A crucial aspect of effective dental practice management is profitability. Higher profitability means a practice can better achieve its mission of providing cutting-edge services. It can afford to hire skilled staff, offer employee benefits or buy new equipment. And that is all in addition to the individual financial benefit to the dentist. So how do you get your practice there?
Here are five key ways to increase dental practice profit.
Increasing Size and Percentage of Full Treatment Plans
The first and fastest method is increasing the size and percentage of full treatment plans presented to patients. These would be necessary treatment plans, of course. But, a dentist who is satisfied with just the minimum treatment plan for the patient is cutting his profit. All other expenses being constant, larger treatment plans make for larger profits.
Let’s say a patient comes in and needs $10,000 worth of dental care. However, the doctor accepts a significantly lower treatment plan of $500. This is a loss of $9500 and most likely a $4000 minimum profit loss! Over the years, we at Sterling Practice Management have worked with many practices of varying profit margins. Of those, we found that dentists who have the highest profit margins always get their patients to agree to the largest necessary treatment plan available and get it done. This is what their patients need as the full treatment plan is the total handling for overall patient dental health.
We also find such dental practices tend to have happier patients as they are not having to come back repeatedly for “repair dentistry.” It goes without saying that one has to be skilled in selling dental plans. This is something we at Sterling teach dentists, as such a skill does not come naturally and is not taught in dental school. But the full treatment plan is usually best for the patient and the dentist.
Having a Full Appointment Book is the Gateway to Increased Profit
Having a full appointment book with lots of productive procedures scheduled is a vital necessity. By servicing all of those patients efficiently, promptly and with care, you will have a very profitable practice. Naturally, this means training the receptionist on how to control the appointment book. It also means having a properly trained staff, which is covered in the next section.
But before we get to that, we need to mention the importance of marketing. If there are no new patients calling in or being referred by your existing patients, you will end up with an empty appointment book. It takes effective marketing to keep the appointment book completely full. Every practice needs new patients to continue to expand.
Effective Dental Practice Management Means Having Staff Who Work as a Team and Perform Well
A successful way to increase profit is by training employees to work as a team and efficiently do their jobs. Most dentists invest too little in staff training. On the other hand, some employees are totally unable to be trained. A dentist will try to train the untrainable and blame themselves or the training for the lack of results. However, the real problem was an untrainable staff member, and no amount of training was going to change that.
So every dentist first needs to know who is able to be trained and who is not. At Sterling, our personnel testing and evaluation can detect which staff applicants can be trained and who is not trainable. Then we work with the practice owner to hire those who can be trained.
When you find and train the right people, your profit skyrockets because every employee does their job correctly and strives to provide the best possible patient experience. Dentists who are hesitant to train their staff, normally have invested in the wrong staff and received no return. This can be prevented by using tests to qualify staff and potential staff.
Raising Fees Can Raise Profit Margin
A fourth way to increase profit is by raising treatment fees. This applies to dentists who have not raised their fees regularly or not kept up with inflation. If all other expenses stay constant, raising fees will increase your profit.
We find that this doesn’t come up as a problem for most dentists, but when it does, profit suffers. Obviously, if you doubled your fees you could double your profit. But even a yearly 2-5% increase should be done in most dental practices to keep pace with inflation. If you let it ride for several years, your fees then end up too low.
Lowering the Practice Overhead
The fifth way to increase profit is by lowering your overhead. Most dentists try to bring down their overhead by cutting unnecessary expenses or finding a less expensive supplier. Though this is a sensible measure to take, it normally has little effect on the profit margin. While you should absolutely try not to be extravagant with expenses and find the best at the lowest price, that is far from what is really hurting your bottom line.
The biggest expense in the vast majority of practices is payroll. It usually runs from 20-55% of overall practice expenses. It should never be higher than 35%, but it can be lower while still maintaining practice efficiency and well-serviced patients.
How does one reduce payroll? You locate any consistently non-productive staff and let them go.
Any consistently non-productive employee will cost you 3-5 times their salary. This is because they overwork other team members and prevent them from being fully productive.
One unproductive employee will absorb three productive employees’ time and attention purely by distraction. That may sound harsh but as the practice owner, your top priority has to be the viability of the practice.
Often, other employees will know who the unproductive ones are in their midst because they are constantly getting tripped up by their avoidance of work and inattention. You as the employer must act to help your productive staff by removing the non-producer(s) from their midst.
This is not to say you have to be mean. In fact, we find most dentists like to be friendly and nice to everyone, including their staff. But is it nice to let a staff member pull down the rest of the team or cause problems for other staff? Is it nice to let an employee lose new patients or existing patients because of their flubs? An efficient, willing staff is a proven, rapid route to higher profitability.
Use of Statistics and Education
We know that letting any staff member go can be a difficult task. By observation, most practice owners will not fire a non-producing employee even though they know it needs to be done. We handle this with statistics and education for the dentist.
Assigning a statistic to each function in the practice and making staff keep and report their statistics allows a practice owner to clearly see who is producing and who is not. Appropriate action can be taken to handle those who are not producing, which does not always mean firing staff. Such a system also enables you to see who the producing staff members are. Armed with that knowledge, you can reward them and implement incentives for staff to produce and meet practice goals.
Sterling trains practice owners on how to implement statistics and how to track and interpret the metrics. When this system is implemented in a practice, most owners rapidly begin to see how keeping a truly unproductive employee is hurting the practice, the patients, the doctor’s profit and even his reputation.
Time and time again, we see amazed dentists watch their practice come to life, all stress drop out and their staff form into a productive team after they let go of the non-productive staff.
We Know How to Evaluate Personnel and We Can Help
Through training on the Sterling program, any practice owner can learn to spot who of their staff can be trained, who are the producers and who are the non-producers. And most importantly, what actions to take to ensure they end up with a profitable practice.
These five methods are a good start to creating a profitable practice and will get you immediate results. But there is a lot more to know on the subject of dental office profitability and sustainability—how to design your schedule, basic organization you need to have in place, assignment of job duties, case acceptance, new patient marketing, etc. That’s why, at Sterling, we train you on effective systems to create sustainable practice growth and profitability.
Senior Consultant, Sterling Practice Management