Inflation is at a level we haven’t seen since 2009. We’ve been fortunate to have more than 10 years of an upward economic trend, and now costs are rising. Dentistry includes several factors that make it imperative for each practice to create a plan to counteract inflation. Consider these two key factors.
1. Staffing costs in dentistry have risen far faster than economic inflation. Levin Group estimates that staffing costs could increase by as much as 10% and the only way to offset this is to increase production by 10%. You should also focus on lowering and controlling overhead. You may want to change purchasing patterns and buying habits and do more analysis before spending to focus on opportunities with good return on investment.
2. Inflation overall is rising. Dental practice expenses will be increasing in different categories depending on suppliers, supply chain, cost of personal protective equipment (PPE), interest rates, and more. Most companies can simply increase their fees across the board like Dollar Store did when it moved from $1.00 to $1.25. However, dental practices are more limited because insured patients have a maximum allowable fee that will not go up unless that specific insurance carrier increases the practice profile.
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How to counteract the effects of inflation
Raise fees. Although this is more difficult for dental practices than other businesses, raising fees is still a good strategy. Some of the fees will be absorbed by noninsured patients and insurance companies. By submitting new fee schedules regularly, in many instances you will eventually increase the practice profile.
Increase production. There are more than 200 ways to increase practice production. Strategies can range from reactivating patients who do not have next appointments to increasing the prices of home care products. Furthermore, by implementing strategies for decreasing no-shows, increasing the average production per patient, and increasing the practice speed, the practice can compensate for inflation with more comprehensive dentistry through better case presentation. For example, simply increasing the speed of dental assistants and creating a new schedule based on procedural time studies will allow the practice to see 10% to 20% more patients easily and efficiently.
Be more careful with what you buy. Lowering overhead will help offset inflation. The first strategy might be to put off a purchase that you don’t need immediately. Also consider waiting until you can pay for something in full rather than borrowing money at high interest rates. Another strategy is to swap out certain products for ones that are equal in quality but less expensive.
Decrease no-shows. No-shows create unused chair time that can never be recovered. Think of it as working against volume, and volume is your friend when you need to increase practice production. Don’t fear the idea of increasing volume. This can be done efficiently and in a low fatigue manner. Implement a system to decrease no-shows and simultaneously set a limit for the number of no-shows for a patient before that patient is politely asked to find another practice.
Inflation is real and something many dentists have never had to deal with. In the current environment practices should work to increase production by at least 12% and decrease overhead by 4% to 6%. Practices working in these directions will not only offset inflation but increase profit margins and profitability.
This article originally appeared in DE Weekend, the newsletter that will elevate your Sunday mornings with practical and innovative practice management and clinical content from experts across the field. Subscribe here.
