Blog · Case Study · Dental Finance
Same $2M collections, a $320,000 difference in take-home
Two general practices with nearly identical top lines and a six-figure gap in what the owners kept. The full explanation fits in five overhead lines, each with a healthy range you can check against your own P&L this week.
Two practices. Both general dentistry, both collecting right around $2 million a year, with similar payer mix, similar markets, and similar teams.
One owner took home $700,000 last year. The other took home $380,000.
When I show owners these two P&Ls side by side, the first instinct is to hunt for a dramatic explanation, maybe a bad partner or an embezzlement or a lawsuit big enough to justify a $320,000 gap.
There isn't one. The gap lives in five ordinary overhead lines that nobody was reading. In this post I'll walk through each line, give you the healthy benchmark range for a general practice, and show you the monthly habit that separates the two owners.
Why production is a misleading dental practice metric
Dentistry trains you to chase production. Every consultant, every study club, every practice management course points at the top line: produce more, collect more, grow.
Here is the problem with that. Production tells you how hard the practice worked. What you keep is the only number that builds a retirement, funds a second location, or makes a buyer lean forward. Overhead percentage, the share of collections consumed by running the practice, is where take-home is actually decided.
Both of these practices won on production. Only one of them won on margin.
The five overhead lines that explain the gap
When we laid the two P&Ls next to each other, the gap traced to five lines. None of them looked like an emergency on its own, which is exactly why nobody had touched them.
Dental supplies as a percentage of collections
The $380K practice ran supplies at 7.4% of collections. Healthy for a general practice is around 6%, and disciplined practices hold 5% to 6%. On $2M, that 1.4 point gap is roughly $28,000 a year, and it came from three quiet sources: price creep on items reordered for years without a price check, vendor sprawl across four or five suppliers with no consolidated pricing leverage, and doctor preference items nobody had questioned since they were first stocked. None of it was a careless decision. It drifted there, a fraction of a point at a time, until nobody could remember what normal looked like.
Hygiene payroll as a percentage of collections
One practice ran hygiene wages near 10% of collections. The other sat at 13%. Nobody was overpaid, and hourly rates at both practices were within a dollar of each other. The difference was structural. The 13% practice ran light hygiene schedules with open chair time nobody measured, appointment templates set years ago when the patient base looked different, and a recall system leaking quietly enough that no single week felt like a problem. Hygiene is usually the largest clinical payroll line on a dental P&L, so structure matters more here than anywhere else. Three points on $2M is $60,000 a year.
Front office payroll
Almost nobody tracks front office cost as a percentage of collections, and that blind spot is expensive. The lean practice tracked it and held the line. The other had added positions one at a time over a decade, each hire reasonable in the moment, the total never reviewed against collections growth.
Rent and the fee schedule
The $380K owner signed his lease in a hurry and hadn't touched his fee schedule since 2022. Four years of inflation ate his margins one point at a time while his rent sat above 7% of collections, well past the healthy ceiling. Both are paper problems, and both are fixable without seeing a single additional patient.
Collections rate
The strong practice collected 98% of what it produced. The other collected around 94%. That 4% is dentistry you already performed and gave away, roughly $80,000 of it, lost to unworked insurance claims, unsent statements, and balances that aged past the point anyone chased them.
Dental practice overhead benchmarks: the healthy ranges
For a general dental practice, these are the ranges we use when we review a P&L:
| Overhead line | Healthy range (% of collections) |
|---|---|
| Dental supplies | 5% to 6% |
| Hygiene payroll | 9% to 11% |
| Front office payroll | 8% to 10% |
| Rent and facility | 5% to 7% |
| Collections rate | 97%+ of production |
Ranges shift with specialty, market, and payer mix, so treat these as a starting point for a conversation, not a verdict. A practice can sit outside a range for a good reason. The problem is sitting outside a range without knowing it.
How the top practice monitors overhead every month
Here is what the $700K owner actually does differently, and it is almost disappointing in its simplicity. Once a month, he reads five numbers: supplies as a percentage of collections, hygiene payroll, front office payroll, rent, and collections rate.
Each number has a healthy range. Each has an owner on his team. When a line drifts outside its range, it gets a conversation that same month instead of waiting for year-end or the moment the bank account feels tight.
Ten years of that habit is the entire difference between these two owners. The dentistry and the effort were the same. The reading habit was not.
How to calculate your overhead percentages this week
Pull your most recent P&L and your trailing twelve months of collections. Divide each of the five lines above by collections and write down the percentage next to the benchmark range.
You don't need to fix anything yet. This week, the only job is to know your numbers, because the practice down the street collecting exactly what you collect might be keeping $320,000 more, and the entire explanation fits on one page you already own.
This week on the podcast, I walk through both P&Ls line by line, with the healthy range for each. If you'd rather have a second set of eyes on your numbers, that is the work we do every day.
Frequently asked questions
What is a good overall overhead percentage for a dental practice?
How often should I review my practice overhead?
Why is my collections rate below 97%?
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