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Six Steps for Improving Your Practice's Profitability

As an employee in a dental practice you know how crucial it is to save every penny. With the pressure of running the business, it can often be easy to overlook areas of wastage and in some cases the drain on your cash flow. Here are some common sense, practical steps that you can take to ensure that you maximize your practices profitability.

Telephone Costs. There are several ways to save money with telephone costs. Firstly, check with your carrier and have them review the usage patterns for your business. Does your current phone plan best suit your patterns of use? Could savings be made by switching to a more cost effective plan (or even to a different carrier)? Is everyone (yes including the doctor) taking advantage of toll free numbers at every opportunity, for example when ordering supplies? Would there be any advantage in switching to an internet based phone system? Or how about emailing patients vs. phoning them? How much are staff using the phones for personal calls? While no one likes to think that it does not happen to excess, the reality is that many doctors lose considerable amounts every month through abuse by staff.

Develop a budget for supplies. How is it every time someone hears the word budget it feels like they told you to go on a diet? To make this a positive word think of it as simply giving your office a firm number to work with each month. Many mistakes practices have made is to give the team a guesstimate or used the previous month's production as a guide. Both are flawed! If you are running your practice off of cash flow then you need to use the current month's net collection figure. Order your dental supplies around the fifteenth of the month and calculate 4% of what your collections have been from the 1st to the 15th. Repeat the process by determining your collections from the 16th to the end of the month and calculate what 4% of net collections are. And yes folks 4% applies to everyone including a specialty practice.

Postage costs. If your business has high postage costs, there are ways to make real savings. Are you regularly mailing out small batches of mail? If so, would you benefit by having less frequent mail outs, but higher volumes in each mail out? Check with your postal service to see if you are eligible for any bulk postage discounts. Do you send marketing material out separately to statements? What about sending them out together? Stop sending birthday cards to your adult patients. Most adults celebrate their birthdays with their families not their professional relationships. If you are not collecting email start today!!!! Email is a wonderful way to communicate with patients! Think outside the box!!! I once heard that each letter that you send out has a cost of $15-$25 each. This cost comes from paying a staff member to create, print, mail, and document the letter in the patients record. Pretty pricey endeavor.

Share numbers with your team. Most team members think that your overhead consists of their salary, rent, lab and maybe a few other items. One team member thought the doctors overhead was around 10K a month and the rest went home with the doctor as cash in a huge suitcase. In reality this doctors overhead was over seventy two thousand a month. You can not expect your team to support you if they do not know what the monthly outgo is.

Marketing Costs. Have you ever really evaluated the return on your marketing dollar? If not, now is the time. Office managers need to survey the patients and ask them how they heard about the practice. Why are patients leaving, what patients have not participated in your practice in the most recent twelve months and why? At the end of the month this data needs to be communicated to the entire team in a report. Why people do not manage their businesses through statistics is beyond me. To toss more money in bringing patients into the practice only to have them leave is a stupid use of your resources.

Be a low stock warrior. How much is your inventory costing you? It restricts your cash flow and takes up valuable space. Is the team on an inventory system? Do you use up old materials before buying the next latest and greatest material? Do you need fourteen bottles of fluoride or do you need two? Do you discuss ways to reduce waste during your team meetings? One practice came up with forty things they could do to reduce supplies. They brainstormed ideas of putting less bond out (that stuff is liquid gold is not it?) to reducing the number of 2 x 2 gauze on the trays. These may seem like small things but in todays economy everyone needs to be mindful of every penny spent.

Good luck and happy savings!

Seed Newsvine

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