ant a quick glance at our four tips for saving money for your dental practice? Read this summary first if you don’t have time to read through the whole article. You’ll get exactly what you need to stop overspending on unnecessary expenses for your practice.
- Invest in staff training for better operational efficiency
- Fix and refurbish equipment and furniture instead of buying new
- Invest in targeted, strategic marketing tactics
- Automate manual administrative processes
Want to get your practice back on track? Provide better touch-free patient experiences.
A Dental Practice’s Largest Expenses
Before we dive into cost-cutting measures for your dental practice, let’s get a sense of benchmarks for a clinic’s largest expenses. For your dental practice to remain profitable, your net revenue will need to surpass your expenses. This is how cost-cutting can become a revenue-generating endeavor. The average American dental clinic runs at an overhead of 75%. Your goal as a lead practitioner should be to reduce your overhead to 55%–60%.
But balance is important here: cut too much, and you’ll sacrifice on the quality of your patient experience. Here are some standard ballpark benchmarks for a dental clinic’s largest expenses:
Labor costs — 25%
Your people are your practice. Labor costs usually comprise approximately 25% of your clinic’s annual income (which of course scales with the size of your practice). Basic labor costs for any clinic include one dentist, one dental hygienist, one dental assistant, and a receptionist. As you grow, you may want to hire an office manager or regional manager, in addition to marketing support.
While you can save on labor costs – see below for our recommendation on how – you’ll want to be strategic about how you save. Patient experience is your number one priority, and you’ll need quality staff to provide a high standard of care.
Facility costs: Real estate and equipment — 10%
Your dental practice needs a shell and some guts to keep running; in other words, a building and the equipment inside. Both expenses combined run approximately 8%–10% of your total operating costs as fixed expenses (costs that would exist no matter how many patients you have). While your real estate expenses (lease or mortgage) are likely to remain fixed, you can save on equipment costs by fixing or refurbishing instead of buying new. Keep reading to find out when it’s appropriate to forego buying new equipment and furniture.
Clinical costs: Laboratory fees, dental supplies, insurance, etc. –– 14%
Your clinical costs are your “good expenses” because they vary depending on how many appointments you have at your clinic. Variable expenses coincide with revenue, so it’s difficult to estimate their total percentage of revenue – but a ballpark estimate puts clinical costs at an average of 14% . Your clinical expenses also include insurance, any license renewals, dental association fees, and any training for employees. Keep reading to find out how an investment in training can save you some money in the long run.
4 Ways to Save Money for Your Dental Practice
If you’re not already a frugal person, now is the time to develop the habits necessary to become one. Yes, you’ll want to focus on patient acquisition as your best way to generate revenue for your dental practice. But after acquiring new patients, the next thing you’ll want to do is become obsessed with saving money – and that means being “strategically nitpicky”.
Here are four of the largest cost-saving opportunities for your clinic:
Overspend #1: Inefficient staff time
When was the last time you audited the day-to-day tasks of your staff? If it’s been a while, you may be missing out on some opportunities to optimize their processes. Your staff should all be working toward the same two goals:
- improving patient
- experience and increasing revenue for your practice.
Your approach to improving staff efficiency in these two key areas is to develop processes and scripts for your staff to follow, then create a training program to make sure staff are spending time on the right tactics to grow your practice.
Your crown and bridge procedures are likely being done one tooth at a time. What if you could develop a simple script for your staff to help patients realize the benefits of more complete care? “Mr. Chang, I can fix your broken tooth for you. But I noticed the tooth beside it is close to breaking, too. I can fix that other tooth today while you’re here, to save you the time and pain of coming back when it does break.”
How to save
- Step 1: Document all processes in place.
- Step 2: Identify areas of inefficiency or ineffectiveness in improving patient experience.
- Step 3: Identify missed opportunities for revenue.
- Step 4: Revise processes for staff. Write a “single source of truth” for all scripts and processes.
- Step 5: Ask for feedback from staff.
- Step 6: Train staff on new scripts and processes.
- Step 7: Revisit new processes after three months to assess further areas of improvement.
Overspend #2: New equipment and furniture
We know: state-of-the-art equipment is fun for dentists. You’re often tempted to justify buying new equipment with the goal of improving standard of care. But we encourage you to stop and ask yourself whether your purchase of new equipment or furniture will really make a difference to the patient. Dentists often make decisions based on pressure to keep up with technological advancement. Meanwhile the patient has no idea they’re receiving “cutting-edge care” and would have been just as well cared for without your new toy.
How to save
Ask yourself the following questions before you commit to buying new equipment or furniture:
- Will my new equipment purchase allow me to expand my services for patients? If so, how much can I reasonably expect to make from this new service in one year? Does that projected revenue increase offset my new equipment costs?
- Am I purchasing this new equipment to keep up with technology for the sake of it?
- Will my patients notice any tangible benefit to their care if I purchase this new equipment?
- Can I repair my existing equipment or furniture to extend its lifespan?
- Am I missing out on any new equipment deals because I haven’t shopped around enough?
Overspend #3: “Spray and pray” marketing tactics
While you do need to invest in marketing to grow your practice, you may be overspending on promotion because you’re not investing in the right tactics. If, for example, you’re spending a lot on Facebook advertising or Google ads without a sound audience targeting strategy, you could be throwing money into the abyss without even knowing it.
When you invest in marketing, you’ll want to pay attention to several things:
- Optimizing your website for local Google searches
- Increasing positive online reviews
- Targeting the right people with your content on social media
How to save
- Only buy Google Ads based on local search keywords.
- Develop processes to monitor your social media ad spend KPIs : cost per lead, cost per acquisition, clickthrough rate, and conversion rate.
- Invest in a solution that will help you generate more positive online reviews . We know it seems counterintuitive to buy a product in order to save money – but considering 84% of patients use online reviews to evaluate physicians, the ROI is sound.
Overspend #4: Manual processes
After you’ve revamped your staff’s processes and scripts, you’ll have the opportunity to make their time even more efficient by eliminating some of their manual administrative tasks entirely. Appointment bookings, reminders, and patient information gathering no longer need to be manual processes. Automation technology developed specifically for dental clinics can replace many a phone call and handwritten form, so your staff can spend time on tasks that require a human touch.
How to save
- Invest in an online booking solution . What you spend on a solution will be offset by the time saved on staff phone time.
- Automate patient appointment reminders . You’ll save on staff phone time here, too, and you’ll reduce appointment no-shows and cancellations.
- Calculate time saved by eliminating most phone calls, and reallocate your staff time to patient acquisition activities like marketing.