Is overhead really that high...

[OoPredentoO]

or do you think some dental practices report a higher overhead cost to lower their taxable income?

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[2TH MVR]

Do you work for the IRS? 🙂

 

[DocJL]

Yes.

Overhead in dentistry is brutal.

Controlling it is also the KEY to a successful practice.

 

[setdoc7]

Overhead is high. Think about all of the perishable and disposable supplies we use. Not even mentioning the fixed costs and ever escalating salaries.

 

[2TH MVR]

There's only 2 ways to reduce the overhead. One way is to reduce the actual overhead itself. This is difficult since fixed and non-fixed costs tend to only rise with time (rent, staff costs, utilities, etc., etc). The other way is to increase production/collections which is obviously the preferable way.

 

[ysrebob]

Many people would pad their reported overhead with personal expenses if opportunity presents, or put their kid on the payroll or etc... but this is still chump change in a business that probably turns over at least $3K to easily 10K or more a day gross revenue (a pretty typical solo GP office). Tax shenanigans aside, expenses truly are a large % of gross: anywhere from 50% (highly efficient multidoc office or very tightly run low-overhead small rural office) to 70% or more (typical suburban solo practice).

 

[DocJL]

Many people would pad their reported overhead with personal expenses if opportunity presents, or put their kid on the payroll or etc... but this is still chump change in a business that probably turns over at least $3K to easily 10K or more a day gross revenue (a pretty typical solo GP office). Tax shenanigans aside, expenses truly are a large % of gross: anywhere from 50% (highly efficient multidoc office or very tightly run low-overhead small rural office) to 70% or more (typical suburban solo practice).

As an experienced GP, my office hits 10k a couple of times a month. Hardly "easily", or "typical".

That said, I agree with your overhead numbers.

Was reading a thread not too long ago where some dental students that "had it all figured out" were stating with conviction that the average general dentist office was 50% overhead, and they thought they could get it down to 40%. I remember thinking, "good luck with that". Roger Levin, DDS, one of the most well known practice consultants in the business, shoots for a goal of getting practices down to 59% overhead.

 

[ysrebob]

True... “easily” was a poor choice of words in several ways. I almost never have a $10K gross production day (tiny, low-overhead office) but it’s well withing the range of normal for GP production.

It's not "easy" in any sense, though. Even a $3K gross (much more the norm in little office like mine) takes effort. The single biggest thing I did not grasp as a predent shadowing is how exhausting it is to keep up with the schedule and do good work under difficult circumstances, all while bantering about patients’ kids and vacations and trying to make it look effortless. That dichotomy creates strain. At the end of most days I go home completely worn out. This is a great profession but sure as heck not an easy one. A good dentist reflexively hides that from his/her patients, and thus also from shadowers.

It’s also IMO why people should be focussed on holding down student loans: it’s not just the actuarial fact of many years of payments, it’s the blood sweat and tears that will come out of you to produce the amount of dentistry it takes to pay back the loans.

 

[setdoc7]

I agree with ysrebob. Not easy to do quality work all day. Easy to do crap. Poor work fails fast and needs to be redone. What new providers, dental students, and predents also fail to grasp is that not all teeth, patients, and tissue respond the way you would expect. Perfect endo fills can hurt. New crowns can break. Major connectors can break. Implants do not always integrate, and peri mucositis and implantitis are real things. Sometimes, the level of competency of the dentist is not determined by all the successes they have, but how they deal with the problems which arise.

 

[sb_ort]

Where does most of the overhead cost go? Supplies, Salaries, Insurance?

Also which disposable surgical instruments / tools are used by Dentists and Orthodontists for daily use or Oral Surgery?

 

[setdoc7]

I will add one more thing. Holding down overhead is directly on the owner. Buying supplies is the same for all businesses, and the price is negotiable. If you do not believe me, talk to your rep about the retail price he/she is giving you, and the university/hospital price. The company is not losing money. The retail price pads the reps commission. Ask for a discount. Be prepared to hear no. Be prepared to find another supplier who will say yes. Business is business. Nothing personal.