How Dental Practice Staffing Costs Affect The Bottom Line

Henry Schein’s dental practice transition advisors will help you save time & money

Dental practice staffing costs have been rising for decades and affecting the majority of dentists at every stage of their practice life. If you are early in practice ownership or are in the middle of your career, this may result in cash flow problems. Perhaps you can’t afford to fund retirement to the degree you would like, take enough (or any) vacation time, establish savings or prepare for your children’s educational expenses. If you are an older dentist closer to retirement, perhaps you don’t have enough saved to live the way you had planned or are disheartened to find there isn’t a market for your practice because the practice cannot support the income needs of a new purchaser.

This last scenario is very common and occurs because income needs of the retiring dentist are less than those of a prospective younger purchaser – the retiring dentist has already eliminated their educational debt, funded their retirement plan, and finished raising children. The younger purchaser likely faces most, if not all, of these expenses along with acquiring debt service to purchase the practice, leaving the anticipated practice profit after the sale to be inadequate.


Where Does The Dental Staffing Overhead Problem Lie?

Upon performing a true cash analysis as part of a practice valuation, we often discover the most significant contributing factor is the high staffing cost that results in reduced profit. In 1980, there were approximately 1.3 dental assistants per dentist in the US labor force. In 2010, that number skyrocketed to over three dental assistants per dentist. Staggering increases have been noted in the ratio of other (non-hygienist) personnel per dentist.

Therefore, no matter what stage of practice ownership you currently are in, it is essential that you examine the true cash flow of your practice. If staff (or any other) costs are out of line, make the necessary changes to correct this to realize your full earning potential.


Hire Right, Train Right

Be sure to hire for excellence in order to prevent over-staffing. You cannot compensate for a lack of qualified personnel by increasing the quantity of unqualified personnel. Although you need to pay highly qualified personnel more, they make up for it in what they accomplish. The most highly competent employees will earn higher wages, but often accomplish the same as two less competent employees. Having one higher paid highly competent employee is fiscally more efficient than having two lower paid incompetent employees.

Invest in training, cross training, and educating your staff so they are able to maximize their full potential. Qualified personnel yearn to work at peak performance and are excited about learning, as well as being challenged.

Lastly, invest in leadership training for yourself. As an effective leader you will create a great work environment for your staff. Truly excellent staff members value an exceptional work environment as much as monetary compensation.


Where do you start?

The most essential place to start, at any stage of practice, is a practice valuation that includes a true cash flow analysis of your practice. Every practice owner should have a current practice valuation and it should be updated annually. Armed with this essential information, we can help you evaluate what changes would best be made to increase the profit of your practice to its peak potential.

Henry Schein Professional Practice Transitions, Inc. is a national leader in dental practice transitions. A subsidiary of Henry Schein, Inc. they provide expert guidance for selling and buying dental practices, assessing partnership and associateship opportunities, and performing dental practice appraisals and valuations.