Dentaltown January 2022 - 68

Owning vs. renting:
The overhead differentiator
When someone says their overhead
percentage is less than 50%, it's likely they
own the real estate of their practice. Not only
can they control their own rent, but they
are also building equity into a nest egg for
retirement, either as a landlord or through
the real estate sale. These practice owners
also have more autonomy and control over
their business. If you haven't recently explored
refinance options on your office property, it
might be a suitable time to do so.
However, for the rest of us, if a great
practice becomes available and there is no real
estate option, we can try to save on overhead
elsewhere. Some benefits can include free
introductory rent, tenant improvement
allowances, or increased signage or visibility.
In Southern California, there can be
multiple dental offices in the same shopping
plaza, so I negotiated a lease exclusivity
clause. Recently, I renewed my lease and
leveraged the pandemic to receive some
concessions. My landlord started referring
patients to my practice as well, so these are
intangible benefits. I just wanted to mention
this when comparing overhead with dental
colleagues because the difference can be
major, especially in more expensive areas
of the country.
Accounts receivable:
The not-so-obvious overhead
Improving collections will quickly lower
your overhead. Put a recurring reminder in
your calendar to run the aging report at the
end of every month. Print out the list and
highlight account balances over 60 days
and hand it to your front desk.
The easiest ones are balances owed
by insurance: Simply have the front office
resubmit the claim, because it is likely " lost. "
For balances owed by patients, if a billing
statement has already been sent, have the
front office send a text reminder instead.
(My front desk likes to jokingly threaten
68 JANUARY 2022 // dentaltown.com
repossession of the teeth!) Run the report
every month so your front office knows that
this work is important. Also, if you have
not done so, switching to electronic claims
and direct deposit payments will accelerate
insurance collections to as fast as one week.
Labor: The highest overhead
Many practices have staffing inefficiencies.
If your office is undergoing
staffing changes, use it as an opportunity
to reevaluate the positions. First, know
your practice and understand your business
model: high-end FFS, community clinic,
lean and mean, or prophy palace, to name
a few examples. If you do not know who
you are, it will be hard to identify the
staffing inefficiency.
For offices with a separate insurance
coordinator or sterilization tech, is it better
to pay eight hours/day for this, or could it
be outsourced to an outside company? For
offices that employ hygienists, would assisted
hygiene improve the patient experience and
eliminate wait times for appointments? How
about if the doctor combined prophylaxis
with operative, fixed or removable deliveries
or postoperative visits? Most patients
would appreciate saving an extra trip to the
dentist's office. (Obviously, this applies to
routine prophylaxis. Anything else should
be rescheduled as gross debridement or
scaling and root planing.)
This list is not exhaustive. There are
many ways to run your office creatively; don't
get stuck thinking about traditional models
only. After I reopened my practice after the
pandemic lockdown, my hygienist resigned
and because of staffing shortages, pay rates for
hygienists went up by 20%-30%. I evaluated
SAMPLE STAFFING RECONFIGURATION*
Baseline (before the pandemic lockdown):
Front office
Dental assistant
Hygienist
TOTAL PAY PER HOUR
Scenario 1 (after the pandemic lockdown):
Front office
Dental assistant
New hygienist
TOTAL PAY PER HOUR
$x
$y
$z
$85
$85/hour x 8 hours =
$680/day
x 4 labor multiplier =
at least $2,720 daily
collection needed
$x + market rate increase
$y + market rate increase
New market rate
$105
$105/hour x 8 hours =
$840/day
x 4 labor multiplier =
at least $3,360 daily
collection needed
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Dentaltown January 2022

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