From how to combat inflation and lower overhead to how to set practice profit goals and what to do if your practice profit is declining—here are your questions answered.

By Roger P. Levin, DDS

Orthodontic practices are businesses. Profit is a key target that every business (orthodontic practices included) should set goals for and focus on. This article will lay out seven key questions, which we have recently been asked by orthodontists, paired with practical comprehensive answers that will help any orthodontic practice to increase profitability.

How do I combat inflation?

First, understand that historically, inflation has been a constant economic reality. It is simply higher now than in the recent past. When inflation rises, there are certain categories that never seem to go back down, including food, labor costs, car prices, orthodontic fees, etc. And keep in mind that inflation is not evenly distributed across all products and services. It just depends on the business model of the product or service you are purchasing. For example, orthodontic practices aren’t affected by transportation costs and, for the most part, are no longer affected by supply chain issues. However, the companies that they buy from may be.

Inflation needs to be offset in two ways. According to Levin Group data, most orthodontic practices have overhead that is 4% to 6% too high. The first step in offsetting rising costs is to lower overhead wherever possible. Second, orthodontic practices need to increase production. Although there are over 200 ways to increase orthodontic practice production, they all stem from having excellent systems that will allow the team to maximize efficiency, productivity, and ultimately production.

How do I lower overhead?

When it comes to increasing profitability, maintaining the lowest possible overhead is obviously essential. What many do not think about is that a 1% reduction in overhead is the same as a 1% increase in profit. If an orthodontic practice can lower overhead by 4%, and most can do this easily, then that practice has immediately increased overall profit by 4%. If a $1 million practice lowers overhead by 4%, it adds $40,000 of income to the bottom line. Over 10 and 20 years, this type of incremental profit improvement can be significant.

There are many strategies for lowering overhead. Tracking the top ten annual expenses so that you can better understand the overall opportunities and possibly select new companies that offer lower costs. Another good strategy is to keep salary increases at a reasonable level by augmenting them with bonuses, which can also increase overall team longevity and satisfaction. Additionally, joining buying groups, finding less expensive products, eliminating unnecessary and unused subscriptions, and maximizing team efficiency so that additional labor isn’t necessary are also good overhead reduction strategies.

Does increasing production automatically lead to increasing profit?

Increasing production can be easy or complex depending on the approach that is taken. Levin Group has identified over 200 ways to increase production in an orthodontic practice, but the majority of the increase will come from about 40 of those key production strategies. Examples include revamping the entire schedule to save 10 minutes an hour. This adds two months per year of orthodontic production time, which equates to six extra years in a 36-year career. Other examples include maximizing delegation, increasing new patients, improving the start percentage, designing a beneficial observation program, increasing practice fees, submitting new higher practice fees to insurance companies to increase reimbursement profiles, and many others.

What is a good goal for orthodontic practice profit?

The answer is different for every orthodontist. We all know that it depends on desire, lifestyle, spending patterns, goal orientation, and a host of other factors. But the one recommendation we would make, especially in light of higher inflation, would be that practice profit must increase annually. Just like a medical patient getting their annual physical, which looks at vital signs such as cholesterol, blood pressure, and glucose, there are vital signs for an orthodontic practice. The two most important vital signs are practice production and practice profit, which are followed closely by the number of new patients and the start percentage rate of the treatment coordinator or orthodontist. Understanding the vital signs of an orthodontic practice is essential and relatively simple. However, any orthodontic practice that is not growing in annual profit is by definition declining.

What do I do about staffing costs?

Orthodontics, like the rest of dentistry and many industries, is going through a labor crisis. It may be getting slightly better, but we have a definitive shortage of trained staff members. Some practices have no issues at all, and others are struggling on a continual basis. Either way, the cost of staffing is rising. Based on Levin Group national surveys, we estimate that the overall cost of staffing has risen approximately 10%, which means the practice overhead will rise anywhere from 4% to 7% when other inflationary factors are considered.

    There’s no easy solution to the staffing crisis and the negative effect this is having on overhead, which decreases practice profitability. There are considerations for staffing cost control. First, have a signing bonus for new staff members (paid over the first 6 months) to attract qualified, trained staff members. Second, implement longevity bonuses for the current staff. It is far less expensive to keep the current staff than to replace them with new staff even if that new staff is trained. Third, cross train staff for multiple functions. This way if a team member leaves, the practice is not sent into a downward spiral and positions can be shifted as necessary to keep the practice productive, efficient, and profitable.

    Recognize that staffing costs will not be coming back down anytime soon, if ever. This means that new production goals need to be set to offset higher staffing costs.

    What is the most crucial factor in increasing orthodontic practice profit?

    There are two key factors, not one in increasing orthodontic practice profitability. The first is increasing referrals, and the second is increasing starts. We have seen examples of practices with dwindling numbers of referrals, but a high percentage start rate, and these practices had nice profitability. We have also seen practices with remarkably high referral numbers and lower than acceptable start rates and these were also very profitable. We do not recommend either scenario. We recommend having a goal for the right number of referrals, combined with a goal for the right percentage start rate, which tells the practice in advance exactly what to expect for the year regarding production and profit.

    Profit is a direct derivative of both referrals and starts. If either is too low, profit will be low. If both are high, profit will be high, and every scenario in between. The orthodontic practice wants to do everything possible to maximize both of these performance areas and regularly measures to evaluate strengths, weaknesses, opportunities, and threats.

    What do I do if my profit is declining?

    The first step, which many orthodontists skip when faced with a decline in profit, is analysis. Pull out your reports and look at all the main numbers. Production, collection, number of new patients, start rate, adult patients versus children, and others. Look for which ones are below either your goals or national averages. Once you perform the analysis, you then need to identify opportunities. There is information available everywhere ranging from articles to webinars to seminars to consulting and we recommend that you access this information at the right level depending on how severely your profit has been declining. The analysis will demonstrate what buttons need to be pushed, what areas need to be tightened, and what strategies need to be put in place.

    Any time profit declines, take it very seriously. This “vital sign” tells you that the practice is sick. You then want to analyze the reasons why just like a physician who performs diagnosis on behalf of a patient with abnormal vitals. Then you can begin to construct solutions that will benefit the practice and bring the profit level back into the right target range.


    Profit is clearly the single most important factor in the success of an orthodontic practice. We have seen large practices with small profit and small practices with large profit and everything in between. The key is to build a profit model, track it and measure it carefully, and know when to add strategies to improve things. If a practice notices a decline, and you take it very seriously, analyze quickly and identify opportunities to improve performance, you can keep your practice on the path to success.OP

    Roger P. Levin, DDS, is the CEO and founder of Levin Group, a leading practice management consulting firm that has worked with over 30,000 practices to increase production. A recognized expert on ortho practice management and marketing, he has written 67 books and over 4,000 articles and regularly presents seminars in the U.S. and around the world. To contact Levin or to join the 40,000 dental professionals who receive his Orthodontic Practice Production Tip of the Day, visit or email [email protected].