Top Financial KPIs Dental Practices Should Aim for Success


If you’ve been thinking about buying a dental practice and putting it to good use, you’ve probably thought about how much money you could save if you only knew the right financial key performance indicators (KPIs) to aim for. After all, not targeting these KPIs properly can result in a loss of revenue and, ultimately, profit.

No worries, though, because this article has put together a list of the top financial KPIs dental practices should aim for. By keeping an eye on these indicators, you’ll ensure your business is running smoothly and meeting its financial goals. 

1. Overhead Rate

One of the most significant KPIs to monitor is your overhead rate. This number reflects how much of your revenue is used to cover your overhead costs, such as rent, payroll, and supplies. Ideally, this number should be as low as possible so that you can use more of your revenue to generate profit.

There are a few ways to lower your overhead rate, such as by negotiating a lower rent or hiring more efficient staff. However, the most important thing is to track this number regularly to identify any areas where you need to make changes.

2. Collections Percentage

There are a few significant metrics that you should track to measure the success of your dental practice. One of the most important is your collection percentage. This number reflects how much of your revenue you can collect from patients. Ideally, this number should be as high as possible so that you’re not losing out on potential revenue.

Improving your collection percentage can be done by sending out invoices promptly and following up with patients who still need to pay. Remember, tracking your expenses and revenue is crucial to identify any areas where you may lose money.

 3. Net Profit Margin 

When buying a dental practice, your net profit margin is one of the most powerful indicators. This number reflects how much money you make after subtracting your expenses from your revenue. A high net profit margin means that your practice is profitable and you’re making a good return on your investment. 

You can tweak a few things to improve your net profit margin:

  • Make sure you’re keeping your expenses as low as possible.
  • Increase your revenue by raising your prices or attracting more patients.
  • Look for ways to reduce your taxes.

4. Staff Satisfaction 

Staff satisfaction is another important metric to track when buying a dental practice. This can be measured by surveys or by tracking the number of employees who leave your practice. 

If you’re not happy with your staff satisfaction ratings, there are a few things you can do to improve them. One is to make sure that you’re providing a good work environment. Another is to make sure that your employees feel appreciated. You can also offer incentives to employees who refer others to your practice.

Final Thoughts

There are a few key financial KPIs that dental practices should aim to hit to succeed. These include net income, operating income, and days in accounts receivable. Practices should also be mindful of their debt-to-equity ratio and their return on equity. Dentists can ensure that their business runs smoothly and profitably by focusing on these metrics.

Ash Dental CPA is a company that caters to dentists keen on buying dental practices and ensuring that they meet the following criteria: net income, days in accounts receivable, return on equity, and debt-to-equity ratio. Get in touch with us today to learn more about how we can help!