What is Dental Practice Overhead?
Dental practice overhead refers to the expenses a practice incurs to operate, besides the dentist’s salary. This could be staff wages, rent, dental supplies, lab fees, and marketing, among other expenses. Ideally, a dental practice’s overhead should fall around 60% of revenue. Understanding industry-related recommendations and keeping your overhead in check can leave more room for profit and growth.
Your biggest expense should always be labor, which include employees’ salaries, bonuses, benefits (if applicable), and payroll taxes. It is recommended that expenses such as rent, dental supplies, and lab fees should be around 6%-8% each, and other expenses in the marketing and accounting areas should fall under 3%.
How Can I Reduce Overhead?
Like many businesses, dental practices can benefit from keeping overhead costs in check. Here are some strategies to streamline spending and improve profitability:
- Increase revenue and improve efficiency: Grow your practice by operating more efficiently. You can do this by networking, gathering more referrals, improving customer service, and possibly adjusting your fees.
- Reduce costs: Review your current expenses and determine which of them you can cut off. You may look for cheaper alternatives if you can’t find a way to completely remove an expense. It may be a tough decision, but cutting costs is an effective way to reduce overhead.
As each dental practice varies, some revenue goals may differ from each other and may not align with yours. Remember, your main focus should be providing excellent dental care while maximizing profitability.
The Bottom Line
Dentists sometimes find it difficult to keep things running smoothly in their practice with overhead at the back of their minds. Because of dental practice overhead, dentists tend to spend less time focusing on what’s important: providing excellent dental care. It is advisable to get help from a dental CPA to keep your practice efficient and drive profitable growth.
If you are interested in hiring a dental CPA, reach out to your local Patterson Representative or visit pattersondental.com/aprio to learn more about Aprio’s services.
