Staffing Expense Against Practice Revenues

Salaries are the largest expense on a dental practice’s financial statement, and managing them effectively is critical for profitability. A well-balanced payroll structure ensures that a practice stays financially healthy while properly compensating the team. Below is a breakdown of industry benchmarks for salary percentages as a proportion of total revenue and key insights on how to optimize these costs.

1. Recommended Salary Breakdown as a Percentage of Practice Revenue

✅ Total Salaries (Including Benefits & Taxes): Target: 45% or Less of Revenue

• If salaries exceed 50%, the practice is likely operating at a loss.

📌 Breakdown of Salaries by Role:

Dentist(s) = 25%

Clinical Team = 12-15%
(Hygienists and Assistants)

Admin Team = 5-8%
(Front Desk, Office Manager, Treatment Coordinators, etc.)

✅ Key Principle:

• Doctors (dentists) are revenue generators and should ideally be at 25% of total revenue when accounting for hygiene offsets.
• Clinical staff (hygienists & assistants) contribute directly to revenue production, so their salary percentage is slightly higher than admin staff.
• Admin team salaries should remain in the 5-8% range because they support clinical operations rather than directly generating revenue.

2. Deeper Analysis & Considerations

A. Dentist Salaries: Target 25% of Revenue

Why 25% instead of 30-32%?

• Many dentists don’t get paid on hygiene production, X-rays, or other non-doctor-generated revenue.
• A healthy general practice should have at least two hygienists per full-time dentist, increasing collections and reducing the doctor’s percentage of total revenue.
• Properly structured compensation brings the actual doctor payout down from 30-32% of collections to 25% when adjusted for hygiene offsets.

📌 Optimization Tip:

If dentist compensation is consistently exceeding 25%, evaluate the fee structure or provider productivity.

B. Clinical Team Salaries: Target 12-15% of Revenue

• Includes hygienists and dental assistants.

Why this range?

• Hygienists are revenue generators through prophies, SRPs, perio maintenance, fluoride, and whitening.
• Assistants improve efficiency by allowing dentists to see more patients per day, increasing productivity.

📌 Optimization Tips:

Consider expanded function dental assistants (EFDAs) where allowed—this can reduce doctor chair time, leading to higher revenue per provider.

• If salaries exceed 15%, evaluate productivity metrics—are providers being underutilized?

C. Admin Team Salaries: Target 5-8% of Revenue

• Includes front desk, office managers, treatment coordinators, schedulers, and insurance coordinators.

Why keep this lower?

• Unlike clinical staff, admin employees do not directly generate revenue.
• However, they are essential for scheduling efficiency, collections, and patient communication.

📌 Optimization Tips:

Automate administrative tasks with software (Weave, Dental Intel, Lighthouse 360) to reduce unnecessary labor costs.

Cross-train admin staff so fewer employees can handle multiple roles, keeping the team lean.

3. What Happens When Salaries Are Too High?

📌 Red Flags:

❌ Salaries exceed 50% of revenue → Practice may be operating at a loss.

❌ High admin salary percentage → Possible overstaffing or inefficiencies.

❌ Clinical salaries exceeding 15% → Evaluate hygiene productivity & assistant utilization.

✅ Fixing Salary Overages:

• Reevaluate scheduling and provider productivity (ensure dentists & hygienists are fully booked).
• Assess whether clinical assistants can take on more tasks to optimize provider efficiency.
• Consider outsourcing insurance verification & billing to reduce admin costs.
• Increase fees or improve case acceptance if production isn’t keeping up with payroll growth.

4. Final Thoughts: Balancing Profitability & Fair Compensation

A profitable dental practice must balance competitive salaries with financial sustainability. Using industry benchmarks helps set realistic salary budgets while ensuring that each team member contributes efficiently to the practice’s success.

📌 Key Takeaways:

• Keep total salaries under 45% of revenue for profitability.
• Dentist compensation should be 25% of revenue after adjusting for hygiene offsets.
• Hygienists & assistants should account for 12-15%.
• Admin staff should be at 5-8%.
• If salaries exceed these benchmarks, evaluate productivity, scheduling, and overhead expenses.