Establishing your own dental practice can be daunting. From finding office space to creating a marketing plan to financing equipment and hiring staff, there's a lot to consider.
New dental practice owners often wonder how much to pay staff. Obviously, it's an important thing to consider as you create your business plan. After all, without competitive pay, you will be at a disadvantage when trying to attract and retain top talent.
According to Linda Miles, CSP, CMC, the founder of a dental management consulting firm, staff salaries should range from 20% to 24% of your practice's collections, excluding doctor and on-site laboratory salaries, taxes, and benefits. But what does that look like in real numbers?
We've compiled some advice from dental practice managers to help guide your planning process.
Deciding Who You Need in Your Dental Group
A bare - bones practice consists of two employees: a dentist and an office manager. You, as the dentist, will provide the clinical care while the office manager handles virtually everything else.
If you're just getting started, these two positions may be all your cash flow supports. However, as your practice grows, you may be able to add employees, enabling you to expand services, see more patients, and increase your revenue streams.
As your business grows, you might consider adding:
- Dental assistants
- More dentists, including junior dentists, dental partners, or specialty providers like orthodontists or endodontists
Salary ranges for these positions vary geographically. For example, a dental hygienist working in San Francisco will earn more than someone working in rural Kansas. But there is some commonality for dental practice staff salaries.
To help you plan for your dental practice's growth, here are some factors to consider when determining salary ranges.
What to Pay Yourself as the Dental Practice Owner
A lot more goes into determining an owner's salary than you might realize, says Emmanuel Miller, a registered investment advisor and CPA who helps dental practices. Before deciding an exact percentage to pay yourself, ensure your salary does not jeopardize the practice's cash flow. In other words, can you take home your desired salary while continuing to pay your staff and bills?
Miller explains dentists can pay themselves through a W-2 wage, a distribution from the practice, or a combination of both.
If your practice is incorporated, you must decide how much to take as a W-2 wage. Your W-2 wage must pay your Social Security (12.4%) and Medicare tax (2.9%). These percentages, current as of 2021, are double the amount for individuals. Since dental practice owners are considered self - employed workers, they are subject to self-employment taxes. Withholding these taxes as part of a W-2 salary is the most common way for dental practice owners to make these payments. However, some choose instead to make quarterly payments.
Miller suggests dental practice owners who have retirement accounts keep their annual W-2 wages below the upper limit at which the IRS allows 401k contributions. In 2021, the maximum eligible compensation was $290K.
Indeed, many factors come into play when making compensation decisions, and there's no universal percentage a practice owner should receive as a salary. Just don't be tempted to take home a large distribution following a good financial period. Since there are likely tax implications, it may be better to reinvest in your practice or put money away for slower periods.
What Dental Office Managers Get Paid
Think of the dental office manager as the chief operating officer of your practice. The office manager’s litany of duties usually include:
- Creating, implementing and enforcing policies and procedures
- Supervising staff, including hiring and firing
- Filing insurance claims
- Maintaining patient schedule
- Overseeing financial aspects of the practice
- Managing insurance claims
- Handling marketing and public relations
- Implementing procedures and policies
What Dental Receptionists Get Paid
A front desk receptionist typically performs multiple tasks in a dental practice. Responsibilities may include:
- Answering phones
- Greeting patients as they arrive
- Scheduling and canceling appointments
- Calling patients with appointment reminders
- Managing office inventory and supplies
- Communicating with vendors
- Filing and scanning documents
What Dental Hygienists Get Paid
A dental hygienist serves a vital role in any dental practice. There are varying degrees of specialty within this field. A general rule of thumb is, the more certifications a hygienist has, the more the hygienist should be paid.
In general, hygienists do the following:
- Perform oral health care assessments
- Maintain dental charting
- Screen for oral cancer
- Evaluate gum health
- Take and interpret dental x-rays
- Remove plaque and tartar from the gumline
- Apply fluoride and sealants to prevent cavities
- Administer local anesthetic including nitrous oxide
- Educate patients on proper oral hygiene techniques
What Dental Assistants Get Paid
Dental assistants can be expected to do a variety of tasks in a dental office. They don't have the same amount of training as dental hygienists, but their role is still vital to the seamless operation of a dental office.
- Ensure patients' comfort during the procedure or treatment
- Prepare work areas
- Sterilize instruments
- Hand instruments to dentists during treatments
- Dry patients' mouths using suction equipment
- Process x-rays
- Make patient appointments
- Update patients' records
What Junior Dentists Get Paid
As your practice grows, you may want to add junior or associate dentists to increase your ability to see patients. These dentists can be paid an annual salary (which Salary.com does not have data on) or have a commission-structured salary based on the work they do for their patients.
Some practices pay associate dentists based on production and some pay based on collections, says Seth Mendelsohn, director of operations for Longmont Dental Loft, in Longmont, Colorado.
"If you pay based on production, you're paying them a percent of the services they charged for. If your associate dentist receives 30% of production, they would be compensated $1,500 for a $5,000 dental crown," Mendelsohn explains.
However, the arrangement looks different if the dentist is paid based on collections. In that case, the dentist would get 30% after everything is actually collected.
Mendelsohn explains that if the same patient with the $5,000 crown pays $2,000 upfront, the junior dentist would get $600 in the next paycheck. When insurance pays the remaining $3,000, the dentist would get the remaining $900 owed to them. And in the event that part of the balance never got paid, the junior dentist obviously wouldn't get paid for the work either.
Adding More Dentists/Orthodontists to Your Practice
Many general dentists add associate dentists and specialty providers (like orthodontists) to their practice. Dentists who add to their practice usually do this in the hopes of accomplishing a couple of goals. First, they can offer more varied services and keep patients in-house instead of referring them to another practice. Second, they may be able to spend more time away from the dental chair and concentrate on other responsibilities — or even take some time off!
However, consider your financial position before going down this path. Several markers can help you determine whether your practice is ready to add more dentists. Your practice's gross receipts should top $800,000 annually, and you should have an active patient count of at least 1,800, according to Henry Schein Dental Practice Transitions. You should also see 25 new patients per month who are active, based on a 12 – 18 month history.
Silvestre Gonzalez, the director of operations at Benevis Practice Services, an Atlanta - based dental service organization, adds several other indicators to consider. Your hygiene appointments should be booked four to six weeks out, and you should have the ability to subsidize 6–12 months of an associate dentist's salary.
There are also logistical questions. Is your office large enough and adequately equipped to accommodate another dentist? Do you have a group dental malpractice insurance policy that adequately covers your practice? Have you created a marketing plan to entice existing patients or new patients to take advantage of the new dentist's specialty skills? You can expect to take a financial dip after adding a dentist, so make sure the new dentist is set up for quick success. An associate dentist should earn three times their salary in production, so set production goals accordingly.
As a dentist, you want to take the best possible care of your patients' oral health. To do so, you need a dedicated staff. To retain well-trained staff who will help you provide superior patient care, ensure they are paid salaries commensurate with established salary ranges.
Don't spread yourself too thin by introducing too many new services or providers at once. A staged approach to building a dental practice is usually the best way to establish a solid financial footing.
The American Dental Association Center for Professional Success offers great resources for dentists who want to start a practice. Dental Economics is another reputable place to look for compensation models and real - world advice. And be sure to look into Berxi's Dental Malpractice policies for yourself and your team.