Financial Diagnostics: Knowing Where Every Dollar Goes
Ask ten dental owners what their overhead percentage is, and you will get ten different answers — usually based on what the accountant said at year-end. Ask them which expense category is most out of line with benchmark, and the room goes quiet.
Phase 01 of the PPS roadmap exists to fix this. Before we touch hygiene, marketing, or scheduling, we want a clean, current picture of the financial reality of the practice.
What a diagnostic actually reviews
A proper financial diagnostic looks at the P&L by category against British Columbia dental benchmarks: staff, supplies, lab, occupancy, marketing, and owner compensation. We review fee schedules against the provincial guide, audit merchant processing costs, examine supply spend by vendor, and reconcile production against collection.
It is not glamorous work. It is also where the largest, fastest dollars are usually found.
The hidden costs that quietly add up
Merchant fees that drift from 1.6% to 2.4% on millions of dollars of collections. Supply spend running 8% when 5.5% is achievable. Lab costs misallocated between hygiene and restorative. Fees that have not been reviewed in three years while the cost of doing business climbed every quarter.
None of these line items feel urgent on any given day. Together, they can be the difference between a practice that funds the owner's retirement and one that does not.
From numbers to decisions
The point of a diagnostic is not a binder. It is a short list of decisions: which fees to adjust, which vendor contracts to renegotiate, which staff costs are misaligned, and how much capacity exists for reinvestment in technology, marketing, or an associate.
Owners who lead from this place — with current numbers, clearly understood — make better calls about everything that follows.