Dental Revenue Cycle Metrics Your Accountant Should Track

Your dental clients give you financial statements. But are you tracking the metrics that actually predict financial health?

Beyond Traditional Financial Statements

Standard financial statements tell you what happened. Revenue cycle metrics tell you why, and what is likely to happen next.

For dental practices, the revenue cycle has unique characteristics that generic accounting does not capture. Production does not equal revenue. Collections lag services. Insurance creates complexity. Cash flow depends on operational execution.

CPAs who track revenue cycle metrics provide better advice and catch problems earlier. This guide covers the metrics that matter most.

Core Revenue Cycle Metrics

Production

Total charges before any adjustments.

What it measures: Clinical activity and potential revenue.

Calculation: Sum of all charges at full fee.

Benchmarks:

• Solo GP: $600,000-$900,000 annually
• GP with hygienist: $800,000-$1,200,000
• Specialty dependent on type

What to watch:

• Declining production may indicate patient loss, scheduling issues, or clinical problems
• Production should align with patient count and procedure mix
• Compare to prior periods and budget

Adjusted Production

Production minus contractual adjustments.

What it measures: What the practice can actually expect to collect.

Calculation: Production - Insurance contractual adjustments

Why it matters: Collection rate should be measured against adjusted production, not gross production.

Note: Some practices do not track adjusted production separately. If not available, work with production and collection rate together.

Collections

Cash received.

What it measures: Actual revenue realized.

Calculation: Bank deposits from patient and insurance payments.

Verification: Should reconcile to bank deposits after removing non-revenue items.

What to watch:

• Collections should be relatively stable month to month
• Seasonality exists but should be predictable
• Sudden drops indicate problems

Collection Rate

Collections as percentage of production.

What it measures: How effectively the practice converts work to cash.

Calculation: Collections ÷ Adjusted Production (or Gross Production if adjusted not available)

Benchmarks:

• Against adjusted production: 96-98% is healthy
• Against gross production: 85-95% depending on payer mix

What to watch:

• Declining rate indicates collection problems
• Rate below 94% (vs adjusted) needs investigation
• Highly variable rate suggests operational inconsistency

Accounts Receivable

Outstanding balances owed to practice.

What it measures: Future expected collections.

Components:

• Insurance AR: Amounts owed by insurance companies
• Patient AR: Amounts owed by patients

Benchmark: Total AR should be 1-1.5 months of production.

Days in AR

How long AR has been outstanding.

What it measures: Speed of collection.

Calculation: Total AR ÷ (Annual Collections ÷ 365)

Benchmarks:

• Under 30 days: Excellent
• 30-45 days: Good
• 45-60 days: Needs attention
• Over 60 days: Problem

What to watch:

• Rising days in AR indicates slowing collections
• Compare insurance AR days vs patient AR days
• Sudden increases need immediate investigation

AR Aging Distribution

Breakdown of AR by age.

What it measures: Quality of receivables.

Standard buckets:

• Current (0-30 days)
• 31-60 days
• 61-90 days
• 91-120 days
• Over 120 days

Benchmarks:

• Current: 60-70% of total AR
• Over 90 days: Under 15% of total AR

What to watch:

• Growing percentage in older buckets
• Insurance AR aging (may indicate claim issues)
• Patient AR aging (may indicate collection weakness)

Operational Metrics

New Patients

New patient acquisition.

What it measures: Practice growth engine.

Calculation: Count of new patient visits per month.

Benchmarks:

• Healthy GP practice: 25-50 new patients/month
• Specialty varies significantly

What to watch:

• Declining new patients predicts future production decline
• New patient source mix (referrals vs marketing)
• New patient conversion rate (consults to treatment)

Active Patient Count

Patients seen within a defined period.

What it measures: Practice's patient base health.

Calculation: Unique patients with visits in past 12-18 months.

Benchmarks:

• Per provider FTE: 1,200-2,000 active patients

What to watch:

• Declining active patients
• Active patient attrition rate
• Recall effectiveness

Case Acceptance Rate

Treatment accepted vs presented.

What it measures: Effectiveness at converting diagnosis to treatment.

Calculation: Treatment accepted ÷ Treatment presented

Benchmarks:

• 60-80% is typical
• Below 50% indicates issues

What to watch:

• Declining acceptance may indicate financial pressures
• Varies by procedure type (preventive vs elective)
• Compare providers within practice

Hygiene Production

Production from hygiene department.

What it measures: Foundation revenue stability.

Calculation: Hygiene production ÷ Total production

Benchmarks:

• Healthy range: 25-35% of total production
• Below 20% may indicate underutilization
• Above 40% may indicate underdeveloped restorative

Why it matters: Hygiene provides steady, recurring revenue.

Financial Metrics

Overhead Rate

Expenses as percentage of collections.

What it measures: Operational efficiency.

Calculation: (Total Expenses - Owner Compensation) ÷ Collections

Benchmarks:

• GP practices: 55-65% overhead
• Specialty: Varies (ortho lower, oral surgery higher)

What to watch:

• Rising overhead without revenue increase
• Specific categories exceeding benchmarks
• Trends over time

Staff Cost Ratio

Staff costs as percentage of collections.

What it measures: Labor efficiency.

Calculation: Total Staff Compensation ÷ Collections

Benchmarks:

• Target: 25-30% of collections
• Above 35%: Overstaffed or overpaid

What to watch:

• Rising ratio without productivity improvement
• Overtime trends
• Staffing changes

Lab Cost Ratio

Lab expenses as percentage of production.

What it measures: Lab efficiency and case mix.

Calculation: Lab Costs ÷ Production

Benchmarks:

• GP: 8-12% of production
• Varies by case mix (more crowns = higher %)

What to watch:

• Rising without procedure mix change
• Compared to similar practices
• Pricing negotiation opportunity

Occupancy Cost Ratio

Rent and related as percentage of collections.

What it measures: Real estate efficiency.

Calculation: (Rent + Utilities + Related) ÷ Collections

Benchmarks:

• Target: Under 7% of collections
• Above 10%: Problem

What to watch:

• New leases approaching
• CAM increases
• Opportunity cost of space

Reconciliation Metrics

Reconciliation Accuracy

How well books match reality.

What it measures: Data reliability.

Calculation: Variance between bank deposits and PMS collections ÷ Total deposits

Benchmarks:

• Under 1% variance: Good
• Over 2% variance: Problem

What to watch:

• Persistent unexplained variances
• Growing variances over time
• Direction of variances (PMS over or under bank)

Unidentified Deposits

Deposits that cannot be traced to PMS.

What it measures: Reconciliation completeness.

Calculation: Unidentified deposits ÷ Total deposits

Benchmarks:

• Target: Under 1%
• Over 3%: Needs attention

What to watch:

• Growing unidentified balance
• Aged unidentified items
• Recurring sources of unidentified deposits

Credit Balance Ratio

Patient credits as percentage of AR.

What it measures: Posting accuracy and refund processing.

Calculation: Total credit balances ÷ Total AR

Benchmarks:

• Under 2%: Normal
• Over 5%: Needs investigation

What to watch:

• Growing credit balances
• Aged credits not being refunded
• Source of credits (overpayments vs posting errors)

Using Metrics in Client Service

Monthly Review

Metrics to track every month.

Priority metrics:

• Collections
• Collection rate
• AR total and aging
• Reconciliation status

Action triggers:

• Collection rate drops below 95%
• AR aging shifts older
• Unexplained variances emerge

Quarterly Review

Deeper analysis quarterly.

Add these metrics:

• Production trends
• Overhead analysis
• Staff cost trends
• New patient trends

Action triggers:

• Consistent declines in any metric
• Overhead creeping up
• Growth metrics stalling

Annual Review

Comprehensive annual assessment.

Full analysis:

• All metrics with year-over-year comparison
• Benchmark to industry
• Goal setting for next year
• Strategic recommendations

Client Communication

Making Metrics Meaningful

Present metrics in context.

Best practices:

• Compare to benchmarks
• Show trends over time
• Explain implications
• Recommend actions

Avoid:

• Data dumps without interpretation
• Jargon without explanation
• Metrics without benchmarks
• Numbers without recommendations

Early Warning Conversations

Have hard conversations early.

When metrics indicate problems:

• Present data factually
• Explain implications
• Recommend investigation or action
• Follow up on implementation

Want better revenue cycle visibility for your dental clients? Zeldent provides the reconciliation foundation that makes metrics trustworthy. Automated daily matching, accurate AR data, and clean books that support meaningful analysis. Schedule a demo to see how Zeldent helps CPAs serve dental clients better.