The question heard around the world…why does this cost so much money? I’m going to let you in on some dental secrets today. The costs to operate a dental office are soooo expensive. A well-run dental office has an overhead cost of 85-90% before the dentist is even paid, and that was before Covid. Covid has been a game changer, which is why you see so many dental offices shut down. No one besides dentists really understands the nuances of running a practice, so I’m going to let you in on the secrets.
Let’s start with staffing. A typical dental office needs at least one front desk person, 2-3 dental assistants, a hygienist, and a manager to keep the office flowing. Since Covid, staffing has been the biggest issue. It is near impossible to find staff and when you do find them, they want significant pay raises from what they have historically been paid. By the time the 6 employees are paid not including the doctor, the grand total is
Grand total = $20,000-$25,000/mo
Next, we have the typical rent and utilities. Obviously, these vary greatly depending on location, but I will give you an average of our practices.
Equipment Cost. Most people don’t realize the massive cost of all of the equipment in a dental office. The minute that the word dental is attached to anything, the price skyrockets. Just one of the “run of the mill” not anywhere near top-of-the-line chairs that are required to perform dentistry in will run you anywhere from $15,000 to well over $50,000, and that is just the chair. It doesn’t take into account that you have to plumb the building to the chairs. You then have to add in all the equipment, the drills, the instruments, the drill bits, and the equipment to sterilize all the instruments. Dental offices come with a hefty price tag and in order to stay current, the price tag never goes away. One digital x-ray sensor costs well over $10,000 and they break about once a year. The point of this paragraph is that practices almost always have some sort of equipment loan that has to be paid. Again this has a huge range. But typically speaking, one dental operatory room costs anywhere from $35,000 to $100,000 and most practices have an average of 5. We have equipment loans ranging from $5000-$20,000/mo.
Grand total average: $10,000/mo
Supplies: This is another big one. Since Covid, the cost of gloves has risen to literally about $1/pair. So, every time the doctor and assistant walk into the room, it is $2, and we all know how many times they come in and out. Add to that, that the average cost just to set up the room with disposable supplies for each patient is~$25, you will see why the average dental practice supply bill is well over $7500/mo.
Advertising: This isn’t your grandparent’s country anymore. In this world of just about everything corporate, even dental offices have changed. When my husband and I bought our first practice, we bought it from a dentist who had been there for 35 years. He had never done any advertising. He knew the 4 other dentists in town, they were all friends, and everything worked out. It was ideal. Life was good. Then Coast opened in town. Aspen and Heartland followed, and we started down the road to going out of business. It is hard to compete with a huge beautiful dental office that people see every day because it sits in front of Walmart. We began advertising just to remind people that we were there. This has become the standard now. Corporations have driven all dental offices to have to advertise in order to stay alive. I can’t even wager a bet on a typical monthly advertising budget, but I know all of ours exceed $12,000/mo, so I will put that to be safe.
Labs: Lab technicians are the middlemen in dentistry. Dentists create the work and finish the work, but we aren’t taught how to do the middle work. We need to be trained technicians to make the crowns, dentures and other appliances that we put in your mouth. Lab bills are variable depending on how much work is completed in the month, but you will rarely have a month where the lab bill is under $15,000.
Merchant Fees: Most offices now try and help patients by offering payment plans. We use third-party financing to try and help patients get the care they need. The third-party company offers the patients a monthly payment based on either interest-free payments or extended payment plans depending on what the patient wants or can afford and the practice pays the third-party company the remainder of the “discount” the patient is receiving. Therefore, for every patient the practice helps, the practice loses at least 10 percent of that payment.
So let’s add up the month.
Rent and Utilities: $5,750
Merchant Fees: varies minimum $5000
Grand Monthly Total: $77,750 on the very low end.
Every month on the first day of the month, regardless of anything else, this is the bill to open the doors of a typical dental office, and that is without the dentist making a cent. It doesn’t even take into account repairs or all the incidentals that add up in the month. It is a tough nut to crack every month, and I hope it gives you some incite as to why dental fees are what they are. We are trying to cover expenses, pay our staff, and our bills, and hopefully have a paycheck to take home and feed our own family. If you look at the yearly totals, the practice has to generate at least $900,000 before the dentist will start getting a paycheck.
Now, those of you who know me, will look at my facebook page and call BS. If you look me up, you will see that I lead a beyond charmed life. However, my life is not financed by our dental office like so many people assume. I am not your typical dentist, and if you’re interested, I will tell you the story of how we got here. My husband and I graduated dental school within a year of each other. We took our first associate jobs together in an office in my husband’s hometown. Our first year out of school, we lived with my mother-in-law so that we could pay off debt from school and try and make ends meet. About a year into our careers, my husband determined that we should open our own practice. You will see in my story that it is always my husband with the ideas. We joke that he is the dreamer and I’m the worker bee. But, that’s what makes us a great team. We were so excited to open our first practice. Like I mentioned above, we bought this adorable practice from a dentist that had been in the community for over 35 years. We thought this was the beginning of our dream. We could not have been more wrong. At the time, I was 26 and my husband had just turned 30. I can honestly say I looked like I was still a teenager. When we would walk in to see the patients in this beautiful practice we had just spent a lot of money on, the patients were dismayed to see, not their beloved dentist of 35 years, but someone they considered to be a kid. Within 2 months, we were going bankrupt. We were so far in debt and credit card debt, I thought we were going to loose the practice. I will never forget driving home from our beautiful office and crying to my husband, as we wondered what we were going to do. We called some friends who owned practices and started taking management courses, and little by little, we crawled out of debt. We learned how to manage staff and all the ins and outs of a dental office.
About two years into owning the practice, my husband said we have to do something else. Long term, this isn’t going to be enough for us to have a good life. While we were making ends meet, we were never going to lead the life he envisioned for us. He said, “You hold the fort, I’m going to open another office.” I thought he had lost his mind. We are both only children, who pretty much always think we are right, so you can only imagine our spirited discussions following his announcement. But, eventually, he won. He opened our second office, and it was much like the first. A few months of nail-biting and wondering if we were not only insane but if we were going to go out of business times 2. Then, it slowly turned around. Now, we had two offices that were each making a little and little times 2 is better than a little time 1. And we kept building and never looked back. That was over ten years ago. My husband’s vision along with long hours at home and work and careful planning has allowed us to live a life I never dreamed possible. But, as I said, we are not your typical dentists. I look at my dental friends online, and I know that so many of them are struggling. They have gone deeply into debt to build and equip beautiful practices so that they can give the very best to their patients, and so many people don’t realize the stress that goes into that. There is a reason why dentists have the highest suicide rate.
So, the next time your dentist tells you that you need a crown and you wonder why on earth it costs so much money, remember that you are not paying just for a crown. You are paying for the office to be there and the staff to be there so that we can provide dental services to the community. We want to be there to help the people that are in pain, or who broke their front teeth. Dentists go into dentistry because we truly like people, and we want to help them. No one trains us in business, and no one ever tells us that in order to be a dentist, you are going to have to learn how to truly manage finances in an office in order to stay open and provide these services that you spent years learning and perfecting. Most communities have a standard dental fee for every procedure. As a consumer, as long as you stay around the average, you are paying for your crown and everything that allows the office to be there so that you can get the dental help you need. When you pay the dentist, you are investing in the community and most of all your own health, but that’s a topic for next week.