Top 10 Ways to Improve Savings and Profitability in Your Dental Office
Most of us prefer to spend our limited time each day on clinical dentistry, and as a result may at times allow some business focus to slide. Over time our lack of attention can lead to higher costs than necessary and may even impact on our ability to provide for our family.
With the current economic market, it has never been more imperative to assess our business practices and find ways to counter the rising costs of overhead expenses as well as stagnant insurance fees. A review of your expenses should be done more than once a year to make sure you aren’t overspending.
Here are a few suggestions that can make a noticeable difference in time savings and profitability:
1) Supplies
The fastest increasing cost in a dental office has been PPE supplies and for most offices there is easy money to save with supplies. Now, I am against buying through multiple different suppliers due to the added time cost (dentist time or team salaries) that negate any savings. Therefore, it is great when you can find a supplier that pretty much guarantees you the lowest price.
Crazy Dental is a part of DC Dental, which is one of the major suppliers in the country. The model of this club is to provide us with everything we need at lower prices than anyone else. I have ordered through them for a year now and have been very happy with their service.
They also have a price match guarantee.
As an added bonus, I got permission to allow anyone to use the special discount code they gave us for an additional 10% off their already low prices: whisper10
Crazy Dental Price Club
Website: https://www.crazydentalprices.com/
Discount Code: whisper10
2) Large Purchases – Save like DSOs
Whether it be an autoclave, scanner, laser, etc., we all know dental equipment can be very pricey. And often those prices are inflated, as with the example of an autoclave in dentistry costing more than the same model in medicine.
Like most things in life, more success often comes from who you know as much or more than what you know.
What is always fun is when I can find ways to save money, that costs me nothing up front.
This group helped us save a fortune on equipment, and they only charge you when you save money, nothing up front. As long as you do not need the equipment tomorrow, they allow dentists to group together and receive group purchase discounts like a DSO.
Go check them out, put in your equipment purchase goals and let them find you far better deals than you will get anywhere else. They do the work; you get the savings. Signing up only means giving them the opportunity to bring you a better deal, it is still our choice whether to purchase or not.
https://www.groupups.com/shopping-list
They will help with almost anything with a retail price of $5000 or more. Handheld x-rays, Pano/CBCT, Scanners, Mills, Laser, Chairs, Vacuum/Compressor, etc.
3) Modify In-House Financing
Many offices provide both 3rd Party Financing (ex: Care Credit) and in-house financing, as well as a % discount for patients who prepay for their treatments. If you are allowing a patient to do both simultaneously, you are really taking a double hit. If this is the case, I’d recommend you make the options mutually exclusive. This minor change can save you a lot of money over time.
Here’s why. There is a cost to the business for financing the expense of treatment. You must wait for the money and assume the risk of potential losses from default accounts. It does not make much sense to allow patients to get a discount on top of that as well.
Here is how such an offer can be presented to a patient:
"Mrs. Jones, we can absolutely obtain financing for your treatment for as low as $99 a month.
Or if you would prefer to pay for your treatment in full, many patients appreciate the 10% ($500) savings that comes with that option.
What sounds like the better option for you?"
Other opportunities for improving financing effectiveness might be:
- Increase Minimums (if a patient wants to pay out more than 6 months, have a minimum of say $1000 in financed care)
- Reduce more costly payment options (ex: cut the 18-24mo CareCredit option)
- Move long-term payment options to 3rd party administrators that pass on some of that cost to the patient.
4) Switch Merchant Service Companies
Merchant services are companies that process the credit card transactions that an office collects. There is little regulation in this industry, hence you can end up with some companies charging up to 10x as much as others. With a little effort, you can potentially locate a lower-priced vendor that is more transparent.
Be aware there are different pricing structures that companies use; some are more cost effective than others despite how the reps might present their pricing structure. Flat rate is the simplest to understand, but you will pay a higher rate. Interchange Plus is the most transparent and will save you the most money, but your rate will fluctuate month to month slightly depending on the cards you process. Always stay away from tiered plans because they promise low rates but that only applies to the most basic non reward debit card and the truth is that most cards process at a higher rate than advertised.
Also avoid contracts that auto renew and make sure you read the fine print about fees that come out once or twice a year but don’t show up in all statements.
Always get a guarantee in writing that your rate will never change. Many companies will sign you up at a low rate and slowly creep up your rate over time.
For example, we switched to Apex Payment Solutions, which is run by a dentist and offers a lower expense for this basic service. The good news about switching companies like merchant services is that once you are done you will likely never notice a difference, except to your pocketbook. If you are paying more than around 2.1% credit card transaction fees, you might want to investigate switching your merchant service company.
Apex has been great for us for years, with multiple people saying they cannot beat what we have:
https://share.hsforms.com/1THCNRkjIQle8PDeR0jlouQ4tz5w
5) Dental Labs
There are many labs around the country that provide basic services like crowns. As you know, the price of the same crown can range from $50 - 500 per unit across different labs. Unfortunately, the quality of the restoration does not always match the price. Our office has tried different labs over time, and I’m pleased to say that our crowns today are coming in with higher quality and less necessary adjustments than ever before. Best part is I am paying less for our crowns now than ever. It may take some searching to find the right lab for you, but it can be well worth the effort! An all-zirconia crown can easily be under $100, made in the US. With restricted in-network fees, keeping these costs down is incredibly valuable. But even OON there is no reason to pay more than necessary.
6) Improve Marketing
A HubSpot study found that companies that increased marketing spend experienced a 126% increase in leads and a 27% increase in revenue, while those that cut marketing had a decrease in leads and revenue. During Covid, we maintained our marketing expenditure while many others decreased or dropped the investment, and we had over $400k revenue growth for the year.
One of the aspects that holds back an office from growth and profitability is maintaining a healthy new patient flow. Many offices will experience natural attrition of 15-20% annually, which is around 20 patients lost per month for a single dentist. Well planned and executed marketing efforts serve to bring in more patients, replenish losses and help grow the office further.
Now, the challenge is making sure the money one puts into marketing is an investment instead of an expense. The investment needs to be worthwhile and effective. Some effective tips for marketing:
- Target your ideal, high-value patients, so you aren’t wasting funds on areas unlikely to respond. Patients for hygiene or cosmetics are hard to generate ROI.
- Quality drives quality. Cheap mailers and large discounts bring low end patients.
- Track campaign results with ROI connected to the production patients spend. Many companies can do this for you now and prove their results.
- Get a call tracker to make sure you are not losing all those marketing dollars on missing phone skills and losing opportunities.
These will help you make sure the efforts and budget you put into marketing translate into a great return on investment as well as a lower overhead. There are a few good marketing companies out there, and many flops (I have tried way too many). One example marketing provider that has proven consistent results over years, and that provides tracking for proof of their effectiveness and ROI, is illustrated here:
https://patientnews.com/free-consultation24/
7) Re-evaluate Dental Insurance Systems
Dental Insurance is often completely misunderstood by many dental teams, even those who have worked in the industry for years. The insurance industry is highly complex and often not clear or transparent about their policies. Here are a few areas that are commonly misunderstood and often result in lower revenue for the dental office:
Non-Covered Services are those that will never be covered by an insurance policy. A common example is veneers and a less common example would be fluoride for an adult. In over 40 states an insurance company is not legally allowed to force a dentist to take a discounted fee on these services; yet the EOB will often not accurately show this fact. Offices that aren’t clear about which services are “non-covered” and subsequently accept a discounted fee are losing legitimate revenue. Understanding the specifics in your state can save your practice thousands a year in unnecessary write-offs. You can find your state law on non-covered services here:
https://dentalinsuranceguy.com/resources/#state-regulations
Upgraded Services. Many dental services come with different options. For example, you could get a standard crown from a lab with average esthetics, or you could get a custom shaded crown from the same lab for an added cost. Any added cost for an upgrade like this would be the responsibility of the patient, above and beyond the "negotiated" fee of the insurance company contract agreement. Understanding how to manage these upgrades and coding options can bring the office significant savings by correctly billing the patient for the upgraded services rendered.
For more information on upgrades, check out this online CE course:
https://dentalinsuranceguy.com/courses/providing-upgraded-and-cosmetic-services-in-network/
Complete Documentation. Finally, many offices struggle with getting reimbursement from insurance companies for legitimate services rendered. Often the problem is due to a lack of correct documentation when preparing and submitting a claim. Insurance companies often require information that dental offices do not naturally capture. Understanding what information is important can mean the difference between dealing with dozens of crown and SRP denials versus obtaining ready approvals and reimbursement with less time spent and happier patients. If you are having more than a 1% denial rate on these services, the attached link contains several courses which will pay for themselves within a few days:
https://dentalinsuranceguy.com/courses/#premium
And if you just want a free intro video to what is and is not possible and the most common myths in the industry, check out this short free course:
https://dentalinsuranceguy.com/courses/dental-insurance-myth-busting/
7) Consider Outsourcing
With current recruiting challenges finding reliable, qualified team members, outsourcing may be a necessary step for an office. The key is to make sure you know how to evaluate what you need as well as if outsourcing that process is worth doing.
Outsourcing a task that is normally a team member role can be useful if that company can provide the service more effectively and less costly than the incumbent on payroll. Again, like marketing there are good companies and flops in each arena.
Also keep in mind that outsourcing expenses should still be captured within the payroll section of your P&L, as they are basically remote employees or contractors. This way you can also evaluate if it is worth maintaining their services or replacing them should you find someone to potentially take that task back.
If you would like a full breakdown of how to evaluate a dental insurance biller, check out this article:
8) Improve Clinical Efficiency
In many cases, the ability to do more work in less time in dentistry is not about working faster. It comes down to working more efficiently, which saves time and money. Often changing the order or steps in a procedure or system can improve efficiency without much change at all. As a common example:
Many offices during a crown appointment have the assistant fully set up the room, get a temporary template impression, sign informed consent, get a pre-op x-ray, etc. before calling the doctor into the room. Then after anesthetic the patient must sit there another several minutes getting numb, which is a waste of chair time.
If instead, you have the assistant focus initially only on getting ready for anesthetic and getting the doctor to come numb as soon as possible, then the other steps can be done while the patient is getting numb and better utilize that time. This can often cut the crown appointment time down by 10-20 minutes, which is better for the office and the patient.
Learning to look at every system or procedure in a different way can lead to being able to do more in the same amount of time without sacrificing any quality. We need to remember, in dentistry, we are selling our time and expertise more than any specific “service” like that crown.
Always be thinking: “how can I do this differently to better utilize time, or to remove one more step from the system?”.
9) Raise Fees or Drop Networks
At the beginning of the year many businesses look to adjusting their pricing to reflect increased costs. In dentistry this could include both service fee increases as well as dropping network participation. Fee increases tend to run in the 3-10% range depending on where your fees are currently and what the service and supply cost increases are for the office.
If you have not checked your fees recently, you really should. A free online database for fees in each specific area can be found here: https://fairhealthconsumer.org/
Most private practices tend to stick to the 70th to 80th percentile, which is what this website tracks. If you are much below the fees listed here, might be time to implement a larger fee increase for the year.
When in-network however, fee increases do not make as much of a difference due to the capped fee schedules. In this case, there is greater risk involved. Dropping an insurance network to get higher fees can either help a lot, or it can destroy an office. The key is making sure to handle this process correctly and make sure the office is ready to handle everything surrounding a change in network status.
If you are wondering whether dropping networks is right for you, check out this in-depth article that starts a whole series on how to handle insurance.
Also check out the CE course on how to effectively go out of network:
https://dentalinsuranceguy.com/courses/going-out-of-network/
10) Learn to Read What Your P&L is Telling You About Your Business
Often, dentists tend to look at P&Ls as a tool for their CPA and not something they should pay too much attention to and analyze. I have been guilty of glossing over my P&Ls in my earlier year of running a practice. However, when set up correctly a P&L can tell you almost everything you need to know about the current health of the business, what sections need improvement, and how to plan growth and improve profitability. It helps to first start with the basic categories and what the industry expectations of each are for your office as a percentage of collections:
- Payroll 20-25%
- Rent 7-10%
- Marketing 3-10% (depending on speed of growth goals)
- Labs 6-8%
- Supplies 4-5%
To answer the most common questions that come up:
- Payroll is for all non-doctor pay, outsourcing and temps, payroll taxes and expenses, benefits, and bonuses.
- For loans, only the interest payment is an office expense, whereas the repayment of principle is considered part of the profit of the owner/office by the IRS.
Keeping these numbers and categories in mind can help you evaluate how your office is functioning and which areas to focus on for improvement.
Summary
Work smarter, not harder! None of these options require doing dentistry any differently. By simply taking time out to educate yourself and your team in a few of these areas can pay off handsomely over time.
Dental Insurance Myth-Busting
Dental insurance is complex and has generated multiple myths over the years. This course will uncover the truth behind these common myths so that you can better understand the dental insurance arena.
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