee surveys haven't fully caught up to the inflation that accelerated starting around September 2021, so even if a survey suggests a fee like $850, he'd personally add about 10 percent on top of that recommendation, landing closer to $925 to $935, to account for the gap the survey itself hasn't yet reflected.
What's an example Jeff gives of an efficient scheduling adjustment that increases average transaction value?
He describes offering both a standard one-hour new patient visit and an extended hour-and-a-half version, with a well-trained receptionist routing patients into the longer slot based on intake questions revealing more extensive needs. That extra time lets the doctor fully present and close a larger treatment plan in a single visit, rather than needing to bring the patient back for a second appointment.
What caution does Jeff give about adding new, niche services to increase average transaction value?
He points to clear aligners as an example, a genuinely good service, but one where he's seen doctors get so focused on it that they neglect the core, bread-and-butter dentistry that built their practice in the first place, especially since clear aligner lab fees tend to run considerably higher than routine procedures. His advice: add new services without letting them pull focus away from what's already working.
Episode Transcript
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The essence of becoming more efficient is getting more out of the same, or fewer, resources, producing more in the same or less time, getting more new patients without spending more money, or collecting more while seeing the same or fewer patients. That last example touches on a metric you've probably heard of before: average transaction value, or ATV.
It's commonly used in retail and other industries to measure the average dollar value of each individual sale or transaction, and it gets a lot of attention when businesses analyze performance or set goals, mainly because of its direct effect on the bottom line. Despite how useful it is, you don't hear much about it in dentistry, which is unfortunate, since it's a genuinely useful tool for controlling profitability, and during economically challenging stretches, the ability to increase efficiency and profitability matters even more.
That's what I want to talk about this week: four ways to increase your average transaction value. My name is Jeff Blumberg, and I'm your host. I think the best place to start is explaining exactly how you calculate ATV, and why it matters in every business, dental practices included.
The standard formula is simple: total sales value divided by the number of individual sales transactions. Say a clothing store does $100,000 in sales for the month, across 500 individual transactions, $100,000 divided by 500 gives you an ATV of $200. If that store wants to increase profitability, one path, beyond marking up prices or negotiating better supplier costs, is increasing that ATV. If they manage to sell a bit more to each customer, not necessarily every customer, just enough to push the average up to $250, with that same 500 customers, sales climb to $125,000, an additional $25,000, without taking on any more customers or all that much extra work.
So how does this apply to a dental practice? Calculating ATV in dentistry gets a little tricky for a couple of reasons. First, what exactly counts as a transaction, a hygiene visit, a night guard, a crown, a full-mouth restoration? And how do you handle partial payments? Say a patient agrees to two crowns today, $2,000 total, but you're still waiting on $1,000 from insurance and only collected $1,000 at the visit itself, that gets messy to track cleanly. It also doesn't account for no-charge visits, it'll capture the appointment where you're prepping a crown, but not the delivery visit, since that one's typically no charge. In its standard form, ATV just doesn't account for encounters where nothing gets charged, and if you're not tracking other supporting metrics alongside it, that gap can actually mask a real problem.
Take that same clothing store example. Say instead of just having 500 purchases, 5,000 people actually walked through the door that month, and only 500 of them bought something. That's a genuinely poor conversion rate, and it wouldn't show up in ATV at all, since ATV only reflects transactions where someone actually bought something. Larger retail chains track foot traffic and conversion closely, but plenty of smaller businesses don't, and they end up solving the wrong problem as a result. You'll see something similar in a dental practice: you send out a marketing piece, it doesn't bring in many new patients, and you assume the piece itself failed. But if you're not tracking how many phone calls it actually generated, you might be looking at the wrong culprit entirely. Say that postcard generated a hundred phone calls, but you only converted ten into new patients, the real issue is reception and conversion, not the postcard.
So for a dental practice specifically, I'd use something simpler, since you don't want a metric that takes an hour to calculate every week or two hours at month's end. I'd track average collections per patient encounter or visit instead. If you see a hundred patients in a month and collect $100,000, that's $1,000 per patient on average, even though some of those patients paid nothing that visit, maybe it was just a crown delivery, some were straightforward hygiene visits, and some were higher-value procedures. I'd actually split this into three separate statistics to keep it simple: one for the hygiene schedule, one for the doctor's schedule, and a combined number for the whole practice. The hygiene-specific number is especially useful on its own, since it tells you the average value of a hygiene visit specifically.
Say across the whole practice you're averaging 20 visits a day, open 17 days that month, and you collected $95,000. That's $95,000 divided by 340 total patient visits, roughly $279 per visit. Yes, some of that $95,000 might include a payment that had been sitting in your accounts receivable for two months, but the point is, this tends to average out over time and gives you a real sense of where you stand. As a side note, you could also track production per day and per hour for both the doctor and hygienist, which accounts for no-shows a bit differently, but I'll stay focused on average transaction value here.
Calculated this way, dollar value per patient encounter, you'll see the occasional one or two-month anomaly, a particularly large insurance check landing after a long delay, say, but it tends to smooth out and give you a genuinely useful read on where you stand.
So the real question becomes, how do you actually increase this number, especially in a healthcare setting, where we obviously want to do this ethically? We're not talking about retail, where you're just getting someone to buy an extra shirt they didn't really need, that's not what this is. In healthcare, whatever a patient ends up accepting has to be something they genuinely need, whether for health, function, or a justifiable aesthetic reason.
There are four basic ways to increase average transaction value in a dental practice.
First: improve sales ability, your actual conversion skill. Say a patient needs six crowns, and you're not especially skilled at helping them understand and genuinely want that treatment. You explain it, they ask how much insurance will cover, and once they realize insurance only covers two of the six, they decide to just do those two for now, planning maybe two more next year and two the year after. If you had the skill to help them genuinely understand why they need and want all six now, the conversation might only take an extra five or ten minutes, 20 minutes instead of 15, and you'd convert a $2,000 or $2,800 case into a $6,000-plus case. That's better for the patient, better for your own sense of fulfillment in the work, and it directly increases your average transaction value. You also end up doing more quadrant dentistry as a result, which tends to be both more enjoyable and more efficient, something I'll get into shortly.
You also need the organizational side of sales in place to support this. Here's one example, there are plenty of others, but this should illustrate the idea: say you're bringing in a solid number of new patients, and you notice that during a standard new patient exam, you're spending maybe 10 to 15 minutes doing the actual exam, which leaves you only five or ten minutes to explain a larger case, not nearly enough time to properly answer the patient's questions or bring that personal touch as the doctor. Maybe you hand it off to your treatment coordinator, but your conversion rate on these larger cases just isn't where it should be, or you're having to bring patients back for a second visit to finish the conversation, which opens the door to no-shows and simply adds time, since you're not closing the case today.
In cases like this, a few efficiency adjustments can help. If your receptionist is genuinely skilled at evaluating incoming calls, not just generally competent, but specifically good at figuring out what kind of appointment a given caller actually needs, they can help route patients appropriately from the start. We've had clients offer both a standard one-hour new patient visit and an extended hour-and-a-half version. Say I call in as a new patient, you ask a few intake questions, we have a free new patient intake form I'll put as a download on the episode webpage, and it turns out I haven't seen a dentist in ten years, I'm missing a couple of teeth, and I've got pain in a few others. Your receptionist recognizes I likely have more extensive needs and books me for that longer, hour-and-a-half slot instead of the standard hour. The hygienist still does their normal work, perio probing, full series of x-rays, and so on, but now you have a genuine half hour left in the appointment to review your findings, walk through a full treatment plan, and actually move forward with it, rather than needing to bring me back for a separate visit. That's a direct efficiency gain, more accomplished in less total time, without creating an additional encounter.
There are plenty of ideas like this, I'm just sharing a couple to make clear this is genuinely achievable. It's absolutely possible to become more efficient and more profitable at the same time. And the appealing part is that improving your sales skill and efficiency here isn't just better for your collections, it's genuinely better for your patients too. That same patient needing six crowns is clearly better off getting all six addressed now rather than spreading it out two at a time over three years, since postponing treatment like that increases the odds that something worsens into a root canal or another complication. Everybody genuinely wins in that scenario.
If you want to learn more about this kind of professional sales approach, helping patients genuinely want the treatment they need, the leading resource in the dental industry for this is MGE's Communication and Sales Seminars, sometimes called the A, B, C seminars, since there are three of them. I'll put a link on the episode webpage. The average attendee sees a $288,000 increase in collections in the first year, that's a real, measured figure, not an exaggeration, and it's genuinely worth checking out, since it tends to make the work more enjoyable for both you and your patients.
That's method one, sales. Method two: adjust your fees. This one's close to a no-brainer, if something costs $10 and you raise it to $15, you're simply making more on that same sale. Obvious as that sounds, I still regularly meet doctors who haven't adjusted their fees since 2020. I won't belabor the inflation point again, you've heard me cover it before, but if you haven't raised your fees yet, you genuinely need to. One caveat worth knowing: fee surveys can tell you roughly what you should be charging in your area depending on whether you want to sit at a low, median, or high percentile, but most of these surveys don't fully account for the inflation that really took hold starting around September 2021. As of this recording, late 2022, even if a survey tells you a procedure should be priced at $850, I'd personally add another 10 percent on top of that to account for the inflation gap the survey itself hasn't caught up to, landing closer to $925 or $935 rather than $850.
The other major fee-related lever, and you've heard me say this plenty of times, is getting out of PPOs. If you're participating in managed care plans and charging a reduced fee, that directly suppresses your average transaction value and your overall profitability, since your costs have kept climbing while PPO reimbursement generally hasn't. If you're not already working toward getting out, please start looking into it, I really can't stress this enough. If a large share of your practice, say 80 percent, is tied up in PPOs, I wouldn't recommend dropping everything at once, that's a recipe for real disruption, a gradual, sequenced approach over time tends to work much better. But you have to start somewhere, and now's the time. We offer something called a PPO Exit Strategy Session if you'd like help thinking through how to approach this for your specific practice, I'll put a link on the episode webpage.
Method three: efficient scheduling. This includes doing more quadrant dentistry, prepping four or five crowns in a single appointment is considerably more efficient than spreading them across separate visits, both for you and for the patient, since it means fewer total encounters. Efficient scheduling also means proper double-booking, something we've covered in more depth back in episodes 49 and 50, along with resources on our online platform, DDS Success, and a dedicated MGE scheduling seminar if you'd like to dig deeper. The general idea is eliminating wasted time and effort in your schedule wherever possible. That's part of why a genuinely good dental assistant matters, they make you more productive, and the same goes for a strong treatment coordinator, who lets the doctor participate less directly in the actual sales conversation while still closing the case. All of this matters because the doctor is the highest-value provider in the practice, so you want their time used as efficiently as possible, with real structure in the schedule to prevent wasted time.
The fourth and final method: increase the range of services you're able to deliver. Since we're talking about healthcare, this isn't about convincing someone to buy something they don't need, the way a retailer might upsell an extra shirt, it has to be something the patient genuinely needs. There may be procedures you currently refer out simply because you don't yet have the skill or confidence to perform them yourself, implants, for instance, or full-mouth reconstruction type cases. Learning to deliver these adds real value to your average patient encounter and lets you help more patients directly, which is really the core point here.
Clinical training is something most doctors naturally gravitate toward, it's often part of why you got into the profession in the first place, learning new procedures is genuinely enjoyable for a lot of doctors. But you also need the business infrastructure to support it, along with the sales ability to actually present and close that new type of case. I've seen plenty of genuinely excellent clinicians who are weak on the business side and unable to sell, which means they technically could be offering these services but aren't actually doing so in practice. You want to balance both sides. If you're currently referring out implant placements, learning to place them yourself, and getting genuinely confident and skilled at it, directly adds value to your business and increases your average transaction value.
On that note, we recently partnered with another group on a full-mouth reconstruction course, built specifically for MGE clients, since we found that most continuing education options required attending several different courses just to piece together the full picture. We consolidated everything under one program, which we'll be hosting here at MGE next April. I'll put a link on the episode webpage if you're interested, seating is limited and it's filling up quickly, nearly full as of this recording. Just wanted to flag it as a concrete example of the kind of opportunity I'm describing.
One word of caution here: be careful about chasing a procedure simply because it's new and interesting if it's genuinely niche and outside your practice's main focus. Clear aligners are a good example, they're a great service, but I've seen doctors get so focused on them that they start neglecting the core, bread-and-butter dentistry that actually built their practice. Clear aligner lab fees also tend to run considerably higher than a typical endo or operative procedure. So if you do add a new service like this, make sure it doesn't pull focus away from everything else that's already working well in your practice.
I'm a big believer in recovering lost opportunity, getting the most out of what you already have, and these four areas genuinely represent that. I'd encourage you to look into each of these for yourself, maybe even make it a 2023 resolution to see where you can improve your value per patient encounter. It benefits you, and it means doing more for your patients at the same time, which benefits them too.
That's all I have for you this week. Don't forget about the downloads, I've got all the links I mentioned today on the episode webpage. If you want more information about MGE, you can find us at mgeonline.com or call us at (800) 640-1140. Have a great week, and we'll see you at the next episode.