When you opened your practice, your time went straight to patient care and building a solid team… not analyzing spreadsheets.
But once you’re up and running, understanding your financials becomes the difference between a practice that runs you… and a practice you can actually grow, sell, or scale with less stress.
And one report holds the key to all of that: your Profit and Loss statement, or P&L.
Your P&L tells the story of your practice’s money. Not the dream version—the real version. What came in. What went out. What’s left over.
And most importantly: whether your practice is actually working financially or just treading water.
At Core Advisors, we work with dentists every day who want to make smarter business decisions—without becoming accountants themselves.
What Is a P&L, Really?
Here’s the simplest way to think about it: your P&L shows whether you’re making money or not.
- It shows how much you collected, not just what you billed (collections are the number that matters).
- It shows where your money’s going—payroll, dental supplies, lab fees, and that tech upgrade you forgot you financed.
- It shows what’s left over at the end: your actual profit.
That’s it. But seeing those numbers clearly and regularly gives you the power to change them. You can spot overspending. Track growth. Figure out why your bank account feels tighter than it should.
You don’t have to memorize every line item. But you do need to know what a healthy P&L looks like, so when something’s off, you notice it fast.
Why It Matters (More Than Most Dentists Realize)
The reality is that plenty of dentists don’t look at their P&L until tax time.
And even then, it’s usually just a glance before sending it off to their CPA.
The problem is, that delay hides problems until they’re expensive—or painful—to fix. A slow bleed in overhead. A slow month in hygiene. Associate production that doesn’t come close to covering salary. Insurance AR quietly aging past 90 days.
Your P&L shows most of that in near-real time—and your AR aging report fills in the rest.
If you don’t look at it, you miss the chance to course-correct before things spiral.
And if you’re thinking about selling someday? Buyers and banks absolutely care about your P&L.
Not just what you made last year, but whether your financials are clean, consistent, and trending in the right direction.
Common P&L Mistakes We See All the Time
At Core Advisors, we’ve reviewed hundreds of dental practice P&Ls, and these issues come up again and again, even in well-run offices:
1. Only Looking at It Once a Year If the first time you see your numbers is during tax season, you’ve already missed 11 chances to catch problems earlier.
2. Lumping Expenses Together When lab fees, dental supplies, and office supplies get mixed into one bucket, it’s impossible to tell what’s driving overhead. Lab and supplies behave differently: lab tracks your crown-and-bridge mix, supplies track chairside consumption. Together they typically run in the range of 6–8% of collections in a well-run practice. Clean categories mean clear decisions.
3. Not Watching Overhead As a working range, total overhead of roughly 55–65% of collections is healthy for a general practice; north of 70% is a problem worth solving now. Staff costs, supply waste, or too many monthly subscriptions could be quietly dragging down profit.
4. Confusing Billed vs. Collected Revenue Just because you billed it doesn’t mean you got paid. A healthy practice generally nets around 98% of what it is contractually owed after write-offs; well below that, you have a billing or follow-up problem, not a production problem.
5. Ignoring Recast EBITDA It might sound technical, but EBITDA is just a clean way to measure how profitable your practice really is before taxes and loan payments. What actually drives a valuation is recast (or “adjusted”) EBITDA—your profit after adding back your own compensation and any personal or one-time expenses running through the practice, then subtracting what it would cost to replace you clinically. That owner-benefit number is what a buyer underwrites. Raw P&L profit almost never is.
What to Watch for in 2026: P&L Trends That Actually Matter
The numbers you’re looking at on your P&L don’t exist in a vacuum. The dental world is changing fast, and your financials should reflect that.
Here’s what we’re seeing across practices heading into 2026:
Cost Pressure Is Still Eating Into Margins
Staff, labs, supplies—it’s all more expensive. If you haven’t adjusted your fee schedule in the past year or two, your margins may be shrinking without you realizing it. And remember that raising fees only moves your fee-for-service and out-of-network collections; your PPO reimbursements move when you renegotiate contracts or drop plans, not when you update your fee schedule. Your P&L will show whether collections are keeping pace with costs.
Hygiene Production Is a Key Indicator
In many well-run general practices, hygiene lands somewhere around a quarter to a third of total production—though the right number depends on your case mix and how much restorative you produce. Treat it as a directional check, not a rule. If your number is well below where it has historically sat, you’re likely dealing with gaps in recall, scheduling inefficiencies, or underutilized hygiene chairs. Tracking hygiene production separately is what makes that visible.
Associates Can Help or Hurt
Associates are great… when they’re profitable. As a working benchmark, total associate compensation—pay plus benefits plus payroll taxes—generally runs about 25–35% of that associate’s own collections. Above that range, the associate needs more production, a different comp structure, or a fuller schedule. Below it, you may have a retention risk. If you’re not tracking each provider’s production and collections separately from the practice total, you can’t tell which situation you’re in.
Buyers Are More Picky Than Ever
Whether you plan to sell in two years or ten, this matters. Private equity groups, DSOs, and individual buyers all expect clean financials and strong recast EBITDA. If your P&L is messy, unclear, or showing razor-thin profit, your valuation takes a hit. Worth naming plainly: a DSO transaction is effectively banking your practice—you convert years of future owner earnings into cash and equity today, and you keep working under someone else’s structure. That can be the right move, but it should be a deliberate decision made against your full financial picture, not a reaction to an unsolicited offer. Either way, the P&L you hand a buyer is the one you have been keeping all along. Get it in shape now, not later.
Technology Spending Needs to Be Justified
We’re not against investing in tech. But we are about measuring ROI. Whether it’s an intraoral scanner, a CBCT unit, AI-assisted diagnostic tools, or a new practice management platform, the question is always the same: did it add production, cut chair time, or reduce lab spend? A scanner that eliminates impression materials and remakes should show up as lower lab and supply costs, not just a bigger equipment note. Your P&L can answer that—if expenses went up and production didn’t, that’s your sign.
What You Should Actually Do With Your P&L
We’re big believers in keeping things simple and doable. So here’s what we recommend for any dentist looking to get better with their numbers:
1. Look at It Monthly
Set a calendar reminder. End of the month, quick 30-minute review. You’re not doing a full audit—you’re just spotting trends, catching problems, and staying familiar with the numbers.
2. Work With a Team That Knows Dental
Not all accountants speak “dental.” That matters. From how your hygiene department is coded to what overhead should look like, it helps to work with people who understand your world—and who also see your tax plan, your payroll, and your personal balance sheet. A P&L reviewed in isolation from your tax position and your savings targets only tells you half of what you need to know.
3. Benchmark Where You Can
You don’t have to compare everything, but it helps to know if you’re on track. Overhead too high? Hygiene underproducing? We help our clients compare against other practices so they can set goals that actually make sense. The most useful benchmark, though, is your own practice six and twelve months ago.
4. Focus on Fixing Overhead
Overhead is one of the easiest areas to improve—once you know what’s driving it. Supplies, staff inefficiencies, software duplication… these things add up. Your P&L can point you to the biggest leaks.
5. Use It to Guide the Big Stuff
Thinking about hiring an associate? Adding operatories? Buying a second practice? Don’t just go with your gut. And once your P&L shows real free cash flow, decide in advance where it goes—a written order of operations for extra cash (practice debt, savings targets, personal goals) keeps the decision from getting made for you by whatever bill arrives first.
Bottom Line
You don’t need to be an expert in accounting to run a financially strong practice.
But you do need to understand your P&L well enough to see what’s happening and ask the right questions.
It’s not just a form for tax season—it’s one of the most valuable tools you have for running your business.
Look at it regularly. Get support when you need it. And use what it’s telling you.
If you want help reviewing your numbers—or just a second set of eyes from a team that works with dental practices every day—we’re here to help.
Helping dentists run more profitable practices is what we do!
Head over to our Contact page and book an introductory call to see how we can help.
Until next time.
This article is for educational purposes only and does not constitute tax, legal, or investment advice. Benchmarks described here are working ranges we use with clients, not published industry standards, and every practice differs. Figures are current as of August 2026 and may change. Please consult your own tax and financial advisors about your specific situation.
Related reading: Why Dental Practices Run on Cash Basis Accounting (And What Accrual Is Actually For) · What a Dental CFO Actually Does (and When You Need One)
