Cost of Running a Dental Practice
How important are the “small things” to controlling your dental supply costs?
Well, when the average dental practice spends 6% to 6.5% of its total expense budget on supplies, the answer is “very important!”
The good news is, you can eliminate overspending and waste. And at the same time, there are ways you can lower your supply costs and ultimately increase your profitability.
Remember this quote, from Benevis Practice Services:
“While building a dental practice that helps you achieve your personal and financial independence, it’s critical that you focus on controlling your costs, and not only focus on marketing and increasing your revenue.”
Remember, a budget is your friend. Your dental supply spending metrics can help you measure supply costs.
Measurements can be as simple and revealing as what supplies you’re consistently running low on (and why). Combine that observation with what’s overstocked.
1. Commission a spending analysis
This is a proactive step you can delegate to a team member. Designate a “supply-champion” who will monitor, for example, quarterly (3 month) supply spending trends.
A spending trend could be the result of supplies needed for a seasonal or special promotion and not a consistent cost affecting your bottom-line. Evaluate trends and then assess the amount of inventory you have in high and low supply.
Share your findings during a team meeting. Ask for ideas about how each department can monitor supply usage and inventory and budget practically.
2. Calculate and compare
The supply spending data is useful as you compare it to your revenue for each trend period. Establish a fair, practical, and realistic calculation of supply cost to revenue.
It might seem like too much attention to detail. But the data can reveal whether your purchasing too much or too little and give you insight about negotiating a lower cost from a frequently used vendor.
3. Change how you order
Systems, like budgeting, can serve you well. Whatever your trend, usage, and spending analysis reveals can help you systematize your ordering process.
For example, adding cost-checking to your system instead of merely ordering on demand could help your bottom-line. Prices fluctuate seasonally and often randomly.
Proactive awareness can affect the timing of your orders. Experiment with ordering approaches then rinse-and-repeat those that are cost-effective.
The “small-things” add up. Being more strategic on the supply-side could give you an advantage.
Learn more about our dental patient financing options.
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