How to Manage a Dental Practice to Increase Profits

Dental practices are unique in that they involve professional, highly-skilled activities and yet have the same needs as any business to make a profit in order to thrive. To improve the financial performance of a dental practice, there are two main areas of focus to manage. These are reducing overhead and increasing revenues. Additionally, the financial fine-tuning of a dental practice includes increasing revenues from the most profitable activities.

Here are some tips to consider that help improve the financial results of a dental practice.

Reduce Overhead

Overhead for dental practices averages 45% to 60% of collections. This figure does not include compensation for the dentist(s) running the practice. This overhead figure is the amount necessary to pay for staff and office expenses. Of the overhead expenditures, about half of it goes to pay staffing costs.

An effective way to reduce overhead is to use technology solutions that automate processes that would otherwise have to be done by staff. These processes include:

  • Using text messages and emails to automatically confirm appointments and send reminders.
  • Fill up the schedule for any cancellations.
  • Send out surveys to get patient feedback after each visit.
  • Encouraging, collecting, and posting positive reviews on review sites and social media in order to attract new patients.
  • Outsourcing the past due account collection efforts.

Many dental practices make the mistake of using highly-paid staff to do these menial tasks that can easily be outsourced and/or automated, thereby reducing overhead.

Increase Revenues from More Profitable Activities

In addition to lowering costs, in order to make more profits the practice needs to increase revenues. However, just increasing revenues alone is not sufficient, if only a tiny portion of the increase results in profits. Instead, the concentration should be on building up the activities that increase revenues and profits.

Things that can be done to achieve this include.

  • Add an extra dental operatory station that is not booked. This makes it easier to accept same-day walk-in patients. Profits from the use of this extra dental chair are approximately 80% to 90% of the billings because the overhead of the practice is a fixed expense. The only added expenses for using this chair, beside the equipment expense, are the dental supplies and lab costs. Just doing one extra procedure per day can have a very positive impact on the bottom line of the practice.
  • If the practice accepts PPO patients, consider getting rid of the lowest paying one. Use the time that is freed up to add new treatments and procedures that are more profitable.
  • Run daily reports to stay focused on long-term goals and adjust activities towards more profitable efforts.
  • Increase fees annually on a per item basis after a detailed review not based on a standard cost-of-living increase percentage. Some procedures may need to go up substantially to be balanced with the goals of the practice. Other increases may be more modest and some procedures may need to go down in price if the practice is not competitive for those items.
  • Work on patient retention rates and visits by existing patients. Look for the 20% of the patients that bring in 80% of the revenues and concentrate on them.
  • Use online marketing techniques that focus on the local area to automatically make appointments. Use the best practices for search engine optimization (SEO) for the website of the practice and make sure the website is able to display properly on mobile devices. Usually, outsourcing the online marketing is a good idea. Be sure to work with a qualified company that can produce results.
  • Offer third-party financing to patients to maximize revenues per visit. Allow adequate time to explain the treatment protocols and the intended pathway for long-term dental care. Make sure to perform and market valuable procedures such as the installation of crowns and bridgework.
  • Monitor and track critical financial parameters to compare against benchmarks that are in alignment with the long-term strategic goals of the practice. Make adjustments quickly, as required, when something gets off track.


By focusing on these issues to reduce overhead and increase revenues from more profitable activities, it is possible to improve the financial results of just about any dental practice. This will help a practice continue to grow and thrive even in uncertain economic times.