4 Ways To Get Overhead Costs Under Control
Looking around your practice, you can see there’s plenty of room for improvement. You’d love to create a more relaxing, comfortable waiting area for your patients and invest in the type of high-tech equipment that attracts new patients and expands the services you currently offer. Yes, you’d love to make some practice updates and upgrades, but with your present financial situation, you won’t be making those changes any time soon.
Instead of investing in your practice, you’re stuck trying to cover out-of-control overhead costs. And not only are you starting to think you’ll never put away enough money to retire, deep down you know your practice might not survive if something doesn’t change soon.
Yes, this is a stressful situation, but that doesn’t mean you can’t get back on the right track. If you commit to making changes, you can get your overhead costs under control and take your practice back. Here are a few tips to get you started.
1. Stop relying on pre-appointing alone. If your practice deals with a lot of cancellations and no-shows, pre-appointing is at least partly to blame. I know most practices still like to schedule patients six months out, but chances are many of these patients aren’t going to show up for their appointments. Whether something else comes up or they just plain forget, the result is the same – holes in the schedule that keep you from meeting your daily production goals.
Instead of relying on pre-appointing, invest in your recall system. Task your Patient Coordinator with calling and scheduling a specific number of recall patients a day. You’ll be amazed what this will do for your patient retention numbers, not to mention the reduction you’ll see in overhead costs.
Another problem with pre-appointing? It gives the illusion your hygiene schedule is full, which keeps new and current patients from scheduling appointments. Problem is, many of those booked slots become last minute openings your coordinator has to scramble to fill. And of course, filling these slots is not always successful, which likely means your hygienist’s salary has soared well beyond the benchmark of 33% of net production, sending overhead skyrocketing.
2. Establish performance standards. Before you give another raise, sit down with your team members and establish performance measurements. Make sure every team member understands raises will be given based on these measurements, not just because they asked or because a year has gone by. Conduct performance reviews and explain to current team members and new hires exactly when raises can be discussed and under what conditions they will be given.
Your team members might not like this at first, but when they see the relationship between their performance, the practice’s success and their ability to earn more, they’ll place more trust in the system, and be more likely to work to meet practice goals.
If you’re used to giving out raises to keep your team members happy, this could be a difficult change – but it’s a necessary one. Remember, payroll costs should be between 20-22% of your revenue, with an additional 3-5% to cover payroll taxes and benefits. Any more than that will send your overhead costs spinning out of control. If you only give out raises when they’re earned, you’ll find your overhead costs will begin to come down while your production numbers finally go up.
3. Implement a perio program in your hygiene department. If you want to improve production and reduce overhead costs, I suggest incorporating an interceptive periodontal program in your practice.
The truth is, most patients exhibit signs of periodontal disease. Yet few hygiene departments offer this type of program, simply because dentists and their team members are afraid of upsetting their patients. It’s your job as health care professionals to tell patients about the presence of periodontal disease and educate them on their condition and the best way to treat it. Implementing this type of program will help improve your patients’ health, increase your production numbers and reduce your overhead.
4. Raise your fees. Most dentists cringe at the thought of raising their fees. They think patients will run to the practice down the street if the price of dentistry goes up, so they convince themselves that keeping their fees consistent is the best move, and will help their practice grow rather than hurt it.
I’m here to tell you never raising your fees will, indeed, hurt your practice. The fastest, easiest way to increase profits and reduce overhead is to increase your fees. If you never raise your fees, it’s contributing to your overhead woes.
I suggest establishing a solid fee schedule that is fair to both your patients and your practice. The fee schedule you develop should be based on solid data, not emotion. Does the thought of raising fees still make you uncomfortable? Remember that patients are willing to pay for quality dentistry. Loyal patients won’t look for another dental home just because you raise your fees. In fact, most patients probably expect it.
Managing overhead costs isn’t easy, but it’s necessary if you want a successful dental practice. If you’re ready to commit to making changes, remember you don’t have to do it alone. I’m happy to help you improve your production numbers, reduce your overhead costs and turn your struggling practice into a profitable practice.
For additional information on this topic and more, visit my blog: The Lighter Side
Interested in speaking to me about your practice concerns? Email firstname.lastname@example.org
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