Overhead is a critical factor in practice profitability. Dentists must focus on overhead monthly and annually to understand its exact effect on the practice. Analyzing overhead in this way helps practice leaders make the decisions necessary to control expenditures and ensure practice success.
Monitor overhead. Your approach to monitoring overhead doesn’t need to be complicated. In fact, it should be very straightforward. Make a list of expense categories, the total expenses in each category month to date and year to date, and the percentage each category represents of total overhead. If the overhead adds up to 65% of practice revenue, then profit is 35%, including all monies paid to the doctor.
Don’t make decisions that hurt the daily performance of the practice. As the saying goes, “You get what you pay for.” If you change laboratory vendors to reduce costs but your level of efficiency and accuracy drops, it’s just not worth it.
Dr. Roger P. Levin is CEO of Levin Group, a leading practice management and marketing consulting firm. To contact him or to join the 40,000 dental professionals who receive his Practice Production Tip of the Day, visit LevinGroup.com or email [email protected].
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