Running a dental practice isn’t just about saving teeth and perfecting smiles—it’s also about keeping your bottom line healthier than the pearly whites you create. Yet here we are, still finding practices operating with no clue about their overhead, cost-per-procedure, or whether they’re making $3 or $300 on a single filling. Yup, $3. Let’s dive in and make sense of it all while keeping it fun, edgy, and real.
What Is Ideal Dental Practice Overhead?
Dental practice overhead refers to the cost of keeping your practice running. From paying your team to keeping the lights on, your overhead is what eats into your profits. Ideally, you want to shoot for an overhead of 55%–65% of your revenue. Anything higher? Time to call the dentist because your practice has a serious cavity in its wallet.
Why Cost-Per-Procedure Matters
Picture this: You’re running a tight ship. Patients are happy, the schedule is full, and you think you’re crushing it. But then you take a look at the actual numbers and realize—brace yourself—you’re pulling in $3 in profit on some procedures. Yup, $3. That won’t even buy you a Big Mac.
Dan Nelson from Wood River Dental shared a story during our podcast about how his office analyzed their costs down to the nitty-gritty. And when I say nitty-gritty, I mean every single thing, like the cost of keeping the lights on and taking out the trash. The result? A shocking realization that some procedures were flat-out losing money.
Dan’s $3 Disaster: A Case Study in Overhead Woes
Let’s break it down: Dan discovered that for every Delta Dental patient coming in for a periodic oral evaluation (code D0120), his practice was making a measly $3 in profit. Three bucks. That’s it.
Oh, and here’s the kicker—they performed 10,000 of these evaluations this year. Multiply that by $3, and you’ve got…a lot of regret.
Now, some of you might be thinking, “Well, at least it’s not a loss.” Sure, but when your profit margin is closer to the cost of a gas station coffee than to a sustainable business model, you’ve got issues.
Stop Thinking with Your Wallet – Ideal Dental Practice Overhead
One major problem Dan and I see all the time? Decisions based on fear. Dental practices are so scared of increasing fees, they’d rather stay in the red than risk losing a patient. Here’s the thing, though—patients don’t have your fee schedule memorized. They don’t care if you bump up prices by a few bucks.
As Dan put it, many practice owners (or their office managers) are “thinking with their own wallets.” They’re afraid to make big business decisions because they’re only considering their own financial perspective, not the actual needs of the practice.
How to Fix It: Break Down Your Costs
Dan’s approach is a masterclass in tackling overhead like a boss. Here’s what you should do:
- Get Granular: Break down your costs by procedure. Include everything—supplies, utilities, staff time, lab fees, and even your own pay as the dentist.
- Compare Reimbursements: Look at your insurance reimbursement rates. Are they covering your costs? If not, it’s time to renegotiate or consider dropping those plans.
- Use Software: Don’t try to crunch these numbers in Excel like it’s 1999. Use tools that can automate and simplify the process.
The Membership Model: Your Overhead’s Best Friend
Here’s where my shameless BoomCloud plug comes in. One of the easiest ways to stop relying on those crummy PPO contracts is by creating a membership program for your patients.
Imagine this: You’re charging patients a flat monthly fee for preventive care and offering discounts on major procedures. No insurance middlemen. No insane write-offs. Just you, your patient, and a steady stream of predictable cash flow.
Membership programs let you:
- Control your fees
- Increase recurring revenue
- Offset losses from insurance write-offs
Seriously, if you’re not running a membership program yet, what are you even doing?
Why Fear-Based Pricing is a Disaster – Ideal Dental Practice Overhead
Let’s talk about the biggest lie dentists tell themselves: “If I raise my prices, I’ll lose all my patients.”
No, you won’t. Patients aren’t sitting at home comparing your prices to the guy down the street. They care about the quality of care, not whether your fees went up by 5%. And if you’re terrified, start small. Adjust your fees a little at a time.
Dan shared how he’s seen practices stuck in the 20th percentile for pricing—basically, running on fumes because they haven’t raised fees since the Reagan administration. Don’t be that guy.
How to Reduce Your Overhead Without Losing Your Mind
If you’re ready to get serious about your overhead, here are a few strategies:
- Drop Low-Paying Insurance Plans: Start with the ones costing you the most in write-offs.
- Renegotiate Your Contracts: Many practices don’t realize they can negotiate for better rates. Do it.
- Outsource or Automate: Don’t waste time on manual processes. Whether it’s billing, marketing, or cost analysis, there are tools and services to make your life easier.
The Takeaway – Ideal Dental Practice Overhead
If you’re not tracking your costs and profitability per procedure, you’re flying blind. And if you’re still relying on PPOs without a membership program or renegotiated fees, you’re leaving money on the table.
It’s time to stop running your practice like a hobby and start treating it like the business it is. The ideal dental practice overhead isn’t just a pipe dream—it’s achievable with the right tools, strategies, and mindset.
So, what are you waiting for? Start crunching those numbers, take control of your pricing, and watch your profits (and sanity) skyrocket.
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