What is Your Dental Office Overhead Worth to You?

Expenses can be some of the most daunting necessities we face as business owners. Profit and expenses go hand in hand, sometimes not for the better. It takes skilled management of both time and finances in order to profit from your business, and if you’re running a dental practice, this is all the more important. Figuring out where your largest expenses lie is just the first step in lowering costs. You must also gauge how close you are to an average as well as understand the necessity of raising costs for a period of time in certain cases. No one wants to fall behind on consumables just because they are an effective cost cut. Dental office overhead isn’t the most fun or engaging aspect of your business, but regardless of whether you’re doing it yourself or have an employee keep track, you’ll rest easy knowing that your practice is streamlined and efficient. Let’s look into some of these averages as well as practical tips to manage your expense report:

Average dental practice expense percentages

What is the average expense for a dental practice? Dental office overhead statistics show that nearly 75% of a practice’s finances go towards overhead. That’s including an average 15% marketing budget, staffing costs nearing 30%, and inventory. If your numbers are a bit off of these averages, you shouldn’t worry, but if you don’t know them, you might be in trouble. A few things to keep in mind when you first crack open your books:

• Forecast your yearly pre-tax revenue by utilizing past receipts and accounting statements.
• Start off with monthly goals when you first start managing finances, then graduate to quarterly and yearly processes.
• Review your expenses whenever you can or have your accountant do it for you. Be sure to let them know exactly what you expect in terms of your set financial goals for the practice.

Dental practice cost structure is variable relative to the type of practice you own yet utilizing national averages can be extremely helpful in determining what kind of expectations you have for the future.

Figuring out your dental practice overhead benchmarks

Expense benchmarks should be a part of the end goal that you want to see. Cutting lab costs by purchasing your own equipment or hiring your own licensed technician? Note it and track these cost cutting measures to make sure that you’re getting the full benefit, over a quarter and through the calendar year. Here are three other aspects to consider throughout your personal auditing period:

1. Inventory management should be specialized per department (i.e.: front office, lab) and clear so that there are no questions about what you have on hand. Buying too much at once? Start a daily supply audit to see immediate cost-effective results in managing consumables
2. If you’re renting a commercial property, what does rent and applicable taxes look like each month/year? Do you have a variable contract that can sudden sink your profitability plans? Look into any agreements and make sure you are getting the full value of your practice space each month. If your lease is ending soon, consider negotiating a longer-term lease for a decrease in monthly charges to persuade property owners of your continued commitment
3. Salary costs are another inevitable dental office overhead cost that you can still manage and keep track of. Your dentists and hygienists should be getting slightly more than your assistants (think 10% versus 5-7% of costs average), yet their value to your business is the same. Retention is also important, and the cost of new hires versus training and education of your current staff goes a long way in providing consistent, quality care and service

If you’re stuck on how to effectively manage your supplier orders, here are three more practical applications that you can utilize right away:

1. Make sure that your dental and medical supplies are not only up to date, but relevant to modern procedures. Are you a primarily cosmetic dentist? Contemporary surgical equipment, anesthesia, and sterilization product investments should be at the top of your list.
2. Have a lot of general oral cleaning procedures? Extra disposable or permanent sterile equipment is a must for walk-ins and those who frequent your practice for cleanings. You should never be stuck waiting for a shipment of needed product, so purchase in advance and use exactly what you need before running low and ordering more.
3. Keep a list handy of the average number of each disposable piece of equipment you use. You may even want to hire someone to manage this in order to get the full benefit of inventory management. What you pay them will pay off when you realize that you’re actually wasting disposables. It may be better for you to make a one-time payment for something that costs less to just sterilize in-house.

Remember, you choose your dental office overhead. Maybe you need more marketing budget to get started or to continue growing. Perhaps inventory can be cut down by purchasing bigger orders rather than many small ones. There is always an exception to a rule in overhead, so choose what fits best for your practice and watch the results. Share the good news of meeting goals with your employees; they helped you get here! Plus, there’s nothing like more motivation towards making your practice run smoother and more profitably.

Help generate revenue by outsourcing your dental office overhead and more

eAssist Dental Solutions is a dental billing platform suite built by dentists for dentists. eAssist offers your practice the ability to better predict overhead and cash flow. Through a variety of available solutions, you can get the benefits of a dental accountant or bookkeeper, consultant, or insurance billing specialist who work aging and increase your collections. No matter your need, eAssist implements the customizable, personalized solution. Schedule a consultation with a Business Development Specialist by clicking below today, and plan out the future of a profitable, successful practice.