Running a dental practice means wearing many hats—clinician, leader, and business owner. When cash flow gets tight or expenses creep up, the pressure to cut costs can feel overwhelming.
But here’s the good news: you can lower your dental practice overhead meaningfully without touching what’s often your biggest expense—your team.
Most dental practices in North America run between 60-75% overhead. The healthy target? 55-65%.
If you’re operating above that range, you’re not alone. Recent surveys show 65% of practices reported overhead increases in 2024, with the average jump at 5.1%. That’s the new normal we’re facing.
Here’s why this matters: every 1% you reduce overhead equals 1% more profit. For a practice collecting $1 million annually, dropping overhead from 70% to 65% puts $50,000 directly in your pocket—money for retirement, student loans, or reinvestment in your practice.
Table of Contents
Know Your Numbers First
You can’t fix what you’re not measuring. Start by calculating your total overhead percentage: divide your total expenses by your total collections, then multiply by 100. Compare this to your target range. If you’re at 70% and should be at 60%, you’ve just identified a $100,000 problem (on a $1 million practice).
Break down your spending by category:
- Labor costs: Target 25-28% (well-managed practices hit 24-26%)
- Supplies and materials: Target 6% or less
- Lab fees: Target 8-12% (or 2-3% with CAD/CAM)
- Facility costs: Target 5-6%
- Marketing: 2.5-3% for established practices
- Other expenses: 10-11%
This breakdown shows exactly where to focus your energy.
Shop Around Strategically
New competitors enter the dental market constantly, often with aggressive pricing to win business. Assign someone on your team to research alternatives for your biggest expenses.
Technology and equipment. We recently switched our patient monitoring system from a well-established provider to a newer competitor. The savings? 40% on our lab bill—substantial money that adds up monthly. The new system doesn’t do everything identically, but it handles what we need without sacrificing patient care.
Supplies and materials. Join a Group Purchasing Organization (GPO) immediately if you haven’t already. Major dental GPOs include Synergy Dental Partners, Unified Smiles, and Dental Buying Power. Most offer free membership with no minimum purchases. You’ll save 18-23% on supplies and up to 35% on select items—that’s volume pricing typically available only to large dental service organizations.
Software subscriptions. Review every monthly charge. Cancel anything you don’t actively use. We all sign up for trials that turn into paid subscriptions we forget about.
Lab fees. Get quotes from 2-3 quality labs and negotiate volume discounts. Use in-network labs when insurance allows. If your remake rate exceeds 5% with any lab, switch immediately.
The Digital Transformation Opportunity
Lab fees traditionally consume 8-12% of collections. Practices using chairside CAD/CAM reduce this to 2-3%—a 75% reduction and one of the biggest overhead improvement opportunities available.
The break-even point? About 17 crowns monthly at a typical $120 lab cost. Here’s the math: traditional lab costs $2,400 monthly (20 crowns × $120). CAD/CAM materials cost $600 monthly (20 crowns × $30). That’s $1,800 monthly savings or $21,600 annually. A chairside system costing $100,000-$150,000 pays for itself in 4-6 years.
Beyond cost savings, CAD/CAM offers single-visit dentistry (what patients want), eliminates temporaries, removes impression material costs, and gives you complete quality control.
Not ready for the full investment? Start with a digital scanner ($20,000-$40,000) and send files to labs. You’ll eliminate physical impression shipping, reduce material costs, and get faster turnaround—a bridge to full CAD/CAM later.
Audit Everything Regularly
Supply management. Conduct physical inventory counts quarterly (monthly is better). Apply the 80-20 rule: you use 20% of supplies 80% of the time. Build a formulary limiting each category to 1-2 preferred brands. Stop hoarding supplies in individual operatories—that’s hidden inventory and waste.
Vendor relationships. Get quotes from multiple suppliers annually. Use your GPO pricing as negotiation leverage. Negotiate payment terms—many suppliers offer 2% discounts for payment within 10 days. Build relationships with reps for promotional pricing alerts.
Credit card processing fees. Currently averaging 2-3% of collections, these fees add up. Shop processors annually, consider cash discount programs (legal in most states), and implement ACH transfers for large payments (0.5-1.5% versus 2-3% for cards). Switching processors can save $500-1,500 monthly.
Facility Cost Strategies
Rent or mortgage should consume 5-6% of collections ideally. If yours is higher, act.
Renegotiate your lease. Start 12-18 months before expiration. Hire a professional lease negotiator specializing in dental practices—their fees are justified by the savings they achieve, typically 10-15% of lease value. Even $1 per square foot reduction saves tens of thousands over a lease term.
Optimize space. Each operatory should generate $25,000-$30,000 monthly in production. Convert unused space to income-generating operatories if demand warrants it. Consider adding operatories before moving to larger locations.
Reduce utilities. LED lighting cuts electricity costs 50-75%. Programmable thermostats optimize HVAC. Water-conserving fixtures reduce bills. Monthly savings of $200-400 compound to $2,400-4,800 annually.
Leverage Technology and Automation
Automated appointment reminders reduce no-shows 30-50%. Online scheduling cuts front desk call volume 20-30%. Digital forms save 30-40% of front desk time. Automated insurance verification saves 15-20 hours weekly. Go fully paperless and save $400-600 monthly on supplies plus 10-15 hours of staff time.
A Video To Show You The Quick Wins:
What NOT to Do
Don’t cut staff as your first move. Your team is your greatest asset for improving productivity and profitability. Staff cuts should be a last resort unless you’re significantly overstaffed. Focus on the other opportunities first.
Don’t sacrifice quality. Cost-cutting that reduces patient care or team morale creates bigger problems than it solves. You’re looking for smart efficiency, not corners to cut.
Don’t ignore the revenue side. Reducing overhead is important, but growing revenue is equally powerful. Each 1% increase in collections adds approximately 0.4% to profit (at 60% overhead). Balance both strategies.
Special Considerations for Women Practice Owners
Women dentists face unique challenges that impact overhead management. With practice ownership rates at 59.9% versus 79.9% for male dentists, and a persistent 22% wage gap, strategic overhead management matters even more.
Work-life balance realities. Women dentists average 32.8 hours weekly versus 35 for men. Fixed costs spread across fewer hours increases overhead percentages. Strategic responses include partnership arrangements sharing fixed costs, phased ownership structures adjusting stakes based on life stage, and leveraging automation and efficiency technology.
Master negotiation. Hire professionals for major transactions like lease negotiations. Join GPOs for automatic leverage. Explicitly establish yourself as the decision-maker in all vendor interactions. Get multiple quotes to demonstrate market knowledge.
Leverage resources. Organizations like the American Dental Association provide access to financing partners, practice management resources, and networking with successful women practice owners who’ve navigated these challenges.
Your Action Plan
This week:
- Calculate your current overhead percentage
- Join a GPO if you’re not already a member
- Identify your highest overhead category
This month:
- Conduct a comprehensive overhead audit
- Implement the 80-20 rule for supplies
- Schedule vendor comparison shopping for your top three expenses
This quarter:
- Negotiate major vendor contracts
- Evaluate technology ROI (especially CAD/CAM if doing 17+ crowns monthly)
- Review facility lease terms
This year:
- Conduct annual comprehensive audit
- Increase fees 4-5% to keep pace with costs
- Plan strategic improvements for next year
The Bottom Line
Reducing overhead from 70% to 65% on a $1 million practice adds $50,000 to your bottom line this year. Over a 30-year career, that compounds to $1.5 million in additional income—money for retirement, student loans, or financial freedom.
The strategies are proven. The opportunity is substantial. The time to act is now. Start with knowing your numbers, then systematically address your biggest expense categories. Your practice’s financial health and your personal financial future depend on it.
You’re not just a clinician—you’re the CEO of your practice. Smart CEOs know their numbers, lead with clarity, and make decisions that build long-term stability. Your team is counting on you, and you’ve got this.
