Analyzing Staff Costs as a RevenuePercentage in a Dental Office

Analyzing Staff Costs as a Revenue Percentage in a Dental Office

Setting up great patient care is the goal of running a successful dental clinic. Knowing the financial figures is also important to keeping the office financially sustainable longterm, and that includes staff expenses. We cannot treat patients without dedicated staff members to help. And yet we have to carefully analyze the number of staff the office can support. One of the most expensive variable budget items in a dental office is staff operational costs.

Let’s break everything down so you can have a deeper understanding and can make decisions to help support office operations for staff and patient care long term.

What Should Staff Overhead Be?

Generally speaking, staff expenses should make up between 25% and 30% of your practice’s income. Taxes on payroll, incentives, benefits, payroll and wages are all part of this.

The usual breakdown of these figures:

25–28% is the ideal range.
Range that is cautionary: up to 30%
Warning sign: Over 30% suggests that staff expenses can be affecting the ability of the office to support other areas such as investments in equipment and technology, rent, lab work, supplies, etc.

Statistics from Dental Economics, Percentology and the American Dental Association (ADA) show that many offices, particularly in general dentistry, fall into this 25–30% range.

The goal is to offer exceptional healthcare to patients, take care and support staff, all in a way that is sustainable longterm.

Breaking it Down by Staff Role

Let’s split that 25–30% according to the job types of the people in the office.

Here is a rough guideline, even though the exact percentages could be different depending on the practice’s scope, services, and patient quantity:

Hygiene Department: 8%–10%

This expense is inclusive of the salary and the additional benefits of the dental hygienist
Hygienists can directly contribute to the revenue of the office as producers of hygiene services.
Each hygienist should ideally be producing revenues that total three times what they are paid in wages (excluding benefits)

Dental Assistants: 7%–8%

Dental assistants play an important role clinically helping dentists deliver services and in the processes of sterilization
In this supporting role, the ratio of assistants to the volume of services and revenue for dental procedures should be monitored.
A dentist who sees 7 patients may be able to support having 1 assistant, whereas a dentist seeing 14 patients a day may be able to support having 2 assistants.

Front Desk : 7%–8%

Refers to front desk office staff members, treatment organizers, and reception workers
These positions are important for efficiency of work flow and the satisfaction of patients
As the size and volume of the office grows, more specialized roles for individual admin can be supported. Larger offices could support an office manager to help with management roles.
For group offices, more specialized Admin Specialists could include support for Insurance, Collections, Marketing, IT, Supply Management and possibly Call Center support.

Admin / Back Office: 2%–3%

Refers to office managers
In much larger practices, Managers can support Finance and Payroll, HR and Admin Support.
Some offices can lower expenses by using third parties to help with some of these services when the volume doesn’t support hiring someone in-house full or part-time.

Benefits like paid time off, health insurance, and savings for retirement are covered in all of these numbers.

Should Benefits Be Included in Staff Costs?

Yes, always include the benefits. It would give a false impression of the operational expenses of the team if benefits are left out.

You can make some of the following a part of your overall staff overhead:

Hourly payments and salaries
The Social Security taxes, the Medicare taxes, and other taxes related to payroll
Contributions to health care coverage
Retirement savings plan contributions by the office, 401(k) matching or profit sharing
Incentives and rewards
Holidays and paid time off

The 25–30% budget could be mismanaged without considering these expenses.

What’s the Ideal Staff-to-Provider Ratio?

Ratio of Dental Assistants : Dentists

The ratio of dental assistants to dentists can vary from 1:1 to 3:1. In general, the efficiency of the office increases when the dentist isn’t waiting in between patients. But too few assistants may cause a decline in customer service in regards to patient care quality.

Low volume offices may be ok with one assistant. As patient volume increases from the dentist and hygienist schedules, a 2^nd assistant can help with sterilization and to seat patients in a second dental operatory and clean rooms..

When dentists see 2 full columns of 7 or more patients in each of the dental operatories, one dental assistant per busy operatory could be supported.

In group practices with multiple dentists and hygienists a dental assistant could be utilized for sterilization and seating patients. We sometimes call this assistant a Rover since they may help with instruments for more than one dentist and hygienist.

In general you would want an average of 7 or more patients per dental assistant or hygienist in a general dental office.

The dentist needs to delegate procedures to optimize efficiency, with too few employees the dentist ends up performing too many general tasks when staffing is overly thin.

Conversely, the office might be not be able to support too many assistants if they are not actively engaged with a sufficient number of patients to support the staff overhead.

Ratio of Front Desk Members : Clinical Providers (Dentists and Hygienists)

One front desk member per 2-3 full time clinical providers (dentists or hygienists) is generally a standard ratio.

Front desk stress often stems from understaffing, even if the clinical staff is properly resourced. Evaluating the workload of the front desk is important.

High tech offices with automated appointment reminders or help with scheduling may get by with fewer front desk staff. Practices that do more in-house billing may need additional staff. In group practices with multiple locations, two front desk may be able to cover 2 dentists and 4 hygienists if there is centralized support to handle insurance, collections, new patient calls or office management tasks.

Hygienists

Hygienists in a productive office ideally see 8-10 patients a day. A good goal is to see at least one hygiene patient per hygiene hour worked. This way you can easily compare the revenue per patient and make sure it’s 3 x the hygiene wage. If there is a no show on the schedule, it’s important to schedule 9 patients to ultimately treat 8 patients in an 8 hour day.

If patients are seen twice annually for a hygiene (recall), one hygienist can realistically handle 800-1000 patients. One doctor typically can work with two hygienists allowing the dentist to stay busy with exams and procedures while the hygienist handles the majority of the preventative care.

If the office uses assistant-supported hygiene, one hygienist may handle more patients, shifting the ratio.

What to do when the staff overhead numbers aren’t 25-28%?

Let’s view it from a different angle.

If the staff overhead % is less than 25%, you might be short of staff, which may lead to missed opportunities and feelings of exhaustion. It may also be time for staff raises.

If the staff overhead is over 30%, it’s time to review everything to find inefficiencies.

Are staff roles clearly defined? Are members of the team cross-trained? Is the performance of the hygiene department adequate? How is case acceptance for dental procedures? Are patient schedules full with confirmed appointments and minimized cancellations?

Also check Fee Schedules charged and amounts collected. Are low paying insurance networks limiting revenue to support staff wages? Increasing revenues will help lower staff overhead costs as a percentage of revenue.

How to Keep Costs in Check

Here are a few tips:

Track production per provider and per hour – Benchmark revenue for the provider related to the associated staff overhead. Look for inefficiencies is staffing.
Use scheduling systems – Keep providers and hygienists booked efficiently using as many automated processes as possible for making appointments or confirming appointments
Incentivize wisely – Tie bonus pay to production of revenue, not just attendance. Impact the areas that will help staff overhead percentages the most.
Outsource wisely – Consider external billing or marketing if it reduces internal admin load
Review Staff Overhead – Go over staff overhead data consistently and don’t wait for an issue to arise. Do a quarterly or monthly review. If incentives for staff are tied to revenue per staff hour, the team will also be informed and motivated to keep these numbers in check.
Have an HR Professional Review Your PayScale – Make sure your pay scale is where you want to be, competitively, in your region.
Monitor Collections – Make sure claims are submitted quickly after services are rendered and copays are collected at the time of service. Followup on delinquent accounts. Drains on revenue can impact staff overhead.
Monitor staff schedules and timeclock – Make sure patient schedules are full and appointment times aren’t stretched longer than necessary. Have a patient no show policy. And check staff time clocks to be sure staff aren’t clocking in or out too early or late or forgetting to clock out at lunch.

Final Thoughts

Your biggest investment and growth potential is the employees in your dental office.

If you care for those who work for you, it will make all the difference in making your organization stand out from the rest.

Open and clear communication is important to identify the goal and the reason why it’s needed. The goal is the be productive and efficient to help patients and to pay staff a fair wage.

The goal is to keep a balance of staff numbers to match the revenues of the office to take care of staff and to keep the operations of the office sustainable for the long term.

The biggest asset is the office staff. The care taken to treat staff well will help lead the office to success.