What Dental Practice Owners Need to Know About Revenue

If a dental practice has a 70% overhead, each extra dollar collected by the practice delivers only 30 cents in profit to its owner, right? Wrong!

Dental practices are largely fixed cost operations, meaning that the additional revenue generated by a practice does not pick up the entire slate of overhead expenses. In fact, two of the largest expenses in your practice – your people and your space – are pretty much the same each month regardless of your revenue.

Assume a practice is able to boost collections by $5,000 per month, dental supplies and lab fees average 15% of collections, and the practice has other variable costs that are 5% of collections. The additional net cash generated by these collections is computed as follows:As you can see, even slight improvements in production and collections can provide a sizable cash return back to the practice owner.

If you would like to discuss ways that you can improve your top line, please contact our office at (205) 871-1880. We have ideas on the topic and strategic partners that can assist you in the design and implementation of revenue-building strategies.