Message Boards
Today's Active Topics Today's Active Cases Browse Forum Categories My Recent Activity My Messages Private Groups My Marked Threads My Subscriptions
Today's Active Images Today's Active Polls Most Active Topics Global Townie Map Advanced Message Board Search Message Board Terms of Use

Turn Record Production Into Maximum Profit by Angie Svitak

Start Discussion
Categories: Financial Planning and Investments; Practice Management, HR and Accounting;
Turn Record Production Into Maximum Profit 

Implement a growth strategy to sidestep inflation

by Angie Svitak

As the dental industry continues to boom, practices everywhere are experiencing record treatment acceptance rates that are driving high production numbers. On the surface, it would seem 2022 is setting up to be a banner year.

Yet, that is not necessarily the case. This year is marked by continually rising inflation, which quickly turns into higher overhead and eats into profits in spite of higher production.

Couple that with overall economic and market uncertainty, and it’s important to make the most of this profitable window while pent-up demand is high. To do this, I encourage dentists to adopt a growth strategy that focuses on growing profits more than simply increasing production.

Increased production is only one piece of the puzzle; doctors need a strategy to get the most profits out of this period of high production, while still somehow leaving time for work-life balance. That can be a tall order, but I suggest a two-phase approach to maximizing profits without taking up too much of a practice owner’s valuable time:
  • Laying the foundation for your profitability strategy.
  • Executing the tactics that will enable profits to grow.
Look at your practice like you would a patient—diagnose the problem areas first, then treatment-plan accordingly.

The first step in doing that is to have a deep understanding of where you currently are in your practice. Some critical decisions will need to be made, and you can’t do it successfully without understanding the factors that play into your business’s profitability.


Nail down your practice finances

Of course you know your practice, but are you truly aware of the key drivers affecting profitability at this moment? Salaries are most likely up. Supplies cost more. You probably raised your fees at least once in the past year.

Your breakeven has most likely changed considerably since before COVID-19. It’s worth the time to revisit and take a deep dive into your numbers to set a baseline for your current profitability before you move into other areas to evaluate.

I like to remind my clients they can’t make sound decisions on their practice until they truly understand the metrics behind the business. They need to look at not only what they are doing to build the top line, but also their total overhead and profitability.


Evaluate what you need at home

Just like your business expenses, costs of goods and services at home are up too. Take a look at your lifestyle and how it fits into your current budget. Are you paying yourself enough? Are there areas you should cut back or spend more in? This will help you determine if your salary, savings and retirement goals are in a good place.

Once you have a new budget, salary and distribution schedule in place, you’ll know exactly how much you will cost the company.


Build a cohesive team

Probably the single most important factor in maximizing profits is optimizing how your staff operates. A trained, cohesive team working from the same playbook will pay off in spades.

For example, is the front desk following through on scheduling next-step appointments? It’s much easier to schedule a patient while they are standing in the office versus trying to get them back on the books after they’ve walked out the door.

Are you and your hygienists asking the right questions that can lead to other services or procedures, and is the patient getting a consistent message on the treatment plan from both the front and back office?

Remember, it’s all about working smarter, not harder, and it starts with a team that’s marching in the same direction. In a tough labor market, this isn’t always easy, but it’s possible. One option is to cross-train your staff for different positions.

Depending on the size of the practice, you may have positions that can be combined. If the practice is on the smaller end, it can be essential for employees to take on multiple roles. When employees are familiar with the expectations and process for other positions, time and money are not lost when you need coverage for an employee because of illness, vacation or turnover.


Evaluate your expenses

Some expenses are hard to change in a short period of time. Others are a bit easier to adjust. I suggest practice owners start by looking at the expenses that can be reduced immediately and work out from there. For example, are you paying too much for dental supplies? Telephone and internet? Advertising and promotion? Then move on to staff salaries and rent.

Not sure how to determine if you’re overpaying in these areas? Cain Watters & Associates’ latest Dental Practice Comparison Report lets you see how your dental practice stacks up with like-size practices across a myriad of metrics, including direct and fixed expenses. The annual comparison report is a great tool for practices of any specialty to see how your numbers match up to peer-practices. To use it, look for anomalies in the comparison data, choose two or three areas that will make the biggest impact and start there.

For example, let’s look at dental supplies and lab costs. For general dentistry practices, I like to see my clients stay in the range of 12%–16% of collections for supplies and lab combined. If you are above this range, consider reasons why your practice may be running high.

Ask yourself how often supplies are being ordered and who in the office is making the purchase decisions. Having multiple staff members responsible for ordering different supplies throughout the day can quickly and unknowingly drive costs up. Assigning a single team member the responsibility for ordering the supplies and giving them a monthly budget can get costs back in line.

Quick tip: To set a budget, look at your average monthly collections and multiply that by your goal percentage.


Optimize insurance

Another key to increasing profitability is to make sure you’re getting the most from your insurance provider partnerships. Are you adjusting off too much? Run reports to find the worst offenders and consider going out of network.

You can also renegotiate with your providers to make sure you’re getting the most reimbursement from every procedure.


Consider increasing fees

Finally, take a good hard look at your fees. Are you charging enough to keep up with rising costs? Some doctors have a fear of raising fees, but there’s nothing wrong with making an adjustment to keep up with inflation.

Even if you’ve raised fees in the past six months, there’s nothing that says you can’t consider doing it again in the very near future—especially if your standard fee is significantly below where it should be for your geographic area. Insurance won’t reimburse you for more than your standard fee, so setting your fees at the appropriate level is critical.

With a little bit of planning up front and some smart decisions around team building, expenses, insurance and fees, you can turn your practice into a profitability machine and take full advantage of the production spike before things settle back to normal levels.
How does your practice stack up?

To download Cain Watters & Associates’ latest
Dental Practice Comparison Report,
head to dentaltown.com/dental-salaries

Cain Watters is a registered investment advisor. Cain Watters only conducts business in states where it is properly registered or is excluded from registration requirements. Registration is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. Request Form ADV Part 2A for a complete description of Cain Watters investment advisory services. Diversification does not ensure a profit and may not protect against loss in declining markets. Past performance is not an indicator of future results.

Author Bio
Author Angie Svitak, a financial and wealth advisor at Cain Watters & Associates, is an alumna of Sonoma State University and earned a bachelor’s degree in business administration and accounting. Before joining CWA, Svitak was a senior auditor with Deloitte in San Francisco and a senior manager at Whitley Penn in Texas. She is a certified public accountant and an investment advisor representative, as well as a member of the Leadership Frisco Advisory Council, the Texas Society of CPAs and a founding member of CWA’s Women in Financial Planning.

More In Financial Planning and Investments
Dental 401(k) Plans: Keep Your Best People and Lower Costs, Risk
Dental 401(k) Plans: Keep Your Best People and Lower Costs, Risk
Mitch Tuchman
CE Credits: 1.75
Professional Courtesy: I’m a Dentist—Now What?
Professional Courtesy: I’m a Dentist—Now What?
by Dr. Thomas Giacobbi
New Grad Edition 2021
The Dental 401k Plan
The Dental 401k Plan
Mitchell Tuchman
CE Credits: 1.5
Turn Record Production Into Maximum Profit
Turn Record Production Into Maximum Profit
by Angie Svitak
October 2022
More In Practice Management, HR and Accounting
A Goal Without a Plan Is Just a Wish
A Goal Without a Plan Is Just a Wish
by Jay Geier
December 2022
Attitudes, Breakdowns and Conflict Resolutions.
Attitudes, Breakdowns and Conflict Resolutions.
Ms. Judy Kay Mausolf
CE Credits: 3
Division of Duties in a Dental Practice, Part 3: The Insurance Coordinator
Division of Duties in a Dental Practice, Part 3: The Insurance...
Sandy Pardue
CE Credits: 1.5
Marketing for Startup
Marketing for Startup
August 2022
Dentaltown Magazine
September 2023
Dentaltown Magazine September 2023 Read Current Issue Read Archived Issues
Sponsors
Townie Perks
Townie® Poll
How many labs do you use on a regular basis?
  
Related Articles
Invest in Your Leadership Skills
Invest in Your Leadership Skills
by Paul Edwards
New Grad Edition 2021
New Products
New Products
December 2022
Rolling Back ‘The Cloud’
Rolling Back ‘The Cloud’
by Andrew Malcolmson
September 2021
Site Menu
Message Boards Magazine Continuing Education Podcasts Blogs Classifieds News Events Townie® Poll Ebooks Townie Choice Awards
Company Info
Contact Us Advertise With Us Howard Farran DDS, MBA Policies and Agreements
Site Help
Sally Gross, Member Services Specialist
Phone: +1-480-445-9710
Email: sally@farranmedia.com
©2023 Dentaltown, a division of Farran Media • All Rights Reserved
9633 S. 48th Street Suite 200 • Phoenix, AZ 85044 • Phone:+1-480-598-0001 • Fax:+1-480-598-3450