Dentaltown July 2021 - 56

Practices could always
be running more
efficiently, just like
there's always room
for improvement in a
personal financial plan.
1
Not assessing fees annually
Nobody likes to raise fees, and many owners
believe that higher prices could become a barrier
to entry. Fees should be assessed annually
and sometimes increases must be made, especially with
2020's cost increases on things like personal protective
equipment.
Additionally, ask yourself:
Are you charging enough, compared with other
practices in your area? With my clients, I consult
various fee publications, which allows a practice to see
where its fees fall compared with practices in the same
area. Gradual increases are almost unnoticeable to
patients, yet can make a big difference on your profit.
For example, a 3% fee increase for a $1 million general
dentistry practice would equate to a $30,000 increase
in net profit.
Following practice closures, are you behind on your
hygiene patients and missing out on diagnosing more
profitable perio treatments? After COVID-19 closures,
many practices returned to packed hygiene schedules
that reduced the capacity to perform more lucrative
(but time-consuming) periodontal treatments. Some
practices may want to consider bringing on a temp
position or even expanding hours to Friday mornings
just to catch up. The perio isn't going away; it just isn't
getting treated like it was prepandemic.
Lastly, how much you are writing off each year?
Dentists are typically invested in their community
through schools, church, events, etc. They know a lot
of people, which sometimes leads to doctors discounting
fees. Adjustments can be within 8-10% on average,
but when you pass 10%, you need to question if you're
writing off too much in discounts.
56 JULY 2021 // dentaltown.com
Consider having a plan of discounts in advance,
quantifying the number of free cases and setting a
standard discount percentage for your selected group,
rather than making it a free-for-all.
2
Not managing staff salaries
Dentists traditionally have great relationships
with their staff, resulting in low turnover.
Although this is good, when long-term staff
have been given 3-5% raises annually, this can lead to
staff wages above national and regional averages. Our
new Dental Practice Comparison Report, featuring
average salaries by specialty and size, is available to
download for free so you can see how you compare.
Staff salaries can be a practice's largest overhead
expense and should be around only 20-24% of
collections to remain healthy. If a practice finds itself
over this percentage, it's time to regain balance.
Similar to fees, being off by only a small amount on
salaries can really add up. For example, a 1% overage on
staff salaries for a $1 million general dentistry practice
would equate to $10,000 each year, while a 4% overage
would be $40,000. The difference could be the deciding
factor in whether or not you're able to fund your share
of a profit-sharing plan.
Look to see what other practices in your geographic
region are paying and how you measure up. (Remember
that hourly rates can vary significantly depending on if you
practice in a rural, suburban or urban area.) It's important
to give raises to underpaid individuals, but employees
whose salaries are within the average range should receive
only cost-of-living increases on an annual basis.
Production-based bonuses are a great way to reward
based on performance. This way you can offer incentives
based on growth and profitability, rather than a blanket
hourly increase.
If you have staff members who are overpaid,
unwinding this is one of the hardest things to do. No
staff member will volunteer to take a cut, and turnover
may be needed to regain control.
3
Not leveraging
tax efficiencies
As successful small business owners, most
dentists are high-income earners, which positions
them in high tax brackets.
With the current proposal from the Biden administration
on increasing the tax rate 5% for the top tax
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Dentaltown July 2021

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