I am in my 4th year of a scratch startup and the practice’s collections are on track to reach $1.2 mil this year.
YTD the profit margin is only 16%.
I’d say 10-15% AFTER “normal” comp for the doctors.
I know the Levin Group says it should be 38-40%.
That’s what a SOLO doctor NETS after their overhead; you might be comparing apples and oranges.
The office manager is my wife and doesn’t get paid anything except part of my salary.
You should factor in a cost for her when arriving at your OH % if you’re going to compare to other practices or general statistics.
We are a heavy PPO/Medicaid practice with 84% of our patients with insurance.
This will usually create higher percentages across the board as your collections will be lower as a percentage of your GROSS production.
Here are my individual expenses:
Staff Wages/Payroll Taxes/Associate Pay 49.3%
What’s the percentage without the associates component?
Facility 4.5%
Dental Supplies 8.8%
Lab Fees 2.7%
That’s low and maybe why your expenses percentages are higher. Your more expensive procedures might be lower compared to the typical practice.
Advertising 4.9%
Office Supplies 1.2%
From what I’ve understood the staff wages/payroll taxes/associate pay should be 22-27%
Correct. Forget what it MIGHT be with an associate. That runs a wider range.
Office Manager … included with my salary
Front desk $14/hr
Floater Assistant/Front Desk $16/hr
Expanded Assistant $19 / hr
Expanded Assistant $ 22.25 / hr
Expanded Assistant $ 21 / hr
Expanded Assistant $16 / hr
Hygienist $29 / hr
Hygienist $29 / hr
Hygienist $29 / hr
Hygienist $34/ hr
Front Desk $16 / hr
Dentist #2 $500 / day or $83.33 per hour
If you weren’t married would you even need an OM?
Now, this doesn’t leave a whole lot of money for me. I’m not doing horrible, in fact I’m probably doing just as well as most associates plus I only see patients 24 hours a week. I have every Friday off and I’ve just taken my 6th full week of vacation this year so I see the good side of things. I just think with some good management things could be even better. Thanks for any advice.
Here is the complete Expense Report:
Expense
4000 • Personnel Costs
4010 • Staff Wages 31.71%
4020 • Payroll Taxes 8.71%
4050 • Contract Labor 0.73%
4070 • Associate Wages 8.13%
Total 4000 • Personnel Costs 49.28%
4100 • Facility Costs
4110 • Rent 3.04%
4120 • Utilities 0.79%
4130 • Telephone 0.38%
4140 • Cleaning & Maintenance 0.2%
4150 • Building Repairs 0.1%
Total 4100 • Facility Costs 4.51%
4210 • Dental Supplies 8.76%
4220 • Laboratory Fees 2.69%
4230 • Office Supplies 1.22%
4240 • Interest Expense 1.99%
4250 • Advertising 4.88%
4260 • Bank Service Charges 0.55%
4270 • Gifts 0.08%
4280 • Legal & Professional Fees 0.4%
4290 • Liability Insurance 0.52%
4310 • Postage and Delivery 0.13%
4340 • Uniforms 0.06%
4360 • Depreciation Expense 3.29%
4370 • Sales Tax 0.03%
6560 • Payroll Expenses 0.17%
6570 • Payroll Fees 0.03%
Total Expense 78.58%
Net Ordinary Income 21.42%
Other Income/Expense
Other Expense
4410 • Doctor’s Salary 3.63%
4420 • Doctor’s Payroll Taxes 0.29%
4470 • Professional Development 0.23%
4480 • Malpractice Insurance 0.03%
4490 • Licenses 0.09%
4520 • Meals & Entertainment 0.44%
4530 • Dues and Subscriptions 0.1%
4540 • Charitable Donations 0.04%
8000 • Ask Accountant 0.23%
Total Other Expense 5.07%
Net Other Income -5.07%
Net Income 16.35%
Some of your expenses percentages don’t make sense:
For example, payroll taxes generally aren’t much more than 8% of gross payroll. Between staff and associates you show wages of 39.84%. So based on collections of $1,200,000 your wages s/b approximately 478,000 and 8% of that is $38,000, which should be the payroll tax cost for JUST those wages. $38k of $1.2mill is 3.2% and you say they’re 8.71%? That’s about $60k higher than I would expect. What else are you putting in there? Is the 39.84% NET or gross wages? Also, do those payroll taxes include yours? If so, that could explain about 1%.
I’d start with the 78.58% and eliminate the associate and their payroll taxes (call it 9%), remove the interest & depreciation of 5% and now you’re at 64.58%, a little more in line to the 57-60% we see, still high by say 6%. Supplies is high by 2%, advertising and marketing high by 2%, staff wages if gross are too high by at least 4%, payroll taxes are off the charts for some reason, some may be your payroll tax.
If I were you I’d want to make sure I’m starting with clean, comparable OH stats before jumping to any conclusions.
This first appeared on Dentaltown.