Dos and don'ts for financial management: Avoid overcontrolling overhead

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Keeping practice overhead under control is essential, but that doesn't mean all cuts are good. Many of the line items in your operating budget have a direct bearing on day-to-day performance, the quality of patient care, and overall practice success. The challenge: identify and strip away unnecessary spending without impairing your ability to meet your own performance standards.

Do

When looking at expenses, consider return on investment (ROI). Some expenses are simply the cost of doing business, but others have the potential of contributing more to the bottom line. Calculate how much additional revenue an investment -- in a new piece of equipment, for example -- will generate. If it's significant and won't create problems (such as by taking time away from other tasks), spend it.

Don

Don't stifle practice growth. One area to be especially careful about is marketing. On one hand, practices can waste a great deal of money on external marketing activities that deliver inadequate results. On the other hand, an overly tight marketing budget will prevent you from bringing in new patients and raising acceptance rates. Emphasize internal marketing strategies, which cost less and can be quite effective.

Roger P. Levin, DDS, is the chairman and CEO of practice management consulting firm Levin Group. You can connect with Levin Group on Facebook and Twitter (@Levin_Group) to learn more strategies and share ideas. Also, check out Dr. Levin's free practice management videos at www.levingroup.com/gp.

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

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