Learn How To Manage Your Dental Practices Finances: Tips To Increase Your Revenue

Find Out Why Your Dental Practice Website Isn’t Ranking On Google And How To Fix It (1)

Each element ensures everything runs smoothly when managing your dental practice. However, one area you may want to pay special attention to is your finances.

Income, overhead, fees, taxes, and insurance reimbursements, can be overwhelming and challenging to keep track of.

Even if you have experience, not being able to take care of your finances could damage your practice.

This article has six beneficial tips for managing and boosting your revenue. We want to help you grow your practice and have you in control of your finances. Whether you need to hire an expert or download some upgraded software, we have the information you need!

Dental Accounting Software

Downloading the right accounting software can make all the difference in managing your finances. You can track expenses, revenue streams, overheads, and other important information.

There are hundreds of dental accounting software on the market and it may take some time to find the one that works for you.

However, the trial and error of finding a system that works for you are worth the effort, as you can see all of your financial information in one place.

You can decide to use general accounting software used by many businesses worldwide or more dental practice-focused software.

Dental-focused software may have the ability to offer more beneficial features, or it may work in conjunction with other software to provide you with the best data possible.

If you decide to work with an expert to get your dental practice finances in order, then having dental accounting software will work in your favour.

While you may not understand the data being presented, the account will be able to help guide you through the process and explain where you need to make improvements.

By providing concrete data for your accountant to work from, you can work towards a goal seamlessly.

Setting Prices and Salaries
As you are placing the foundations of your practice, dictating certation prices and the salaries of your employees is a fundamental step. These two elements have different factors which determine their set costs.

Prices or fees are often determined by the average fee for the area and the current insurance reimbursement rates for that particular fee.

Salaries are determined by the average salary rate of that position in your area, not to mention the particular person’s experience in the field.

You may find it beneficial to find the average salary range for each position and begin at the middle of the range.

When it comes to prices, don’t be afraid to set a higher price when you are delivering a high-quality service.

You don’t want to risk being the lowest in your area, as this can give the impression that your services are not of good quality and can drive away potential patients.

As you build your practice, you may want to set a baseline for services and slowly increase the cost of fees as your business grows and you have a large percentage of patient loyalty.

Investments

We are all aware that to make money, we have to spend money. This is no different for health care practices. You should invest in certain things to provide the best service possible for your patients and boost your revenue.

When it comes to your practice, there are two things that you should always be working towards:

  1. Making and keeping your patients happy and satisfied.
  2. Increase the online and offline visibility of your business

To help you reach these goals, we have compiled a list of tasks that you can do:

Build on your relationships with your patients. This can be done by offering free or discounted services. This is also an effective way to encourage your patients to make referrals to your practice. Get involved in the community.

Whether you are an established practice or new to the area, giving back to the community is a great way to spread the word about your practice and build a good branch image. You can donate to a local charity, volunteer and local events and get to know your community.

Invest in Technology. This can seem like a large expense at the time, but the benefits make it worth the cost. With higher-quality equipment, you can improve your patient’s experience and, in turn, provide a higher patient satisfaction rate.

Invest in Facility Improvements. Whether fixing that leaking roof or making your patient waiting room more comfortable, these small investments can boost your practice revenue.

Marketing.

To grow your business and generate more revenue, you need to market your practice. Provide a portion of your finances into a good quality marketing campaign that includes online marketing to reach a larger audience.

Invest in Good Staff. Employing staff that truly care for your patients and your practice can make all the difference in the workplace environment, not only boosting your revenue but making your office a positive place to work.

Making a small yet effective investment in your practice can make a significant difference in your revenue. However, it can quickly become unmanageable. Over-investing in your business can cause more damage than good to your finances and practice.

Minimize Overheads

Keeping costs low to save money seems rather obvious in business. However, you would be surprised at just how you are overspending on your overheads.

While saving money now may seem irrelevant, you never know what you may need to make an unexpected investment in the future. Not to mention you also want to be able to save some of your earnings for personal expenses.

With the continuous rise in rent, equipment, lab fees, staff salaries, and various other costs, it cannot be easy to see where you can save any revenue.

There is also the added fact of insurance reimbursements restricting the amount that you can raise your fees.

One way to keep your overheads in check is by keeping a stock count of your supply cupboards. You may find it beneficial to overstock your cupboard. However, this can be damaging to your overhead.

Items such as disposable protective glasses can quickly amount to an unsightly cost! Switching to protective eyewear, you sanitize between patients could save you thousands a year.

You can also reach out to manufacturers about free goods. If your sales rep isn’t finding you the best deals, it may be time to look elsewhere!

Manufacturers offer thousands of dollars worth of free goods for healthcare practices every year and it could just be the thing to cut down your overhead costs.

In order to ensure that you are not overspending when it comes to your overheads, you should have a budget and stick to it as much as possible.

Determine your typical supply spending over the previous 12 months, multiply it by your average monthly productivity, and create a supply budget that is comfortable for you.

This can identify the areas that are costing you unnecessarily. Sticking to a budget can help you purchase what you need and save every dime you can.

Track Practice Metrics

Staying on top of your day-to-day finances can seem like you are overdoing it, but this can help you understand where you may be losing profits. One of the most important reports to keep track of is your profit and loss statement.

It is important to ensure that all your costs land within their set parameters. A good guide is for your total wages to be 23-25%, supplies 5-8%, and your labs are around 4-6%. This will help you stay within your budget and show where you may be overspending.

However, getting an accurate P&L statement is difficult if you aren’t tracking your practice metrics. Being detailed and meticulous will help make maintaining your finances easier and simpler to understand.

Other information regarding your expenses can hugely impact your profit and loss statements.

This includes:

Variable Expenses. These are costs that could alter depending on your monthly output. Expenses such as bills, supplies, staff, etc are all variable expenses and must be managed diligently.

Fixed Expenses. These are costs that remain constant from month to month. This can be rent/mortgage, loan payments, utility bills etc.

These expenses are great when making financial projections.
Patient Statistics. This can include the number of patients you see each day, how many patients cancel, and the rate of new patients each month.

Projected vs Completed Treatment Ratio. This is the ratio at which patients are recommended a particular treatment versus the number of patients that accept and complete treatments. This can be estimated to understand your business’s future expenses and profits.


Over The Counter Collection.

There are many different ways to track these metrics and each method should be tailored to your practice’s needs and targets. They can include:

The projected vs Completed Treatment Ratio should remain within 70-90% to remain viable.

Over-the-counter and collections should be between 45-55% for fee-for-service practices.

Patient Statistics can regularly differ; however, aiming for 15% new patient growth each month can help balance any patient loss.

This is natural as new dental practices open or patients have personal commitments, meaning they must find a new practice.

The most important thing to remember when beginning to track your metrics is to monitor them almost daily. If you aren’t checking your financial statements for weeks, you may miss crucial data that could improve your revenue.

Or worse, you could miss the forecasting that your business may fail to give you little to no time to make changes.

Hire An Expert

Employing a financial specialist, particularly one with specified expertise in dental practices, is one of the first steps dentists advise for managing a practice’s finances. As you study and train to become a dentist, knowing how to track, manage and control your finances is often the last thing on your mind.

So, how can you learn? Hiring a financial expert is key if you want to learn how to take control of your finances without having to attend a class. It is also crucial for avoiding large financial mistakes during tax season.

Working with an expert can allow you to gain an outsider’s perspective and identify where you could be going wrong with your investments.

Whether you allow them full access to your finances or require some advice, they can talk you through the processes to help you get your finances on track.

However, a common error when hiring a financial expert is to hire someone you have a personal relationship.

This can be a mistake as their judgment may be clouded when offering advice. Hiring an unknown 3rd party will provide you with clear, concise advice.

Take the time to do your research on a range of financial advice providers before committing to one person. This can give you the peace of mind that the expert you hire will give you beneficial, effective advice to help boost your revenue and manage your finances.


Conclusion

If you have never had to look at an excel spreadsheet or know what a profit and loss statement is, you could lose control of your finances. This can be critical for your practice and cost you more than you think.

The above tips will help you manage your finances and boost your revenue.

Our biggest recommendation for those without experience in financial management is to hire or consult an expert. They can provide the steps and knowledge to understand and control your finances. And help you avoid rather large legal mistakes regarding tax season.

However, if you need some refreshing, our tips above can help you get back in the driver’s seat of your finances.

Whether paying more attention to your profit and loss statements or investing more into your practice, staff, and patients, your finances will be under control while your practice thrives.

Take a look at our tips and see what you need to do to get back on top of your dental practice finances!