Pivotal Business Tips to Manage Your Dental Practice in an Economic Downturn
A swift and robust recovery has followed the COVID-19 crisis ahead of predictions from the ADA’s Health Policy Institute for most dental practices across the country. Weekly survey results have shown many practices operating at 70% of their pre-COVID-19 production within 5 weeks of re-opening, perhaps due to pent up demand for dental care.
Other sectors of the economy may not fare as well and some economists are predicting an economic downturn. As unemployment rates climb, loss of dental insurance benefits follows, which could create a reduced future demand for dentistry. Economic downturns are not new for dentistry, and some practices will fare better than others based on how well-prepared they are. There are steps – crucial steps – to take over the next few months to lay a foundation to weather this potential economic downturn.
If you assume patients are unable to accept comprehensive care, you may stop offering it. You and your team must have the mindset that everyone deserves comprehensive care, including options, and, accept that it is not appropriate to make financial assumptions. Patients make oral health choices based on their values as well as their finances; leave that decision to them.
ACTION ITEM: Share our Case Presentation Skills article with the team as a means to start a healthy dialogue about comprehensive care and case presentation.
Calculate Your Practice’s Monthly Break-Even Point
Understanding your monthly break-even point is crucial when entering a potential downturn; it allows you an opportunity to make quick corrections and remain nimble. Review your monthly fixed, variable, and discretionary expenses and how reduced collections will impact these categories. Your fixed expenses create the backbone of your budget; added collections allow greater leeway with variable and discretionary expenses. Tracking every expense, no matter how small, is essential for effective budgeting. Reduce spending where feasible; don’t reduce spending when it will further impact your ability to provide exceptional care. Set ranges for expenses rather than set dollar amounts to remain flexible in a changing economy. If you remain mindful of this principle and have a keen understanding of categories of expenses, you will be better prepared in an economic downturn.
ACTION ITEM: Use our Financial Forecasting spreadsheet as a starting point to understand your break-even point.
Set Updated Goals, Share Them with Your Team and Monitor Regularly
Review and update your goals around key practice health indicators. These should include Doctor and Hygiene production, collections, case acceptance, new patients, AR over 90, referral requests, etc. Share these with your team, monitoring regularly with a report-out at your morning huddle and team meetings.
Focus on keeping a healthy monthly collections rate of 98-99% of net production. Review your aging accounts receivable, and identify strategies to eliminate the added staff hours and costs needed to collect slow-paying accounts. Utilize formal budget plans, with automatic monthly credit card processing as well as outside finance options. Don’t be tempted to increase your adjustments as a means to resolve aging accounts receivable; instead, focus on good collection policies and verbal skills.
In-House Membership Plans
A loss of jobs is quickly followed by a loss of dental insurance for your patients. If you have considered an in-house dental plan in the past, now is the time to get one in place.
ACTION ITEM: Thoughtfully consider setting up an in-house plan after reviewing these resources: In-House Dental Savings Plan.
Move Away from a Prophy Palace Philosophy
Review your periodontal philosophy of care and analyze the type of care provided in the hygiene department. A practice with a high rate of prophy (D1110) visits, also known as a “prophy palace” will have a harder time recovering than a practice with a healthy ratio of periodontal procedures. An increased oral health awareness, through proper coding and treatment, builds greater loyalty and perceived value for hygiene care. In addition, many periodontal patients benefit from 3 or 4-month intervals rather than the traditional 6-month interval used for non-periodontal involved patients.
ACTION ITEM: Complete our Perio Program Evaluation worksheet for your hygiene department to uncover areas needing additional focus.
Cross-Train Your Staff
Difficult choices must be made when a prolonged drop in collections occurs. Cross-train your staff now to increase their value and set your practice up for success. Cross-training also improves job satisfaction and enhances skill sets. To make this achievable, start with clear job descriptions and written standard operating procedures. These procedures need to be specific to your practice; start by having staff members outline key processes they are responsible for and write their own SOP. Many practices call these “Quality Control Systems” and task each team with authoring key systems in an easy-to-read written format that creates consistency while providing crucial training for new team members.
- Dental Assistant
- Dental Hygienist
- Front Office Administrator
- Front Office Coordinator
- Sterilization Technician
ACTION ITEM: Identify key systems that need continuity, such as the hygiene recare system and claims filing, in order to prioritize skills that need more than one point person. Cross-train one new skill each quarter.
Add Elective Options In-House
If you have considered adding orthodontic treatment, implant placement, sleep apnea services, TMD treatment, or other services you don’t currently offer, now is the time to gain the confidence you need to provide additional care and keep patients in-house.
ACTION ITEM: An important first step when adding new treatment is to share your vision and five-year growth plan with your staff. This helps the team understand the benefit additional in-house treatment will bring to both patients and the practice. It also helps staff understand how they can be instrumental in meeting practice goals.
Offer Patient-Friendly Hours
During an economic downturn, patients may not want to take time off work for dental visits. Offering patient-friendly hours outside the traditional 9-5 Monday – Friday dental care hours will open possibilities for patients. Consider early morning, evening, or Saturday hours.
ACTION ITEM: Meet with your front office team to see which times patients are asking for, then meet with your team members to create a flexible schedule to meet patient demand.
Invest in Marketing and Your Patient Experience
Competition for new patients will not decrease in a downturn. Take steps now to network with other local businesses, review your website “through the eyes of a patient”, actively engage with social media, and ensure your patient experience is outstanding. ASK for reviews and referrals.
ACTION ITEM: Devote a team meeting to reviewing our Marketing Recommendations together, choosing three to implement consistently.
Review and Renegotiate PPO Contracts
Analyze your current PPO contracts to determine the average adjustment per contract and the number of patients on each plan. Be careful to include network share arrangements and umbrella plans to understand your full exposure to each contracted plan. With data in hand, determine if the plan is viable, needs to be re-negotiated, limits the number of new patients coming in on the plan, or if it needs to be dropped.
ACTION ITEM: Review our PPO Renegotiation Steps. Consider contacting the Practice Support Team (PST) for a detailed PPO Analysis Report.