May 4, 2023

How To Increase Dental Practice Profits During Inflation

By: Drew Hinrichs, CPA, CEO of Engage Advisors

A year ago, inflation was at a 40-year high, and while it’s gone down since then, the economic pressure it created is still pretty strong. It’s a challenging environment for any business, but dentistry is a resilient industry. By being proactive, practice owners can find plenty of ways to increase profits. It’s really about having good business systems in place and paying attention to the fundamentals.

Here are some ideas for how your dental practice can become more profitable in spite of high inflation rates.

1. Increase Fees Regularly

You should make point to evaluate your fee schedule regularly, but it’s especially important during an inflationary cycle. Overall, aim for fees that are in the 80th percentile or higher for your market. The most reliable way to make that evaluation is to use zip codes to localize fee schedule information, then compare where your fees stand in relation to other offices in your area.

2. Renegotiate PPO Agreements

You should also review your PPO agreements regularly to be sure they positively impact revenue. If the thought of trying to negotiate a higher fee schedule induces a headache, you can avoid the hassle and get better results by contracting with a third-party that specializes in managing PPO relationships. A firm like PPO Advisors can negotiate on your behalf while also closing all the loops insurers rely on to lower reimbursements. PPO Advisors offers a risk free analysis so you know what the return on investment (ROI) is before you sign up. They average a 400% ROI in the first year for established practices, making it a pretty good investment.

3. Fill Empty Chair Time

Even if it’s at a reduced rate, when you have a fixed overhead, bringing in additional dollars can make a big difference in your bottom line. There are a variety of strategies to choose from:

  • Offer discounts: Discounts and deals can attract new patients who have been considering visiting but needed an incentive to change their existing dentist.
  • Ask current patients for referrals: Your existing patients are one of the best sources of new patients, but a passive approach won’t cut it. Send feedback emails to make sure current patients are happy with your services, and then follow-up with an email asking for referrals.
  • Add a PPO: Depending on the circumstances, adding another insurance plan could make a big difference. To be sure it’s a net-positive, get a free analysis before you sign the contract.

4. Consolidate Buying Power

One way to enhance buying power is to consolidate your purchases. By becoming a more important customer to one supplier, you may get a better deal. Another option is to leverage your buying power by joining a group. A growing number of dentists in private practice have found they can maximize their purchasing power by working as a collective, allowing everyone to lower their costs.

5 Add In-House Procedures

Reducing the number of referrals you make by adding treatments can make a big difference in revenue. Procedures such as endodontics, crowns and bridges have a higher profit margin and may be worth adding if you can do so efficiently. Other treatments that are growing in demand such as clear braces, implants, and sleep apnea are also worth considering.

6. Invest in Better Technology – Don’t waste valuable staff time on tasks that could be completed by office automation software or AI tools. For example, you can automate patient communication with systems that not only send appointment reminders but will also introduce new procedures and services.

If you have questions about how to improve performance and profitability at your dental practice, schedule a call with our team at Engage Advisors. We combine industry expertise with business knowledge to help your practice achieve the success you deserve.