Whether you’re talking about groceries, rent, or a new desk, inflation over time is normal. Due to COVID-19 and other factors, however, inflation rates have been putting many business professionals and customers–including dentists and dental patients alike–in tighter economic situations. As a result, you must take action in your practice to ensure that your service quality and availability stay high, so people continue to accept and receive your care and services.
How Bad Is It, Really?
According to the Federal Reserve, inflation projections remained between 5.3 and 5.5 percent in 2021. But consumer prices are currently rising by nearly seven percent compared to 2020, which is the fastest pace in almost 40 years. While the Federal Reserve anticipates relief in 2022 with rates dipping back between two and 3.2 percent, some economists assert that it will take the entire year for rates to come back down closer to the two percent norm. Other economists worry that inflation will keep rising and stay at eight percent or more through 2022.
In your office, you shouldn’t be surprised by staff who request raises or quit to go elsewhere–they need more money just to pay basic expenses. Basic supplies that support your services, such as PPE, will cost more. Patients may worry they cannot pay or need more payment options, or they may put off their visits altogether.
How To Keep Your Dental Office in the Black
As MGE Management Experts, Inc. points out, most dental offices operate best if they can keep overhead categories within specific limits. For payroll, for instance, that’s 22.5 percent of revenues, including payroll tax. When overhead costs increase, revenues must grow without raising costs to stay within these percentage limits. If you’ve already been as efficient as possible and can’t slash expenses by streamlining anymore, other measures may become necessary.
MGE identifies three key routes to bumping up the amount of money your practice brings in:
Increase the Number of People Coming Into Your Office
You might be able to get creative or take advantage of options like referral programs to increase your caseload. But, this can be challenging. You have to ensure that you and your staff take on a level of work that remains reasonable in terms of burnout risk, especially if your office is smaller. If you and your team all work long hours, then the additional pay for those hours must be less than what you make from the new patients.
Raise Your Fees
Patients may not resist rate increases as much as you expect, given that they are seeing and expecting price hikes everywhere else, too. It’s critical to do market research to understand their current situation and find the ceiling of what they still can pay. Communicating well in advance about the increases and why they happen can make them more palatable. The current recommendation from MGE is to raise fees by as much as ten percent. Stage this increase gradually, so people have a chance to adjust and plan financially.
Rethink Your Approach to Insurance
Participating in Preferred Provider Organizations (PPOs) can be enormously helpful to patients because it enables them to apply their insurance to your services. But right now, many insurance companies are reimbursing dentists less than before. If the majority of your business is PPO-based, you may have to rework your model so that a smaller percentage of your revenue comes from those reimbursements. Although you might lose some patients by refusing to work with their insurance provider, it probably won’t be the sky-high number most dentists fear–MGE asserts it’s usually no higher than 30 percent. Typically, you can make up that money by continuing to provide top-of-the-line care to full-fee patients who have adjusted to your inflation-based prices. Most dentists can actually maintain revenue levels after dropping plans and don’t need new patients to bridge income gaps if they’re getting paid appropriately.
Act Now To Protect Your Practice
Inflation rates won’t stay near the ceiling forever, but until they decrease to a more reasonable level, protect your practice. Effective marketing strategies and a careful approach to your insurance and fees will allow you to sail through the choppy waters. After things settle, if you continue with those ways of doing business, you’ll be in a much better position for the extended future, too.
Dr. Steven Ghim is a cosmetic dentist who also provides general and comprehensive dental care. Ghim has over 20 years of clinical experience and his private practice office is fully digital, ultra-modern, and serves the adult patient. He also serves as a lieutenant colonel in the U.S. Air Force.