Smart Strategies for Managing Dental Practice Overhead
Historically, general dentistry practices have maintained a steady overhead with an expected profit margin of 38-44%. Employee compensation, typically the most significant overhead expense, has increased further due to the shortage of applicants, especially for clinical roles. Dentists offer higher salaries to stay competitive and attract new team members, often resulting in lower profit margins. Fortunately, there are practical solutions to enhance profit margins while maintaining a high standard of patient care.
Understand your Overhead Categories
While grasping your Profit and Loss Statement is crucial, comparing your spending categories against industry benchmarks is equally important. Key categories include:
- Profit Margin: 38–44%
- Personnel: 26–31%
(includes wages/taxes/benefits) - Dental Supplies: 6–7%
- Lab: 7–10%
- Rent: 5-7%
Contact your Account Manager or visit our website for an overview of healthy spending categories to see where you stand.
Improve Production Without Adding Staff
Maximizing insurance reimbursements through healthy coding protocols is essential. Review codes for under and over-utilization, as unnecessary write-offs erode profit margins. Ensuring accurate coding boosts profitability and enhances patient care through ethical coding protocols and reduced billing challenges.
Scheduling Templates Maximize Production
Assisted hygiene scheduling has become a popular method to improve profit margins, address the staffing shortage, and provide adequate patient scheduling opportunities.
Several models exist, including Shadow Scheduling, Targeted Assisted Scheduling, Assisted Scheduling, and Accelerated Scheduling. Each model progressively adds more patients per provider. Select the model that works with your patient demographics and number of available operatories. This approach ensures that patient care remains a priority while optimizing your team’s time and productivity.
Monitor your Key Performance Indicators (KPIs)
In addition to diving into your P&L, monitor KPIs monthly to identify growth opportunities. Capitalize on those throughout the year to realize a higher profit margin by the end of 2025.
Top KPIs include:
- 1,600–1,800 active patients for 1 FT Doctor
- 99% net collections
- Practice fees in the 80th percentile
for your zip code - Annual Patient Value greater than $785
- AR ratio of 1–1.5 months of production
- No more than 10% of AR in the over
90-day column - 50%+ mix of high-profit margin
restorative procedures - 40–50% periodontal mixture of services
Healthy overhead and KPIs contribute to a healthier practice culture and work-life balance, ultimately benefiting patient care.
Burkhart’s Practice Support Team welcomes the opportunity to support your healthy business. We are committed to your practice’s business success and the well-being of your patients. Reach out today for your Overhead Analysis, complimentary to our Supply Savings Guarantee and Platinum clients.
Your success is our success. Please reach out to us anytime.
To learn more, visit the Practice Support Team page, email us at PracticeSupportTeam@BurkhartDental.com, or call 1.800.665.5323.
Category: Practice Consulting
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