5 ways to offset inflation by increasing production

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Inflation is here, and it’s real. Even if it improves, it isn’t likely that inflation rates will return to the extremely low levels of 2012-2021 for a while. Every 1% increase in cost to the practice represents a 1% decrease in practice profit. This can have a short- and long-term effect not only on practice profitability but on the ability of dentists to retire at a reasonable age. The good news is that there are effective strategies that can be used to offset inflation.

The meaning of inflation

Dr. Roger P. Levin.Dr. Roger P. Levin.

Overall, higher inflation affects every dental practice in different ways. We see some practices with higher staffing costs and others where the staff are not demanding significant increases. We also see practices that insist on acquiring the latest technology or the most expensive supplies and some practices where overhead is well monitored and well controlled.

Levin Group found that overall increases in expenses for dental practices are currently averaging around 6%. It is important to evaluate how inflation has affected your practice so that you can mathematically determine how you want to offset inflation. Below are five strategies to help your practice stay ahead of inflation:

  1.  Increase fees annually. When economic times become challenging, many dentists are afraid to increase fees. Although a percentage of most practices receive insurance reimbursements, and these are not likely to increase anytime soon, there are fees charged to patients that can be increased. We suggest increases in slow increments. Either increase fees each year by 3% or 4%, or increase fees by 1% every 90 days until you reach that level. Increasing fees is one of the most effective ways to offset inflation.

  2.  Decrease overhead costs. Inflation doesn’t mean that every cost will go up. Even in grocery stores, certain food items cost the same or lower than they did prior to the increase in inflation. The same is true for dental practices, at least from the standpoint of strategic cost-cutting. You can reduce certain costs by changing the types of materials or the company you buy from, or by bidding out some goods and services used by the practice to determine if there are opportunities to reduce costs. Employing overhead reduction strategies can often decrease practice overhead by 4% or more, which once again goes to the heart of offsetting inflation. As an example, one practice reduced its supply costs by 10% by working with its sales representative to take advantage of better pricing opportunities.

  3. Reduce no-shows. How can no-shows offset inflation? No-shows represent unused chair time that can never be recovered and therefore don’t generate fees. Think of fees as having two components. Component No. 1 is the part of the fee that covers overhead. Component No. 2 is the profit. By reducing no-shows and maximizing chair time, the practice contributes more toward covering overhead. If you don’t have that contribution toward overhead, then overall practice profit margins will decline.

  4. Be creative with staffing costs. There is a staffing shortage in dentistry that is increasing staff compensation. Levin Group estimates that staff compensation has increased nationally by approximately 10%. Being creative may help compensate for some of the higher labor costs, which is a version of offsetting inflation. For example, one practice offered staff members a significant bonus directly tied to increases in practice production. Not only could staff members do extremely well if they hit goals, but the doctor improved their income as well. It is important to design bonuses properly in the best interest of motivating the team to help increase team compensation and practice income.

  5. Eliminate waste. Dental practices are often inefficient. Wasted time means wasted money. There are many tasks being done by habit that either no longer need to be done or could be done much more efficiently. Each practice should examine its systems and establish a daily checklist for every team member. By working through a checklist, you’re able to identify which steps and tasks are necessary and which ones are not imperative. This assessment frees the team to focus on higher-level activities. When the team is more efficient and effective, inflation is offset, because the team can perform at a higher level. This improves practice performance as well. 


As inflation grows, it can reduce overall profitability if the practice does not take steps to implement change. The five recommendations above can lower practice overhead by 4% to 8%, which is essential from a business standpoint. Each practice should evaluate these recommendations and determine the best way to implement each and measure results. Not only will you offset inflation, but you will be delighted by the increased practice profitability.

Dr. Roger P. Levin is CEO of Levin Group, a leading practice management and marketing consulting firm. To contact him or to join the 40,000 dental professionals who receive his Practice Production Tip of the Day, visit LevinGroup.com or email rlevin@levingroup.com. 

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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