Think about the dashboard in your car.
It tells you where you’re going and how fast. How much gas you have. How the transmission is doing. And when something’s wrong, a check engine light comes on. It’s every insight into how the car is operating, and you don’t have to be a mechanic to read it — you just have to look.
Now think about the dashboard for your practice. A lot of owners don’t have one, and don’t look at the one they have. That’s fair enough. They’re busy doing clinical work and trying to run a practice, and building a reporting system is the last thing on the list.
So they default to the only number that requires no setup: the bank account.
The problem with running your practice off your bank account is that it tells you one thing: whether there’s money in there, and whether it’s going up or down. What it does not tell you is what you need to fix in order to make that balance go up.
But the power of looking at the dashboard is everything. It tells you where you’re going. Whether you’re on track or off track. Whether you need to course correct. Here are the seven numbers that belong on it:
The First Four: How Are We Operating?
The first four group together, and they answer one question: how is this practice operating?
You should be able to pull this dashboard up weekly, monthly, and over the last quarter and see it.
1. Production
Do we have a production problem, or is production on track? Are we producing enough clinical dentistry to produce enough cash flow to operate the business?
You have to have production. Hygienists need to be producing effectively. Doctors need to be producing effectively. If you’re the sole provider, it’s on you. If you have associates, you need to be monitoring how they’re performing — because those providers cost you money. Are they costing you money, or are they making you money? There’s a very big distinction there.
Three sub-metrics make production actionable:
- Production per operatory. Are we utilizing the space effectively?
- Doctor production per day. Are the doctors producing what they need to?
- Hygiene production per hour. Hygienists are paid hourly and they’re expensive. Are they producing enough to cover themselves and their part of the overhead?
2. Collections
Caleb Gussner puts it bluntly: “It’s a moral outrage in dentistry not to collect what you produce.”
The work is done. The chair time is spent. The team has already been paid to produce it. Every dollar you don’t collect is dentistry you gave away.
The standard is 98%, measured every month, or at minimum across a rolling 90-day period. Anything meaningfully below that isn’t a collections philosophy problem, it’s a specific breakdown you can find and fix.
Then there’s the check almost nobody runs. Collecting 98% inside your practice management software is not the same as receiving it.
Say you produced $1 million and your PM reports $999,000 collected. That’s 99% — an excellent month by any measure. Then you look at the bank statement and it shows $900,000.
Where did the other $99,000 go?
It isn’t enough to collect what you produce. What the system says you collected has to actually reach the bank, and reconciling those two numbers is one of the highest-value five minutes on this entire dashboard.
When collections do slip, the causes tend to be concrete: treatment presented without financial arrangements in place, claims going out incomplete, statements that quietly stop after the second notice. These are front-desk systems problems, not clinical ones — which means they’re fixable without anyone doing more dentistry.
3. Overhead
Overhead is where the leaky buckets show up.It’s the number that tells you whether you’re splurging somewhere, whether there’s fat worth trimming, and which categories have drifted while nobody was watching. For anyone sitting in the finance seat, it’s the most diagnostic line on the dashboard.
But it reads in both directions, and that’s the part most owners miss.
Consider a practice with low production because not enough new patients are coming through the door. Look at the overhead bucket and you find it running lean — only 1.5% going to marketing. The problem isn’t discipline. The problem is that marketing is underfunded, and the fix is to put money in rather than take it out.
Overhead management isn’t always about cutting back. Sometimes the right call is to reinvest in the business.
For category-level targets — what personnel, clinical supplies, facility, and general business expenses should each run as a percentage of collections, see how to protect profit margins as your dental practice grows.
4. Net Operating Income
This is the one that matters most, and it’s the one to read first.
Production, collections, and overhead are the diagnosis. Net operating income is the result they produce. Hand a set of financials to a dental CPA and NOI is what they’ll look at before anything else, because it answers the only question that ultimately matters to an owner: is this practice profitable, and is it producing cash flow?
If the answer is no, you already know where to look. Go back through the first three and find out which one is broken.
At 20 to 25% NOI, you’ve got cushion. That’s the range where the conversation shifts from fixing something to improving it — optimization rather than panic mode.
Four Questions Every Owner Should Be Able to Answer
Here’s the test. Right now, without looking anything up:
- What is your production per operatory?
- What is your collections percentage?
- What is your overhead percentage?
- What is your NOI percentage?
If you can’t answer those four, go figure it out. Ask your CPA, your accountant, or your internal controller. Those are the key numbers you need to know.
And to be clear, you don’t have to be the one putting them together. But you as the owner need to know what they are.
The Last Three
5. Tax Liability
At any point in the year, you should be able to say roughly what you owe, what you’ve already paid in, and what will be due when the year closes.
Most owners can’t. Tax is the one significant number on this list that tends to get discovered rather than tracked — and the discovery usually happens in April, at the exact moment the money is due.
That’s what “caught off guard” actually means. It isn’t a tax problem, it’s a visibility problem. The liability was building all year and was knowable the whole time; nobody was looking at it.
The difference is practical rather than philosophical. When you know the number in July, the cash gets set aside deliberately over the following months. When you find out in April, it comes out of whatever happens to be in the account, often alongside the current year’s first estimated payment.
Which is why it belongs on the dashboard rather than in a once-a-year conversation.
→ Get ahead of your taxes: the proactive tax strategy for dentists
6. Cash Reserves
Going back to the dashboard analogy — cash is your fuel. It’s what gets you to the next spot.
The recommendation is 10% of annual collections, give or take.
That sounds like a lot until you convert it. Ten percent works out to roughly six weeks of cash burn, or about three payroll periods. It’s a cushion, not a war chest. It also strengthens your position with lenders, and there’s no real cost to holding it — which makes it one of the few decisions on this list with no downside.
On a million-dollar practice, that’s $100,000 sitting in the bank. You will sleep better at night with it there.
And it doesn’t have to sit in an operating account doing nothing:
- Keep $40,000 in your operating account — that’s your two-week spend.
- Keep $60,000 in a high-yield savings account, a money market, or a fintech like Mercury or Brex, where you can earn 4.5–5% interest.
Because the target is a percentage rather than a fixed figure, it moves with the practice. Grow from a million to two million in collections and the number becomes $200,000. That’s the part owners miss — the reserve that felt comfortable two years ago is often thin today, and it’s easy to overlook because the dollar amount in the account never went down.
7. Contribution Margin
If you run a single location, skip this one. If you run more than one, it may be the most important number on the list because it’s the one thing a consolidated P&L is structurally incapable of showing you.
The pattern is familiar enough. You build a strong flagship, then go replicate it. Nothing wrong with that at all. But the second and third locations often bleed a little in their early years, and that bleed gets quietly absorbed by the flagship. Look at the group consolidated and everything appears fine.
The only way to see it is to class each practice out separately and ask what each one is actually contributing to the whole.
Take a three-location group. Consolidated, it shows 18% — healthy by any reasonable measure. Separate the locations out, though, and one of them turns out to be carrying 95% of the contribution.
| Location | Contribution margin |
|---|---|
| Practice A | 27% |
| Practice B | 7% |
| Practice C | –14% |
You have one location covering the sins of another.
That’s invisible on a consolidated statement, and it stays invisible until someone goes looking for it. Review contribution margin by location every month and you can actually do something about what you find. Review it once a year and you’re only confirming what already happened.
→ How to scale a multi-location dental practice
Don’t Let the Check Engine Light Stay On
Everybody has a dashboard. The question is whether you’re reading it, because plenty of owners are looking at one with a warning light on and driving anyway.
There’s a version of this most people have lived. A sixteen-year-old ignores the check engine light on his truck for months, until the truck stops running. Then comes the conversation with his father. “What is this light?” “Dad, that’s the check engine light.” “Why didn’t you say anything?” “Dad, it’s always been there.”
The light had been doing its job the whole time.
Don’t let a check engine light live permanently on your dashboard. It’s telling you something for a reason, do something about it.
This dashboard is a good starting point for diagnosing whatever leaky buckets exist in your practice or across your portfolio. Put it in place, monitor it, and make sure the right numbers are on it. What gets measured gets managed, and if you’re looking at your dashboard, you’re going to get better.
If you don’t have one, don’t know what belongs on it, or aren’t looking at the one you have: figure it out. Go to your CPA and ask, “what do I need to do here?” Put something in front of your face.
Frequently Asked Questions
What financial metrics should a dental practice owner track?
Seven metrics: production, collections, overhead, net operating income, tax liability, cash reserves, and — for owners with multiple locations — contribution margin.
The first four answer how the practice is operating, with production, collections, and overhead serving as the diagnosis and NOI as the result. The dashboard should be something you can pull up weekly, monthly, and across the last quarter.
What is a good net operating income percentage for a dental practice?
A practice running 20 to 25% NOI has cushion. At that level the work is optimization rather than panic. NOI is the most important metric on a practice dashboard because it’s the result the other operating metrics produce. If NOI is low, the answer will be in production, collections, or overhead.
How much cash should a dental practice keep in reserve?
Roughly 10% of annual collections. On a million-dollar practice that’s $100,000 which is about six weeks of cash burn, or three payroll periods. It scales with the practice: at $2 million in collections the target becomes $200,000. It doesn’t all need to sit in an operating account earning nothing; part can be held in a high-yield savings or money market account.
What is the difference between production and collections in a dental practice?
Production is the clinical dentistry performed; collections is the money that comes in for it. The target is 98%, measured monthly or across a rolling 90-day period. There’s a second check that matters just as much: confirming that what’s posted as collected in the practice management software actually reaches the bank. A system showing 99% collections while the bank shows considerably less is a real problem, and it’s easy to miss.
What is contribution margin in a multi-location dental practice?
Contribution margin is what each individual location contributes to the whole. It matters because consolidated financials hide underperformance — a group showing 18% consolidated might have one practice at 27%, a second at 7%, and a third at –14%, with the flagship carrying 95% of the contribution and covering the losses. The only way to see it is to class each practice out separately and review it monthly.
Why isn’t my bank balance a good measure of practice health?
A bank balance tells you whether there’s money in the account and whether it’s going up or down. What it can’t tell you is what you need to fix to make that balance go up. It’s a result with no diagnosis attached.
Get the Dashboard in Place
If you couldn’t answer those four questions, that’s not a discipline problem. It’s a reporting problem, and it’s fixable.
Duckett Ladd builds this dashboard for dental practice owners and then sits down with them to read it — so the check engine light gets noticed while it’s still cheap to fix.
Take the Dental Practice Quiz to see where your practice stands, or schedule a discovery call.
Disclaimer: Duckett Ladd, LLP does not provide tax, legal, or accounting advice. This content has been prepared for informational purposes only and should not be relied on for, tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in any transaction. Also, tax law is ever-changing, and every effort should be made to seek out the most current information. Make sure to check the date of published content to ensure the most current information.
