BUSINESS BITES — Overhead
You billed a great month. You collected decently. And somehow you don’t have much left. Here’s what's actually happening, and what the numbers mean.
The ADA Health Policy Institute reports a median overhead ratio of approximately 61.9% for general dental practices. That means for every dollar you collect, roughly 62 cents is gone before you’ve counted it as income. What changes when that number drifts to 70%? On a practice collecting $1 million annually, the difference is $90,000 in net income, roughly a decade of retirement contributions.
“Overhead seems to now be rising at about 5% per year, and this may be the new normal.”
The biggest line item is staff. According to ADA HPI data, personnel costs consume 25–30% of collections, salaries, benefits, payroll taxes, and temp coverage combined. That number has climbed sharply: front desk salaries rose 15–25% since 2020, and hygienist compensation increased 20–35% in the same window.
The second shock for new owners is how overhead scales with practice size. ADA data shows that practices collecting under $750K typically run 70–80% overhead. Those in the $750K–$1.5M range land at 60–70%. Only practices above $1.5M in collections consistently break below 60%.
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