The Inflation Reduction Act (IFRA) which was passed by Congress and signed into law on August 16, 2022, is essentially a climate change law with some healthcare benefits related to pharmaceutical costs. After researching and studying the legislation, it appears that the IFRA will not have a significant impact on reducing inflated operational (overhead) costs for dental practices and small businesses in general. Rather, we expect that this legislation will have a neutral effect on reducing the rising costs of goods and services (inflation) that have impacted every business sector in the United States.
What Does This Mean for Your Business?
While the new legislation does not include any direct tax increases on small and midsize businesses, some of its provisions have the potential to raise costs for businesses rather than lower them.
One of the major possibilities for small to midsize businesses is the increased chance of being audited by the IRS. The IFRA bill substantially expands the Internal Revenue Service’s budget. For example, more than half of the $80 billion increase in the IRS budget over 10 years will be used to beef up enforcement through new technology and new hires. That potentially means more audits for small and midsize businesses.
The takeaway here is to get with your tax advisor regarding any questions you may have regarding your taxpayer obligations and commit more resources to record keeping. Assume that you will be audited and prepare accordingly. Your tax advisor should be able to provide insight into potential IRS targets related to certain tax credits and tax deductions.
What Does This Mean for Your Patients?
On the clinical side, many dental practice owners report seeing adjustments in patient behavior and needs as it relates to certain types of care. Some dental practices indicate that patients are delaying routine care such as cleanings, X-rays, and exams due to inflationary pressures many families are experiencing. This current scenario could be specifically due to several reasons including patients not being able to afford insurance deductibles or copays and a reluctance to take time off from work.
Economic challenges, including inflation, have always affected healthcare practices and always will. To best meet patients’ needs and weather the storm of economic challenges, dental practices should comprehensively assess their practice operations, evaluate overhead expenses, and determine (with the input of their team) what potential changes will have the most impact. As patients’ needs evolve, so should a dental practice’s service offerings.
For example, to cut down on unnecessary return appointments that require valuable staff and resources, dental practices should find ways to increase production per patient visit. Be sure to take the time to understand patients’ short and long-term dental needs and wants to determine if additional same-day treatments are beneficial and in the patient’s best interests.
What You Can Do to Help Your Practice
The following list of actionable items to consider may help your practice and its patients mitigate inflation and also improve the patient experience:
– Pay attention to your dental inventory and establish a reliable inventory management system. Assign someone on your team the responsibility for inventory management and have them report regularly to you on this.
– Get input from your team on ways to improve your practice’s waiting room and the impression that it gives.
– Monitor statistical data as it relates to your practice’s monthly dental collections and other key performance indicators. Identify KPI trends that are good and those that may be concerning. It is always beneficial to analyze why good trends are happening as well as bad ones.
– Provide dental financing for patients that allows expanded payment options and for your practice to get paid quicker.
– Commit to intentional follow-up on dental treatment plans.
– Keep your patient schedule full and efficient.
Paying attention and knowing what’s right for your practice and how to elevate the patient experience comes from intentional and ongoing reflection, oversight, and an understanding of economic shifts and new legislation. These dynamics will always be a part of managing a successful practice. Always have a trusted advisor to check with and ask for help, when needed, as running a profitable and patient-centered practice becomes more complex at an increasingly rapid pace.
Paying attention and knowing what’s right for your practice and how to elevate the patient experience comes from intentional and ongoing reflection, oversight, and an understanding of economic shifts and new legislation. These dynamics will always be a part of managing a successful practice. Always have a trusted advisor to check with and ask for help, when needed, as running a profitable and patient-centered practice becomes more complex at an increasingly rapid pace.
