Every business in America is feeling the wage pinch right now, and private practices are feeling the brunt. While large corporation happily pass these wage increases onto their customers by raising prices, increasing volume, & reinvesting in more efficient processes, many practices aren’t. Let’s talk about a couple simple things every practice can do to fight the wage squeeze.
1. Increase fees: Let’s say you were paying your assistants $22/ hr pre pandemic and that’s ballooned to $25/hr now. $3/ hr increase equates to a 14%. Since labor is your largest overhead category, it seems silly to not increase your fees at least 3-5% each year. In fact, it’s still a loss, but does soften the blow. Do this every single year, even if you are primarily insurance driven. It can help with contract negotiations or help position you to drop lower contracts if you can offset the volume loss with higher paying quality patients.
2. Adjust goals, be transparent: Your collections and profit goals are derived from your overhead and personal needs. We call this your “Goals-Based Breakeven”. As your costs rise, so should your Goals-Based Breakeven. Goals should also be clearly communicated to staff in annual, monthly, and daily terms, as they serve as everyone’s “north star” guiding success. Always think about raises/ hires in terms of monthly costs and recalculate new goals. Let’s say you need to give raises totaling $3k/ mo and your target labor is 30%. Take the monthly increase ($3k), divide it by the target labor (30%) and you’ve calculated the increase in your monthly collection goals (+$10k). Are those staffing decisions worth having to produce $10k more per month? This math exercise alone can help you answer some tough questions. Share this information with key staff and put them in the yoke with you. It will force some resourcefulness if the new goal in unreasonable. Especially if their bonus is tied with said goal.
3. Offer a bonus: Fighting higher wages with more wages might seem counterintuitive. But if the bonus is designed with the practice’s goals in mind, then it can broker a win-win partnership between you and the staff. Let’s say, for example, a hygienist wants a $3/ hr raise and they’re receiving a bonus based on them producing 3x their daily rate. This would then increase their production requirement by $72/ day ($3 x # of hrs x 3 multiplier). Fine, take the raise, but here are the new results we expect accordingly. If they hit the new numbers, who cares if you’re paying them more - you’ve offset the cost with higher revenues.It also helps to review your non-monetary rewards.
The workforce places more value on non-monetary incentives than ever before, and this trend will only continue with younger staff. What are you offering that other offices are not? It could be flexibility options, training, coaching, access to personal enrichment/ wellness programs, team outings, or an annual trip/ getaway if the practice hits the annual goal. Whatever is unique to you and your staff, make sure their experience is more than a 9-to-5 job.
Remember that you and your staff are in this together, and your success in inextricably linked with theirs. Ideally, they want your practice to thrive just
Wes knows what's best for dental practices. He's been doing this for a long time and he sees lots of practices. He can tell me how our practice is doing, and what we can do to increase our productivity. With past CPA's, there were no ideas. It was all coming from me, saying "I think I can do better, but I don't know how." I come in to meet with Wes and he says "You CAN do better, and I know how."
PracticeCFO is in hundreds of dental offices around the country. They know what numbers should look like. They know what percentages of payroll, rent and supplies should be, and they will hold you accountable to those numbers, which will really help you stick to your plan and your path of growth and savings. That is invaluable
Whenever something comes up, whether it's building or practice related and we weren't sure where the numbers would go, PracticeCFO has been instrumental in helping us figure that out. I can't say enough of how important that is - that it goes beyond that initial partnership. They make sure this business marriage works.
When I go home from work, I don't spend a whole lot of time stressing about what my books look like, or how much I owe in taxes. By using PracticeCFO, the burden of keeping track of a lot of the big financial numbers and metrics are taken off my plate.
PracticeCFO helped me develop a plan for the future. I have colleagues that work with other accountants that don't have a plan - they just look at the numbers of the practice and that's it. There's no plan for 10, 20 years from now. But with PracticeCFO, you get that. PracticeCFO makes you feel like you're they're only client.
(In reference to his practice sale) What could've been super stressful, wasn't! When picking John and Wes, it was from word of mouth recommendations and other people's experiences from the past that really did it for me. And it turns out that those recommendations were right on the line.
Wes knows the business side of dentistry. His comprehensive plan will organize your personal and professional finances so you can focus on taking care of patients. Massive ROI.
I can’t say enough good things about everyone at PracticeCFO. Everyone on the team is professional, organized, knowledgeable, helpful and kind. They also respond to emails and phone calls immediately and are always happy to help. They have helped me navigate year-to-year as a business owner. PracticeCFO gives me peace of mind that my business is in good hands.
I love Practice CFO! They have helped me obtain a practice and maintain a practice. They are incredible people who are on top of everything and make owning and running the business portion of a practice easy. They couldn’t be better for my business and my sanity. They have every detail of the business and taxes taken care of where all I have to do is show up and follow their easy steps to success!
Practice CFO has the best tools I’ve seen for personal tax and financial planning in addition to top-tier corporate tax and accounting services. I have been very pleased with the level of quality service. They manage my monthly bookkeeping and accounts payable. It is a great system and saves me a ton of time, and it allows us to have monthly financial statements within a week of month end.