The Financial Backbone of a Successful Dental Practice: Why Accounting Matters
As a dental office, we understand the importance of providing our patients with quality oral health care services. However, running a successful dental practice is not just about providing excellent dental care. Establishing a well-managed business that includes an excellent accounting service is also essential.
Importance of the Accounting System
One of the most important benefits of having an accounting system in place is that we can accurately track our expenses and revenues. This helps us understand where our money is coming from and where it is going, enabling us to make informed decisions about investments, budgeting, and pricing.
Most importantly, accounting services can help us to plan. By analyzing our financial data, we can identify trends, forecast revenues, and plan for growth.
This allows us to make informed decisions about investments, staffing, and marketing strategies, ensuring we are prepared for the future. This ultimately helps us to provide better service to our patients while also ensuring the long-term success of our practice.
Insurance Equals Cash Flow
As a dental office, it is essential to provide quality care to our patients and maintain a healthy cash flow. Like any other business, cash flow is essential to the success and sustainability of our establishment. Cash flow from insurance companies is also crucial to running a dental office. Since most of your revenue comes from insurance reimbursements, ensuring timely payments from insurance companies is essential.
The partnership between dental establishments and insurance companies is critical for the prosperity of both sides. Dental offices rely on insurance companies to provide patients with top-of-the-line care without the burden of costly expenses. In return, insurance companies depend on dental establishments to offer exceptional dental care to their policyholders.
This symbiotic relationship between dental establishments and insurance companies is vital for their success.
Dental offices can benefit from insurance companies by accessing a larger pool of patients and receiving assistance with challenging billing and payment processing. Additionally, insurance companies may offer incentives to dental establishments that meet specific performance metrics, such as high patient satisfaction or low cancellation rates.
Furthermore, insurance companies can benefit significantly from dental establishments. By providing high-quality dental care, dental offices can help insurance companies reduce the overall cost of healthcare. Dental care can prevent serious health problems, leading to costly medical treatments. Additionally, partnering with high-quality dental establishments that offer exceptional patient care can enhance insurance companies’ reputations.
Partnerships between dental establishments and insurance companies are win-win situations for both parties. Working together, they can provide patients with the best possible care while achieving their business objectives. Whether through increased patient access, improved billing and payment processing, or reduced healthcare costs, the synergy between these entities is critical for achieving success in the dental healthcare industry.
Type of Patients and Payment Mode
As a dental office, it is essential to categorize our patients based on their needs and behaviors. This helps us to understand their preferences and allocate our resources and finances accordingly.
Here are the different categories of patients in our dental office and their income summary:
- Emergency Patients: These patients require immediate attention, usually for problems like severe tooth pain, abscesses, or fractured teeth. Although they may not be the most profitable group, they generate a steady income stream. Typically, emergency patients account for 20% of our total patient base and contribute 10% of our revenue.
- Regular Checkup Patients: This group comes for routine checkups and cleanings. They are generally healthy and require minimal treatment. Regular checkup patients are the most profitable segment, accounting for 60% of our patient base and contributing 70% of our revenue.
- Cosmetic Patients: These patients come for cosmetic treatments like teeth veneers, whitening, and braces. They are willing to pay a premium for these services and are a profitable segment. Cosmetic patients account for 10% of our patient base and contribute 15% of our revenue.
- Chronic Patients: These patients require ongoing treatment for chronic dental problems like gum disease, decay, or missing teeth. They are a less profitable segment, as they require frequent visits and extensive treatments. Chronic patients account for 10% of our patient base and contribute 5% of our revenue.
By categorizing our patients and analyzing their income summary, we can better allocate our resources and tailor our services to meet their needs.
It is also important to note that each category of patients requires a specific approach to patient care, allowing us to provide the best possible service and maintain high patient satisfaction.
Why Strong Accounting Matters in Dentistry
Running a dental office is challenging and requires careful attention to numerous details. Among these details, accounting stands out as a crucial factor that can make or break the success of your establishment.
Accounting is essential for every dental practice, just as it is for any other business, as it enables you to keep track of your finances and make informed decisions about allocating resources.
By keeping detailed records of the finances, an office can better understand the financial situation, manage their taxes effectively, and improve financial transparency. Prioritizing accounting ensures that a dental office will thrive. Do not let poor accounting practices undermine hard work and dedication—invest in the financial health of your establishment today.
About the Author
Estela Go, MAADOM
Estela L. Go is a Chemical Engineer from the Philippines. After taking all the major accounting courses at UCLA, she worked as a general accounting manager in mortgage corporations for 15 years.
Dr. Robert Y. Go and Estela founded Go Family Dental in 2007 after decades of experience in dentistry, accounting, and operational excellence in Anaheim, CA. This led her to her simple guiding principle: “Patients First.”
Estela has been an AADOM member since 2022, when she joined AADOM’s Dental Spouse Business Network. She received her AADOM Fellowship (FAADOM) in 2023 and her Mastership (MAADOM) in 2024.
