Getting overhead costs under control Skip to main content

Getting overhead costs under control

Higher than average overhead costs can cut into your earnings and make it difficult to upgrade equipment, purchase new technology, invest in marketing or save for the future.

If you suspect overhead costs are too high at your practice but can’t seem to find the leak, here are five areas to investigate and solutions for reining in any unnecessary expenditures.

You’ve hired too much

Finding the perfect equilibrium for staff size versus payroll is not easy. Running your practice shorthanded is a recipe for disaster and bad for morale. But if you’ve got two people doing the job of one, it might be time to make some hard decisions and trim your staff.

Raises are not fully earned

Pay raises should be reserved for employees who boost their value to your practice, for example, learning new skills or becoming more efficient. When you give a raise to every employee at every annual review, regardless of performance, you may disincentivize your team. Most businesses cannot afford to increase payroll without an improvement in productivity.

Rethink lab fees

Local labs have been the norm for a long time and there are advantages to having your lab nearby but if you need to cut costs while maintaining quality, a national lab might be a solution.

Talk to your suppliers

If you’ve been loyal to certain suppliers, it may be time to ask for their help in lowering costs. A number of strategies exist to cut costs without lowering prices. There are costs associated with product returns, holding overstocked items and more. A quality distributor will guide you through the implementation of a better tracking system and help you take advantage of special offers, credit for supplier issues and so on.

Consider joining a buying group

With the rise of large dental care providers, it can become harder for individual private practices to leverage suppliers for better prices. You can improve your purchasing power by joining a buying group. It’s generally good practice to only sign up with a buying group that uses suppliers and distributors you know and trust.

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