Dental Practice: Cost Per Procedure

By Dr. Addison Killeen

August 23, 2022

Anger

Every few months after a negative interaction with an insurance company, sometimes I get angry and state, “Let’s drop that insurance company!” to my front desk coordinator. Have you ever been in the same spot?!

While this anger is real, the outcome of that anger is usually a pretty random answer that may or may not be good for the practice. When I talk with dentists across the country, I (unfortunately) usually hear this problem quite often. At this inflection point, I usually ask about the ‘cost per procedure’ and whether taking the insurance write-off is still a good option.  

To calculate this “Cost Per Procedure”, we have linked a spreadsheet HERE.

 

True Cost

Go through each procedure listed on here and figure out exactly how much of each supply is used. Then go to the supply order to figure out exactly how much you’re paying for each of these items.  

The main goal of this spreadsheet is to calculate exactly what it costs to produce this dentistry; inclusive of the building, team costs, and supplies cost. After adding all this in, you’ll see the true cost for you to produce: and thereby, see the expected profitability on each of these types of procedures.  

After doing this exercise with different types of dentists all over the country, we have noticed a few things. The biggest thing is that rent and facility costs vary extremely wildly between metropolitan practices and those round in rural areas. This can sometimes be the single largest difference between two practices. Similarly, team costs in metropolitan areas are significantly higher, so that can sometimes create another big difference in costs. While these seem insurmountable, it is important to remember that sometimes these metropolitan practices also get paid significantly more than the rural ones, so sometimes the expected profit is still similar.

In order to truly see the range, the DSN team created a ‘Group Data’ spreadsheet that allows people to enter their own cost per procedure and see the expected profit, split up by state and whether the practice is metropolitan, suburban, or rural. We hope that this extra resource is helpful in getting a firm handle on the ranges you might expect in different locations!

 

Re-evaluate Your Anger

Rather than lash out in anger (like me), It’s always wise to do this cost per procedure every year to evaluate the financial impact of different insurance plans on your practice. If there’s a certain insurance plan that is paying less than your cost to produce this procedure, then you might need to re-evaluate your participation with that plan. Relying on the data in this area is one of the best things you can do for your practice; and, if you come to the conclusion that a certain plan doesn’t pay well enough, then let the data make the decision!

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