With inflation still cripplingly high, how can practices navigate the cost of living storm?
This was one of Dentistry’s Biggest Questions posed in Practice Plan’s Dental Business Theatre at May’s Dentistry Show.
Wesleyan’s head of dental, Iain Stevenson, hosted the conversation between UNW’s head of dental, Mike Blenkharn, President of ADAM (Association of Dental Administrators and Managers) Lisa Bainham and Dental Business Coach Ashley Latter as they addressed it.
Iain Stevenson (IS): From an accountant’s perspective, Mike, do you wish people were a little bit more proactive in terms of decision making?
Mike Blenkharn: Yes. Although I think a lot of dentists are already. The best ones are those who have systems in place already. So, the likes of Xero or QuickBooks software where you get up to date, live figures.
This allows you to forecast forward based on real time information. As opposed to those without the software, where you have an accounts meeting six months after the accounts year end and so you’re looking at figures which are 18 months old in the earliest period. So really, you’re looking backwards to try and forecast forwards.
The ones where we have the software in place and we’ve trained them to use it, they can look at the last month, or the last 30 days and see, yes, wages have gone up, materials have gone up. They can look at their energy costs.
We need to be able to forecast forwards. Also, you can determine what your cash flow constraints are going to be and that’s crucial when you’re looking at interest rates rises, and rising energy costs. So, the ones who are proactive and have the systems in place generally are the ones who have weathered the storm fairly well.
IS: What are your thoughts, Lisa?
Lisa Bainham (LB): The things I always try to get into place are the non-financial key performance indicators (KPIs). Things like diary utilisation. Are the fees right? What are the conversion rates from an enquiry to treatment?
These are the non-financial KPIs which then get fed into the financial KPIs. From a front of house point of view, all they need to worry about is everybody has their own bit to do, that then feeds into the figures. And this is not difficult once you have the systems in place. So it’s about everyone doing their bit.
IS: Ashley, how can practices make themselves leaner in terms of costs and overheads? Have you seen opportunities for them to do things in a different way?
Ashley Latter (AL): When I’m going into practices, I see leaky buckets everywhere. I see the telephone being answered to a new £10,000 enquiry by someone who’s had no training at all. They’re answering the phone at the reception desk while the receptionist has six people in front of her, which is about the worst place that type of call can be answered.
I’m seeing dentists who have been asking for scanners and when they get them, they don’t use them. If they just scanned every patient and put a picture up and said, ‘Is there anything you’d like to change or improve about your smile?’, somebody during the day will say, ‘Yes. I don’t like that. Can you change it?’ and suddenly, they have a £3,000 or £4,000 implant treatment.
Dentists who’ve been on my courses, who’ve been asking this question, have told me they’ve had this answer even with a patient they’ve had for 25 years. And when they’ve asked the patient, why they’ve never said anything about it before? They say, ‘Well you’ve never asked.’
So, it’s about going in and saying, ‘Look, you’ve got buckets here with leaks. Why don’t we just start plugging them as there are opportunities everywhere.’ It’s about looking for opportunities to grow turnover. And if you grow your turnover, your profits will go up as well.
IS: Good point. Anything you’ve noticed that practices can do in a different way to make themselves leaner, Lisa?
LB: It can be difficult to reduce costs. Although, if you have some contractual arrangements, such as with compliance companies, it’s always good to try to negotiate a better rate. However, I feel it’s about building the profit. As Ashley said, putting the plugs in those leaks. I go into a practice and within the first hour I can look at the diaries and find easy wins. I’m not asking someone to change their whole way of doing things, just make it leaner to maximise profitability.
It could be sometimes there’s time wasted in diaries. If your hygienist likes a 10 minute gap between each appointment, your fees need to reflect that. Because those 10 minutes without charges, three or four times a week, add up to about £25,000 a year. So, those are the sorts of things we need to address to make sure we are running things as a business.
IS: So, practices need to be creative. Any more ideas about being creative in how people look at the business, Ashley?
AL: I have a couple. The first thing is dentists have got to stop reducing the fees in their head. I am generalising, but a lot of dentists do this, and several times a day. They’ll take off £50 here, £20 there. If you add that up over 48 weeks, it’s £20,000-£25,000 plus.
If you’ve got three associates, that’s nearly £100,000 they’re losing. So, that needs to stop, and they need educating that reducing the fee will not make any difference at all to whether the patient says yes or no.
The second thing is you have to start putting up your fees. If you can try and keep your costs the same, if you put up your fees by 10%, your gross profit goes up by a third. So that’s the impact it can have. With my clients, we go in and we educate them. They put up the fees, and it doesn’t make any difference at all to case acceptance.
So, fees for me is a massive one. And that’s a big part of what I do when I go into practices, stopping them from reducing them and then edging them up.
IS: Great insights. Thank you all.
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