Budgets are crucial for running a successful dental practice, but are you spending too much on supplies?
As a dental practice owner, you know that supplies are a critical component of providing quality patient care. However, it can be challenging to determine how much you should be spending on supplies and when you’re spending too much.
Unfortunately, there isn’t a one-size-fits-all answer to this question. The amount of money you spend on supplies can vary depending on the size of your practice, the specialty of your dentist, the types of procedures offered, and the number of patients seen.
Don’t worry though, there are some general guidelines you can follow to determine if you’re overspending on dental supplies.
Firstly, it’s important to establish a budget for dental supplies based on the practice’s needs. This budget should be reviewed periodically to ensure that it is still reasonable and realistic.
One way to ensure you are not overspending on dental supplies is to compare prices from different vendors. Consider shopping around to find the best deals on supplies, but be careful not to sacrifice quality for a lower price.
How much should I be spending on supplies?
This answer depends on the size of your practice.
Pre-pandemic, practices reportedly spent 5.5% to 6% of their revenue on dental supplies. As of 2022, that spending has increased to an average of 8% to 9%. This inflation is primarily due to suppliers increasing their prices to adjust for their increased costs (such as rising labor and shipping costs), along with the increase in raw material prices that manufacturers need to make their products.
Although this is a market average at this time due to inflation, this percentage shouldn’t be considered common.
Dental group purchasing organizations (GPO)’s like SourceClub are driving member’s supply expenses below 4.5%, and more often than not, below 4%.
Carl Marks Advisors surveyed supply chain executives and found that over 50% of them do not foresee a return to “business-as-usual” until the first half of 2024.
Budgeting for Supplies
Suppliers don’t offer discounts to offices that buy in bulk, but instead offer discounts to organizations, like a GPO, with purchasing power. A way to reduce costs is to leverage the buying power of larger organizations, such as a GPO.
Many dental supply companies offer discounts for bulk orders, which can be a cost-effective way to purchase the things you need. A GPO can help negotiate these bulk deals for you.
It’s also essential to keep track of inventory levels to avoid over-ordering or under-ordering supplies. Ordering too much can result in wasted supplies, while ordering too little can lead to supply shortages and delays in patient care.
In addition to these measures, dental practices should consider using digital tools to manage their inventory more efficiently. Determine which supplies you have, and which you need.
For example, using a digital inventory management system can help automate the process of tracking supplies, reducing the risk of overspending. Think about investing in procurement software to help you keep track of your inventory.
While looking through your inventory you can determine if there are any supplies you can cut back on or get rid of altogether. Identify which supplies are essential to your practice.
Go back and analyze the past year’s expenses. This will help you understand how much your practice has been spending on supplies and how frequently you’re purchasing items.
Be sure to set your spending target for the upcoming year. Make a realistic target, taking into account any changes that may impact your practice’s finances, such as new hires or equipment upgrades.
Continue to monitor your expenses regularly to ensure that you stay within budget. If you need to, adjust your budget accordingly. There may be unexpected changes in your practice’s finances or supply needs.
So, Am I Spending Too Much?
Ultimately, there is no set amount that your dental practice should spend on dental supplies. However, by establishing a budget, comparing prices, ordering in bulk, tracking inventory levels, and using digital tools to manage inventory, your dental practice can ensure that you are not overspending on supplies.
Although there is no set amount, as each office is different, set a goal for yourself. Again the market average was 6%, and now it’s 8-9%, but the reality is that you should be spending between 3.5-4.5%. SourceClub can help you reach that goal by negotiating the best prices for your practice.
You should remain mindful of your spending on supplies and establish a budget based on your needs. It’s important to leverage purchasing power, compare prices, track inventory levels, and use digital tools to manage inventory to avoid overspending. By following these guidelines, your practice can strike a balance between providing quality patient care and managing their expenses effectively.
