Running a successful dental practice isn’t just about delivering great care — it’s about managing the financial health of your business. One of the most important metrics to track and understand is overhead. Mismanaging overhead can quietly eat into your profits, while smart overhead management can boost your bottom line without compromising patient care.
In this article, we’ll break down what overhead is, why it matters, and how you can control it more effectively.
What Is Overhead in a Dental Practice?
Overhead refers to the ongoing expenses required to keep your practice running, excluding the compensation you (the owner) take home. It includes everything from rent to lab fees to staff wages.
Common Overhead Categories, as seen on your Financial Statements
- Staff Costs – Staff Salaries, Payroll Taxes and Benefits
- Occupancy Costs – Rent, Utilities, Repairs & Maintenance
- Direct Costs – Dental Supplies & Lab Fees
- Billing Costs – Data Processing, Merchant Fees
- General Costs – Insurance, Professional Services, Office Supplies, Dues & Licenses
- Hygiene Costs – Hygiene Salaries, Payroll Taxes and Benefits
These are costs you incur regardless of how many patients you see in a day. Keeping them under control is critical for profitability.
What’s a Healthy Overhead Percentage?
Most dental practices aim to keep overhead in the range of 55% to 65% of collections. However, this can vary depending on the practice type (how insurance heavy), the number of providers and location. Data from our recently published General Dentistry – Dental Practice Income Survey, shows the average overhead for a single dentist practice around 61%, with the average multi-dentist practice closer to 58%.
If your overhead is consistently above 70%, it may be time to review your spending patterns and look for inefficiencies or consider whether you should remain in-network with certain insurance providers. By understanding where your money goes and making strategic decisions to control it, you can protect your profit margin, reinvest in growth, and build long-term financial stability.
That said, sometimes it’s okay—and even necessary—to spend a bit more in certain areas. Maybe you choose a pricier lab because you trust their quality, or you invest in your team with competitive pay & benefits to keep them motivated and loyal. These intentional decisions aren’t just expenses—they’re investments in your practice’s future.
Tips for Managing and Reducing Overhead
- Track your expenses monthly
Review your profit and loss statement regularly to catch spending trends early. - Benchmark against industry norms
Compare your practice’s numbers to dental industry standards to see where you’re overspending. - Negotiate with vendors
Shop around for better rates on lab work, supplies, and software. Loyalty matters, but cost control does too. - Maximize staff productivity
Ensure team members are working at the top of their skillset. Cross-training can reduce the need for excess hires. - Utilize technology
Automating scheduling, billing, and reminders can reduce administrative overhead and errors. - Watch your payroll closely
Payroll is often the largest expense in a dental office. Make sure staffing levels match production demand. This can vary greatly between a fee for service only practice, compared to a practice that is PPO heavy.
Drill Into the Details, Fill In the Profits
Managing overhead well is essential to running a successful dental practice. By understanding your expenses, keeping a close eye on them, and making smart adjustments, you can boost your financial health without compromising the care you provide. Even small changes can have a big impact on your bottom line.