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what makes a practice have such a high overhead? low overhead?
overhead
- Thread starter cluelessdr
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Expenses for dental materials, lab fees, equipment, building rent/mortgage, etc. Higher these costs are the higher the overhead. But it is possible to run a dental clinic with low overhead. I know some Endodonists who have extremely low overhead in their offices
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HIGH OVERHEAD:
-Overstaffing. For many offfices, staff salaries take up a largest portion of the overhead. The F/T staff get a guaranteed daily pay regardless your office has patients or not. The law requires that you have give them sick pays. If you give them health benefit, holiday pay, and 401k etc, your overhead will be significantly higher. When I looked for an office to buy, I noticed that a lot of selling older docs hired too many employees in their offices...and the employees were sitting around doing nothing.
-Rent. The landlord charges you by square footage. The larger the office, the higher the rent. You also have to pay more money to build a larger office because the builder also charges by square footage. Higher construction cost = more loan to borrow = higher monthly loan repayment bills.
-Outside services: dental/ortho lab, call center, 3D printing service, Invisalign etc.
-Technology. The more modern equipment you have in your office, the more money you have to spend to maintain and to repair them.
LOW OVERHEAD: pretty much the opposite of the above
-Fewer staff. Hire fewer F/T and more P/T employees. You don't have to give P/T employees any benefit. You can adjust their work days according to how busy your office is. Some assistants have young children and only want to work P/T. Cross-train your staff so one person can perform multiple tasks. If you are good and fast, you don't need to hire another associate dentist to help you. If you are willing to do all the cleanings yourself, then you don't need to split your profit with the hygienist.
-Cheaper rent: if you get rid of the doctor's office and the staff lounge, you can have a smaller office (with lower monthly rent) and still have a lot dental chairs to treat your patients. For a specialty office, you don't need to set up an office in an expensive highly visible shopping center because you get patients from GP referrals and word-of-mouth (for ortho).
-Fewer outside services: if you can do many of the lab works in-house, your lab bills will be smaller.
-Fewer modern equipment. If you stick to what you were taught at school....ie the more traditional way to treat your patients, you don't need to spend a lot of money to equip your office. A reliable Belmont dental chair and a cheap $10 Ebay handpiece are all you need.
-Overstaffing. For many offfices, staff salaries take up a largest portion of the overhead. The F/T staff get a guaranteed daily pay regardless your office has patients or not. The law requires that you have give them sick pays. If you give them health benefit, holiday pay, and 401k etc, your overhead will be significantly higher. When I looked for an office to buy, I noticed that a lot of selling older docs hired too many employees in their offices...and the employees were sitting around doing nothing.
-Rent. The landlord charges you by square footage. The larger the office, the higher the rent. You also have to pay more money to build a larger office because the builder also charges by square footage. Higher construction cost = more loan to borrow = higher monthly loan repayment bills.
-Outside services: dental/ortho lab, call center, 3D printing service, Invisalign etc.
-Technology. The more modern equipment you have in your office, the more money you have to spend to maintain and to repair them.
LOW OVERHEAD: pretty much the opposite of the above
-Fewer staff. Hire fewer F/T and more P/T employees. You don't have to give P/T employees any benefit. You can adjust their work days according to how busy your office is. Some assistants have young children and only want to work P/T. Cross-train your staff so one person can perform multiple tasks. If you are good and fast, you don't need to hire another associate dentist to help you. If you are willing to do all the cleanings yourself, then you don't need to split your profit with the hygienist.
-Cheaper rent: if you get rid of the doctor's office and the staff lounge, you can have a smaller office (with lower monthly rent) and still have a lot dental chairs to treat your patients. For a specialty office, you don't need to set up an office in an expensive highly visible shopping center because you get patients from GP referrals and word-of-mouth (for ortho).
-Fewer outside services: if you can do many of the lab works in-house, your lab bills will be smaller.
-Fewer modern equipment. If you stick to what you were taught at school....ie the more traditional way to treat your patients, you don't need to spend a lot of money to equip your office. A reliable Belmont dental chair and a cheap $10 Ebay handpiece are all you need.
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You hit most of the points deadon w/ some additions below.
- Staff should never be idle. They must always be doing something, and there's ALWAYS something to do. There is such a thing as understaffing, where efficiency is impacted, but that only occurs with higher volume offices. There's a minimum amount of staff to be able to maintain efficiency. I think that floats between 3-4 staff in a moderate volume office.
- Rents. Definitely hard to control on a per sq ft basis, because location does play a factor in walk in patient visits. Making efficient use of the space is important. However, this can be negated with more advertising (yet another cost). You could also purchase a property and reap some benefits, but that's more capital intensive and has its own risks.
- Outside services: this depends on time v. money. If it's cheaper to delegate in house (factor in any materials/equipment/labor cost), then fabricate in house. Otherwise, you may end up spending more trying to keep a service in house. When I was lower volume, I did my own IT, plumbing, etc... These days, my time is worth a lot more that I don't have the time to do these on my own (lost production every minute not spent doing dentistry).
- Modern equipment: Modern equipment is fraught with electronics that break a lot more readily. An example is analog pelton and crane autoclave. Those are built like a tank and don't break down like the new statims or midmarks with the fancy electronics. I think the $10 ebay pieces are great for ortho. However, for preps, I am not a fan. It takes too long to prep a tooth with air driven. I want my prep to be one and done in a minute or less. That is achievable with the torque on electric handpieces. Something I think is extremely stupid is the use of a 150k laser on preps and having the finish it off with a handpiece afterwards.
- Recurrent subscriptions: Things that have an annual subscription fee. Most notorious are digital impression machines. In a low volume office, they do not make much sense.
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I agree with the
posts.
Also...
1. Always shop for good deal on dental supplies. Month to month and quarterly promotions are always there to be taken advantage of. If you can, buy supplies in large bulks for better pricing. Like shopping at Costco or Sam’s Club, versus local grocery shop. Text your local dental supplier regularly if you can - to negotiate better pricing. Teach your staff how to utilize supplies properly, with emphasis on conserving and monitoring supplies day to day. Don’t be shy to look up dental supplies on amazon, eBay, etc.
2. Don’t (ever) micromanage staff unless they are a new recruit. Inspire them to work hard, efficiently, and independently. Coach them to learn and follow your work ethics. Have monthly staff meetings, and use those meetings as a team building opportunity. They will eventually see your office as an institution - a place they are proud to be affiliated with and work at. Don’t let them sense you are too much of a boss, but more of a colleague and a team member. All this can help you keep your staff for decades and avoid a costly revolving door for staff turnovers.
3. Aim to buy the building your practice is in from your landlord. If not, have a plan to buy a close by available land and build a new building, from the ground to the crown. Teach yourself the process of real estate ownership, the sooner the better. Plan accordingly, it can take a year or 2 to do it. Fear is normal in getting into the commercial real estate world, let the landlord know your intent early when you sign a lease - with a “first right of refusal” clause in your space lease. Your office is better off in the long term in saving money going out for rent and the tax benefits that will reduce your income taxes every year.
4. Consolidate expenses. If you have more than 1 practice, be sure to have separate LLC’s and books for liability issues - but create common expenses; 1 payroll account, 1 accountant, 1 office cleaner, 1 dental supplier, 1 lab, 1 equipment service guy, 1 computer support service, 1 alarm company, almost 1 of everything for all offices. It will save you a lot of time and money to track all your numbers for fewer vendors and support systems.
5. Chair-side time and overall communication in the office. Try to improve how long you spend with each patient and the communication between you and the patient, and with other staff. Think like a Jedi, it comes with a lot of experience. Time is the “invisible cost”; less talking, more productivity. A lot of things that happens in an office can be “cut to the chase”. Don’t defer issues to a later date that can be addressed sooner - take care of things as they happen. Don’t let paperwork pile up on your desk. Turn things around quicker. Set-up autopay on all expenses and direct deposits for all insurances reimbursements - less trips to the mailbox for you or your office manager, which also reduces the risk of embezzlement. Your smart phone is your 24/7 accountant, you can track everything (if you choose to) in your office through apps. Time, time, time... that’s your religion in the office.
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posts.Also...
1. Always shop for good deal on dental supplies. Month to month and quarterly promotions are always there to be taken advantage of. If you can, buy supplies in large bulks for better pricing. Like shopping at Costco or Sam’s Club, versus local grocery shop. Text your local dental supplier regularly if you can - to negotiate better pricing. Teach your staff how to utilize supplies properly, with emphasis on conserving and monitoring supplies day to day. Don’t be shy to look up dental supplies on amazon, eBay, etc.
2. Don’t (ever) micromanage staff unless they are a new recruit. Inspire them to work hard, efficiently, and independently. Coach them to learn and follow your work ethics. Have monthly staff meetings, and use those meetings as a team building opportunity. They will eventually see your office as an institution - a place they are proud to be affiliated with and work at. Don’t let them sense you are too much of a boss, but more of a colleague and a team member. All this can help you keep your staff for decades and avoid a costly revolving door for staff turnovers.
3. Aim to buy the building your practice is in from your landlord. If not, have a plan to buy a close by available land and build a new building, from the ground to the crown. Teach yourself the process of real estate ownership, the sooner the better. Plan accordingly, it can take a year or 2 to do it. Fear is normal in getting into the commercial real estate world, let the landlord know your intent early when you sign a lease - with a “first right of refusal” clause in your space lease. Your office is better off in the long term in saving money going out for rent and the tax benefits that will reduce your income taxes every year.
4. Consolidate expenses. If you have more than 1 practice, be sure to have separate LLC’s and books for liability issues - but create common expenses; 1 payroll account, 1 accountant, 1 office cleaner, 1 dental supplier, 1 lab, 1 equipment service guy, 1 computer support service, 1 alarm company, almost 1 of everything for all offices. It will save you a lot of time and money to track all your numbers for fewer vendors and support systems.
5. Chair-side time and overall communication in the office. Try to improve how long you spend with each patient and the communication between you and the patient, and with other staff. Think like a Jedi, it comes with a lot of experience. Time is the “invisible cost”; less talking, more productivity. A lot of things that happens in an office can be “cut to the chase”. Don’t defer issues to a later date that can be addressed sooner - take care of things as they happen. Don’t let paperwork pile up on your desk. Turn things around quicker. Set-up autopay on all expenses and direct deposits for all insurances reimbursements - less trips to the mailbox for you or your office manager, which also reduces the risk of embezzlement. Your smart phone is your 24/7 accountant, you can track everything (if you choose to) in your office through apps. Time, time, time... that’s your religion in the office.
Sent from my iPhone using Tapatalk
