A dental practice can produce millions of dollars and still leave the owner wondering where the profit went. In this episode, Kirk Behrendt speaks with dental practice coach Courtney Dalton about the four financial gaps that determine how production becomes usable cash.
You will learn how to identify losses within adjustments, collections, overhead, and cash flow, along with the metrics and systems needed to improve profitability. Understand where your practice’s money is going and how to make informed financial decisions—listen to Episode 1082 of The Best Practices Show!
Main Takeaways:
- The effort gap is the difference between a practice’s full master fees and its net production after insurance and elective adjustments.
- Practices must enter full fees for every procedure so their production and adjustment data accurately reflect the dentistry performed.
- The collections gap measures the difference between net production and the money that reaches the practice’s bank account.
- Financial policies, accounts receivable systems, insurance follow-up, and payment options directly affect collection performance.
- The overhead gap represents the percentage of collections used for operating expenses across seven expense categories.
- The cash flow gap explains the difference between profitability shown on a profit-and-loss statement and the cash available after loans, taxes, owner compensation, and other outflows.
- Measuring and monitoring each gap gives practice owners the information needed to make targeted financial improvements.
Episode Chapters:
00:00 Why high-producing dental practices can still lack profit.
03:00 How production becomes profit within a dental practice.
04:24 The effort gap and the impact of adjustments.
05:44 Why practices must bill their full master fees.
09:26 How the effort gap affects APV, PPD, and PPV.
12:09 Why gross production does not determine practice value.
14:08 The collections gap and the 99% collection target.
16:04 Systems that improve collections and accounts receivable.
21:08 The overhead gap and seven expense categories.
23:04 Team compensation, staffing, and practice systems.
26:22 The cash flow gap between reported profit and available cash.
28:43 How loans and taxes affect cash flow.
32:49 Why earnings and profitability determine practice value.
33:20 The process of measuring, monitoring, and improving financial performance.
34:39 How the four financial gaps affect one another.
Guest Bio:
With an A.S. in Dental Hygiene from Manor College and a B.S. in Exercise Physiology from West Virginia University, Courtney blends her expertise in both healthcare and wellness to drive success.
As a member of the Business Development team, she is dedicated to helping doctors and practice owners realize their full potential by understanding the link between ownership, culture, and the health of the business. Courtney is all about building strong, thriving communities at home or in the office!
Courtney has been a part of the dental community since 2004 and is as passionate about patient care as she is about those who are providing it. Outside of ACT, Courtney enjoys exercising and spending time with her family.
Episode Resources:
- GAPS Calculator within the Community Hub: https://join.actdental.com/c/announcements-9fc6ae/financial-gaps-calculator
- https://www.actdental.com/free-resources/
- Smile Source Transform Membership: https://info.smilesource.com/smile-source-act-dental-transform-membership-1
More Helpful Links for a Better Practice & a Better Life:
