Reduce overhead, raise production to head off inflation

2021 07 22 21 56 8043 Man Money Stop 400

The COVID-19 crisis narrowed our profit margins as practices were all but closed during the height of the pandemic. Now we have inflation eating away at the value of each dollar, and we must monitor our expenses and rein in any unnecessary outgo.

One way to do that is to take a look at your overhead. Overhead consists of the following categories:

  • Building or facility costs -- whether leased or owned
  • Dental supplies/disposables
  • Instruments and equipment
  • Office supplies and computers
  • Laboratory expenses -- whether outsourced or in-house
  • Payroll for staff
  • Employee benefits
  • Officer benefits (dentist owner)
  • Officer wages (dentist owner)
  • Officer payroll taxes (dentist owner)
  • Miscellaneous expenditures (about 10% of overhead)

Trim overhead with efficiency

Lower profit margins create the need to identify areas of the practice to make more efficient with time and monetary expense. It is essential to analyze each item in the overhead category.

For dental supplies, disposables can be managed by not stocking and storing large amounts of supplies that will take years to use. That is money on the shelf. Instead, shop for the best deals and keep within a budget of 5% or less of total overhead. Avoid compulsive buying.

Dr. James V. Anderson.Dr. James V. Anderson.

Additionally, look into more modern and efficient ways to work at the chair, such as isolation systems that offer more efficient handling of the patients for less chair time and fewer demands on having a dental assistant present during the procedure.

In the sterilization area, use cassettes and instrument tubs, such as Hu-Friedy's cassette-based "Instrument Management System." Cassettes are efficient for rapidly organizing the set-ups and the ease of sterilization without separation and loose instruments. Portable instrument tubs quickly moved from room to room will reduce the number of times a doctor waits while an assistant hunts for a needed instrument.

Teledentistry became popular when dentists were open only for emergency care, yet some clinicians have abandoned this practice and returned to older operations. Continue to promote teledentistry by establishing a screening system with your front office team. Studies have shown that teledentistry appointments resulted in referrals to specialists and even eliminated an additional exam appointment -- as well as the personal protective equipment, infection control, and staff expense associated with the work.

You can also save dollars by rethinking your loans. Building and facility costs are often fixed on a lease agreement or a loan situation that may be negotiable depending on the terms.

Finally, outsource complex dental and medical claim filing. An excellent billing company can help with appealing unpaid claims, which takes your business team away from patients. Most claims processing companies will charge 2%-4% of insurance collections for their service. If they cannot collect the insurance money, they don't get paid. Run the numbers, and a professional billing service may be less than hiring an insurance coordinator.

Summing it up for success

The success of our practices relies on our resilience and perseverance. Dentistry is and always will be necessary for the health of our society, and it is up to us to create an efficient and profitable business under any circumstance.

To sum it up, here are my top three tips for reducing your overhead.

  1. Consider outsourcing insurance verification and pay a fraction for this service instead of the hourly rate of your business team.
  2. Create a more effective and disciplined team. Staffing, payroll, and benefits are the highest payouts in overhead expenses. Encourage and provide cross-training of the team to help when very busy or team members are out for illness or personal time. Show appreciation for your team daily and include them in improving practice systems for efficiency.
  3. Set up a system to monitor clock hours and establish a guideline for clocking in and out related to patient care time. The errors of clocking in and out for employees can be a source of lost revenue.

Dr. James V. Anderson is a practicing dentist in Syracuse, UT, and is the CEO and founder of eAssist Dental Solutions. He can be reached via email.

The comments and observations expressed herein do not necessarily reflect the opinions of, nor should they be construed as an endorsement or admonishment of any particular idea, vendor, or organization.

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