4 ways to counter the effects of inflation
Inflation is at a level not seen since 2009. We were blessed with over 10 years of upward economic trends, and now the costs are rising. Dentistry includes several factors that make it imperative for every practice to create a plan to counter inflation. Consider these two key factors.
1. Dental personnel costs have increased much faster than economic inflation. Levin Group estimates that personnel costs could increase by up to 10% and that the only way to compensate for this is to increase production by 10%. You should also focus on reducing and controlling overhead. You may want to change your buying habits and do more analysis before you spend to focus on opportunities with good ROI.
2. Headline inflation is on the rise. Dental practice expenses will increase in different categories based on vendors, 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 went from $1.00 to $1.25. However, dental practices are more limited because insured patients have a maximum allowable fee that will not increase unless that specific insurance company raises the profile of the practice.
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7 tips to increase production and reduce the effects of inflation
How to counter the effects of inflation
Increase fees. Although it is more difficult for dental practices than for other businesses, raising fees is still a good strategy. Part of the cost will be absorbed by uninsured patients and insurance companies. By regularly submitting new fee schedules, in many cases you will end up raising the profile of the practice.
Increase production. There are over 200 ways to increase practice output. Strategies can range from reactivating patients who do not have an upcoming appointment to increasing the prices of home care products. Additionally, by implementing strategies to reduce no-shows, increase average output per patient, and increase practice velocity, the practice can offset 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 procedure time studies will allow the practice to see 10-20% more patients easily and efficiently.
Pay more attention to what you buy. Reducing overhead costs will help offset inflation. The first strategy might be to postpone a purchase that you don’t need immediately. Also consider waiting until you can pay something in full rather than borrowing money at high interest rates. Another strategy is to replace certain products with products of equal quality but less expensive.
Reduce 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 output. Don’t shy away from the idea of turning up the volume. It can be done efficiently and with little fatigue. Implement a system to decrease no-shows and simultaneously set a limit on the number of no-shows for a patient before that patient is politely asked to find another practice.
Inflation is real and many dentists have never had to deal with it. In the current environment, the practices are expected to increase production by at least 12% and reduce overhead by 4% to 6%. Practices in this direction will not only offset inflation, but will increase profit margins and profitability.
This article originally appeared in FROM Weekend, the newsletter that will elevate your Sunday mornings with hands-on, innovative practice management and clinical content from experts in every field. Subscribe here.