Reducing your practice costs


With the GDS contract under review, Units of Dental Activity prices static and patient reluctance to take up regular appointments due to their own financial constraints, many practices are fighting to prevent a serious drop in profits this year. Practices are struggling to sustain profits on static income and therefore, now more than ever, it is time for practice managers to explore new income streams and tighten up spending to a level that will enable increased profitability, but not compromise quality of care.


When looking at new income streams /services, consider firstly the costs to ensure services are profitable. Time should be an area of careful consideration and ensuring the availability of practice and staff time to deliver the services is feasible (overtime costs). Resources are also a key consideration; ensure the resources are available to provide the service as this can lead to additional costs if you need to invest in extra materials.


Medical expenses need to be well maintained as these are a significant and essential cost. Practices should shop around for best prices or discounts on laboratory fees and medical supplies. Communicate with other practice managers and look at using buying groups. Keep a record of medical supplies and stocks to prevent over purchasing.


Staff costs are the biggest expense but are also a practice’s biggest asset. Practices should have a good staff mix and ensure that staff skills are being utilised effectively to improve efficiency.  Try to reduce overtime costs where possible with use of part time staff and keep on top of staff training needs to ensure your staff work to the best of their abilities.


Premises costs are a necessary cost and should be kept as low as possible. Heat and light costs are not going to go down any time soon and therefore practices need to ensure they are getting the best price for gas and electricity and should be looking at possibly changing suppliers for more favourable rates. Practices can reduce their premises costs at a more hands on level by switching off appliances and using energy saving light bulbs and other energy saving equipment, such as solar panels.


Administration costs have also been another big area of increase over the past few years. Some commodities which have seen a noticeable rise in costs are toner cartridges and postage prices. Practices should consider using a log of toner cartridges stock to ensure usage is accounted for. Stock should be allocated to a specific printer and usage monitored.


Make a practice commitment to embrace technology. This will improve efficiency, free up staff time and make activities cheaper and easier. Consider modernising systems of communication, for example the use of emails and reducing telephone and postage costs.


Always remember there is a limit to how much costs can be cut before it starts a downward spiral effect on the business. Look to ensure you are getting the best value out of essential expenditure.


There is no magic wand to improve practice profitability or to find new income streams to replace lost ones. However, ignoring the problem and taking no action is definitely not the answer. Instead, review where you are now, look at what you want to achieve, and make some small steps to help keep you moving in the right direction.


For more information on reducing practice costs, please do not hesitate to contact me.


Catherine Hough, Healthcare services accountant, 01253 404404,