Managing Finances: Guidelines for Practice Success. American Dental Association

      Introduction

       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. These practices have become financially astute to ensure that the business is profitable. While practice success requires a lot of hard work and sometimes difficult decisions, many dentists are happy in their careers and feel the challenges are worthwhile. They feel professionally satisfied and appreciate the benefits, flexibility and profitability that they are able to build into their personal and professional lives.

      Several recent surveys have reported that the 2008 recession has caused significant and lasting shifts in consumers’ spending patterns, especially when it comes to healthcare. And, even though the recession is over, consumer demand for dental care has leveled off and caused dentists across the country to increase their capacity with a reduction in profitability and earnings.

      The American Dental Association’s Health Policy Institute (HPI) describes this economic reality as the “new normal” and reports that this shift has caused many dentists to do more with existing resources and, in some cases, to postpone retirement. Today’s economic realities have made it even more challenging for dentists to maintain the right balance between revenue and expenses.

      Another reality of this new normal is the challenge of managing the clinical aspects of dentistry while monitoring the balance sheet and growing the practice. Recent data shows that mid-career and older dentists are feeling the pinch of trying to gain traction in today’s economy.

      While today’s dental practice environment doesn’t require the dentist to have an MBA, it’s important to have enough business savvy to capitalize on revenue. Critical factors include identifying metrics for success, establishing internal controls to prevent fraud and embezzlement, setting up patient payment systems that work, determining how you pay yourself, and improving patient satisfaction and retention. Many dentists — at all stages of their careers — find that having a clear, documented financial protocol outlining these procedures and targets can help. Many find that it also helps to share some of that information with members of the dental team since it’s an opportunity for them to see how they contribute to everyone’s success.