Dental Office Tips to Grow During High Inflation

Man blowing up a baloon
Key points:
  • Knowing your actual costs helps you hedge against inflation by creating a more robust procedure mix.
  • Temporary dental staff and proactive staffing help you navigate the labor crisis while still growing.
  • You have to make some tough choices regarding insurance, training, and equipment if you want to keep your overhead low.

For dental offices, the beginning of the year has traditionally been dedicated to growth-related discussions. This year, the headlines are telling a different story:

  • “Inflationary economic conditions are sparking a potential global recession.”
  • “Interest rates rising as the federal reserve continues to combat inflation.”
  • “Massive layoffs are impacting multiple industries.”
  • “Food and commodity prices at all-time-high.” (let’s not even talk about eggs!)

Obviously, the economic mood is different than it has been for the last near-decade. Suddenly, those growth discussions are underpinned by fears of inflation, a shaky economy, and an ongoing staffing crisis. But here’s a big secret: you can grow during a crisis. Thoughtful decisions that balance growth with staffing needs, inflation with margins, and growth with risk are the key to climbing over the current inflationary economic landscape.

Obviously, we can’t tell you the exact moves to make. It’s highly dependent on your unique office conditions. That said, we do have some universal tips to help. These aren’t low-hanging fruit. Today, we’re looking at the table stakes of growth during today’s crises.

Know Your Costs

We know; this sounds like a basic tip. But hear us out. This is actually the single trickiest component of growing during an inflationary period.

You need to deeply understand your costs. To do this, we recommend breaking your costs down into hourly buckets. Not only does this make your costs more digestible, but it helps you create better procedure mixes based on tangible cost data — not gut feelings.

We can split costs into two buckets:

  • Fixed costs
  • Variable costs

The first bucket — fixed costs — includes all costs that are fixed across every procedure. For most offices, this bucket includes costs like:

  • Equipment financing
  • Marketing ad costs
  • Software subscriptions
  • Utilities (of note, these are technically flexible, but the flexibility is low enough to consider them fixed)
  • Rent/mortgage
  • Insurance

The second bucket — variable costs — include all costs that change by the procedure. So, for example, hygienist and assistant labor changes by the procedure (you may or may not need them) as do lab costs, dental supplies, and office supplies. This is, by far, the most complex bucket. Some procedures require a significant number of supplies, like:

  • filling materials
  • gloves
  • plastic covers
  • adhesives
  • masks
  • polishers
  • burs
  • syringe tips
  • plastic cups
  • syringes
  • anesthetics
  • etc.

Labor (as a whole) is variable. While receptionists are fixed costs in some offices, most labor is variable based on the procedure.

Together, these two buckets will give you your cost-per-procedure. You take your hourly fixed costs + the variable costs of the procedure and figure out what your actual procedure cost is. For example, let’s say you do a dental sleep procedure and fix a dental sleep device onto a patient. It takes you 45 minutes.

You would take your fixed hourly cost/0.75 + the variable costs associated with the procedure.

Here’s a great post we dug up from Dental Economics that explains many of these same concepts.

Often, dental offices only understand their overhead by tracking expenses for the entire month. When you break it down and start tracking by procedure, you start to understand which procedures are worth more of your time.

We’ve discussed shifting your procedure mix in the past, so we won’t go too deep into this component.

But it’s important to track costs effectively and honestly.

This may help. The average overhead for dental offices is 62 percent.

In general, growth-driven offices should shoot for a 50 percent overhead. Easier said than done. With inflation increasing faster than reimbursements, hitting this goal will require a reshifting of procedure mixes and an extra emphasis on marketing the right procedures at the right time.

Staff Proactively

Finding dental talent isn’t easy.

All told, the United States needed at least 150,000 new dental talent to support offices. Today, things are much direr. So… how do you support continued growth against a backsplash of talent shortages.

Easy. You leverage a temporary staffing and permanent employee recruitment solution.

For context, we get more resumes than even the largest DSOs. Our candidate experience (something we pour a significant amount of time, effort, and energy into) is top-notch, and we’ve baked talent-centric practices into the heart of our company. That said, there’s a secret: 70 percent of our temporary talent is looking for a full-time position. They want to find an office that’s honest, hardworking, and with a positive culture.

We have talent ready.

That said, often, the issue is balancing the need for the increased revenue of hygienists (the average hygienist produces $1,600 per day for the office) with inflationary conditions that prevent you from hiring a full-time staff member.

Additionally, even we don’t have the talent to fill every possible schedule; there are too many offices in need.

To get around this, many offices leverage proactive staffing. In a nutshell, this means using temp staff when you have the opportunity. You work your schedule around the availability of temps. When you can get them, you leverage temp assistants and hygienists to boost revenue.

Eventually, the goal is to use temporary staff as a bridge to hiring a full-time assistant or hygienist. Once you feel like you’re ready, we’ll help screen, identify, and present the ideal candidate. You can also convert one of our temps to a full-time employee if the interest is mutual. Using temps staff is a great way to evaluate the available talent before you commit.

Make Tough Choices

You have some choices to make. And they’re not all easy.

On the simple side, choosing to switch your procedure mix, schedule around temp talent, and invest in ongoing training for staff members are no-brainers. They’re low-cost and high-value.

But some decisions aren’t so simple.

For starters, it’s starting to make sense to go out-of-network for many insurance providers. Inflation is going up; payments aren’t. Yes, this is tricky. You have to balance out-of-network decisions against patient flow needs. When you choose to drop a provider, it will impact every patient that uses said provider.

That said, it’s also nonsensical to continue to work with providers that are a net negative (or close enough to it). It’s okay to pull the plug. Get the pain over with now. Once it’s done, you can focus on getting new patients (see this post for marketing tips).

Also, consider the sunk cost fallacy. Many practices made investments during the pre-pandemic economic environment that no longer make sense. The salesperson said this particular piece of equipment would produce “x” ROI. Instead, it rots in an operatory room, and you don’t particularly like using it. So, you and your team subtly avoid it, and the ROI is pitiful.

Sell it!

Don’t keep it just because you’ll net a loss on the sale. Instead of convincing yourself you’ll use it “eventually,” just ship it out and focus on other areas of opportunity.

In order, your priorities should be:

  • Creating a loyal team
  • Deal with staffing issues early and often
  • Focus on acquiring new patients and keeping case acceptance rates at an acceptable level
  • Focusing on your procedure mix and cutting costs by combining procedures by paying attention to the variable costs
  • Trimming overhead to ~50 – 55 percent
  • Increasing costs for cash-paying customers and negotiating (or eliminating them altogether) with insurance companies.

And we can help.

Helping Offices Find Valuable Talent

At WORKFORCE, we help dental offices mitigate the staffing crisis. Our industry-leading recruitment and temporary talent pipeline give you access to high-quality talent to keep your practice growing during chaotic times. We can’t save you alone. But we can certainly help.

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