Keep the Operating Costs of Your Private Dental Practice Healthy

Keep Operational Costs Healthy Feature

“Beware of little expenses. A small leak will sink a great ship.”

Benjamin Franklin’s wisdom has bold application for how you monitor the operating costs for your private dental practice.

Overhead expenses can force you, on occasion, to run a “tight ship.” And yet doing so can have an impact on employee salaries, benefits, investments in marketing, facility, and technology upgrades, and more.

The “cost of doing business” certainly requires responsible spending.

Perspective from a break-down of operating costs for a private dental practice

The following statistics are from a portion of 2019 American Dental Association and Bureau of Labor Statistics data. They give you a fly-over perspective on what most private practices experience annually.

Average net income

  • General practice dentist average net income: $204,710
  • Dental specialist average net income: $343,410

Average annual gross billings

  • Average gross billings per owner dentist (general practitioner): $742,490
  • Average gross billings per owner dentist (specialty): $1,059,890

Median hourly salary of other private practice dental staff:

  • Full-time dental hygienist: $36.65
  • Full-time chairside dental assistant: $19.27 [1]

Overhead can average 75% of a general dentist’s income. As you know, net income will naturally drop as collections drop.

This forces you to choose how much you spend on operational costs. Consider the quality of care you can deliver based on a certain percentage of revenue flowing into your overhead costs.

The choice is yours!

Wherever you land in the context of this average financial breakdown and overhead spending, you’ll probably agree that being more intentional about your bottom-line will maximize your revenue stream.

Where to focus intentional effort to keep your operating costs healthy

Refine your systems and train your team

Any “leaks” in your routine systems and workflows can increase operational costs. Solid systems are among the best ways to decrease overhead.

Your daily team workflows are those tasks that they do on repeat. How well you monitor their related energies can lead to improved efficiencies.

One benefit is that consistent workflows enable you to keep your pace when staff turnover occurs. And without established systems your team’s efficiency will lag.

Since staffing accounts for a large percentage of your operational costs, it makes sense to implement set workflows and train your team around them.

  • As the dentist and practice leader, put your systems preferences in writing.
  • Provide ongoing training yourself, task a qualified in-house team member, or contract with an outside consultant (briefing them on your preferred workflows).
  • Make your systems available for easy access to team members and creatively keep them front-of-mind as a practice culture norm.

Keep an eye on your lab costs

Your lab expenses can be 10% or more of your practice overhead costs. Decreasing that percentage is to your advantage.

Sure, switching labs can be counterproductive. You might find that saving a few dollars here and there could also involve subpar case delivery.

Technology is your friend when considering lab costs. The savings are common as many labs are utilizing new innovations that deliver better products at improved savings.

  • Research your lab options. A national or network lab could be a better choice for some (or a majority) of your cases.
  • Establish an effective contact and communication chain with your chosen lab. Make sure they know who will most often be communicating from your office and your case preferences per type of case.
  • Consider providing a photo journal of your cases step by step. “Before” photos help a lab tech understand color, shade, and contour matching.
  • Give your lab-specific feedback when they deliver exceptionally – not just when they botch a case. Also, share patient comments too when appropriate.

Optimize your marketing strategies

Marketing your services is a top operational priority. A designated portion of your collections must be funneled into attracting, informing, and retaining patients.

It’s vital that your marketing overhead is invested in relevant and effective strategies. Perhaps you’ve been a fan of direct mail but you’re now discovering the return is lacking. You might keep a percentage there but be willing to explore new marketing channels.

  • Segment your patient data and determine what marketing medium is best suited to each age, lifestyle, or location demographic. For example, social media and digital marketing have more appeal to a younger and middle-aged demographic than it might with the senior-aged.
  • Be willing to experiment and innovate around the marketing channels that produce the best returns. Is it email, social media, blog, video, podcasts, direct mail, etc.?

Keep in mind that automation can reduce your costs and help you monitor operational expenses.

These resources can help:

Re-Boot Your Momentum with a Dental Practice Cash-Flow Strategy

The ROI-Boosting Revenue Cycle Management Module of Your Dental Practice Management Software

Automated operational cost monitoring at-your-fingertips

The financial management capabilities of your software platform help maximize your working capital while clarifying those metrics that improve your bottom-line.

Consider a cloud-based solution and accurately measure your operating costs

You might find the cloud solution like Denticon to be a more efficient report gathering platform to monitor and drive your overall dental practice or dental organization’s performance.

Aside from its financial management capacity, the Denticon platform also provides:

  • A predictable, monthly subscription rate
  • Data hosted in the cloud that’s remotely and securely accessible
  • Savings that compared with a “legacy” system can total an average of 40%

It makes sense to look below the surface and see the massive potential of upgrading to a cloud-based dental practice management solution with a more advanced operational cost monitoring capability.

Thinking about or ready to update your dental practice management software? Contact us or request a demo of the Denticon platform before you decide!

 

References:

[1]               https://www.beckersdental.com/dentists/36398-private-dental-practice-operating-costs-7-statistics.html