By many accounts, it looks as if 2022 will be a record-setting year for the dental industry. As a result of pent-up demand, practices are experiencing strong treatment acceptance rates that are driving impressively high production.
However, as we take a closer look, dental practices (like all businesses) are also facing significant headwinds in the form of inflation. Despite the healthy top line revenue growth for many practices, achieving profitability growth in 2022 is whole different challenge!
In this post, Shawna Aho, CEO of STAC Bizness Solutions based on The Woodlands, TX, shares four tips to ensure this record production leads to record profits.
1.Embrace a Profit Mindset
By nature, most dental practice owners prefer to focus their attention on providing exceptional service for their patients. While it’s always healthy to “put patients first,” this tendency often leads to using production level (rather than profits) as the primary measure of success.
I’d challenge practice owners to embrace a mindset often cited by financial advisors, “It’s not how much you make. It’s how much you keep!” In other words, embrace a profit mindset. This means focusing on production growth while also smartly managing expenses.
2. Know Your Practice Finances COLD
The first step to maximizing profits is understanding all the variables of your practice’s “financial equation.” It all starts with the basics of money in and money out. Solid bookkeeping plays a starring role in helping clarify the specific line items that contribute to (or reduce) your practice’s profitability. It’s a snapshot of your current financial state and it provides you with the foundational knowledge to proactively drive profitability.
This is especially true during these inflationary times. As a practice owner, you must understand and stay informed of your practice’s finances on an ongoing basis.
3. Be Informed and be SMART About Incurring Expenses
Related to the previous tip regarding understanding your practice’s profit and loss, you’ll want to be smart about incurring expenses. To effectively reduce expenses, you will first need to have good handle on how your dollars are spent (and we mean EVERY dollar). Too often, physician-owners are reactive to incoming bills rather than strategically approving expenses in advance and then allocating approved dollars as expenses occur.
Budgeting sessions are also the ideal time to cut costs that are just “nice-to-haves” or that aren’t required to maintain and grow your operations. If you take a hard look, we’ll guess there’s some waste that, once eliminated, flows right to profits.
As you begin to better define your monthly and annual expenses and pair those with expected revenue, your cash flow and profit picture begins to take shape.
4. Build a High-Performing Team & Streamline Processes
This may seem a bit unusual to mention the “human” element of your practice in an article focused on finances. However, the highest performing dental practices know your people and your processes are perhaps THE MOST important element to determining profitability.
Dedicating time to properly training your staff to efficiently perform their responsibilities is critical. Equally important is to embrace feedback and ideas from your staff to identify areas for improvement.
If it’s been some time since you’ve evaluated your practice from top to bottom from an operational perspective, NOW is a great time. Can roles be streamlined? Can certain tasks be eliminated? Are there areas in the practice that should be outsourced to a lower cost and/or higher quality alternative?
Technology is also your friend when it comes to streamlining. Whether it’s online patient scheduling, automated appointment reminders, online/tablet-based patient intake, or automated patient charts, get creative and look for ways to streamline and save your practice money.
I hope these tips help you navigate these inflationary times. Despite this challenge, times of increased production is an ideal time ensure you are maximizing profits!
Until next time…
If you’re looking to increase both the revenues and profitability of your medical practice, don’t hesitate to reach out at 844-424-9637.
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7 Key Financial Practices That Separate Thriving, Growing Practices From The Rest.
There’s no denying it. Creating a thriving practice is about much more than practicing medicine!
Topping the list of “other” priorities is your practice’s financial management. In this short guide, the experts at STAC Bizness Solutions outline 7 financial best practices that differentiate struggling practices from those which are highly profitable and experiencing healthy levels of growth.