Components of a Dentistís Compensation
+ 7 Profit
two major ways dentists can take money from their practice is
through draws or by receiving a paycheck.
The type of entity in which your practice is
set up will determine which method can be used. In either
case, dentists need to be careful not to shortchange
Hereís a quick list of five elements that should be included
in the compensation of every dental practice owner:
If you were doing the same work for a practice that hired you,
what would your pay be? Are you making at least market
equivalent or better? A lot of times, as entrepreneurs, we
tend to focus only on this piece of our compensation when we
set our pricing, and thatís a big mistake. Itís only 75
percent of what our total pay needs to be.
As a practice owner you take extra risk when you own your own
practice, and you should be compensated accordingly. Your
capital is tied up in your practice and should be earning a
good return in addition to your reasonable compensation.
Employees get vacations, health insurance, and bonuses; and
you should too. This should be part of your compensation
package as a practice owner.
Although our individual taxes are not deductible as business
expenses, we need to compensate for them so that weíll have
enough cash for our living expenses. Itís a huge chunk too. We
work about three and a half months every year, just to pay for
When you work for yourself, no one is going to fund your
retirement for you. Although the Social Security program helps
a lot of seniors, itís up to you to set up a retirement plan
for yourself and if desired, for your practice staff. Failing
to do so could result in your being forced into practicing
dentistry many years past your target or typical retirement
age. Or if you do retire, severely curtailing your current
Your compensation should include all of these components. If
it doesnít and you feel like you canít afford to pay yourself
that much, then your case & procedure pricing might not be
reflecting all of these items correctly, you might have a case
acceptance problem, or your practice expenses may need some
Itís normal to take a smaller paycheck the first few years as
weíre building our practices, but if youíre still doing it
after several years or constantly having cash flow issues,
then something may be wrong.
If youíd like our help in this area of your business, please
reach out and let me know at
Make sure your future is bright and financially secure by
including all five components in your dental practice ownerís
an entrepreneur and dentist, you are responsible for
shaping your practice success. Any habits that sabotage
your success in your personal life can often carry over to
your practice. Becoming aware of these is the first step to
Here are seven success-boosting habits to
double-check against your own.
Being able to say "No."
Do you say "yes" to too many things that donít
serve your life purpose, help your family, or move your dental
practice forward? If so, youíre not alone. Saying "yes" in a
weak moment when you feel like you can do it all can be a
downfall for many entrepreneurs. It can also distract you from
success if you are not working on the right things for you.
You may need to re-evaluate the value of your
time and your priorities. Practice making smart decisions by
having a structure and a higher purpose that helps you decide
what you should and shouldnít do with your time, money, and
life. And if you tend to be one of those who says "yes" to
everything, you may need to practice saying "no" in front of
the mirror to break your habit.
Hiring fast and early.
The best time to hire is just before you need
your new team member. It can be easy to put off hiring if you
fill with dread when you think about large stacks of resumes
and endless phone calls. Not hiring soon enough can cost your
practice in reduced service and sales. The smartest dentists
stay ahead of the game in this area.
How much time do you spend in reactive mode
versus proactive mode in your practice? Reactive mode includes
answering emails, fighting fires, serving patients, and
managing employees. Proactive mode includes developing &
introducing new services, advertising & marketing your
practice, creating and implementing your revenue plan, and
Sometimes we have to really push ourselves to
look beyond the daily fires. One way to do that is to plan
time every day for proactive activities and be ruthless about
keeping that time slot on the calendar.
Setting tight scope and polite boundaries with patients.
Successful dentists set clear boundaries when it comes
to delivering their services to patients. Especially in large
practices where you delegate case presentation, it may not
always clear to the patient what is included in their
procedure unless itís clearly spelled out.
If you are asked to do something thatís not included in
the procedure, you now have a choice. Do you give it away for
free, or do you have a change order process where you can
easily provide an estimate for that extra work?
Only what can be measured can be improved, and smart
entrepreneurs & dentists know this. Track -- in real time, not
a year later -- whatís important to you. New patients, new
leads, case acceptance, revenue per day, cases per day,
monthly net income, certain costs, profit margins, profit per
patient, profit per case, and profit per operatory are just a
few of the many metrics you can choose to track for your
Once you measure it, you can now set goals to improve
Curbing irrational spending.
Invest in things that will last, such as your own
education, great systems, team training, and assets that you
really need. Avoid spending on items that are used up quickly,
such as elaborate entertainment expenses that donít generate
significant revenue, excessive utilities, and stopgap
This area can be a tough one to evaluate objectively
because there can be emotion and attachment involved in the
spending. Let us know if you need help in this area; we can
help you look at your spending with fresh eyes and provide a
Great dentists have clear focus. If you have too many
projects going on at once, you end up delaying all of your
project completion dates, and nothing gets finished. Ask
yourself, whatís the most important thing I can do today? And
work on that until itís done. Then ask yourself the same
question again, and wash, rinse, repeat your way to success.
Which of the seven habits are you best at? Celebrate
your natural gifts while keeping an eye on the habits you need
to work on. That will move you to the success you deserve.
Remember you can call our offices if you have any
questions about these or any other accounting, tax,
financial planning or insurance related issues, at
Regards, Don DeHaven, CPA
Principal DeHaven and Company, Inc.