In the past, many dentists reviewed their expenses only once a year during their annual meeting with an accountant. However, with the significant changes the dental industry has experienced over the last two years, it’s more important than ever for dentists to understand their expenses on a monthly basis and to have tools in place to make informed adjustments when needed. While patient care remains the top priority, practice owners must devote equal attention, or delegate responsibility, to monitoring expenses and making thoughtful, data-driven decisions.
Some dentists focus solely on their Profit and Loss Statement without fully understanding their true overhead or distinguishing between fixed and variable expenses. Every practice owner should know their monthly break-even production amount, which includes all expenses as well as the owner’s take-home salary. Understanding this baseline allows you to make smarter operational and financial decisions.
Certain expenses are largely fixed, such as utilities, rent, insurance, bank fees, and maintenance. While these costs may not be easily reduced, it is important to ensure you are on the most competitive plans available without sacrificing quality. For example, choosing a lower-cost internet plan that is unreliable can ultimately hurt productivity. Before switching any service, do your research to ensure the change provides value beyond simple cost savings.
Understanding benchmarks for variable expenses—and knowing where your practice stands relative to them, is key to effective expense management.
One of the most pressing concerns today is staffing and staffing costs. Ideally, staffing expenses should fall between 26% and 28% of total production. If your percentage exceeds this range, it doesn’t necessarily mean reducing staff hours or positions. Instead, it often signals the need to increase production. This may involve evaluating and strengthening systems such as hygiene retention, hygiene open time, hygiene production per hour, treatment acceptance, and dentist availability. Improving these systems can significantly boost overall practice production.
Dental supplies should typically account for 6.5% to 7% of total monthly collections. Because this budget is based on collected fees, it’s important to ensure the revenue is in the bank before spending it. This metric is easy to track and can be assigned to a specific team member, whose role is to balance time spent sourcing quality products with finding cost-effective options.
Lab fees are another important metric and should average around 8% of overall production. If lab fees fall below this benchmark, it may indicate issues within your treatment coordination systems. Most dental practices have patient demographics that can support this standard when systems are functioning effectively.
It’s also important to maximize the value of services you are already paying for. Track the performance of both internal and external marketing efforts. Marketing metrics should clearly show whether new patient numbers are meeting goals and whether referral sources align with where your marketing dollars are being spent.
Finally, before investing in expensive courses or new equipment, run the numbers. Determine whether the investment is primarily for personal development or whether it will expand services and increase production. Having this clarity ensures decisions benefit both the dentist and the practice.
In today’s dental practice environment, expense management must be reviewed monthly or quarterly, not just annually. Investing in a coach who can help bring your practice in line with industry benchmarks through efficient, effective systems is often money well spent.
