The hot new topic in dental circles is your EBITDA and how good it is compared to practices across the nation. Anytime you pick up a national publication there’s all this talk about how good your EBITDA is, why it matters, etc.
The truth is that it only matters (at least in detailed format) when people talk about valuations, partners, or selling a practice, but beyond that it’s often misunderstood at the practice level. Even if you aren’t selling anytime soon, it’s still important to know, and try to maximize, because at its core it is your practice’s profitability. EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) is meant to show the true operating performance of your dental office, stripped of financing decisions, taxes and accounting noise.
What Should Be Included (and Excluded) in EBITDA?
EBITDA should reflect normal, ongoing operations. That means clinical payroll, hygiene, supplies, lab, rent, marketing, software, and admin costs all belong in the calculation. If you run your car through the practice, then that’s not normal operations so take it out. What typically gets “added back” are things like owner perks that aren’t required to run the practice (personal auto, excess travel, family cell phones). It could also include one-time expenses like a lawsuit, a flood repair, or a renovation/relocation. The goal isn’t to “game the number,” but to normalize it so it reflects how the practice would perform for any competent owner.
You’ll also need to normalize the doctor salary. Sometimes this is a shocking number. To arrive at this number, you’ll want to see what it would actually cost for you to hire an associate to replace yourself.
What Shouldn’t Be Adjusted Out?
One big mistake I see is adding back real operating costs just because they’re uncomfortable. If the practice needs three front desk team members, that payroll stays. If marketing is required to drive new patients, it stays. If rent is high because you have a bad-ass location, that stays.
My Top Three to Consider
- Revenue Per Hour (Increase Revenues)
The fastest way to grow EBITDA is to produce more in the same amount of time. It’s also the easiest because it doesn’t require more staff or equipment. You can achieve this by scheduling more efficiently, treatment planning with higher case acceptance, and proper use of hygiene and assistants.
- Team Cost Efficiency (Increase Efficiency)
Payroll is the biggest expense in most practices: usually anywhere between 18-30%. The lever here isn’t “pay people less.” That’ll lead to more problems. It’s about increasing productivity and creating systems so that each team member is working at the top of their skill set. Well-trained teams almost always improve EBITDA more than understaffed ones.
- Overhead Discipline in Supplies, Labs, and Subscriptions (Lower Costs)
Supplies, labs, and software quietly erode EBITDA when they’re not monitored. Usually supplies should be at 4%, labs at 6%. However, sometimes we see these at double this rate in unorganized practices. Standardizing materials, reviewing lab fees, eliminating unused subscriptions, and renegotiating vendor contracts can add real margin without impacting patient care! If you need help here, check out the DSN Manual for Supply Ordering!
At the end of the day, EBITDA isn’t just a valuation metric. It tells you whether your practice is healthy, scalable, and resilient instead of haphazard, unorganized, and unprofitable. If you focus on clean numbers and pull the right levers, EBITDA takes care of itself (whether you’re selling your practice or keeping it).
Be well and do well (financially and physically),
PS: Need to find a community to help you understand your numbers in 2026? Join DSN, a community of real dentists that share and help each other with their experiences! Apply now to get a 7-day free trial!
