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GPS Managing Finances

Managing Finances

Running a dental practice requires a lot of hard work and attention to details that aren’t related to the clinical care of your patients; in other words, it isn’t easy.Successful private dental practices have owners who understand the importance of tracking expenses systematically, maximizing revenue, and minimizing risk.

Managing Finances

  • Billing and Coding

    As the dentist, it’s your responsibility to always supervise the filing of dental claims and make sure your coding information is current and correct.

  • Active vs. Inactive Patients

    Make sure your practice has a functional and documented process for moving patients from active to inactive status on a regular basis.

  • Health Information Portability and Accountability Act (HIPAA) Rules

    The ADA has a number of resources, including the ADA Complete HIPAA Compliance Kit, to help dentists design and maintain a comprehensive HIPAA compliance program.

  • Fraud Prevention

    While you may believe you can trust your staff and that you’ve hired or inherited honest employees, ultimately it’s up to you to be sure that all financial aspects of your practice are accurate and current.

  • Embezzlement

    Embezzlement, or stealing by deceit, is more common in dentistry than many dentists realize. Dishonest staff members have stolen cash, supplies and insurance checks worth millions of dollars.

  • Responsibility for Billing, Records, and Accounting

    The dentist, as the owner of the business, is responsible for the oversight of all employees.

  • Key Performance Indicators (KPIs)

    Key performance indicators (KPIs) are measureable values used by business owners to assess the business’ growth, profitability and other factors.

  • Rent vs. Mortgage

    Is it better to rent or to own? The answer to that question is that there’s no right answer.

  • Payroll

    Managing payroll can be especially complicated in practices where staff members lack detailed job descriptions that outline tasks specific to each position.

  • Taxes

    Be aware that there can be tax implications if your practice experiences unplanned growth, such as the acquisition of new equipment or an increase in the number of operatories and chairs.

  • Marketing

    A good rule of thumb when budgeting for marketing expenses is to allow 3-6% of a new practice’s expenses; 2-3% for mature practices; and about 4% for practices that are in the middle.

  • Equipment, Maintenance, and Tech Support

    While it’s human nature to want the latest and greatest technologies, it’s important to base your equipment purchase decisions on the type of dentistry you do, the needs of your patients, and your budget.

  • Dental Supplies-Inventory Control

    The rule of thumb for inventory costs is that they should be no more than 5-6% of collections and that office supplies costs shouldn’t exceed about 2%.

  • Laboratory Services

    While your patient mix will influence the amount you spend on laboratory services, lab costs of 4% may indicate that your case acceptance rate is too low; if that’s the case, consider brushing up on your case presentation skills.

  • Vendor Contracts

    While most dentists might consider “vendor contracts” to be limited to IT expenses, they can include everything from cleaning services to landscaping or equipment maintenance to outsourced services.

  • Utilities

    While the term “utilities” refers collectively to the costs of providing the practice with heat, light, electricity, telephones, Internet and cell phones, be sure to track each item separately.

  • Professional Dues

    Successful dentists join and get involved in organized dentistry for a variety of reasons.

  • Variable Costs

    Variable costs include such expenses as consumables, repairs, and maintenance, training or continuing education, and doctor compensation.

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