nug

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I shadowed a general dentist today and he said that he has 80% overhead. Is overhead for a general dentist normally that high?
 

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There are many things that determine overhead. Everything from the building you practice in to the type of equipment. I am sure Dr. Jeff can shed some light on this.
 
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G. S. Khurana, DMD, MBA
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I thought overhead was around 50-55%. I think most dentists hit around that range.

DrJeff should give us a clear cut answer. Maybe 70-80% is more incoming dentists who just graduated and are including their loans as well.

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DrJeff

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Overhead, overhead, overhead. Something that you'll love and hate at the same time. The average amongst offices in my area (Southeastern New England) based on informal discussions with my colleagues is in the 55 to 65% range. I've heard of ranges from 30% all the way upto 85%:eek:

Things to remember though about overhead: You need to look at the fixed cost side(rent, equipment purcahses, salaries {basically these are fixed costs}, insurance for the practice, liscense fees, etc) verses the variable expenses (supplies, lab fees, continuing education costs, equipment purchases, etc). Notice that equipment purchases are both a fixed cost (paying off already bought equipment) and a variable cost (buying new "toys" for the office).

Last year, my office had an overhead of 53.6%, this year I'll almost guarentee that we'll be above 60% (we just bought a soft tissue Nd:Yag laser (chalk up $27,000+ to the varibale expenses, and a bleaching light ($3000) and we finished off equiping the new operatory that we built the end of last year add another $10000 to the variable side) This will drive up our overhead for this year, but these are costs that won't be occurring every year. As a rule of thumb if your looking at a progressive office, you'll have a higher overhead since new technology is always being incorporated into the office. Offices with lower overhead may not have as large an investment and interest in new technology.
 

Ronny

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Just curious, but are taxes usually included in fugures of overhead. Taxes are an operating expense too.
 

DrJeff

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Yes, the IRS falls into our variable overhead category. Most of the time it seems like that variable portion is too high!!:D
 

Ronny

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Dr Jeff, The IRS taxes us al too much. Now, I hope I'm not being too nosy but I'm no tax expert and I'm a curious guy... Just out of curiosity since you own your own business I know you have to pay business tax. But then do you have to pay an extra 40% income tax on the income you pay yourself, or do you just need to pay a 15% self employment tax? If it's the 40% income tax then it's way too excessive in the tax dept.
 
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