The Myth of the 5% Dental Supplies Budget
After two years of closely watching 130 practices across the United States waste money on dental supplies, we decided to study the problem and shed some light on the issue. We have seen a waste anywhere from 14% all the way down to 3.8%. Therefore the question is, is it even possible to have 5% Dental Supplies Budget?
For our example we will review 3 case scenarios, going from 14% to 8%; from 8% to 5%; and from 5% to 4%. We will use a practice that will collect (again collect) $700K per year with five treatment rooms, one sterilziation room, one lab and no storage to make it a little difficult.
Scenario 1: Dr. Awesome: “I spend any where from 8-14% on dental supplies per month.” Our response: “I’m sorry but you have no idea what’s going on in your office and at this stage saving $3 on gloves is like a lipstick on the pig. It will not help.” If you and your office can relate, you need to get control of your supplies.
These are the steps:
- Do not blame your assistant. Honestly, it’s your fault and responsibility to run the practice and have systems in place. But also do not be hard on yourself. You are not alone and many practices have been, and still are, there.
- Start reviewing ALL the orders yourself. Anything that touches your credit card has to get an approval. Record every approved order in the spreadhseet and then when you see a charge in the statement run it against what you have approved. If you see something without your approval, there are usually two scenarious; someone geniunly didn’t ask your approval or someone on purpose didn’t ask your approval (embezelment).
- Ask yourself: “Do I really have the budget?” and “How is it being used?”
- Put together a spreadsheet of all products purchased in the last 12 months with their price from the invoice. Yes ALL OF THE PRODUCTS. Even if you purchased one item from ACE surgical, put it on the list. Most likely you are buying 6 different gloves size S and your bonding agent is out of control (spreadsheet attached).
- Review the list with assistant and decide which product you no longer will be purchasing!
- After you have a Master List of all the products you approve, ask your lead assistant to make future purchases only using the products in that list. If it’s not on the list, she will need to ask first.
- Watch quantities by asking questions like, “Do we really need 5 boxes of lidocaine when not many procedures are scheduled in the next 2-3 weeks?”
That’s it! Yes! These few steps alone will help you save at least 4% because now you are watching every order. Total saved 4% which is $28,000 per year!
Scenario 2: Dr. Awesome: “I spend between 5-8% on dental supplies.” This is not horribly bad, and with a few extra steps, you get thousands in savings. Here are the steps to get an additional 3% in savings.
- Remember the spreadsheet from step 1.2? Make that spreadsheet again but add additional columns for Alternative Distributor 1/2/3. Yes, you will need 4 columns. And the distributors you will add are (the list of distributors is our complete unbised suggestion; we are not getting paid for it; and we might change our mind depending on the data and analytics of our software):
- Your Current Distributors (or distributors)
- Safco Dental
- Darby Dental (through Synergy group)
- Dental City
- Contact the above listed distributors, and send a spreadsheet with your current price column (remove the name of the your current vendor to protect the greedy).
- Wait for the prices and compare. Have all three additional distributors provide prices for exact same match and for house brand of the similar product (they can just add a column and have one price column for a product with exact match and one column for house brand).
- Ask all three additional/alternative distributors for free shipping and add the note “free shipping” to the spreadsheet, so you can reference to it when verifying orders (just in case save the email where you are promissed free shipping)
- Make sure you stick to the spreadsheet and do not purchase outside. Anything outside has to be approved by YOU before placing an order!!!
- Once you get 10-20% saving across the board you can now decide where to send orders. I would suggest not to get emotional with any of the vendors and send based on the product cost and the shipping fees. Do not be afraid to send orders to multiple vendors as long as you are saving money.
- Tip out bins – remove all products from rooms and store in central location, sterile as an example. Remove doors from uppper cabinets in sterile so you SEE all the products on the shelves. What you see is what is managed. (For more information on purchasing tip out bins, visit https://simplastics.com/zen27 recomended combination if you have room allowed. If not, get any combination so you can organize supplies in one room.)
- Do not be fooled by places like Net32 and other similar companies. You can save plenty by following these steps and working with authorized distributors that have products in stock and ship in time. I can guarantee that you will save more by purchasing two boxes of GC Fuji cups for roughly $190 from smartpractice and will have it delivered within 2-3 days as opposed to chasing three boxes from some grey place for $130 per box because you do not know how many you need and it’s shipped in 2 weeks, not to mention with 2 week shipping you now need to order 1 box from your current reputable distributor (or better yet call the rep who you said to go “pound sand”).
Steps 1-8 will bring you a total savings of $21,000 per year!
Scenario 3: Dr. Awesome: “I want to spend 4-5% on dental supplies.” This is high level of prediction and reconciliation. However, this Dr. Awesome is already monitoring what is bought, where it is bought from, and how much is spent on supplies. To get to the next level, follow the next steps.
- Reconciling the invoices. Yep, bookkeeping and numbers. You need to check your order from distributor, compare the invoice and check for discrepancies. Are you overcharged for shipping when you favoriate Distributor D**** promised free shipping? Did they charge an extra for the heavy body when they promised the price is locked for 12 months? And so on and so forth. Every invoice must match what was ordered. Also, if there was a return, it must be reflected on the credit card statement. Small nuances can take up a lot of time but this final step is found in small details.
- No Free Goods or Specials. Yes, a final, white belt step, is no free goods. You need two boxes of gloves and buy 3 +1 on special. This no longer can happen. You need two boxes of gloves; you buy two boxes of gloves. Here is the simple math: 2 boxes at 5.99 = $11.98 (free shipping with top Quality gloves or most of the Zen Preferred Vendors) 3+1 deal for 4.99 = $14.97 (add shipping and other charges). You just went over the budget by almost 20%. I want you guys to wrap your head around % not the $ amounts. We are trying to save 2-3% on overall supplies budget and allowing ourself to go 20% over the budget. Yes you will use an extra box of gloves and it will not exprire; however that 20% increase will push the limit for another product that you really needed to purchase this month and now entire budget is over. Next month, same thing, because you see a product on the special and now you can’t wait for these special and you are always over the budget.
Total saving $7000 per year!
If all three scenarios with their steps are implemented, and I hope you take our savings as an example plus/minus since you might need to implement only some of the steps, you are saving a WHOPPING $56,000 per year. When I run my business, these kinds of savings can motivate me to move in the right direction, work on Saturday to organize inventory and train the team how to order and build the system around it, and other hefty measures to help my business grow. It will even convince me to pay my team overtime and order pizza so we can all work together a little extra to clean up all the rooms, remove old junk, purchase and install tip out bins and reorganize supplies. Not to mention you will have great content for Facebook and Instagram! 🙂
This article is by no means an attack on doctors, teams (who we love the most) and certainly not distributors. This is an action plan for people who are tired of listening to others complain and want to do something about it. This is the kind of action plan one can apply right away, tomorrow morning!
Please remember your happiness starts with Zen, I meant you! (Sorry, didn’t mean to promote that Zen can do all of the above steps and make your life simple while saving you thousands! 😉
Let me know your thoughts,