How To Offset Rising Wage Costs

With the current staffing shortage, you’re likely paying more to recruit new employees. And that necessitates bumping your current employees’ wages to maintain an appropriate wage differential. Below we discuss strategies you can use to offset these higher labor costs so they don’t dent your profit margin.

Over the past few months the biggest challenge for most practices has been staffing, particularly recruiting new assistants and hygienists. Most practices are having to raise pay to recruit new employees in this extremely tight labor market. In many cases, you may end up paying 5-10% higher wages in order to attract new employees, in addition to any signing bonuses and increased benefits.

This higher pay for new employees creates another problem—“wage compression.” That’s when the higher wages offered to new hires approaches what long-time employees make, creating another management challenge. With record-high rates of job resignations, you must increase what you pay your existing employees if you want to keep them. But that could pose a double hit to your profitability—unless you take action.

Respected practice management consultant Bill Rossi* says: “You can’t control the labor market, so you have little choice but to offer higher pay and give substantial raises. So, while you may increase wages more than you want to, it’s important to get something for it in return.”

Below are 12 strategies to help you offset these higher labor costs:

  • Increase production by having employees use “down time” to contact inactive patients and invite them back to your practice, as well as to follow-up with patients who have not accepted previously discussed treatment plans.
  • Cross-train your employees so you can meet peak patient demand without having to add additional employees.
  • Boost new patient flow by having the staff routinely ask patients for referrals.
  • Increase hygiene productivity (now that the COVID-19 backlog has been cleared) by scheduling routine hygiene appointments for 30 minutes for children, 45 minutes for routine adults, and one hour for soft-tissue management and difficult adult prophy patients.
  • Improve quality of care and production by having each hygienist use the intraoral camera during every hygiene exam.
  • Increase practice production by using the intraoral camera in your treatment presentation and offer flexible payment options to increase conversion rates for needed treatment.
  • Increase hygiene production by placing greater emphasis on providing soft-tissue management services and ensuring they’re coded correctly. Dedicate one hygiene slot per hygienist per day for this procedure.
  • Increase new patient flow by having employees assist in producing video testimonials from patients, parents, and referring doctors, and obtaining favorable Google reviews from your patients.
  • Inform your employees that you will be raising fees to cover your higher labor, supply, and lab costs, and get their support for this increase. We’ll discuss how to raise fees in detail next month.
  • Have your insurance coordinator run a Production Adjustments Report showing the total production and related adjustments (write-offs) separately for each PPO plan. Thereafter, rank all
  • PPO plans that you are participating in from top (best) to bottom (worst) by total production, write-off percentage, and administrative hassles. Then have your employees trained to implement a plan that reduces PPO write- offs to maintain profitability.*
  • Orthodontists should make sure each treatment assistant is scheduled for at least 16 patients per day, while Invisalign-heavy practices should schedule at least 20 patients per assistant per day. Also, schedule Invisalign appointments for no more than 20-30 minutes each to increase labor efficiency.
  • Orthodontists should schedule no more than two retention visits per patient and offer teledentistry for those visits to maximize labor efficiency.