Learn how to reduce overhead waste and
increase efficiency in all areas of your practice
Dentists love to talk about production numbers—and why not? It’s an easy
number to know and compare. The bigger, the better, right? When I began
writing this article in September 2021, one of the trending message board
threads on Dentaltown was “How Would You Increase Office Production by $1,000 a Day?” While office production is indeed a key performance indicator
and most of the contributions on the thread were great, some of the suggestions
could actually decrease overall net income if one is not careful.
Coming to terms with production and overhead
Production is the total amount of money charged for dental services for a
particular period, such as monthly or yearly. Adjusted production refers to that same
amount, but after the fees have been adjusted to reflect insurance participation,
discounts or refunds. Of the adjusted production, collection is the actual amount
of money received. Finally, net income is the amount of money remaining after
revenue is collected and expenses are paid. It’s also known as profit.
This article will focus on some key expenses that I, an average practicing
dentist, implemented to bring overhead costs down—or, in essence, how to
increase office net income by $1,000 a day.
Owning vs. renting:
The overhead differentiator
When someone says their overhead
percentage is less than 50%, it’s likely they
own the real estate of their practice. Not only
can they control their own rent, but they
are also building equity into a nest egg for
retirement, either as a landlord or through
the real estate sale. These practice owners
also have more autonomy and control over
their business. If you haven’t recently explored
refinance options on your office property, it
might be a suitable time to do so.
However, for the rest of us, if a great
practice becomes available and there is no real
estate option, we can try to save on overhead
elsewhere. Some benefits can include free
introductory rent, tenant improvement
allowances, or increased signage or visibility.
In Southern California, there can be
multiple dental offices in the same shopping
plaza, so I negotiated a lease exclusivity
clause. Recently, I renewed my lease and
leveraged the pandemic to receive some
concessions. My landlord started referring
patients to my practice as well, so these are
intangible benefits. I just wanted to mention
this when comparing overhead with dental
colleagues because the difference can be
major, especially in more expensive areas
of the country.
The not-so-obvious overhead
Improving collections will quickly lower
your overhead. Put a recurring reminder in
your calendar to run the aging report at the
end of every month. Print out the list and
highlight account balances over 60 days
and hand it to your front desk.
The easiest ones are balances owed
by insurance: Simply have the front office
resubmit the claim, because it is likely “lost.”
For balances owed by patients, if a billing
statement has already been sent, have the
front office send a text reminder instead.
(My front desk likes to jokingly threaten
repossession of the teeth!) Run the report
every month so your front office knows that
this work is important. Also, if you have
not done so, switching to electronic claims
and direct deposit payments will accelerate
insurance collections to as fast as one week.
Labor: The highest overhead
Many practices have staffing inefficiencies.
If your office is undergoing
staffing changes, use it as an opportunity
to reevaluate the positions. First, know
your practice and understand your business
model: high-end FFS, community clinic,
lean and mean, or prophy palace, to name
a few examples. If you do not know who
you are, it will be hard to identify the
For offices with a separate insurance
coordinator or sterilization tech, is it better
to pay eight hours/day for this, or could it
be outsourced to an outside company? For
offices that employ hygienists, would assisted
hygiene improve the patient experience and
eliminate wait times for appointments? How
about if the doctor combined prophylaxis
with operative, fixed or removable deliveries
or postoperative visits? Most patients
would appreciate saving an extra trip to the
dentist’s office. (Obviously, this applies to
routine prophylaxis. Anything else should
be rescheduled as gross debridement or
scaling and root planing.)
This list is not exhaustive. There are
many ways to run your office creatively; don’t
get stuck thinking about traditional models
only. After I reopened my practice after the
pandemic lockdown, my hygienist resigned
and because of staffing shortages, pay rates for
hygienists went up by 20%–30%. I evaluated some of my choices: a new hygienist, a new
assistant or a new associate doctor.
For me, a new hygienist at the new market
rate is highly inefficient (see Scenarios below).
On the other hand, a new assistant would
be a fraction of the cost of a hygienist and
will enable the practice to see more patients
in less time without compromising quality.
Lastly, because hygiene salary is
dentist per-diem salary in
some states, an associate doctor would be
an economical choice because they can
perform additional dental procedures that
a hygienist cannot. It became clear to me
that my practice could not go back to the
traditional model with a hygienist. In fact, I
found that by reconfiguring my staff, I was
able to afford pay raises, boost employee
retention and improve patient experience.
Now, is that counterintuitive or what?
Supplies: The insipid
Supplies are mundane. Nobody wants
to deal with them, and supply companies
know this. They will suggest a subscription
plan or creep up contracted rates when you’re
not paying attention. Dentists also talk a
good game about negotiating good prices or
joining groups for discounts, but have you
ever actually looked at your supply closet,
operatory shelves and cabinet drawers?
Marie Kondo, a tidying expert, helped
business clients declutter and save cash on
her Netflix series, and Breakaway dental
seminars are telling us the same thing
with their office designs. However, this
is something you can easily do yourself
over a weekend with some items from The
Container Store. Start by taking out all
your supplies and labeling your shelves
before organizing everything. If you find
expired local anesthetics, you can forget
about group discounts, because you just lost
$30! Reevaluate each product you use and
why. For example, in my practice, I don’t
need 10 different shades of composites; with
Tokuyama Omnichroma, I can simplify my
composite inventory. Another example: I
don’t automatically use Articaine on every
block; I try lidocaine first and chase with
Articaine only if needed.
Next, you must count everything. This
is an inventory list. It does not matter how
you choose to implement this concept, but
you cannot order supplies before you know
what you have (and thus do not have). This
counting can later be delegated to a staff
member to complete right before you order
supplies. So instead of having a list of what
is empty or needs to be ordered, we want a
list of how many we have.
When ordering supplies, be familiar
with what you paid last time—this is where
the supply companies will try to get you
with price creep. Take advantage of sales
and bulk-buy items with long shelf lives,
especially if you have extra storage space
like an unutilized or unplumbed operatory.
Lastly, when supplies do arrive, staff
must initial the packing list against the items
delivered and store them where they belong,
rotating the stock. Organization saves you
time and money, and you will never lose
track of expired products again.
Now your work is cut out for you
Being a good dentist and successful
practice owner requires discipline. Just like
when first learning to use the mouth mirror,
it will one day click and get significantly
easier if you are consistent and conscientious.
By committing to reduce overhead waste
and inefficiency, you can pass on these
cost savings to your loyal patients and staff
and start to enjoy some financial freedom.
Remember to keep your head up, be smart
and work hard. You’ve got this!
Dr. Claudia T. Le, a native
Californian, has been
serving the San Diego
community since 2015. Le
has worked every position
in the dental office and
holds a master’s degree
from Brandeis University,
a postbaccalaureate from
Harvard University and a
dental doctorate degree from Tufts University. Before
becoming a dentist, she traveled globally, helping
clients as a business software consultant for IBM. Her
family dental practice was featured in an Office Visit in
the December 2019 issue of Dentaltown.
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