How to master these seven dental key performance indicators
Updated: Mar 23, 2022
There are so many dental practice key performance indicators floating around, it probably makes your head spin 🤪. The good news is, no matter what all that KPI noise tells you, the ultimate dental practice KPIs simply come down to your financial reports (the actual money in and out), particularly, your collection income vs. practice overhead expenses.
The financial reports are the endgame results of everything in your dental practice, and also the easiest dental metrics to get your hands on. Everyone has a dental Profit & Loss report, right? If you file a tax return, you should have a Profit & Loss report. There are seven key performance indicators (KPIs) right on your Profit & Loss report that will tell you the most insightful story into your dental practice performance.
The greatest part about these dental KPIs is by simply adjusting your mindset and only focusing on what matters most, I'll tell you where you are going to make the biggest domino impact to master all seven dental KPIs.
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Below, I have listed and explained the seven dental KPIs for easy reference. These KPIs are calculated as a percent of your income. Then keep reading because I explain how you can master them all!
Dental key performance indicators:
Team/Personnel Costs - 24-28%
Clinical Supplies & Lab - 12-14%
General Business Costs - 11%
Facility & Equipment - 10%
Discretionary Costs - 0-2%
Total Overhead - 60-65%
Owner's Compensation & Profit - 35-40%
Team Key Performance Indicator - 24-28% of income
Your dental practice Team KPI mostly consists of the team's payroll costs, with the addition of services you outsource like phone answering and collections/billing services since they replace the staff in your practice. This dental KPI does NOT include any doctor, owner, or associate expenses. Be sure to take doctor related costs out of all the items below.
Staff Gross Payroll
Staff Employer Payroll Taxes
Employee Benefits
Temp contractors
Answering Services
Collection/Billing Services
Facility & Equipment Key Performance Indicator - 10% of income
Your Facility KPI is everything related to your space and the equipment in it. It includes depreciation expense, which you might not be able to get totals for without your CPA, but that's okay. You can do this KPI without it, and it'll still be pretty close.
Rent/Lease of your space
Repairs & Maintenance
Utilities
Depreciation Expense
Amortization Expense
Loan Interest
Dental Supplies & Lab Key Performance Indicator - 12-14% of income
The Dental KPI for clinical supplies and lab fees is an easy one. It is exactly what it says. Hopefully your Profit & Loss report is organized enough to keep this simple. Add your dental supplies and lab fees together and that’s it.
Dental Supplies
Laboratory Fees
Discretionary Costs Key Performance Indicator - 0-2% of income
The Discretionary costs dental KPI is one of my favorites. Why you ask? Because it’s an awesome dental metric that points to all the extra money you spend on things that don’t provide value to the practice. The only exception is continuing education, but even that can be spent wisely, and not excessively. The discretionary costs also get pulled off the P&L when doing an dental practice EBITDA valuation.
Automobile Expenses
Automobile Lease
Travel and related costs
All meals, even staff meals
Entertainment
Business Gifts
Charitable Donations
Continuing Education