The Economics of Dental Hygienists

Analyzing Your Hygiene Profit Potential
Editorial by Jim Du Molin

Last week I started talking about dentists and dental hygienists, and how you, the dentist, need to think like a capitalist. The first step in this capitalistic venture is preparing the operatory space for the hygienist – as I mentioned last week, it’s both an investment and a risk, and it’s one you need to consider fully.

Next you need to actually hire a hygienist. Let us assume that the dentist is working four days per week and that 25% of his or her time is spent performing treatments that a hygienist could perform. This means that there is at least one day of potential hygiene production per week.

Let us further assume that based on the dentist’s fee schedule, a hygienist would average $700 per day in production. Collections at 96% would reduce this to $672, from which we have to deduct variable costs (disposable supplies and materials used in treatment), salary, and employer taxes. Our estimated profit before indirect overhead costs is $292 per day.

Daily Gross Profit on Hygiene Production

This is the first level of profit to be realized from hiring the hygienist – direct profit on the hygienist’s production. Adding just one day of hygiene per week provides $1,168 of passive income per month and $14,000 per year.

More importantly, the dentist is now free to use his or her time more productively. Previously, 25% of the dentist’s time (two hours per day) was used to perform hygiene treatments. Let’s say that he or she could bill $88 an hour for those treatments. Now, the dentist can use these two hours to perform more complex and more costly treatments – at, say, $313 per hour. That’s an increase of $225 per hour, or $450 per day.

Assuming that collections are 96%, and variable costs including lab and supplies are 24%, the marginal net profit on the additional production is 72%. Therefore, if daily production increases by $450, the extra net profit will be $324. Remember, that’s $324 everyday. In an average 16-day month, that comes to an additional $5,184 in profit per month.

Adding the dentist’s additional production to the hygienist’s production, the total additional profit is $6,352 ($1,168 + $5,184) per month.
However, there’s more to the story: capitalists have to take risks, and smart capitalists can make lots of money… but I’ll get to that next week!