The Most Important Number You Must Pay Attention To (It’s Not What You Think!)by Dr. Ron Arndt
Okay, maybe it is what you think. I bet you immediately thought of “Overhead.”
NOT!!!!!!!! If you are like most dentists.
But do you know what that really means? Yes, you want to keep overhead low, but do you have a clue what kind of number “low” is? Or even the norm? Ok, I bet you listened to one of your “buddies” tell you what you should be doing? Oh, you read an article in one of the dental magazines that quote studies and information that is 15 months past today? Ok, I bet you are getting pissed because I have just hit a “RAW” spot. In reality, you are not looking at your numbers and you hate this stuff…just let me treat my patients.
Keeping your overhead to 60-65% or less is critical. Who is holding you accountable? Mr. Practice Overhead? No…don’t get pissed at me…get pissed at how challenging it is to operate our practices profitably!
Specifically, the biggest piece of that overhead happens to be the allocation of staff costs. Staff costs should IDEALLY be no more than 24-30% (Dr. Charles Blair would tip the end of the scale if you have 2 Full-Time Hygienists) of gross receipts. That is your magic number. Staff costs include: all wages, all benefits, matching social security and FICA taxes; workman’s compensation and any of the Dental CEOs contributions to their benefit package.