Show notes
Why Your Dental Practice Isn’t Profitable: The Hidden Collection Crisis Killing Cash Flow
Dental practice owners across the country are working harder than ever, with packed schedules and satisfied patients, yet many struggle with profitability problems that seem impossible to solve. Despite strong clinical skills and busy practices, too many dentists find themselves wondering where all the money went when they check their bank accounts at month-end.
The immediate assumption is always the same: “I must be overspending.” Practice owners scrutinize supply orders, negotiate with vendors, and cut expenses wherever possible. But according to Morgan Hamon, CPA and founder of EAG Dental Advisors who has worked exclusively with dental practices for over 15 years across all 50 states, this assumption is not only wrong—it’s preventing practices from solving their real problem.
The counterintuitive truth that could transform your dental practice profitability: The #1 profitability killer isn’t overspending—it’s poor collections.
Watch GrowOrtho episode here.
The Profitability Benchmark Most Practices Miss
Before diving into solutions, it’s crucial to understand what dental practice profitability should look like. Hamon is clear about the standards: “If it is a single doctor owner operated dental practice and it’s an established practice, 35 to 40% profit is what it should be. And that’s what we see.”
If your practice falls significantly below these benchmarks, the solution likely isn’t in the expense column—it’s in the money being left on the table every single day. Most struggling practices are losing thousands of dollars monthly not because they’re spending too much, but because they’re failing to collect what they’ve already earned.
The Overspending Red Herring: Why Doctors Always Blame the Wrong Culprit
When cash flow gets tight, there’s a predictable pattern in dental practices facing profitability problems. The owner’s first instinct is always: “Show me where I can cut costs.” This reaction makes psychological sense—cutting expenses feels controllable and immediate.
But this approach is like trying to fill a bucket with a massive hole in the bottom by pouring water slower. Practice owners address the symptom while ignoring the cause.
Hammond has witnessed this scenario hundreds of times: “The most common pitfall we see is just collection challenges. They’re just not collecting money. And the default go to answer… is always, ‘Why is my overhead high? I’m overspending. Tell me where I’m overspending.'”
The truth is devastating: when practices aren’t collecting money effectively, everything else looks like overspending. Overhead percentages appear inflated because the denominator (collected revenue) is artificially low. Owners feel financial pressure and naturally assume they need to spend less, when they actually need to collect more of what they’ve already earned.
The Collection Crisis No One Talks About
Many dental practices are essentially running “collection-optional” businesses without realizing it. They charge for services, they bill insurance and patients, but the third critical component—actually collecting that money—becomes an afterthought.
This happens because of what Hamon calls the “trust trap.” Most dentists hire someone to handle insurance and billing, then step back with faith that this person knows what they’re doing. The staff member shows up daily, stays busy at their computer, and everyone likes them. But being busy doesn’t mean being effective.
Hamon recalls a dramatic example: “The doctor hired an insuran...
Dental practice owners across the country are working harder than ever, with packed schedules and satisfied patients, yet many struggle with profitability problems that seem impossible to solve. Despite strong clinical skills and busy practices, too many dentists find themselves wondering where all the money went when they check their bank accounts at month-end.
The immediate assumption is always the same: “I must be overspending.” Practice owners scrutinize supply orders, negotiate with vendors, and cut expenses wherever possible. But according to Morgan Hamon, CPA and founder of EAG Dental Advisors who has worked exclusively with dental practices for over 15 years across all 50 states, this assumption is not only wrong—it’s preventing practices from solving their real problem.
The counterintuitive truth that could transform your dental practice profitability: The #1 profitability killer isn’t overspending—it’s poor collections.
Watch GrowOrtho episode here.
The Profitability Benchmark Most Practices Miss
Before diving into solutions, it’s crucial to understand what dental practice profitability should look like. Hamon is clear about the standards: “If it is a single doctor owner operated dental practice and it’s an established practice, 35 to 40% profit is what it should be. And that’s what we see.”
If your practice falls significantly below these benchmarks, the solution likely isn’t in the expense column—it’s in the money being left on the table every single day. Most struggling practices are losing thousands of dollars monthly not because they’re spending too much, but because they’re failing to collect what they’ve already earned.
The Overspending Red Herring: Why Doctors Always Blame the Wrong Culprit
When cash flow gets tight, there’s a predictable pattern in dental practices facing profitability problems. The owner’s first instinct is always: “Show me where I can cut costs.” This reaction makes psychological sense—cutting expenses feels controllable and immediate.
But this approach is like trying to fill a bucket with a massive hole in the bottom by pouring water slower. Practice owners address the symptom while ignoring the cause.
Hammond has witnessed this scenario hundreds of times: “The most common pitfall we see is just collection challenges. They’re just not collecting money. And the default go to answer… is always, ‘Why is my overhead high? I’m overspending. Tell me where I’m overspending.'”
The truth is devastating: when practices aren’t collecting money effectively, everything else looks like overspending. Overhead percentages appear inflated because the denominator (collected revenue) is artificially low. Owners feel financial pressure and naturally assume they need to spend less, when they actually need to collect more of what they’ve already earned.
The Collection Crisis No One Talks About
Many dental practices are essentially running “collection-optional” businesses without realizing it. They charge for services, they bill insurance and patients, but the third critical component—actually collecting that money—becomes an afterthought.
This happens because of what Hamon calls the “trust trap.” Most dentists hire someone to handle insurance and billing, then step back with faith that this person knows what they’re doing. The staff member shows up daily, stays busy at their computer, and everyone likes them. But being busy doesn’t mean being effective.
Hamon recalls a dramatic example: “The doctor hired an insuran...