If you run a dental or medical office, making sure it is profitable is very important. After all, nobody wants to work for nothing. However, how is this achieved? It can be very complicated to deliver what is in essence a community service, and hence by definition not for profit, in such a way that you are able to make a decent living as well. There are a number of hints and tips out there for you.
Making Your Office Welcoming and Accessible
There is a lot to be said for the business side of managing a dental or medical office, but the reality is that none of those things matter unless you have patients. This means you have to create an office that is welcoming and attractive to your patients. It is hence recommended to work closely together with a reputable independent contractor, such as apollointeriors.com, in order to design a practice that meets those standards. If your practice is pleasant to attend, you will immediately have a bigger chance of profitability, since patients will come.
Understanding the Big Four
In every dental or medical practice, you will come across the so called "Big Four". Understanding these and getting to grips with them will help you create far greater profitability. The first of the Big Four is staff expenses.
Making Your Office Welcoming and Accessible
There is a lot to be said for the business side of managing a dental or medical office, but the reality is that none of those things matter unless you have patients. This means you have to create an office that is welcoming and attractive to your patients. It is hence recommended to work closely together with a reputable independent contractor, such as apollointeriors.com, in order to design a practice that meets those standards. If your practice is pleasant to attend, you will immediately have a bigger chance of profitability, since patients will come.
Understanding the Big Four
In every dental or medical practice, you will come across the so called "Big Four". Understanding these and getting to grips with them will help you create far greater profitability. The first of the Big Four is staff expenses.
Keep staff expenses at 20% to 25% of gross revenue. Many think this is unreasonable and absolutely impossible. However, you have to realize that this percentage is directly tied to production.
You have to make sure you have the right staff in your office and that they always have something to do. Obviously, the bigger the office, the more staff you need. However, going above 25% of your gross revenue will generally mean you have too much staff. This is unproductive and highly costly.
The second element of the Big Four is the lab cost. A good practice keeps this cost below 10% of the gross revenue. Although you can see a return on some of the lab costs, more than 10% means you are spending too much time researching things and not enough time working on your patients. The third item is your supplies. Supplies should not exceed 5% of your gross revenue. You simply shouldn't need more supplies than that. If your supplies go above this, then either your practice is too big to manage or you need to rethink your entire strategy. The final item is your facility. Generally speaking, your facility should not come to more than 7% of your gross income.
Following these rules means you will have to spend not more than 47% of your gross income. Of course, this doesn't mean that you will make 53% profit, as there are many other expenses you will have to contend with as well. However, with less than half of your income spent on essentials, you have a much bigger chance of becoming profitable. This also means you could have the money available to refurbish your practice, which could in turn increase your profitability even more.
Managing dental and medical offices to ensure profitability can be difficult. It is about performing a balancing act between what you need and what you actually have available. Naturally, to be profitable, you also need patients. Although you can do a lot to attract new patients, people could have a period of exceptional health, which means your profits will be much lower. Again, sticking to the business model of the Big Four will help you to make sure you can also overcome these periods of scarcity that are normal in any business, particularly for small to medium sized businesses.
The second element of the Big Four is the lab cost. A good practice keeps this cost below 10% of the gross revenue. Although you can see a return on some of the lab costs, more than 10% means you are spending too much time researching things and not enough time working on your patients. The third item is your supplies. Supplies should not exceed 5% of your gross revenue. You simply shouldn't need more supplies than that. If your supplies go above this, then either your practice is too big to manage or you need to rethink your entire strategy. The final item is your facility. Generally speaking, your facility should not come to more than 7% of your gross income.
Following these rules means you will have to spend not more than 47% of your gross income. Of course, this doesn't mean that you will make 53% profit, as there are many other expenses you will have to contend with as well. However, with less than half of your income spent on essentials, you have a much bigger chance of becoming profitable. This also means you could have the money available to refurbish your practice, which could in turn increase your profitability even more.
Managing dental and medical offices to ensure profitability can be difficult. It is about performing a balancing act between what you need and what you actually have available. Naturally, to be profitable, you also need patients. Although you can do a lot to attract new patients, people could have a period of exceptional health, which means your profits will be much lower. Again, sticking to the business model of the Big Four will help you to make sure you can also overcome these periods of scarcity that are normal in any business, particularly for small to medium sized businesses.