2.26.16 Issue #729 info@mckenziemgmt.com 1-877-777-6151 Forward This Newsletter
 

3 Ways to Improve Practice Profits
By Sally McKenzie, CEO

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Owning a dental practice isn’t easy. Not only do you need to focus on providing excellent patient care, you also must manage a team and handle the business side of running a practice. There’s certainly a lot to think about, and that includes practice profits.

This is something many dentists struggle with, and it’s understandable. After all, chances are you didn’t become a dentist because you wanted to own a small business. You would much rather focus on the dentistry as the money just rolls in, enabling you to do what you love and live a comfortable life. Unfortunately that isn’t reality. If you want a profitable practice, you have to embrace your role as CEO, and that means understanding what influences revenue losses and gains.

I know this can seem overwhelming, but don’t worry. I’m here to help. Here are three tips designed to help you grow practice profits.

1. Conduct a simple 10-point financial assessment. Before you can make improvements, you need to know where your practice is today. Ask yourself these 10 questions to get a better handle on how your practice is performing financially:

1. Are you bringing in as much money as you believe you should/could be?
2. Are you saving enough money for retirement?
3. Are you waiting to start saving for retirement until practice income increases?
4. Do you ever skip making payments to your retirement fund when money gets tight?
5. Do you have enough revenue to cover continuing education for yourself and your team members?
6. Do you hesitate to make investments in equipment that could improve your practice and better serve your patients because you’re worried about the price tag?
7. Do you delay improving the physical appearance of your practice because of the expense?
8. Are you effectively marketing your practice and your services to both existing and prospective patients?
9. Are you concerned about staff raises?
10. Do you feel like you can’t possibly work any harder?

The answers to these questions should tell you if your practice’s financial health is keeping you from achieving both personal and professional goals. If finances are holding you back, it’s time to make changes in your practice that will help you grow your bottom line.

2. Create a financial policy. This is the cornerstone of your revenue system and key to ensuring you get paid on time. Develop a policy that makes practice payment procedures clear. The policy shouldn’t be condescending, but it should leave no question about when and how payment is expected from patients.

Your goal should be to collect most, if not all, of what a patient owes before he or she leaves. That said, I know some practices allow patients to carry balances. If that’s the case in your office, it’s important to establish parameters and stick to them. Don’t extend credit to patients indefinitely. While you think you’re helping them, you’re just creating a liability for your practice. Determine how long you’re willing to wait for payment and communicate that to your patients.

On the other hand, don’t make your policy too strict. If you decide you’re not going to accept insurance or only offer a few payment options, many patients won’t be able to go forward with treatment because they won’t be able to afford it. And that means practice productivity and revenues will go down.

Once you develop a written policy for your practice, hand it out to all new patients as part of the new patient packet. Remind existing patients of the policy before they start restorative or elective services so they know exactly what to expect. It’s also a good idea to post the policy on your website.

3. Communicate the value of dentistry. Don’t just collect money from patients once their appointment is over. Train your team to communicate the value of the services you’ve provided. Here’s an example of what team members should say:

“Mrs. Smith, the doctor performed fillings on three teeth today. This involved seven surfaces including medication in each tooth and anesthetic.”

This level of detail tells patients exactly what the doctor did, helping them understand that they received much more than just a simple filling. This helps them see the value of the care you provide, making them more likely to accept treatment in the future.

When telling patients the fee, it’s important to be clear, direct and polite. Here’s an example:

“The charge for today’s restorative treatment is $402. Will you be paying with cash, check or charge? As a special service to our patients, we’re happy to submit your insurance claim. The payment will come directly to you.” 

Remember, patients with insurance should pay all of their portion when services are rendered, unless it’s more than $200. I suggest you provide convenient payment options for more expensive procedures, such as CareCredit. Another idea? Offer a 5% adjustment in fees when patients pay for expensive procedures in full. This gives patients a slight price break while you receive payment up front.

As the CEO of your practice, you have to find ways to increase profits. These tips will help you get there.

Next week: How to handle collections and grow profits

For additional information on this topic and more, visit my blog: The Lighter Side

Interested in speaking to me about your practice concerns? Email sallymck@mckenziemgmt.com
Interested in having McKenzie Management Seminars speak to your dental society or study club? Click here.
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