Page 105 - The Dental Entrepreneur

The Dental Entrepreneur

The first $100 procedure that you do might result in you having enough money to go out and
have a fast food dinner. Its pretty sobering, but I am trying to drive home a point. You will
handle a lot of dollars, the numbers sound large, but the reality is far from that.

How To Manage Profitability

Because your profit involves two factors: (collections and overhead), you must master the
management of theses factors.

How Do I Decrease My Overhead?

There are only two ways:
1. Increase Collections
2. Reduce Spending

Increasing Collections

You may increase collections on three ways:
1. Increase Fees
2. Increase Production
3. Increase Collection Rate

Increasing Fees

Increasing fees is an effective way to increase collections and improve profitability. Conversely,
once you have these equations and principles firmly etched in your brain, you will come to
realize how damaging and risky fee reductions can be.

One important observation on fee increases is that it is much better done on a regular basis as
opposed to doing a large increase every 5 to 10 years. A method of regularly adjusting fees is
to utilize the annual cost of living adjustment (COLA). It is a figure calculated by the
government that is used to make increases to such things as social security. It is reflective of
the overall inflation rate in the economy. The annual cost of living adjustment is published
shortly after the first of every year. You can plug it into your practice management software and
the increases can be made globally. One fee that you might be a little more sensitive as to the
frequency of your increases and that is your fees associated with recall visits. Prophys, exams
etc. This seems to be the only fee your patients become very knowledgeable about and they
readily compare this with friends and neighbors. Outside of that regular fee they really are not
focused on a particular fee. Knowing fees for your region are important. Dental economics
magazine publishes the Levin Annual Survey and there are several online resources that can
give you geographic based UCR reports by zip code.

Page 99