Managing dental office overhead is a key aspect for financial success. Digital solution provider Dandy’s 2022 Dental Industry Report found that practices are grappling with rising costs, insurance billing, hiring and employee retention, practice growth and profitability, and more. Lowering costs is a priority for dentists, according to the report. If you are seeking ways to reduce your practice’s overhead, consider outsourcing your billing. The cost savings of dental billing outsourcing can be significant as it enables you to reduce overhead expenses and allocate more resources to patient care.
Understanding overhead is a quick way to get an indication of the health of your practice. A 2021 study by Dental Buyer Advocates found that the average dental practice overhead was 61.9%. Similarly, in a 2019 Dental Economics article, dental business advisor Mark J. Nadaud, CPA/ABV, stated that average overhead typically ranges between 55% and 65%.
Regardless of size, every dental practice aims to reduce overhead and increase profit and savings while delivering high-quality care. One often-neglected aspect with significant cost-saving potential is dental billing. Outsourcing billing can streamline operations, reduce errors, and most importantly—cut costs. This post examines the components of overhead in a dental practice and how outsourced dental billing services can help reduce these costs.
Improve your revenue with efficient dental billing services!
What is Overhead in a Dental Practice?
In simple terms, overhead is the expense of running a business. In the context of dental, these are the essential costs of running your practice. Overhead includes fixed and variable costs. Understanding your dental practice overhead is key to cutting costs, boosting profits, and keeping your practice healthy long-term.
Fixed costs include rent, insurance, taxes, and utilities — expenses that cannot be easily changed, reversed, or reduced. Fixed costs remain the same regardless of changes in patient volume.
Variable costs include salaries, dental supplies, equipment, and fees for laboratory services.
In general—except for very small practices—overhead tends to increase as a dental practice grows as it requires more staff to manage the workload. With more patients and procedures, the practice would need additional hygienists, front office staff, or potentially, an associate dentist. Due to labor shortages, salaries and wages have increased significantly and hiring additional staff is expensive.
Cost-effective dental billing solutions for practices offer a smart solution for cutting overhead and save money—without compromising on efficiency or quality of care.
How Outsourcing Dental Billing Reduces Costs
Outsourcing billing can streamline operations, reduce errors, and most importantly—cut costs. Here’s an overview of the cost savings of dental billing outsourcing:
- Reduces Staffing Expenses
In-house billing requires trained personnel, salaries, benefits, and ongoing training. Billing staff costs tend to increase as a practice grows, especially due to recruitment and turnover. Outsourcing eliminates the need for hiring full-time billing staff, allowing you to divert valuable resources to patient care or expansion needs.
- Lowers Overhead Costs
Fixed costs such as office space, IT infrastructure and software licenses necessary to run billing operations are key factors that contribute to overhead. By outsourcing, practices can reduce these fixed expenses. Dental billing companies are equipped with their own platforms and tools, allowing your practice to significantly reduce investment in equipment and technology.
- Minimizes Errors and Avoids Costly Denials
Experienced outsourcing companies offer the services of dental billing specialists who stay up to date with constantly evolving insurance policies and coding standards. This ensures accurate claim submission, minimizing rejections and denials, which can be costly to rework and appeal. Fewer errors mean faster reimbursements and fewer write-offs.
- Comprehensive Insurance Checks
Outsourcing to specialized companies allows you to save time and money on hiring in-house staff for dental insurance verification. Billing companies have a team of dedicated eligibility verification experts equipped with advanced tools and focused on efficient insurance checks. These professionals don’t just rely on web portals—they proactively make live calls to insurers. This approach ensures you receive accurate, up-to-date information about a patient’s coverage, limitations, and preauthorization requirements, which is especially crucial for complex procedures. With a reliable partner, your practice can take the first step towards claims processing with confidence, reducing eligibility-related denials and improving your overall revenue cycle performance.
- Improved Cash Flow and Faster Payments
Outsourced billing teams ensure timely claims submission and robust follow-up, which supports faster collections and improved cash flow. By helping identify claim denial patterns and recommending strategies to improve the process, these experts can enhance your revenue flow.
- Scalability Without Higher Expenses
As your practice grows, your billing activities increase. Outsourcing offers scalability without the need to hire additional staff–an expensive prospect. Whether you’re adding new dental professionals or expanding locations, your billing partner can provide the flexibility you need in a cost-effective way.
- Save on Training Costs and Maintain Compliance
With evolving insurance requirements, CDT codes, and compliance regulations like HIPAA, dental billing faces constant updates. Providing in-house training to your staff can be expensive. By partnering with a HIPAA-compliant billing company, you get access to trained professionals, saving your practice both time and money.
Dental Billing Outsourcing: A Winning Strategy on All Counts
In addition to reducing expenses, outsourcing dental billing helps you maximize efficiency, minimize risk, and improve your bottom line. The major advantage is that outsourcing revenue cycle management tasks cuts overhead without compromising efficiency or patient experience. By delegating your billing tasks to specialists in the field, you gain more time to focus on patients while ensuring operational efficiency and higher reimbursements.
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