The post-COVID financial threat
Elena Meskhi takes a look at a number of key financial issues dental practices may have and reveals how to fix them.
The pandemic hit the dental industry hard. In order to reopen their doors to the public, practices have had to implement a lot of changes. As expected, the changes coincide with extra expenses and have a deep financial impact on the business.
The first and most important problem is profitability sacrifice. With all the new regulatory changes and requirements (personal protective equipment [PPE], extended time to keep the surgery empty after certain procedures, extra working hours to maintain cleaning standards, extra cleaning regimes etc) there is no way that profitability can remain the same. These new expenses are taken direct from the business’ profit. There is pressure to resolve the problem by increasing prices.
The solution is to be transparent with your patients about the changes you have had to make in order to reopen and resume treatments. Once you have vocalised those changes, come up with a decision on how and who will pay for it.
There are clearly only two options. Either the business pays from its profit, and the profit element will be sacrificed, or the patients pay for it.
Different practices are charging different fees for PPE, ranging from £20 to £80 extra per visit. Each practice needs to decide for itself how much this extra fee should be and how to charge it.
To successfully implement this, consider using the following:
- Explain to patients and the team what the fee is for and why you are charging it. Patients will notice that things have changed; as long as you keep them informed about the changes you make to protect them and have the ability to resume treatments, the majority will support you. Those who don’t support you will usually let you know about it in advance
- Have the policy in place so all your team members know and are able to explain it to the patient. It’s a new thing and it might initially feel awkward explaining it to the patients. It’s helpful to have a written script of answers
- Follow the policy and do not make exceptions. We do not know how long we will be in this situation. It feels very surreal indeed right now and I’m sure many of us hope we will soon wake up
from this craziness. The only solution is to act now as it becomes our new normal. One exception will spread quickly and potentially create chaos in the practice and confusion for your patients. Once you have decided on a policy, stick to it
- Collect the financial data and review it weekly and monthly. It is very important to do this and to understand the exact financial position of your business. It reminds me of the line from Lewis Carroll’s Alice in Wonderland: ‘If you don’t know where you want to get to, how does it matter where to go?’. Reviewing the financial data will soon show whether your policy is working for the business, or whether you need to change it.
Associate profit arrangements
Clearly, there are many changes practices have to implement in order to operate. For example, fallow time (after seeing patients for aerosol generating procedures [AGPs]), provision of dental nursing personnel during dental hygienist appointments and many more, so profit-sharing arrangements will need to reviewing.
Look at your financial data to see how many patients are required now to be seen per day, what the average spend per patient is and compare it with your ‘chair break-even point per working day’.
Out of all performance indicators, this is the key one to help you run a successful business.
While it might be an uncomfortable conversation to have with your associates, it’s an essential one. I would suggest a private, one-to-one conversation with each of your associates to see what they think about the current situation.
The changes in regulations have meant that dental nurses need to work extra hours. Some dental nurses might be in the shielding category and uncomfortable about assisting during AGPs.
While at first sight it doesn’t look like much of a financial issue (more of a human resource issue), the extra cost of recruitment, replacement, or engaging agency workers can turn it into one very quickly.
Have a conversation with each member of the team and get their point of view. Some might have the uncertainty of childcare. Some might be frightened to work in this environment, some might simply not be able to work due to the masks and health conditions.
Understand each team member’s situation. Now, more than ever, business owners need supportive and loyal team members. Then, review the schedules and plan your team accordingly.
There’s a chance that you might have less staff.
The good news is that now is the best time to hire. I know it might sound counterintuitive, but with such high levels of redundancies in the current climate, the chances are much greater in finding the perfect candidate for your team; members who will share the same values and fit perfectly within your team.
Every little helps
All of the above have a detrimental effect on the businesses. Business owners and principal dentists are required to look at it openly and acknowledge the impact.
The volume of changes might be demotivating, but don’t be discouraged. Small changes can make a huge difference.
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