Running a successful dental practice requires more than excellent patient care, it also demands disciplined financial management. One of the most impactful areas to prioritize is managing operating expenses and building effective vendor partnerships. By doing so, you can protect profitability while ensuring that your practice runs smoothly and sustainably.
1. Understand Your Expenses
Start by breaking down your operating costs into broad categories: clinical supplies, lab fees, payroll, equipment, rent, utilities, and marketing. Tracking these monthly helps you identify trends and spot overspending. Consider using dental-specific accounting software that allows you to benchmark your expenses against industry standards. For instance, many practices aim to keep supply costs under 4–6% of collections. If your percentage is higher, it’s a sign to review purchasing habits.
2. Streamline Vendor Relationships
Dental practices often rely on multiple vendors, such as supply companies, labs, IT support, and service providers. While it’s important to avoid overdependence on a single vendor, consolidating purchases with fewer partners can unlock discounts and stronger relationships. Develop a vendor evaluation system based on cost, reliability, quality, and customer service. Schedule annual or semiannual reviews with your key suppliers to renegotiate terms or explore alternatives if pricing or service has shifted.
3. Leverage Group Purchasing Power
If your practice is independent, consider joining a dental buying group or association that negotiates lower pricing on supplies and equipment. These groups can reduce costs significantly while maintaining quality. Even if you don’t join, ask vendors whether volume discounts or loyalty programs are available—many are willing to reward consistent customers.
4. Prioritize Relationships, Not Just Price
While cost savings are important, the cheapest vendor isn’t always the best choice. Reliable partners who provide responsive service, flexible terms, and product support can save you more in the long run. For example, a slightly more expensive equipment provider with excellent maintenance service can prevent costly downtime.
5. Monitor and Reassess Regularly
Vendor contracts and operating expenses should not be considered items to “set and forget.” Commit to reviewing expenses quarterly and conducting a deeper vendor evaluation annually. Small adjustments—such as renegotiating shipping fees, bundling orders, or switching to more efficient products—can yield substantial savings over time.
By proactively managing expenses and fostering strategic vendor relationships, dental practices can create a healthier bottom line without changing or compromising patient care. The goal is balance: keep costs under control while building long-term partnerships that support both clinical excellence and business success.
If you would like help on any of the following topics, please reach out to a member of our team HERE:
- Proper expense allocation within the P&L
- Benchmarking your expenses as a percentage of your income
- Expense evaluation and determining areas of opportunity
- Negotiating with vendors while protecting the relationship
If you missed our last post about the Importance of OSHA and HIPAA Training, you can read it HERE. To request a FREE Practice Optimization Analysis for your practice and to learn a bit more about your expenses, click HERE.
