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Revenue Growth Does Not Equal Practice Growth

Dental Practice Growth - Dental CPA

Instead of looking for more patients to cover the difference, give yourself permission to starting thinking about your practice from a much smaller scale. Get rid of the extra baggage that’s holding you down. Revenue doesn’t mean a whole lot unless you have the cash to back it up. To that point, it may be time to stop accepting patients who aren’t prompt when it’s time to pay their bills. Instead, be more selective when choosing which patients you will see.

We know a lot of dental professionals who like to spend their free time enjoying the outdoors when they are not seeing patients, which is why it may be helpful to bring some of the lessons you learn on the trail into the office. Take the growth of your dental practice, for example. It’s easy to get trapped into believing that you have to take on more patients to be more successful. But, if you’re not careful, more patients can actually hinder your growth in the long run.

Stay Out Of The Rocks

Have you ever been white water rafting? When the water is high, you glide effortlessly through the river, expertly navigating the bends and slicing through the current – it’s exhilarating. Flash forward a few months later, after the water level has dropped, and it’s a completely different story. Where it was once smooth sailing, you are now confronted with a scattering of rocks, boulders, logs and branches. Your ability to progress through the course takes a hit.

Your revenue is like the water level in this example. When it’s high, it hides a lot; but when it’s low, problems begin to reveal themselves. Unfortunately, some dental professionals believe that the best way to fix their problems is to add more revenue. What they don’t realize is that this tactic is simply masking the real problem.

If you want really want a financially healthy practice, you can’t rely on revenue growth to solve your problems.

Healthy dental practices are ones that are able to generate healthy cash flow. One way to do this is to tighten up your billing strategy. Oftentimes, business owners will only focus on their monthly revenue and forget to consider how long it actually takes for the money to roll in. Even though your practice’s revenue looks great for the month of July, it could be September (or later) before you actually get paid. In the meantime, you are stuck playing the waiting game.

Instead of looking for more patients to cover the difference, give yourself permission to starting thinking about your practice from a much smaller scale. Get rid of the extra baggage that’s holding you down. Revenue doesn’t mean a whole lot unless you have the cash to back it up. To that point, it may be time to stop accepting patients who aren’t prompt when it’s time to pay their bills. Instead, be more selective when choosing which patients you will see.

What’s Holding You Back?

It can be a lot of work to identify what’s holding you back and sometimes you need to look at your practice from a different perspective, some dental professionals find great success simply asking for help from an outsider. There is no one-size-fits all solution. The best way to take control of your business is to work with a trusted advisor.

A great place to start is by listening to Episode 10: The Revenue Sin from Unsuitable on Rea Radio to learn more about business health and what you can do to strengthen your cash flow. When you are done, you are welcome to click here for additional resources.

Do you have a question you would like us to address on Unsuitable? Send it to podcast@reacpa.com and let us know what issues are challenging your business. We could feature your question on an upcoming episode of Unsuitable or in a blog post.

You can also email your Bright Dental CPA for assistance or to learn more about how you can increase your dental practice revenue.

By Brad Martyn, Founder & CEO, FocusCFO

Looking for more ways to improve your business? Check out these articles:

Put Together An Amazing Dental Advisory Team

What To Expect From Your Career In Dentistry

Buying An Established Dental Practice? Master The Changeover

Don’t Let Obamacare Take Down Your Dental Practice

Obamacare - Ohio CPA Firm

Learn more about ways to avoid Affordable Care Act penalties by listening to our podcast, “Unsuitable on Rea Radio.” Episode 5, “Don’t Get Burned By Obamacare.”

For business owners, keeping up with Affordable Care Act (ACA) regulations has been about as much fun as receiving a root canal – and it’s not likely to get more pleasant any

time soon. However, after a close examination, you may be able to uncover areas of opportunity. (Or at least options that will help you avoid paying steep penalties. Here are three tips all dental professionals should know.

  1. Large dental practices (those with 50 or more full-time employees) have to worry about large employer reporting and potential pay or play penalties (which could add up to roughly $2,000 per employee annually).
  2. All employers need to avoid excise taxes for discrimination and violating the ACA’s “all or nothing” mandate. WARNING: These are business busters that could cost you $100 per employee, per day for noncompliance. This means that you could owe the government as much as $36,500 per employee, per year! Excise taxes can be triggered by continuing to do things you’ve always done, such as offering reimbursement arrangements to your employees.
  3. Dental practices also have the opportunity to review their insurance options and compensation structure. SHOP, drop, roll (“traditional” insurance), self-insure, private exchange and models like reference-based pricing are all options to explore. In some cases, dropping insurance can actually result in less expenses and improved benefits for the employers and employees alike.

Don’t wait any longer. Work with an ACA expert who can help you determine the best option for your practice while helping you identify areas of opportunity and risk. For more Obamacare insight, listen to Episode 5: Don’t Get Burned By Obamacare on Unsuitable on Rea Radio – a podcast for entrepreneurs who are ready to trade in the business suit culture for measurable results.

Want to talk to an ACA expert before the penalties start piling up? Email a Bright Dental CPA today.

By: Joseph Popp, JD, LLM (Columbus office)

This article was published in the November 2015 issue of Columbus Business First – Ask The Expert.

Want to read more topics related to health care and your dental practice? Check these out:

How To Get a Tax Credit for Health Insurance Costs

Are Your Employees Aware of the Benefits?

10 Year-End Tax Planning Strategies for Dentists

Rea & Associates, Inc. | Bright Dental CPAs | 7201 Center St, Mentor, Ohio 44060-4858
phone + 440-266-0077