A High-Touch Guide to Optimizing Dental Practice Overhead

Running a successful dental practice isn’t just about providing excellent patient care, although that’s certainly the heart of it. Behind every healthy smile you create is an intricate balance of financial decisions that can make or break your profitability.

One common struggle dentists face is managing dental practice overhead. And if it feels like your operating expenses keep you from truly enjoying the rewards of ownership, you’re far from alone.

Many dentists find themselves asking: “Where is all our revenue going?” You work long hours, yet the bank balance doesn’t reflect that hard work. Optimizing overhead isn’t about cutting corners. It’s about gaining clarity and control so your practice can run efficiently, profitably, and sustainably.

What Is Dental Practice Overhead and Why It Matters

Overhead refers to the ongoing costs required to keep your dental practice running, excluding provider salaries. These costs typically include rent, staff wages, dental supplies, lab fees, marketing, and technology.

For most practices, ideal overhead should range between 55% and 65% of gross revenue. Anything higher can significantly erode profit margins and hinder growth. When overhead creeps up unnoticed, it can sabotage cash flow, limit investment in your team or equipment, and increase stress levels.

Regularly evaluating your overhead positions you for better decision-making. Knowing exactly where your money is going allows you to:

• Uncover hidden inefficiencies draining resources
• Free up cash to reinvest in high-ROI areas like patient acquisition or advanced technology
• Enhance profitability without increasing chair time or patient load

Key Areas Where Overhead Can Be Optimized

Staff Costs

Labor is often the largest expense in a dental practice, typically accounting for 25% to 30% of revenue. Evaluate roles, responsibilities, and scheduling to ensure you're adequately staffed without over-hiring. Cross-training and streamlining workflows can enhance productivity without adding headcount.

Dental Supplies

Supplies should be approximately 5% to 6% of collections. Monitor usage and ensure you’re negotiating smartly with vendors. Bulk purchasing and subscription models can sometimes offer better pricing, but watch expiration dates and storage issues to avoid waste.

Tip: Assign a team member to track supply inventory monthly and compare vendor pricing quarterly to uncover cost savings.

Outsourced Services

From cleaning services to IT support, not all outsourcing is created equal. Review vendor agreements annually and ensure you’re getting value in terms of price, reliability, and performance. Redundant or outdated subscriptions can add up quickly if left unchecked.

Office & Facility Costs

If your lease is consuming more than 5% to 7% of your collections, it may be time to renegotiate or reassess your space needs. Facility updates like energy-efficient lighting or digital document management can lead to long-term savings.

How to Strategically Optimize Your Overhead

Effective overhead optimization isn’t about slashing expenses across the board. It’s about aligning your costs with your priorities, ensuring every dollar spent is either generating revenue or enhancing the patient experience. Here's a step-by-step roadmap:

• Conduct a Full Financial Audit: Use detailed profit and loss reports to categorize expenses and identify trends.
• Benchmark Against Industry Standards: Compare your expenses to standard overhead targets for similar practices.
• Identify Actionable Reductions: Look for non-essential or bloated expense categories first.
• Reinvest Savings Intelligently: Use the savings to fuel marketing, technology, or staff development, areas that drive growth.

FAQ: Does Cutting Costs Impact Patient Care?

Not when done strategically. In fact, reducing wasteful spending behind the scenes often frees up resources to deliver a better, more consistent experience for your patients. It’s about being intentional, not frugal.

Why Dentists Partner with Tooth & Coin for Overhead Optimization

Jonathan VanHorn and the team at Tooth & Coin work exclusively with dental professionals across the nation. We provide tailored financial strategies built around your unique needs, not generic accounting templates. 

Unlike typical CPAs, we focus on dentistry-only profit metrics, so we know what 'normal' should look like in your practice. Here’s what sets our approach apart:

• Dental-Specific Benchmarks: We know what percentages your staffing, supplies, and rent should be, because we only serve dental practices.
• Time-Saving Technology: Our streamlined accounting system can save you 15-20 hours every month, giving you more time to treat patients or enjoy life outside the office.
• Education You Didn’t Get in School: Our proprietary Tooth & Coin Academy offers bite-sized learning modules covering topics like overhead optimization, taxes, and ownership strategies.
• Profit-Focused Advisory: We don't just track your numbers. We help you make sense of them to grow your bottom line.

Making Overhead Work for You, Not Against You

Optimizing dental practice overhead isn’t just about saving money. It’s about building a more resilient, profitable, and enjoyable business. With the right strategy, visibility into your numbers, and guidance from experienced dental CPAs, you can make confident business decisions that align with your practice vision and values.

Need a clearer view of where your practice stands financially? Book a free strategy call with Tooth & Coin today and let’s get started optimizing the finances behind your smile-driven business.