Payroll percentage

Payroll percentage is staff wages and payroll taxes (excluding the dentists) divided by collections, and it is almost always the single largest line in a practice's overhead. Ryan's healthy range is 25–28% of collections, and because it is the biggest number, it is also the one owners are most tempted to cut first when profit is tight, which is often exactly backwards.

A payroll percentage running above range is not automatically a sign of overstaffing; it can just as easily mean collections have stalled while staffing stayed appropriately sized for the practice's real capacity, in which case the fix is growing production and collections, not cutting the team that is needed to deliver it. Cutting staff to hit a target percentage while collections stay flat usually just breaks the systems that were producing that collections number in the first place.

The more useful diagnostic is asking whether payroll is buying something: a fully staffed hygiene department that drives reappointment and new-patient flow, or a strong treatment coordinator who lifts case acceptance, is payroll working for the practice even at the higher end of the range. Read this line alongside production and collections trends before deciding it is the problem rather than a symptom of a different one.