ENCOURAGE SAVINGS BY SHARING WITH STAFF THE DAILY COSTS OF OFFICE OPERATION

Many practice management consultants preach, “Earn more---increase profit by increasing productivity!”  That is a valid point, but the other half of the formula is often minimized---“Spend less---increase profit by spending less!”

The dentist alone may achieve some savings by instituting such things as better inventory control, adequate but thrifty use of materials, wise shopping for better merchant rates on credit cards, lower insurance premiums on personal and staff insurances, lower telephone, computer support, and janitorial charges, etc.  However, to achieve significant, consistent savings month to month, the entire team must buy into and be involved in the concept of SAVING.

But why should the staff understand the necessity of cutting overhead costs if they have no idea how much money the dentist spends to run the practice for even a day?  Sharing the daily average cost of operation is often a surprise for staff---and I’ve witnessed a recently-employed associate dentist equally as shocked when presented with daily cost of operation---her response, “You’re kidding??  I had no idea it was that much!!”

To calculate daily costs, review your Income and Expense Statement for 2015.  List total costs for the seven main categories of expense: (1) personnel, (2) occupancy, (3) administrative, (4) equipment, instruments, and a contingency fund for emergencies, (5) clinical supplies, (6) lab, and (7) marketing.  Add the totals of these categories---this sum is the office overhead costs for 2015.  Divide the sum by the number of days worked in 2015.  The dividend is the average daily cost of operating your office.

Typical costs of operating a busy office is between $2500 - $3000 per day with many offices in high-cost-of-living metropolitan areas exceeding that average.  Note: no compensation or profit for the dentist(s)/owner(s) is included in this calculation.

Once your team members are aware of such significant daily expense, it becomes more meaningful when the dentist emphasizes to them the necessity of saving on operational costs wherever possible.  “Turn out lights when not in a room.; Use materials sparingly.; Shop for the best supply prices from vendors.  Minimize billing by getting patients to pay on day of treatment.”---on and on---seemingly small savings made by an involved team will add up to big savings and a much sweeter bottom line for your practice by the end of 2016.