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What are the different revenue streams and cost centers for a dental practice?
Hello! Thanks for your question about the different revenue streams and cost centers for a dental practice.
In short, there are three main types of revenue streams/cost centers for a dental practice; where the money is coming from (such as insurance, client payments, interest, and refunds), why the payment is provided (services and treatments offered), and patient financing/costs.
Below you will find a deep dive of my research.
METHODOLOGY
The main sources that I looked at for information regarding your query came from industry reports and trusted media sites.
REVENUE STREAM
The average expense (per capita) on dental services is nearly $360, of which 48.1% comes from private insurance, 42.3% comes from out-of-pocket charges, and 9.6% comes from government sources. Additional revenue also comes from the services and technology provided to the customers.
The main overhead costs consist of expenses (such as wages, dental supplies, etc.), general expenses (such as accounting, consulting, billing, etc.), and owner's expenses (such as payroll taxes, etc.).
IMPACT OF INSURANCE
The main way that insurance influences the bottom line is if more than 60-70% of customers are processed, which results in a growth in account receivables.
Generally, patient insurance makes things more difficult for dental practices, according to the Dental Practice Guide to Insurance. The main ways to increase the bottom line of dental practices with insurance are as follows:
- Shop for insurance plans that are advantageous to both the practice and the customer.
- Expand the team and enhance quality so customers keep on coming back.
- Transparency with policies.
- File claims daily.
MACHINES AND SERVICES TYPICALLY OFFERED
Services that are typically offered consist primarily of diagnostic (59%), preventative (18%), and restorative (14%), according to dental practice demographics.
Additionally, dentists typically perform either specialty or general dentistry, with general dentists providing services such as preventative care and procedures such as fillings, etc. On the other hand, specialty dentistry includes "endodontics, oral surgery, orthodontics" and many others and accounts for about 20.1% of practicing dentists.
Machines that are typically used consist of dental chairs, x-ray machines, and various cameras and machines that are specific to the type of specific dentistry.
TRENDS IN THE INDUSTRY
According to dental practice demographics, trends that are primarily seen in dental practices are as follows:
- The average practice today has 5 personnel.
- The average practice today garners a net revenue of 27.4%.
- The annual growth rate is 2.1%.
SUMMARY
To summarize, there are three main types of revenue streams/cost centers for a dental practice; where the money is coming from (such as insurance, client payments, interest, and refunds), why the payment is provided (services and treatments offered), and patient financing/costs. The main impact of insurance on bottom line costs is generally to complicate things, but certain measures can be taken to mitigate this. Lastly, the machines and services provided depend on whether dental practice is general or specialized.
Thank you for asking Wonder! Please let us know if we can be of any further assistance.