by Discover how strategic moves by SohDental transformed their financial margins and learn how to apply these insights to your dental practice.
Improving margins is essential for every dental entrepreneur seeking sustainable success. But what if the secret to boosting your dental practice’s profitability lies in a few strategic adjustments? Dr. Samson Liu, CEO of SohDental, has done just that. Through his recent DEO presentation, Dr. Liu shared how his organization enhanced their margins using key strategies that any dental owner or leader can implement. Are you ready to transform your practice’s financial health? Let’s dive in.
1. Mastering Insurance Negotiations
What’s the first step to increasing revenue? According to Dr. Liu, it’s mastering insurance negotiations. This means more than just agreeing to terms – it’s about playing the long game with analytics and persistence.
- Analyze UCR Fees: Check that your usual, customary, and reasonable (UCR) fees are competitive in your market. This step is crucial to leveraging higher reimbursement rates.
- Submit Full Fees: Always submit the full fee when filing claims to push for better reimbursements.
- Direct Contracts vs. Networks: For larger DSOs, consider negotiating direct contracts with insurers. Direct arrangements often yield better returns than network agreements.
- Focus on Key Codes: Pinpoint the top 20 revenue-generating codes and focus your negotiations here.
- Be Persistent: Negotiation isn’t a one-and-done deal. Dr. Liu emphasizes persistence, noting that his team doesn’t back down until they achieve their goals.
Imagine taking these actions at your own practice. How much more could you be bringing in by negotiating smarter?
2. Lowering Supply Costs Without Compromising Quality
The second area where SohDental saw significant margin improvement was in supply cost reduction. Here’s the system they used:
- Bulk Purchasing: Volume speaks. By committing to larger orders, SohDental secured better prices from suppliers.
- Manufacturer Direct Negotiations: Cut out the middleman. By negotiating directly with manufacturers, they gained more transparency and better pricing.
- Standardize Supplies: One key to reducing costs was standardizing supplies across all locations, allowing SohDental to take advantage of economies of scale.
- Monitor Budgets: They set a monthly supply budget and monitored it closely. This budget, based on a percentage of collections, ensured they stayed on track.
As a dental leader, consider how streamlining your inventory or negotiating directly with manufacturers could benefit your margins.
3. Optimizing Labor Costs
Labor costs are a massive expense in any dental practice. Here’s how SohDental made their team more cost-efficient:
- Centralize Billing: By moving revenue cycle management from individual offices to a centralized location, SohDental reduced duplicative roles and increased efficiency.
- Leverage Technology: They used platforms like AirPay to automate tasks such as insurance verification, saving both time and labor costs.
- Flexible Staffing Models: Tailoring staff numbers to actual patient demand prevents overstaffing and ensures efficient service delivery.
- Continuous Training: By investing in ongoing training, SohDental’s team became more productive, handling higher patient volumes without the need to increase headcount.
Are you maximizing your team’s efficiency? Think about the impact of centralizing tasks or automating processes at your dental practice.
4. Tracking the Right Metrics
Finally, success is nothing without measurement. SohDental monitors several key performance indicators (KPIs) to ensure these strategies continue to drive profitability:
- Net Revenue: Regularly track your collections.
- COGS (Cost of Goods Sold): Keep supply costs in check as a percentage of revenue.
- Gross Profit & Net Operating Income: These are essential for understanding overall efficiency.
- EBITDA: This metric gives you a clear view of your practice’s financial health.
As a dental owner, do you have a system in place to monitor these vital KPIs? Tracking them is the key to staying profitable.
Dr. Liu’s strategic moves offer a blueprint for any dental entrepreneur aiming to enhance margins. Whether you focus on insurance negotiations, supply chain efficiency, or labor costs, the message is clear: relentless pursuit of operational improvement is what turns a fragile dental practice into a thriving, profitable organization.
