Managing Finances: Guidelines for Practice Success. American Dental Association

       • The Dental Record

       • The HIPAA Minimum Necessary Rule

       • Billing and Coding

       • Active vs. Inactive Patients

       • Health Information Portability and Accountability Act (HIPAA) Rules

       Fraud Prevention

       • Internal Audits

       • Responsibility for Billing, Records and Accounting

       Embezzlement

       Measuring Success

       Expenses

       Fixed Costs

       Rent and Mortgage

       Payroll

       Taxes

       Marketing

       Equipment, Maintenance and Tech Support

       Dental Supplies-Inventory Control

       Laboratory Services

       Vendor Contracts

       Utilities

       Professional Dues

       Variable Costs

      ADA Guidelines for Practice Success™ (GPS™)

      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.

      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.

      The Managing Finances module of the American Dental Association’s (ADA) Guidelines for Practice Success™ (GPS™) offers tips on managing your practice’s revenue and expenses. This unit provides a framework for handling the business side of your practice with consistency and predictability. Keep reading for more information or link to one of the topics below for more details about specific areas of interest.

Revenue

      While generating revenue from your practice can be difficult to achieve, being profitable is the real challenge. Over the course of one generation, dentistry has seen a revolution in new materials, techniques and technology. At the same time, caries rates have been reduced, patients are more sophisticated and have higher expectations, and even the dental benefits arena has seen tremendous changes. New dentists in particular face a steep learning curve regarding the business side of practicing dentistry.

      Successfully managing a dental practice at any stage in your career requires short- and long-term strategies that you can adjust in response to shifts in the dental landscape. Paying close attention to key performance indicators (KPIs) will help you assess your practice’s growth and profitability and simultaneously help you