Top Tips to Reduce the Costs of Owning a Dental Practice

Running a dental practice comes with its fair share of challenges, especially as the costs of owning a dental practice continue to rise.

With the planned increase in the National Living Wage, changes in employers' National Insurance, and the ongoing inflation in operational costs, dental practice owners have to stay vigilant and find ways to cut the costs.

But how can you keep costs down without compromising the quality of care you provide? Let’s explore some actionable strategies.

1. Know Your Practice Valuation: The Key to Long-Term Success

Have you ever stopped to consider how rising costs might affect your practice valuation? This is the first step to understanding where you stand financially and what you can do to protect your investment.

Many dental practice owners focus on turnover, assuming that a growing revenue equates to a successful business. But here’s the catch - valuations aren’t just about top-line numbers. They focus heavily on profitability, which is where cost management becomes essential.

Why is this important? If you’re planning to sell your practice in the next few years, the impact of rising costs (like staffing and operational expenses) will directly affect your valuation. So, getting a professional valuation now can give you a clear picture of how to adjust your costs to preserve - or even increase - the value of your practice.

2. Streamline Staffing Costs

Staffing is one of the largest expenses for any dental practice, and getting this balance right is critical. While employees are invaluable assets, overstaffing or inefficient staffing can significantly impact your bottom line - and your practice’s valuation.

Review staffing levels: Are you overstaffed due to historical recruitment challenges? Are you paying fair wages, but also mindful of not overspending?
Clinician-to-nurse ratios: Make sure you’re maximising each staff member’s time. Could some roles be combined or adjusted to improve efficiency?
Be strategic about replacements: When a staff member leaves, take the time to assess whether a replacement is necessary or if adjustments to workload can be made.

Align your staffing levels with the industry standards to maintain both the effectiveness of your team and the profitability of your practice.

3. Maximise Your Chair Time

This one’s a no-brainer: the more efficient your clinicians are, the more revenue you generate without increasing costs. It’s essential to look at the utilisation of all team members, especially hygienists, who are often underutilised when paid on an hourly rate.

Is their chair time being maximised?

Are hygienists fully booked, or are there gaps in their schedules?

Could you optimise the way associates are remunerated, especially for large capitation schemes where there may be duplication of costs to both the associate and hygienist?

Reviewing clinician productivity regularly can uncover hidden inefficiencies that might be eating into your profits.

4. Reevaluate Your Marketing Spend

Is your marketing budget working as hard as it should be? In today’s digital age, it's easy to pour money into various marketing channels, but how do you know what’s delivering real value?

The answer is simple: evaluate the effectiveness.

Audit your current strategy: Are you seeing the results you expected from your marketing spend?
Analyse patient acquisition: Is your marketing driving the right kind of patients - those who align with your business goals and are likely to stay loyal to your practice?
Reduce unnecessary spend: If your marketing efforts are not producing a high return on investment (ROI), consider cutting back on areas that aren't contributing significantly.

A well-targeted marketing strategy can help drive growth while keeping your costs under control.

5. Consider Small Price Adjustments

As costs rise, many practices pass some of those increases on to their patients. However, it's important to do this cautiously and strategically.

Incremental price increases: A small, gradual increase in treatment fees or plan prices is less likely to shock your patients and can help keep the business profitable.
Strategic pricing: Instead of blanket increases, focus on areas that make sense - for example, premium services or treatments with high margins.

If you’re transitioning from NHS to private care, consider alternatives to price hikes. Growing your patient base or offering new services could be more effective ways to boost profitability.

What Does the Future Look Like for Your Dental Practice?

The reality is that as costs continue to climb, you must become more strategic about how you run your practice. Regular evaluations, from understanding your practice’s valuation to scrutinising every expense, will help you identify areas for improvement before they negatively impact your profitability.

Whether you're looking to sell your practice in the near future or simply want to ensure its long-term success, taking proactive steps now can safeguard your investment. After all, managing your practice’s costs effectively isn’t just about surviving; it’s about thriving.

Ready to take control of your practice's financial future? Start with a professional valuation and work from there.