The supply costs for a healthy practice should be between 4% and 6% of the total overhead. Here are seven reasons why your supply percentage is too high.
1) You’re paying too much! Sounds pretty simple, but it is the No. 1 reason supply bills are too high. If you can buy the same product at a lower price, why wouldn’t you? Why is it so many offices blindly buy from the large supply houses without ever shopping for a better deal? I ask this in offices I coach and I usually get the same answer, “Because that’s the way we’ve always done it.” It does take time and effort to shop, but there is an easier way. Look into a Group Purchasing Organization (GPO) such as Synergy Dental Partners. They have the ability and negotiating power that an economy of scale provides to deliver the lowest price. If there are two gas stations side by side and one is charging 2 cents less for a gallon of gas, why would buy from the higher priced one?
2) You're buying too much. There is a stockpile of supplies that will most likely go out of date before they are used. You do not need 10 cases of impression material clogging your shelves just because your rep told you their company is running a special. Who knows? Version 2.0 may be coming out soon and you may want to try it, but you’re saddled with two years of version 1.0. Implement an inventory control system so that your purchasing is lean and your stock is adequate, not excessive.
4) Have one, and only one, person in charge of ordering. Too many people calling and ordering is a surefire way to run up the supply bill. The attitude may be that nobody is accountable, so it doesn’t really matter if the office orders five cases of patient napkins two days in a row. Set up an incentive program for the ordering coordinator that rewards him or her for keeping the percentage below a target number.
5) You are changing too many bibs! This means you’re seeing a lot of patients but are not being terribly productive. Remember, we are talking about a supply percentage, not gross cost.The more dentistry you do per visit, the lower your percentage will be. The cotton rolls, 2x2’s, chair covers, and other materials cost the same whether you do a prophy or two quadrants of scaling and root planing. The impression material costs the same whether you do one crown or both teeth that need done in the same quadrant. Do as much treatment as possible during each visit. This is especially effective if you think comprehensively. Nothing reduces your supply percentage more than high production procedures. Improve your case acceptance and you will improve your supply percentage.
6) Scrutinize each and every supply invoice. Who has time for that? I say make time! Far too many dentists look at the supply charge on the credit card, shrug their shoulders, and move on. Is somebody stealing from you? Who the heck would steal dental supplies? You’d be surprised. I’ve never seen anybody order a case of bite registration material for home use, but I have seen a staff member order Allopurinol to take home to treat her father’s gout! Have you ever looked at what is available in the catalogs? Office supplies, cleaning supplies, and many other things that are not dental specific but will be billed under the name of the supply house. If there is free and easy access to a credit card number and no watchful eye, the temptation can be overwhelming. Nobody ever really thinks it could happen to them. This is what the neighbors always say when the local news interviews them about the “normal” neighbor down the street who just committed some unspeakable act. Don’t be paranoid, but be diligent in making sure you know what you’re buying.
7) You might be including non-dental products in the “dental supply” category. I see this frequently. Office supplies are frequently mischaracterized as dental supplies, especially if you buy them from the same supplier as your true dental supplies. Office supplies are lumped together on the same invoice, and the entire amount is placed in the supply column. Another big driver of an increased supply percentage is implant parts. Abutments, screws, transfer copings, analogs, etc. are expensive and should be categorized as a lab cost. The 42 screwdrivers and 12 wrenches you have rattling around in a plastic Tupperware container should be recorded as equipment.
Look over these seven reasons and determine why your supply percentage is too high.
This article first appeared in DE's Expert Tips & Tricks. To receive enlightening and helpful practice management articles in this e-newsletter twice a month, visit dentistryiq.com/subscribe.