What’s going on with dentists’ incomes?
Median income has dropped significantly since 2005, and has even dipped since the end of the Great Recession in 2009, according to a recent analysis by the Levin Group Data Center.
The report, which was based on data from the American Dental Association and the Bureau of Labor Statistics, found that dentists’ median income is now $205,000 ($193,000 for a general practitioner; $276,000 for a specialist), down from $216,000 in 2005.
A key insight from the report is that incomes are down despite most practices having robust revenues. On average, general practices are bringing in $771,000 in annual revenue and specialists are bringing in $1.1 million.
So why aren’t dentists making more money? The answer is simple: overhead.
Both GPs and specialists are spending 75% of their annual revenues on overhead costs, leaving only a 25% profit margin. To put that in perspective, the average dentist is losing more than $600,000 per year to overhead costs.
On top of this decline in revenue, many dentists say they aren’t having much fun on the job. According to two surveys, between 83% and 86% of dentists report experiencing moderate/severe stress because of work, with the top reason cited being time pressures.
These financial and time stresses are not, for the most part, due to inexperience or ineffectiveness. The average overhead costs for high-performing and low-performing practices are very similar for both GPs (76% vs. 78%) and specialists (74% vs. 76%). Moreover, established dentists (6–10 years of experience) actually report working more than dentists just starting out (1–5 years of experience).
Rather, the root cause of these issues is structural. In particular, dentists operating independent practices, rather than group affiliated offices, are struggling with overhead and time pressures because they’re missing out on important efficiencies in an era of more patients and lower payments.
Specifically, a dental support organization offers two key benefits that help with both revenue and time. First, group affiliation allows offices to optimize revenue by normalizing pricing, improving advertising effectiveness, allowing dentists to accept more insurance plans, and reducing no-shows/cancellations.
Second, affiliated group practices can significantly reduce overhead through scaled real estate, insurance, negotiated volume pricing, and staff negotiations.
How much additional income can reducing overhead net an individual dentist? The Levin Group suggests a benchmark 59% overhead spend for GPs. If a practice earning a median $771,000 in revenue can reach that benchmark, down from 75% overhead, it results in an extra $123,000 in earnings.
Lowering overhead by that much may not be realistic for all practices, but for the median GP even a 1% reduction in overhead boosts income by $7,700.
Beyond increasing revenue, a dental support organization also frees dentists from having to deal with both back- and front-office stresses—including scheduling, payroll, and marketing.
Ultimately, switching to a group affiliation model gives individuals both more time and money and, most importantly, allows dentists to focus on dentistry.
To learn more about how dentists can earn more and stress less check out the full infographic below:
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