4 myths about money and the dental practice

December 16, 2015

Money can be mysterious and can also be the source of stress in your practice. How you manage money has a direct impact on your ability to serve your patients’ oral health needs.

Money can be mysterious and can also be the source of stress in your practice. How you manage money has a direct impact on your ability to serve your patients’ oral health needs.

This may seem at odds with your goal as a practitioner, as time in the back office looking at spreadsheets is not time spent with patients. However, when your books are in order, you will feel comfortable and able to focus better on your profession. So in preparation for the end of the year, here are some busted money myths to help you put your books in order.

Continue to the next page to see the first myth...

 

 

 

 

Myth #1: Patients and insurance companies will pay on time

Your patients may have the best intentions of paying, but sometimes life gets in the way, or patients forget. Insurance companies may also need extensive communications before you receive your payment. This may seem like a chore with insurers and an imposition to your patients, but requesting payment can be done professionally which can help to communicate your value. Payment requests and billing may appear to be something that you can put off, but delays decrease the likelihood of payment and can cripple your cash flow. Which leads us to the second myth….

 

 

 

Myth #2: Revenue is a measure of practice health

Just because you are making money doesn’t mean that you are taking home enough to support the practice and your expenses. One of the best measures of practice health is actually cash flow, which tracks available cash moving in and out of the business over time. Cash flow allows you to pay salaries and buy necessities to keep your practice running. Without it, a practice will fail. A mix of revenue and debt is what keeps your doors open and patients in your chair.

 

 

 

Myth #3: Debt is bad

Speaking of debt, the recent financial crisis had the side effect of making debt look risky. The truth is that risk is something that can only be assessed based on your own market, financial situation and projected revenue and cash flow. If you are thinking about starting your own practice or taking on debt to finance growth or large capital expenditures, this is a conversation that requires in-depth discussion with financial planning experts and stakeholders. Always ask yourself, “what is my intended outcome of this debt, and can this debt achieve this goal?” This leads us to myth number four…

 

 

 

 

 

 

Myth #4: If you build it, they will come

Patients have a lot of options and can find many ways to evaluate potential practices online and through their social network. Make sure you are putting your best foot forward, monitoring review sites, encouraging word of mouth and making sure patients have a great experience. Know your skills, specialties and the geographical area you are a part of, and use these parameters to build your practice around a value proposition. For example, are you root canal or cosmetic experts, do your patients demand the latest technology or are they budget conscious, etc.? Use your statement to guide business decisions, like taking on debt, and market to the community.