For many dental practice owners throughout the U.S and beyond, finding new ways to save money and boost profits is all part of running a competitive business in an evolving dental landscape. But for some, financial mistakes could already be damaging their bottom line, adding to the existing pressures they’re forced to face.
According to the best dental accountants, many practices are spending too much of their time and resources on revenue growth alone, either dismissing profitability altogether, or not paying equal attention to it.
With practices producing more dentistry than ever before, the rising cost of labor, operating costs and supplies, are leading to margin compression.
So what should dental practices be doing instead?
Rather than chasing production, practice owners should shift their focus to controlling overheads, case acceptance, patient retention and operational efficiency.
The most successful practices may not necessarily be those with the highest collection figures, but those that have a deeper understanding of their numbers, who protect their margins, and who build systems to deliver outstanding patient care that are ultra-efficient.
Let’s look at some more financial mistakes that could be costing practices dearly:
Another financial mistake made by many practice owners is not retiring when they should, or not selling their practice when they should.
- Not retiring or selling strategically
Due to conditions in the current economy, a lot of dentists are continuing to work well into their 60s and 70s, but their practice might not be as busy or as valuable based upon gross income if they plan to sell the business.
A practice is only worth as much as its current status; not what it achieved in previous years, or what it might achieve in the future. It’s always best to sell your practice strategically, when at the height of your career, otherwise subsequent negative events could easily reduce the price.
- Failing to understand insurance benefits
Not all dentists fully understand their insurance plans, particularly when underlying scenarios are applicable. Some insurance providers offer one benefit plan to one group, and a different one to another, and yet all have the same employer. Reimbursement fees may be capped, or not capped, and dental offices must have the requisite knowledge to be able to get the best reimbursements even though patients may have the same employer, but work in different departments.
Ultimately, insurance companies often have gimmicks or hidden clauses that they hide behind, and dentists can be forgiven for not understanding these, or being able to navigate them. But if their dental office staff also don’t understand them and hence are unable to navigate them, getting the best reimbursement for the practice could prove virtually impossible.
- Over hiring
Employing too many staff members or not hiring the kind of people who will support the longevity of the practice, can be costly. Employees who are treated well and recompensed fairly will be far more likely to demonstrate loyalty, meaning the cost of hiring new team members when existing ones leave, can be reduced. Based upon workers compensation, liabilities and benefit packages, good hiring decisions and fair salaries could save the practice thousands in the long term.
Sound financial decisions are easier to make with strategic guidance from experts in tax planning for dentists, and specialist dental accountants.
Having professional support and advice from industry experts can help practice owners make the kind of financial decisions that support sustainable profitability, instead of harming their bottom line.