How to Decrease Your Dental Practice Costs

How to Decrease Your Dental Practice Costs

As the owner or manager of a dental office, finding effective ways to trim your budget while providing quality services is key. It’s no secret that running a practice can be expensive, and the more tips you have about saving money and decreasing practice costs, the more you can improve your profit margin.

Find out everything you need to know about overhead expenses and how to lower dental costs in this guide.

Creating a Dental Practice Cost Breakdown

A critical part of learning how to decrease your dental practice costs is to create a dental practice overhead breakdown. Your dental practice overhead total looks at all of your monthly expenses and fixed costs.

There are two types of overhead you need to know about — direct overhead and fixed overhead. In order to take a comprehensive look at your dental practice overhead, you must first understand both kinds of overhead.

Direct Overhead Costs

Direct overhead, or variable overhead, includes expenses that change based on the amount of work your practice does. A few examples of your direct overhead costs likely include the following:

  • Employee benefits: Depending on your specific practice, you may give employees different perks, such as bonuses, that can change from month to month.
  • Dental and office supplies: The amount you spend on stocking and restocking your supplies is affected by how many patients you see, making them direct overhead costs.
  • Lab expenses: Lab expenses vary depending on how much work you require from your dental lab.
  • Credit card processing fees: Credit card processing fees can add up quickly and affect profit margins, so they must be taken into account. Usually, these fees are based on a percentage of the revenue you collect when patients use the credit card processor, meaning you pay more to process those payments when more people use the processor.
  • Continuing education: Keeping yourself and your staff informed and educated on proper industry practices is essential and may be part of your overhead costs. These costs may vary depending on how you access continued education services. For example, subscriptions are a fixed cost, but attending events requires money for traveling and accommodation when necessary, making that a variable cost.
  • Maintenance: This category covers any unexpected maintenance fees you may pay in a given month.

Fixed Overhead Costs

Fixed overhead refers to expenses that stay consistent regardless of how busy your practice might be. Your fixed overhead costs may include the following:

  • Rent: The rent you pay for your practice’s operating space is a fixed monthly cost.
  • Utilities: Utilities like water, electricity, waste disposal, sewage and heating can be monthly fixed costs.
  • Insurance: The monthly premium you pay for your practice’s insurance is considered fixed overhead.
  • Marketing and advertising: Marketing and advertising budgets are set as monthly expenses.
  • Salaries: The salaries of your office and dental staff are likely your most significant monthly expense.

Overhead Estimates

On average, around 60% of a practice’s profits should be spent on monthly expenses, leaving a 40% profit margin for your dental office. You should spread your collections carefully across the different categories listed above to keep you on track. How exactly you plan to distribute your collections depends on your specific practice, but creating a budget for your practice is essential to defining your dental office profit margin.

7 Tips for Decreasing Overhead Costs

7 Tips for Increasing Dental Practice Profit Margin

These tips for decreasing your overhead costs will teach you how to lower the cost of dental practice operation expenses without sacrificing the quality of care offered to your patients.

1. Find the Right Group Purchasing Organization

Joining the right group purchasing organization (GPO) is a reliable way to increase your operational efficiency and provide your dental office with many other advantages. A GPO helps your dental practice save money on dental supplies and reduces dentist equipment costs to help you improve your bottom line.

There are several points to consider when trying to find the right GPO. Factors like associated suppliers, discounts, shared values, affordability, and services offered should all play a big part in helping you decide on the best GPO for your practice.

2. Evaluate Your Expenses

Mapping out your overhead estimates will help you plan out your expenses by allowing you to find out where you can afford to cut down on costs without reducing the quality of your services. Even expenses that might seem minor can add up in the long run, so don’t be afraid to consider cutting discretionary costs.

3. Optimize Your Technology Use

Using marketing automation software, cloud-based servers, and IT services can help you maximize productivity and reduce employee expenses by automating tasks. Automation can help your practice with appointment scheduling, email marketing, invoicing, online reputation management, and even social media.

4. Choose the Right Lab Partners

Paying the right amount for your lab expenses can save your practice money. The dental lab you choose to partner with should help you improve the quality of your services and be reasonably priced. Dental labs are an important part of your business, but you need to ensure they offer you the best possible deal.

5. Invest in Reliable Equipment

You can save on office and dental equipment by investing in high-quality products. Replacing furniture and dental equipment becomes costly when done frequently. Spending more on reliable furniture, computers, and equipment can save you money in the long run, as you’ll have high-quality pieces that last for several years.

Synergy Dental Partners has partnerships with partners like Darby and Renew Digital, allowing practices to save on high-quality imaging equipment and dental supplies from trusted sources.

6. Save on Insurance

Insurance is a necessary overhead cost for any dental office. Ensure you’re paying for an insurance plan that gives you the most at the best price. The reputation of an insurance company and its plans are valuable data points to consider when deciding which insurance you want to invest in.

7. Compare Quotes

Ask for quotes from companies and suppliers when beginning a new business relationship or venture. This allows you to compare costs and benefits to make sure you’re paying the best price you can get for your supplies and equipment. 

Partner With Synergy Dental Partners

Synergy Dental Partners is a GPO that gives independent dental practices access to benefits such as discounts on supplies and services, continuing education, cloud-based procurement services and insurance. When you partner with Synergy Dental Partners, we work to give your dental practice the best solutions and help you cut costs, increase your profit margins and reduce your overhead.

Contact us today to find out what else we can do for you and your practice.

Partner With Synergy Dental Partners

Join Synergy Dental Partners Today

Are you considering picking a dental GPO? Check our website or contact us to learn about the services we provide. We make onboarding easy if you’re ready to join.

Read what our members have to say about Synergy in our Dental Product Shopper Evaluation

“These are the same brand name dental supplies at a discounted price.”

Thomas Farley,
DMD, Charlotte, NC

“I can order from one vendor with confidence that the products are at a good price point.”

Gregory Camp,
DDS, Mansfield, TX

“Synergy allowed me to leverage the power of group buying, saving money and lower overhead.”

Levy Do,
DDS, Charlotte, NC