What You Need to Understand About Dental Practice Overhead Costs

Overhead refers to the expenses that are associated with running a dental practice. This can include things like rent, utilities, supplies, and staff salaries.

Here, our team of CPAs for dentists at Ash Dental CPA shares the basics of overhead that you need to understand:

What’s the Difference Between Variable and Fixed Overhead Costs for Dental Practices?

The main difference between variable and fixed overhead costs for dental practices is that variable overhead costs fluctuate with the number of patients seen. In contrast, fixed overhead costs remain the same regardless of how many patients are seen.

Variable overhead costs for dental practices include lab fees, supplies, and wages for dental assistants and hygienists. These costs will either go up or down depending on how many patients are seen in a day or week.

Fixed overhead costs for dental practices include rent, utilities, and insurance. These costs will stay the same regardless of how many patients are seen.

Common Examples of Variable and Fixed Overhead for Dental Practices

Dental practices typically have both variable and fixed overhead costs. The amount of each will vary depending on the size and scope of the practice.

Here are some examples of a dental practice’s overhead costs:

• Wages and benefits paid to all staff and contracted personnel
• Owner’s compensation
• Utilities, mortgage, and maintenance of facilities
• Administrative costs
• Clinical costs and other supplies
• Discretionary costs

How Your Dental Practice’s Overhead Costs Are Calculated

Your dental practice’s overhead costs are calculated based on various factors like the type of practice you have, the number of patients you see, the amount of time you spend seeing patients, the number of staff you have, and the cost of your office space.

The first step in calculating your overhead costs is to determine the type of practice you have.

General dentistry is the most common type of dental practice. This type of practice provides services to patients of all ages. The overhead costs for a general dentistry practice are typically lower than those of a pediatric or orthodontic practice because the patient base is more extensive and the services are less specialized.

Pediatric dentistry is a dental practice specializing in the care of children’s teeth. The overhead costs for a pediatric dentistry practice are typically higher than those of a general dentistry practice because the patient base is smaller and the services provided are more specialized.

Orthodontics is a type of dental practice specializing in treating teeth that are misaligned or malformed. The overhead costs for an orthodontic practice are typically higher than those of general dentistry or pediatric dentistry practice because the patient base is smaller and the services provided are more specialized.

The next step in calculating your overhead costs is determining the number of patients you see. The more patients you get, the higher your overhead costs will be. This is because you will need to hire more staff to see all of the patients, and you will need to rent or lease more office space to accommodate them.

The third step in calculating your overhead costs is considering the amount of time you spend seeing patients. The more time you spend seeing patients, the higher your overhead costs will be. This is because you will need to hire more staff to help you see all of the patients, and you will need to rent or lease more office space to accommodate them.

The fourth step in calculating your overhead costs is factoring in the number of staff you have. The more employees your practice has, the higher your overhead costs will be. 

The fifth and final step in calculating your overhead costs is adding the cost of your office space. The more expensive your office space is, the higher your overhead costs will be, of course.

Conclusion

Understanding your dental practice’s overhead costs is essential to make informed decisions about your budget. By understanding how your overhead costs are calculated, you can make adjustments to reduce expenses and increase profitability. If you want to learn more about your overhead costs and how it affects your practice, seek the services of a CPA for dentists.

Ash Dental CPA can provide you with the expertise of one of the best dental accountants in Massachusetts. Set an appointment with us today!