5 Strategies to Help Improve Financial Management at Your Dental Office

Managing finances for your dental office can be complicated, especially in an uncertain economy. Technology continues to evolve, along with the expectations of patients. In addition to caring for patients’ dental needs, it may seem overwhelming — but vital — to also manage practice finances effectively through smart dental financial management strategies.

Making a few smart moves can go a long way toward improving operational efficiency and strengthening your dental office’s financial standing. For example, maybe patients would schedule necessary care more readily if your practice offered flexible payment options. Or, your practice may be able to cut costs by negotiating more affordable prices with vendors.

Consider these five strategies that can make a positive difference in managing your dental office finances.

1. Effective Financial Planning and Evaluation

Effectively managing finances can’t be done without proper preparation. Your finance office needs a dedicated dentist financial plan for collecting and spending funds, with focused goals for continuous improvement.

Build a dentist financial plan budget  

Every business needs an operating budget. Financial planning for your dental office starts with forecasting your monthly income based on past performance and developing a budget based on those figures. Be sure to include salaries, needed supplies, building expenses and other required costs. You can choose to allocate remaining funds toward marketing, staff training, new equipment or other practice goals.

Develop KPIs for dental practice management

Key performance indicators (KPIs) are measurable values that demonstrate how effectively you’re achieving your strategic goals. KPIs are used widely in the corporate world to help teams track their progress toward important goals, provide insights into whether strategies are working and identify areas for improvement. For example, a KPI for your dental office could be a specific percentage of revenue from returning patients or of patients who schedule biannual exams.

By developing and tracking KPIs, you can ensure that your finance office is focused on the goals that are most important to the practice. You can also easily adjust your future strategy based on KPI results.

Review finances regularly

Financial management is never a “set it and forget it” undertaking. Just as your dentists are regularly continuing their dental education and adjusting their approaches or services, the practice’s finances must also be reviewed regularly. On a continual cadence, such as quarterly, review the budget, as well as current income and expense reports. Look for items that need to be adjusted or for any opportunities you may have for improvements.

2. Streamline and Automate Your Dental Office Billing and Revenue Cycle

Dental revenue cycle management is the process of ensuring that a dental practice gets paid for the care it provides, from a patient’s initial visit to final payment. The main components of the revenue cycle management process include charge capture, the coding process, claims submission, payment collection and payment processing.¹

Enhance dental revenue cycle management to improve cash flow

To keep the revenue cycle moving and money coming into the practice, it’s important to implement effective systems and processes. That means having reliable, easy-to-use processes for every step, including appointment scheduling, patient collections and insurance reimbursement.

For example, if you don’t schedule annual appointments in advance, many patients may never schedule those appointments on their own, and your practice could lose out on the accompanying revenue. Also, if it’s difficult for patients to pay their bill because your practice doesn’t offer flexible payment options, it could likely take longer to get paid.

Improve billing accuracy to strengthen dental financial management

In addition to implementing effective systems throughout the revenue cycle, dental offices should also aim for accurate billing. That requires creating invoices that precisely reflect the care and services a patient received, ensuring that the amount charged is correct and complete.

Accurate billing requires correct documentation, coding and charging, and can lead to improved financial stability for the practice.²

3. Offer Flexible Financing Options to Help Ease Cost Concerns

For patients who want or need non-covered services or who will be paying for their own dental treatment, offering a variety of financing options can help you collect faster. For example, many dental practices offer third-party financing options — such as a health and wellness credit card like CareCredit — or a loan, in-house payment plans or in-house coverage plans.

Highlight the benefits of offering flexible dental patient financing solutions

Giving patients more financing options is a win for the patient as well as your practice. Synchrony’s Dental Lifetime of Care study found that 58% of respondents believe dental care is not affordable, and 83% say they would pause on pursuing emergency dental treatment because of cost.³ However, when patients know they have options for paying for dental care over time, they may be more likely to move forward with treatment to support their oral health.

These varied payment options, including third-party options, can also help your practice minimize collection efforts. Because patient payment agreements are made with third parties, your staff may not have to worry so much about managing accounts receivable.

Compare third-party financing vs. an in-house payment plan

When determining which payment options to offer, think about the staff time and effort each one will require. For example, in-house payment plans may take more time and effort to collect the total, while your practice may receive immediate payment with third-party financing. With CareCredit, providers are paid within two business days.

Learn More: Discover how third-party financing may benefit your practice.

4. Reevaluate and Renegotiate Vendor Contracts

Another strategy to streamline financial management is to regularly review your vendor contracts and renegotiate them as needed. On at least an annual basis, take time to look through each contract and consider whether you still need the product or service, if you need to adjust the terms of your agreement or if your history with the vendor might warrant a request for renegotiation. Reevaluating and renegotiating may uncover opportunities to reduce operational costs, maximize the value of provided goods and services and potentially help improve your profit margin.

In addition to other vendors, you can also try to regularly negotiate reimbursement rates with dental insurance companies. In some cases, dental insurance companies may be willing to negotiate rates if your practice has a history of providing accurate claims with thorough documentation and if you have fostered positive, professional relationships with insurance representatives.

5. Use Automated Solutions to Streamline Financial Management in Your Dental Practice

Many of the time-consuming manual tasks traditionally associated with billing, collecting and managing accounting processes can now easily be handled with technology. If you’re still relying on spreadsheets or manual processes to track schedules, bills, claims or other pieces of your practice’s financial management puzzle, you can simplify the work by leveraging technology. Consider billing, accounting or revenue cycle management software and a robust practice management system.

Build payment and billing systems into your practice's software to optimize financial workflow

Use tools to make it easy to automate processes that would otherwise be handled manually. For example, CareCredit integrates with many practice management systems and software, which allows your team to complete CareCredit transactions right in your practice software — no need to leave your existing platform. Such integrations also enable your team to see which patients on your schedule are CareCredit cardholders or are pre-approved for the CareCredit credit card, and allows for automated transaction uploads to your ledger.

By taking advantage of the robust financial management tools available, you can help relieve your team from managing rote manual work, adding to operational efficiency and more time for serving patients and focusing on activities that can help grow your practice.

Strategies for Your Practice: Build Strong Foundations in Dental Practice Management

A dentist’s office is primarily focused on caring for patients, but without effective financial management, the practice cannot collect revenue and continue providing patient care. These five strategies can form the building blocks for strong dental practice management.

A Dental Patient Financing Solution for Your Practice

Want to help more patients move forward with the dental care they want or need? Consider offering the CareCredit credit card as a financing solution. CareCredit allows patients to pay for out-of-pocket dental care costs over time while helping enhance the payments process for your practice.

When you accept CareCredit, patients can see if they prequalify with no impact to their credit score, and those who apply, if approved, can take advantage of special financing on qualifying purchases.* Additionally, you will be paid directly within two business days.

Learn more about the CareCredit credit card as a dental patient financing solution or start the provider enrollment process by filling out this form.

Author Bio

Nancy Mann Jackson is a journalist and content writer who writes regularly about finance and healthcare. Her work has been published by AARP, CNBC, Entrepreneur and Fortune.