You already know that quality supplies are a fundamental part of any well-run dental practice. But, even though you need to spend money on supplies to care for your patients, you don’t need to spend more than is necessary. You can save money on supplies without giving up quality.
This chapter covers tips for saving money on supply purchases and recommends ways to maintain your stock. If you need an efficient online tool for comparing prices and ordering dental supplies, let us know.
How Much Do Dentist Offices Spend on Supplies?
The national average overhead for dental offices is around 65%. So, if an office collects $1 million a year, $650,000 goes toward overhead costs. Ideally, a dental practice will spend 4% to 6% of its overhead on supplies. For an office that spends $650,000 on overhead, that comes out to be $26,000 to $39,000 a year.
Many dental practices don’t meet the ideal benchmark. According to an Aldrich report, the average single dental practice spends 7.2% of collections on supplies. For a practice making $1 million, that’s $72,000 on supplies — and that’s more than it needs to be.
Tips for Saving on Dental Supplies
If your office spends more than 6% of revenue on supplies, it’s time to think about ways to save. Saving on supplies puts real money back into your pocket so you can invest in other things, like a well-earned vacation.
Here are tips to help you save on dental supplies and stay within that 4% to 6% range:
- Review your budget and spending history: Look over your budget and how much you actually spend on supplies, so you can set goals and make changes where necessary. For example, maybe you’ll realize that you’re spending more on gloves than you need to or ordered too many supplies for a procedure you rarely perform. Look for any issues in your spending habits and areas you can cut. Aim to review your budget monthly or quarterly.
- Improve your purchasing system: What method do you use to order supplies? Does it consist of phone calls, emails and impromptu meetings with sales reps? It might be time for an upgrade. By transforming your procurement process into a more efficient operation, you could potentially save thousands of dollars a year.
- Use dental-specific software: For the greatest return on your software investment, choose a solution that’s designed specifically for dental practices. Dental-specific purchasing software is tailored to meet the needs of dental practices and can help you overcome unique challenges — like spending too much on supplies. With this software, you can compare real-time prices between competing vendors and accelerate the request-approve process.
- Buy what you need for the month: It’s good to be prepared by always having the essentials on hand. However, ordering too much can be problematic for a few reasons. First, you’ll spend more money than you need to by ordering the wrong amount of supplies. Also, excess inventory creates a cluttered closet, which takes more time to manage. Lastly, some of these items might expire if they can’t get used in time. To avoid these problems, watch how much you actually use and strive to order only what you need for the month.
- Follow the 80-20 rule: One way to ensure you only buy what you need is to follow the 80-20 rule. The 80-20 rule says that 80% of results come from 20% of causes. If you apply this idea to dental supplies, you’d say dentists use 20% of supplies 80% of the time. Consider what you use 80% of the time and focus on only ordering those items in volume.
- Make sure employees want to save: Who’s in charge of ordering your supplies? Ensure this person wants to look for ways to save money and understands the impact of excess inventory. You might offer the employee an incentive to save by rewarding them for keeping supply costs under a certain percentage.
- Search for hidden supplies: Check the operatories in your practice and look for stashed-away supplies. Did you discover that staff members are hoarding gloves, prophy angles or other items? If so, you may want to hold a meeting about inventory management. When staff store too many supplies in the operatories, it leads to an empty supply room and the false assumption that it’s time to reorder supplies.
- Avoid urgent orders: Although you don’t want to keep too much on hand, it’s also a bad idea to have too little. If you notice you’ve hit your reorder mark on a supply, don’t wait to take action. Give yourself enough time to buy what you need so you can avoid expedited shipping fees.
- Negotiate with suppliers: You probably didn’t become a dentist to negotiate with your suppliers. Still, negotiation should be part of the job if you want the best deals on supplies, and it doesn’t have to take too much effort. For example, with Method purchasing software, you can easily request quotes from multiple suppliers, compare prices and ask for a price match. The software also keeps a record of your communication with suppliers to hold them to the negotiated price.
- Try products first: Before you invest in a new product, request a sample and try it first. Ask staff to test the new product as well and give their feedback. After you and your team try the product, consider if it’s something you need. Any new items you order should have benefits for your practice and patients.
- Take inventory management seriously: Implement an inventory management system that allows you to monitor stock levels and track purchases easily. A solid inventory management system can help you understand factors that affect costs, such as restocking fees and shipping charges. It will also help you reduce waste and identify theft.
- Match items to invoices: Whenever you receive an order, make sure you check that the invoice matches the box’s contents. That way, you’ll notice if items are missing, and you can contact the supplier and avoid paying for items you did not receive.
- Think about reusability: Look at your inventory and consider if it makes sense to buy reusable items rather than disposable supplies. Some items cannot be cleaned effectively in an ultrasonic cleaner or sterilized effectively in an autoclave, but other supplies can be reused and save you money as a result. The product’s manufacturer should indicate whether an item is sterilizable on the package.
- Consider durability: Before buying the least expensive product, consider how long it’ll last and if it’s worth spending more on a higher quality item. The cheapest brand is not the least expensive option if you’ll need to replace the product repeatedly. However, some items, like cotton rolls, are acceptable to buy at a bargain price. For supplies used in diagnosing and treating patients, opt for quality and save more in the end.
What Is Considered the Largest Expense for a Single Dental Office?
Employee wages are the largest expense in a dental office and typically take up 18% to 24% of a practice’s annual income. One way to decrease your practice’s labor costs is to implement an efficient procurement process.
With a streamlined purchasing system in place, employees will spend less time ordering and receiving supplies. This means you won’t have to pay overtime or add more hours to an employee’s schedule when you need to restock. Add an easy-to-use inventory management system to the picture, and you’ll decrease duplicate orders and time wasted maintaining excess stock.
An efficient and simple purchasing process can also keep you from having to hire more staff. And, it’ll be easy to cross-train the employees you already have on different purchasing tasks.
How Do You Budget a Dental Office?
Dental supplies are just a fraction of the costs required to run a successful dental practice. It’s essential to understand all of your overhead expenses and create a budget your entire team can stick to.
What is a dental office budget? A budget is a plan that will help you manage your practice’s finances. It involves setting goals and tracking your spending to ensure you make a profit that you’re happy with.
To create a budget for your office, take these steps:
1. Look at Past Records
The first step to creating any budget is to know where you currently stand. Gather your past year’s financial records and list every operating expenditure, including money spent on supplies and rent.
2. Calculate Costs
Add up all of last year’s expenses and compare the total to your revenue. For example, if your office spent $600,000 on operating expenses and generated $900,000, your office has an overhead cost of about 67%.
Compare your overhead to the national average to see how well your practice is doing. A healthy operation should have an overhead of 65% or less.
You can use the following benchmarks provided by Pediatric Dentistry Today to compare individual percentages:
- Miscellaneous, like advertising and business insurance: 4% to 6% of overhead
- Dental supplies: 4% to 6% of overhead
- Facility costs, such as rent and utilities: 8% to 10% of overhead
- Office expenses: 3% of overhead
- Professional advisors: 2% to 4% of overhead
4. Set a Goal
How does your practice compare to the recommended benchmarks? If you found some problem areas, you can set a new percentage as a goal. For example, if you discovered that 9% of your overhead went to supplies, you might set a goal to spend no more than 7% of overhead on supplies.
5. Cut Where You Can
Look at your list of expenses and think about costs you can cut to reach your new goal, whether you’re trying to reduce your overall overhead or an individual expense. If you’re trying to reduce supply costs, look at your inventory and purchasing records and consider where you can decrease spending.
Periodically look at your budget and see if you’re moving toward your goal, and make adjustments as needed. Be sure to get your team involved and ask for their feedback. Your staff could cause you to re-think cutting back on certain expenses or help you find areas you can cut that you overlooked.
7. Stick to It
The point of any budget is to stick to it — if you want to see results. This means fighting the urge to buy unnecessary supplies, equipment or services. Depending on your goals and needs, it may also mean resisting hiring more staff.
Another vital part of adhering to your budget is your commitment to tracking spending. Talk to your staff about the importance of keeping complete records so everyone’s on the same page. Method’s software can help you and your employees stick to your budget and meet your target with inventory management and procurement capabilities.
What Is the Best Way to Store Dental Supplies?
Properly storing and maintaining your supplies is crucial to reducing waste and staying within your supply budget. A clean, well-organized supply closet also allows staff to work more efficiently, which can help you save on labor costs. Also, when employees work faster and better, you’ll keep patients beaming and more likely to return.
Follow these tips to keep your supplies in top shape:
- Label supplies: When it comes to labeling your supplies, you’ll want to follow a procedure similar to the stock-keeping unit system used in retail. Label all supplies with locator numbers and product descriptions. Make sure items are also stored in labeled tubs. That way, when an assistant has to set up a treatment room, they’ll know exactly where to find the supplies they need. Labels also help staff members restock the supply room without wasting time.
- Keep supplies clean and organized: When you keep a clean, uncluttered supply room, you make it easier for staff to do their jobs. You also decrease the chance that a patient will spot a messy supply closest and cancel their next appointment. Strive to keep every area of your office tidy so that you can project professionalism.
- Create identical rooms: Make sure each treatment room is set up exactly the same. When rooms are identical, staff can quickly determine if they need to restock an item. Team members can also have an easier time using different rooms if everything’s located in the same place.
- Ensure supplies are accessible: Supplies must be easy to access to keep productivity high, both in storage closets and treatment rooms. Consider storing essential supplies like wipes, tissues and chair barriers in an easy-to-reach cabinet within operatories. The goal is to reduce the amount of steps staff need to take, which will aid productivity and lower stress levels.
- Keep supply closets stocked with the items you need: To maintain workplace efficiency, it’s also essential to make sure you always have what you need in stock. Be sure to check your inventory routinely to see what you have on hand and predict future needs. An efficient supply ordering system allows you to submit an order before supplies run out.
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