With patients carefully examining every purchase they make these days, a dental practice’s current production growth curve may be flat or slightly down compared to its previous year. In the “new economy”, flat production growth may very well be the new “up” for the immediate future. If your practice is in a holding pattern, it may now be time to reassess how you do business and which assumptions or systems are preventing you from growing as you could when the economy finally regains momentum.
Expand into a Niche or Boutique Service
Perhaps yours is a practice that has focused on general dentistry for years and making a change from that is something you haven’t considered up to this point. What if you could simply adjust your message? Many dental offices have decided to begin promoting a new focus, be it on children, older patients, cosmetic dentistry, or endodontics. Your office may have always done this, but perhaps it has become time to rethink the perception of your services from “the other side of the desk (or chair)”.
For example, a dental office that had historically offered maintenance and preventive care may now consider adding a new focus on whiter teeth by using whiteners, veneers, and other cosmetic services. This may be a direction that will offer increased production opportunities and set your practice apart from competitors when the economy swings back up. As well, there is the potential for staff to contribute to developing the marketing, new patients, and production levels in a “fresh” area of services. Typically a modest investment in equipment and training may be required relative to the opportunities for increased production.
Make Profit a Team Effort
In the new up, profits become a team effort, from the front desk to the hygienists and your bookkeeper. To accelerate cash flow, consider the following changes:
• Ask for some cash at the appointment booking based on expected insurance coverage. Some insurance plans are now able to tell you the coverage estimate before treatment. In essence, ask the patient for a down payment on a piece of the service.
• Offer alternative financing options. Credit card payments or private lending offer excellent sources to accelerate the cash collections with modest charges. Full payment of a case will not require billing or time on collection problems or review of accounts receivable.
• Offer a discount for cash payments up front. We recommend at least the co-pay amount paid up front, but suggest a payment of 50% of
the entire patient responsibility.
• Accelerate collections by gently reminding patients of amounts outstanding. Monthly statements
are a must.
• Actively work the patient recalls. Untreated production in the patient files should be monitored, tracked, and followed up. This is a great source of additional production.
• Remind patients that their pre-tax plans expire at year-end and to schedule services so they don’t lose those funds.
What if a dental practice thought of its budget as a profit plan? Consider setting production and collection goals and tying staff bonuses to production. Consider setting weekly and monthly goals for the number of patients treated, cash collection ratios, new patients, and prudent management of supply inventory.
One of the most important things you can do in your practice is to adjust your fees up according to the allowed amounts. There are practices that literally have not adjusted fees in years. This is bad not only for business, but for the valuation of a practice. A dentist can only legally adjust from one to five percent per year. Therefore getting behind will put a serious dent in potential profits.
While running a tight ship is a must in the new “up”, a dentist can still be a valued employer and doctor of choice. Profits may never return to the levels they once were — or they could exceed expectations. A strong practice will work to be well positioned for both. n
Expense Control Tips
In the new “up“, include your staff as much as possible in expense control, and leverage them as efficiently as you can.
• Consider bunching appointments into three days if you only have three full days of appointments. Do not offer appointments or put staff on the schedule on the other days of the week until the first three days are filled.
• Discuss a pay freeze and profit sharing suspension in lieu of layoffs. When growth returns, reinstate the annual profit sharing contribution as allowed. If you offer health insurance benefits, discuss with your insurance advisors about alternative health plans, such as an HSA or an HSA blend plan.
• In a smaller practice with slower schedules, doctors may consider sending a hygienist home and doing some of the patient hygiene work.
• Discuss with vendors, landlords, and service providers the opportunity to manage fees, rents, and services in the most efficient manner. Perhaps a loyalty agreement will result in a purchase discount for lab fees, dental supplies, and lease terms. Ask landlords for a temporary rent concession until business improves. Agree that you will make up the difference in increased rent a year from now or spread it out over a two- or three-year period. If vendors are not willing to give up a little margin for continued volume, then shop around.