Dental overhead review checklist

Gather the numbers

• Pull the P&L for the last 12 months and for the 12 months before that.
• Pull 12 months of bank and credit card statements to catch spending the P&L lumps together or misses. Often missed
• Pull collections, not production, for the same months from practice management. Overhead is measured against collections.
• Set owner pay, owner benefits and personal expenses apart from operating costs.
• Mark one-time costs such as a major repair, legal matter or build-out so they do not distort the comparison.

Categorize every cost

• Staff: wages, payroll taxes, benefits and retirement contributions for hygienists, assistants, front desk, office manager and associates.
• Supplies: clinical and office supplies and small instruments.
• Lab: every outside lab invoice, including remakes you paid for.
• Facility and equipment: rent or mortgage, utilities, common-area charges, cleaning, building repairs, and equipment leases and repairs.
• Marketing: agencies, ads, website, directories and patient communication tools.
• Admin and other: insurance, software, CE, accounting, legal, bank and card-processing fees, and dues. Nothing stays in "miscellaneous" without a label.
• Each category is calculated as a share of collections, and total overhead as total operating costs divided by collections.

Compare with your prior year

• Each category is compared with the same 12 months a year earlier, both in dollars and as a share of collections.
• Every category that grew faster than collections is flagged.
• Monthly totals are scanned for spikes, and each spike is explained.
• The totals are run through the overhead calculator to see each category as a share of collections and of total overhead.

Staff costs

• Paid staff hours are compared with scheduled patient hours by day of the week, looking for fully staffed low-production days.
• Overtime is reviewed by person and by reason.
• Payroll is reconciled against the current roster, so no one is paid who no longer works there. Often missed
• Bonuses and raises are tied to results you can name.
• Benefit plans and employee cost-sharing are reviewed at each renewal.

Supplies

• The top 20 supply items by annual spend are listed and quoted by at least one competing vendor.
• Invoices are checked to confirm contract or buying-group pricing is actually being applied. Often missed
• Par levels are set, and one person orders on a fixed day.
• Shelves are checked for expired stock and duplicate brands of the same product.
• Monthly supply spend is compared with monthly production, not just with last month's bill.

Lab

• Lab fees are totaled by lab and by case type.
• Remakes and adjustments are tracked by cause and by provider. Often missed
• Price and turnaround are compared across at least two labs for your highest-volume case types.
• Lab invoices are matched against the case log.

Facility and vendor contracts

• Every recurring contract is listed: lease, equipment leases, software, phones and internet, IT, answering service, card processing, marketing and maintenance.
• Each contract's renewal date, notice deadline and auto-renew terms are on a calendar. Often missed
• Unused subscriptions and software seats, including those for former staff, are cancelled.
• The card-processing statement is reviewed for the effective rate and any added fees.
• The lease's renewal date, rent escalations and pass-through charges are known and on the calendar.
• Business insurance is quoted by at least one other carrier at renewal.

Marketing and admin

• Marketing spend is tied to booked new patients by source.
• Any channel you cannot connect to booked new patients after a fair test is paused.
• Bank fees, loan rates and accounting and legal fees are reviewed once a year.

Act and keep tracking

• The two or three categories with the largest increase each have an owner and a target date.
• A monthly overhead review with the office manager is on the calendar.
• This full review is scheduled again in 12 months, or sooner after a major change.