The Top 5 Profit Killers in Dental Practices

Let’s talk about something I hear all the time from dentists: “Why am I working so hard, but barely seeing the payoff?” It’s a tough spot to be in, but here’s the good news—it’s fixable. When we dig into your practice’s numbers, there are usually a few common culprits draining your profitability. Let’s take a closer look at the top five profit killers and what you can do about them.

1. Loans and Leases

Have you ever invested in something for your practice—like new equipment or a fancy office build-out—only to wonder later, Was this worth it? You’re not alone. Loans and leases are supposed to make your life easier, but they can backfire when:

• The new equipment doesn’t actually boost production.
• The cost of a relocation or renovation spirals out of control.
• The shiny upgrade doesn’t bring in the revenue you’d hoped for.

Here’s the thing: it’s easy to get caught up in the excitement of upgrading. That state-of-the-art equipment or sleek new office space might feel like a win, but if it doesn’t pay off in productivity or patient volume, it’s just a financial anchor.

What to do: Before making a big purchase, ask yourself, “Will this tangibly increase production or efficiency?” If the answer isn’t crystal clear, pause. Create a financial plan, map out the ROI timeline, and don’t make decisions based on trends or assumptions alone.

2. Marketing and PR

Marketing is non-negotiable, but overspending on the wrong strategies? That’s a fast track to frustration. Have you ever looked at your marketing budget and wondered if you’re getting your money’s worth? Some common pitfalls I see include:

• Outsourcing to expensive agencies with no measurable ROI.
• Overreliance on PPOs and HMOs, where write-offs are your sneaky “marketing costs.”
• Going big on campaigns without tracking results.

Here’s an example: Let’s say your practice produces $80,000 a month, but after $20,000 in write-offs, you’re left with $60,000. That means 25% of your production is essentially a hidden marketing expense. Is it worth it?

What to do: Treat write-offs like part of your marketing analysis. Track the ROI of every campaign and make sure it aligns with your collections goals. And if you’re paying an agency, hold them accountable for delivering measurable results like increased patient volume or higher treatment acceptance.

3. Payroll

Now, let’s talk payroll. For most practices, this is the single biggest expense. But here’s where it becomes a profit killer:

• You’re paying staff who aren’t fully utilized.
• Treatment acceptance is low, leaving your team twiddling their thumbs.
• You’re rewarding longevity instead of productivity.

Here’s an easy exercise: Take your monthly payroll costs (excluding doctor and associate salaries) and divide that number by 22.5% of your collections. If payroll is taking up more than 22.5% of your income, it’s time for adjustments.

What to do: First, focus on boosting productivity—improve case acceptance, streamline workflows, and ensure every staff member is pulling their weight. Incentives tied to productivity can help align your team’s goals with practice profitability.

4. Supplies

This one might surprise you, but dental supplies can quietly eat into your profits if you’re not careful. The most common problems?

• Over-ordering or exceeding budget.
• Failing to adjust supply orders as production fluctuates.

Think about it: If you suddenly start doing more crown and bridge cases, your supply costs will spike unless you’ve planned for it. Without clear budgeting and accountability, this line item can creep up fast.

What to do: Set a budget and stick to it. Assign someone on your team to manage supply orders, and review them regularly to make sure they align with production. And remember—it’s not about being cheap; it’s about being smart with your inventory.

5. Lab Expenses

Let’s wrap up with lab fees, which can be a real problem if they’re eating up more than 8-10% of your collections. The big issues?

• High reliance on lab-heavy procedures, like prosthodontics.
• Low fee schedules or heavy PPO/HMO participation.
• Poor collections overall.

Here’s the reality: If your lab fees are consistently high, it’s a signal to reevaluate your fee schedule or reconsider your reliance on low-margin plans.

What to do: Make sure your lab expenses align with the services you provide. Partner with labs that offer competitive pricing without compromising quality and explore digital workflows to cut costs where you can.

Final Thoughts

Managing profitability isn’t about cutting corners—it’s about making sure every dollar you spend is working for you, not against you. Regularly audit your overhead and ask yourself, “What’s adding value here?”

When you tighten up these five areas—loans and leases, marketing, payroll, supplies, and lab expenses—you’re not just protecting your bottom line. You’re creating the financial breathing room you need to grow and thrive.

And hey, if you’re not sure where to start, let’s chat. Sometimes, all it takes is a fresh set of eyes to uncover opportunities you didn’t even know were there. Or, if you really want to take control of your profitability attend our online webinar The Top 6 Profit Killers in a Dental Practice. It’s 2 CE credits and its completely free to attend.

Feel free to call us if you have any questions at (800) 640-1140 or email me at Jeffs@mgeonline.com