More than just pennies: 6 tips to dramatically cut your dental supplies overhead

January 12, 2014

Dentistry has one of the highest overheads of any profession. The rising cost of rent, equipment, lab fees, staff salaries, and numerous other costs can easily take over your bottom line. If you are an insurance-based practice, you can only raise fees so much. Being in network with an insurance company limits what you can charge.

 

I believe one of the biggest drains in overhead is right in your supply room. Most offices don’t know how to manage their supplies in a cost-effective way. The key to keeping supply costs down isn’t hard … it just takes dedication.

 

Here are some numbers that may shock you. Disposable safety glasses are great. Use them once and throw them away, right? The only problem is they cost about $1 each. If you use three per patient (doctor, assistant, and patient), you’ve just spent $3. How many patients do you see a day? For a large practice that sees 40, 50, or even more patients, that can add up to $100 or more a day!

 

Our office used to use disposable bite blocks for the X-ray sensors until I saw how much we were spending. Between our busy hygiene department and taking various PAs, I totaled the cost we spent in one year for disposables and it was well over $1,200. We now use autoclavable ones and, you know what, they work great! More money in my boss’s pocket means more money for CE, more money for bonuses, and a very happy boss!

 

“Pennies,” you think? Those pennies add up. I’ve named only two products that were costing our office a lot of money. Many professionals claim the average overhead in dentistry for supply cost only is about 7%. That seems fair, but with a little planning, you can cut that to 4 or even 3%. Knowing what to do isn’t hard, but you must have a dedicated person keeping an eye on those supplies. Here are six tips to help you save money.

 

Set a budget

Look to see what percentage you have spent on average over the last 12 months in supplies, then take your average monthly production and come up with a budget for supplies that makes you comfortable. If you were at 7%, then shoot for 6 or even 5%. If you were at 6%, go for 4! Last month, with more than $150,000 in production, we were able to keep our supply cost just under 3%.

 

Ask about free goods from manufacturers

Don’t forget this. It’s huge! Your sales reps are there to help you. If they don’t help you out with free goods, then it’s time to find a new rep! Manufacturers offer them so take advantage of them. Again, they add up!

 

Only order what you need for the month

This is the part that many people don’t get. With a monthly budget, it truly does me no good to have a lot of inventory on the shelf. I don’t like running out of anything and I try to order twice a month so I can split up my budget. This is the part where you have to be very dedicated. Watch what you order in bulk. Too much inventory on our shelves is money sitting around. We go through certain things like suction tips, 3 way tips, and prophy angles, so they are always ordered in bulk. But many things don’t get used as often, so hold off on ordering so much. It may take you a few months to get the hang of it, but try it!

 

Take a good look at what you are ordering

Talk to your supply rep. I have often sat down to go through products we frequently order and come up with some alternatives. Many times, we find products we actually like better … like the gauze I just found that is saving us $11.53 a case! I’m also a negotiator. I find a fair price and ask my rep to match it. Sometimes it’s in free goods and sometimes it’s in cost savings. Many dental supply companies offer a “savings plan” as well. If you purchase mainly through one company, it should offer some sort of savings in addition to what it already offers. It never hurts to ask.

 

Eliminate those finance charges

One of the most overlooked and biggest wastes of money are the finance charges you pay on supplies when not paid on time. Statements going out 30/60/90 days will rack up some pretty hefty charges (around 18% on average). Let’s face it, if your balance is sitting there on the books, then even if you keep the cost at 4%, it’s really a lot more than that after all those finance charges. Try looking at what you paid last year in finance charges … it’s not pretty! Keep your supply cost down so you can pay it off monthly and save those extra charges.

 

Don’t make “the big mistake.”

Go into your operatory and look to see what “extra” supplies your assistant has stashed in there. When you keep extra supplies in the operatories, it gives you a false sense of what you have on hand in the supply room. Since you don’t want to keep a huge inventory, it’s money just sitting there. For instance, we have six operatories. If all six of those operatories have two or three boxes of “extra” gloves (not what is open and in use) stashed in them and my supply room is empty, I may think we need a lot more than I would normally order. This all depends on how busy your practice is and how often you go through supplies. Keeping all supplies in one location can help you get a better handle on how much you need to order and keep on hand.

 

“Pennies,” you’re still thinking? Go ahead and keep thinking that. Take a long, hard look at your supplies, what’s on the shelf, how much you’re spending, and then look into what you can save. Those “pennies” could be in your pocket.