The Silver Bullet to Making Money in Dentistry | Part 1

The Silver Bullet to Making Money in Dentistry | Part 1

Looking at the income statements for several practices, I’m seeing a trend. It’s so obvious now that I think about it, but it’s the obvious things that bear repeating.

The profitable practices all have one thing in common.  And, the struggling practices are all missing this same thing.

So, the more I think about it, this is the silver bullet to making a profit in dentistry.

Staff expense.

The common denominator for the profitable practices I’m seeing is that each and every one has their staff expense on target.  And, for practices that are struggling to make a solid profit, every one also struggles with their staff expenses. (Now, to be fair, there is one practice on my list that needs to hire a new dentist and this overshadows all else.)

When we think about practices struggling with staff expenses, it’s easy to look at your 37% staff compensation compared to collections and feel defeated. Looking at this giant number and knowing the benchmark is 28% often starts a mental conversation that goes like this . . .

Wow. 37% is way too high for my staff expense. So, let’s think through each of my staff to see who I might be able to cut . . .

Manager – She makes everything run around here, I can’t live without her

Hygienist – Patients love her, even though she is the highest paid employee, there’s no way I can risk losing patients and she knows everyone

Assistant – She’s my right hand, I can’t lose her

Front desk team member – She’s not that great, but she’s a single Mom and my manager says she’s getting better

Second assistant – Helps keep us on time and I might be able to change her to part time, but she is best friends with my hygienist and I just don’t want the drama right now

Well, I know my staff expense is too high, but there’s nothing I can do.”

And so begins a low-level resentment for staff management.

You know your staff is paid more than they should be, and you know that you are earning less profit than you should be.

Next, when there is a mistake, especially one that costs you, like eating an extra lab fee because your team messed up the case or having to accept a lower collected amount on a treatment plan because the financial arrangement was inaccurate – it’s easy to quickly get angry.

Since your team has no idea the practice is spending way too much on staff compensation overall, they think everything is fine. And one day, they make “funny” jokes about being underpaid and the dentist seethes inside.

So, what can you do?



#1: Track your staff expense

First, you have to track your staff expense every month.

I hope you review a copy of your financial statements every month even to see your total staff compensation expense and compare it to your collections. But even if you don’t get a completed financial statement, you can get your payroll report and add any extras spent on your team and again, compare that against your collections.

In Dentrix Ascend, run your day sheet for the dates that match your payroll and then look for Applied Payments to see your collections. This image shows a section of the Dentrix Ascend day sheet with the collections highlighted.

Staff expense % = Staff Compensation / Collections

Now, track this every month.


#2: Make Changes

From the equation, you can see there are only two factors that determine your staff expense percentage. And if you want to improve your percentage you can either reduce staff compensation or increase collections.

In Part 2 of this article series, we will discuss what you can do to manage staff expenses.


Check out my Free Resources

If you’re managing a dental practice and want organized systems for easier dental staff training, then check out my Collections System and how to Set Up a Recall System. Once these internal systems are in place, you may want to focus on marketing with a system for New Patient Referral Tracking and handling patient complaints.

And, if you’re interested in a comprehensive approach to run your dental practice and train your team, visit Dental Staff Training Levels.

AUTHOR: Jill Nesbitt
  • You made some good points here. The cold reality is that expenses can easily accumulate if not tracked properly. And balansing the equation seems like a resonable way to run a business where profit is shared more justly.

    August 31, 2016