Laurie Spitz, FAADOM, and her husband, Steve, a prosthodontist, founded Smileboston Cosmetic and Implant Dentistry, a three-doctor dental practice outside Boston, MA. Her business, marketing, and public relations degree has given her the background to successfully work in every office capacity (other than clinical), and anything her degree didn’t teach, life has. As an AADOM spouse, Laurie has a unique perspective, allowing greater optics in every aspect of the organization. Over the last 27 years, she built a business from scratch, purchased and sold a second office, and evolved to an OON office while raising three kids, two growing up in a pack-and-play behind her desk. Outside the office, she is an avid photographer and mom of three grown children, two rescue dogs, a bearded dragon, two leopard geckos, and a 40-year-old Senegal bird. She and her husband will be celebrating their 33rd anniversary in August 2024.
For more content by and for dental office managers, visit AADOM at https://www.dentalmanagers.com.
In the world of AADOM, I am privileged to be part of a small group of amazing women and men who serve as both office managers and owners. Along with my husband, a prosthodontist, I own Smileboston Cosmetic and Implant Dentistry, just outside of Boston. In my role, I am responsible for all non-clinical functions, including operations, HR, payroll, management, and marketing, and have evolved into our practice's CIO, COO, and CFO. Through this journey, I've developed expertise in profit and loss statements, balance sheets, and financial operations.
As an owner looking at overhead, I have the 1000-foot view, which lets me notice that what happens today affects the financials tomorrow. This perspective has taught me that small, consistent improvements in operational costs can create substantial long-term benefits for any dental practice. The strategies I share today aren't just theoretical concepts—they're proven methods that have delivered measurable results in our practice and can be implemented in yours. These approaches require dedication and attention to detail, but the financial returns justify the investment of time and effort.
The Importance of Financial Assessment
Before diving into specific cost-saving strategies, it's essential to understand why financial assessment and overhead management are crucial to the success of a dental practice. Many office managers focus primarily on patient care and scheduling, which are undoubtedly important, but often overlook the financial infrastructure that supports these operations. Every transaction, every fee, and every monthly charge directly impact your practice's profitability and ability to reinvest in patient care, staff development, and practice growth.
Financial assessment begins with understanding your practice's current cost structure. This involves examining every recurring expense, from obvious costs such as supplies and equipment to hidden fees that quietly drain your resources. By developing this comprehensive view, you position yourself to make informed decisions that benefit both your practice's financial health and your professional development as a practice manager. The knowledge gained through this process demonstrates your value to practice owners and enhances your role as a strategic partner in practice management.
Simple Cost-Saving Strategies
In my previous article for our AADOM community, I shared some "quick" bottom-line savings opportunities, such as using Pirate Ship for shipping and browser extensions like Rakuten for online purchases. While these strategies provided immediate but modest savings, the approaches I'm sharing today require more effort but deliver substantially larger, measurable savings to your practice. These advanced strategies focus on two major expense categories that most practices can optimize: credit card and bank processing fees.
Understanding these fee structures and learning to negotiate better rates represents a significant opportunity for most dental practices. Unlike one-time cost reductions, improvements in processing fees create ongoing monthly savings that compound over time. The skills you develop through these negotiations also prepare you for future discussions with vendors and service providers, making you a more effective financial steward for your practice.
Credit Card Processing Fees: A Hidden Expense
As an out-of-network practice, approximately 75% of our payments come through credit cards. We saved over $10,000 in 2024 alone by implementing the strategies below. Many dental office managers don't realize that when patients pay with credit cards, their practice doesn't receive the full payment amount. Instead, they pay several fees for each transaction, directly impacting their bottom line.
Understanding Credit Card Fee Structure: The Main Types of Credit Card Fees
Interchange Fees: These fees are paid to the card-issuing bank, such as Chase or Bank of America. Typically ranging from 1.5-3.5% of each transaction, interchange fees usually represent the most considerable portion of your credit card fees. These fees are often tied to cardholder rewards programs, meaning cards offering higher points or rewards to patients cost your practice more in processing fees. Understanding this connection helps explain why some transactions are more expensive to process than others.
Assessment Fees: These fees are paid to card networks like Visa, Mastercard, American Express, and Discover. Usually ranging from 0.1-0.15% per transaction, assessment fees are generally the most minor component of credit card processing costs. However, when calculated across all annual transactions, they still represent a meaningful expense.
Payment Processor Fees: These fees are paid to the transaction processing companies, such as Square, Stripe, and other merchant service providers. Typically ranging from 0.25-0.5% plus a fixed fee per transaction, processor fees vary significantly between companies and service levels. Some processors offer lower percentage rates but higher fixed costs, while others provide the opposite structure.
How to Negotiate Better Credit Card Processing Rates
Many years ago, I learned how to negotiate with our merchant processor to reduce these fees. To do this effectively, you need confidence and knowledge of your numbers. Companies like Worldpay process payments and deposit them directly into your bank account. As mentioned, fees are deducted from the patient's payment transaction before your bank deposit. You should receive monthly statements with specific fee breakdowns, though they can be challenging to interpret without proper guidance.
My Negotiation Cheat Sheet
Gather data: Pull your last three months of statements and ask your payment company to explain the details. Don't hesitate to ask questions about every line item, fee category, and calculation method. The more you understand your current fee structure, the more motivated you'll be to negotiate improvements. Request detailed explanations of how rates are calculated and what factors influence your fees.
Know your volume: Calculate your practice processes' average monthly dollar value through credit card transactions. This figure is likely higher than you initially think, which gives you more negotiating leverage with processing companies. Higher volume typically qualifies practices for better rates, so understanding your processing volume helps you negotiate from a position of strength.
Research alternatives: Call comparable processing companies first to see their rates and service offerings. They'll typically ask you to review your statements from the previous three months to provide a competitive quote. Use these quotes as leverage in your negotiation with your current processor. This research also helps you understand market rates and identify whether your current fees are competitive.
Target two key rates: Focus your negotiation efforts on interchange fees (your payment percentage rate) and assessment fees (the per-transaction fee). Based on our office's processing volume, I successfully negotiated our rate from 2.9% to 2.6% and reduced our per-transaction fee from $0.10 to $0.07. These seemingly small improvements created substantial annual savings when applied to our transaction volume.
Bank Processing Fees: Another Opportunity for Savings
Like credit card fees, your bank charges a fee for every check you deposit and other banking services. These fees can also be negotiated to improve your bottom line, though many practice managers never attempt these discussions.
Understanding Bank Fee Structure
Common Bank Fees Include:
Deposit Item Fees: These charges are based on the number of days deposits are made per month. Some banks charge a fee per deposit day, while others have monthly limits before additional fees are applied. Understanding your deposit patterns helps you optimize both convenience and cost.
Per Deposit Fees: These charges are based on the number of individual checks deposited per month. If your practice processes many small checks, these fees can accumulate quickly. Some banks offer tiered pricing based on check volume, making negotiation worthwhile for higher-volume practices.
Maintenance Fees: These include monthly account fees, analysis fees, insurance fees, download fees, and various other service charges. These fees may vary depending on your bank, account type, and the deposit method. Many practices pay for services they no longer use, making regular audits essential for cost control.
How to Reduce Your Bank Fees: My Negotiation Cheat Sheet
Review your statements: Pull the last three months of banking statements and ask your bank representative to explain all the details. Request clarification on any terms or charges you don't understand. Banking fee structures can be complex, and representatives can often provide insights into fee reduction opportunities you might not discover independently.
Know your metrics: Calculate your practice's average dollar value, number of checks, and monthly individual deposits processed. This information demonstrates your value as a banking customer and provides the foundation for fee negotiations. Banks want to retain valuable customers and may offer concessions to maintain their business relationships.
Audit your services: Verify that you're using all the services you're being charged for. This step is crucial because your banking needs may have changed over time, but you might still be paying for unused services. Eliminate unnecessary services and negotiate better rates for essential ones.
Tips for Successful Fee Negotiations
Document everything: Keep the name and contact information of everyone you speak with and take detailed notes of all conversations. This documentation helps ensure consistency in future discussions and provides reference points for follow-up conversations. Written records also protect you if disputes arise about agreed-upon terms.
Maintain professionalism: Be courteous rather than demanding during negotiations. Remember that representatives have discretion in adjusting your rates and are more likely to help customers who treat them respectfully. Professional relationships often lead to better outcomes than adversarial approaches.
Monitor regularly: Check statements monthly to ensure negotiated rates remain in place and don't creep up over time. Service providers sometimes implement rate increases or system changes that affect your negotiated terms. Regular monitoring enables you to identify and address these issues promptly.
*Note that in reading over my latest statement, I noticed (at the very bottom of the statement) that the structure of my system was set to be adjusted the following month. Although I am currently in the process of negotiating again, I wouldn't have known otherwise.
Review annually: Contact your providers yearly, especially if your practice's transaction volume increases, as you may qualify for better rates. Annual reviews also allow renegotiating terms based on your evolving business needs and market conditions.
Express gratitude: Send your contact a thank-you email after successful negotiations to maintain positive relationships. These relationships often prove valuable for future negotiations and problem resolution. Appreciation also encourages representatives to continue providing excellent service to your account.
Conclusion
Every dollar counts toward your overall success and sustainability in a small business like a dental practice. By reducing your transaction processing fees through strategic negotiation and careful monitoring, those savings flow directly back to your practice's bottom line and create opportunities for reinvestment in patient care, staff development, and practice growth. This approach allows you to demonstrate your tangible financial value to the practice in a measurable way, enhancing your professional reputation and career advancement prospects.
The strategies outlined in this article represent proven methods for reducing operational costs while maintaining service quality. Implementation requires initial effort and ongoing attention, but the financial returns justify this investment of time and energy. As office managers, our role extends beyond daily operations to include strategic financial management that supports long-term practice success.
I encourage you to implement these strategies and see the results for yourself. Gather data from your current providers, and then gradually work through the negotiation process with confidence and preparation. Please email me your success stories or any questions about these cost-saving approaches, as your experiences can help other AADOM members achieve similar results in their practices.
