A New Year Will be Here Whether You are Ready or Not

What’s your forecast for the new year? Will it be the same as last year, or have you made your New Year’s Resolution that next year will be better, different, or more profitable for your practice.


Don’t settle for the same lame resolutions you made last year.


The truth is…there are only a few things you can really control in a practice so you have to ruthlessly focus on these things to make a change.


What will you resolve to focus on in the coming year?


Staff Overhead. Of course, you need to pay your staff competitively. The staff is any practice’s most essential asset. However, the biggest item within your control is payroll and every individual practice must generate the right numbers to support their staff. This is all about the efficiencies and systems you build into your everyday operation.

In a practice with a single dentist, the hygiene department should be producing 25-30% of total gross revenue. If this isn’t the case, then your overhead is too high and you are operating at a loss.

You can’t fix this by cutting salaries. That only undermines your service. You have to increase your revenue. You can do this by maximizing your scheduling and recall system to improve efficiency and patient retention. More importantly, develop  concise step by step preventive and periodontal protocols to deliver optimum care for your patients. Consistent care with set guidelines will improve hygiene department revenue.


Capacity. Ideally, facility overhead should fall between 5-7%. While you may feel locked into your current lease or constricted in your current space, the capacity of your practice IS something you can change.

If you have four chairs operating at full capacity, this may be restricting your growth and revenue thereby increasing your overhead. Maybe it’s time to add a chair. Wouldn’t it be great to do more same day dentistry?

If your overhead is too high, look again. Maybe it’s time to hire another person. Practices often hit production plateaus when producers are working at full capacity. Hiring an EFDA allows the doctor to see more patients and do more dentistry in less time. Match hygienists and hours to adequately serve your patient base and new patient flow.

You work 8-5 Monday through Thursday. Good for you! But your facility sits idle for 3 days. What can you do to maximize your facility to offset costs? Consider other options like hiring an Associate dentist for evenings and weekends or adding a specialist or just renting your space for training purposes like dental assisting or sleep medicine.


Total Costs. Cutting expenses is hard, especially if you aren’t truly managing your costs. Do you fully understand your practice’s expenses?

If your numbers are different than suggested here, you need to find out why. The list of the biggest expense culprits is relatively short.

  1. Dental supplies. What is your practice purchasing and why? Do you have streamlined inventory management in place? Are you correctly allocating and controlling expenses in each area of the practice? Business, clinical and hygiene?
  2. Lab expenses. These should be less than 10% of your total costs and your fees should be 5 times your lab costs. If your numbers don’t match, maybe it’s time to re-evaluate your lab, re-negotiate, shop around, or adjust your fees.
  3. Technology and equipment. Do you have a technology strategy and a budget? If not, it’s all too easy to spend money on equipment that might not be the best fit for your practice. Large purchases need to be planned ahead to not only pay for itself, but to generate additional revenue. Do not get caught up in loans for technology that you cannot pay for or the lure of a one- time tax break. Think it through.


Yes, there are a lot of costs you can’t control and you must understand these as well.

Taxes, benefits, supplies, and marketing are all costs you will incur and cannot fully control.

The cost of your facility is out of your control. Whether your lease or own, your facility will incur cost. Any choice to purchase, relocate, or expand will incur a cost commitment. Calculate the cost to profit ratio.

One of the most elusive and simplest decisions you can make to gain better control is to begin planning when these costs will be incurred and manage the timing with good systems.


What can you do?

Really help your staff to understand overhead and the numbers. Just because you have a million dollar practice certainly doesn’t mean that the owner is taking home a million dollars. You staff needs to understand how the dollars get distributed.

Establish accountability with budgets and benchmark the numbers to clearly demonstrate how you expect your practice to run. If your staff understands the numbers, they will better understand that when expenses exceed the expectations it impacts profitability, therefore their salary, and they will better understand how to manage the timing. Help them understand how to plan ahead to manage necessary purchases.

Ask your CPA or bookkeeper to break out the expenses that you and your team need to watch. Ask them to point out the accounts that determine your profitability and fund the practice’s expansion. Set up a schedule to review the numbers regularly and make adjustments.


Once each year, pull your team of advisors into the same room for a concise, but complete, review. This may include your financial advisor, business banker, CPA, and your practice consultant. Ask them to review together and look at the true practice numbers and help you set goals for the coming year to improve your bottom line.

If you need help setting your resolutions and evaluating opportunities for increased revenue, give Vero3 a call. We work with practices every day, helping them improve their results, year after year.