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Financial GAPs Calculator

ACT Financial GAPs Goal Setter
What time period are you evaluating? We recommend using month end data. The longer time period the better up to 12 months. If you are currently mid month, use the previous final month end numbers.
How many Active Patients do you have?
Defined as having a visit in less then 18 months
How many full time equivalent dentists in your practice?
Days Worked
This is the total number of days your office was open for business in the time period chosen. We know that each day may have different providers.
Gross production $
$
Do you bill your one true fee or the Insurance Allowable Fee for your PPO patients?
Gross production/Day $ {{ formatToUSDRaw(calculatedValues.gross_production_day) }}
Write-Offs % {{ calculatedValues.writes_off_percent }} % This includes insurance adjustments, elective adjustments, and membership plan discounts.
Write-Offs Total $
$
How many PPO Plans are you contracted with?
How many of your Active Patients are In Network with one of your contracted PPOs
Net Production $ {{ formatToUSDRaw(calculatedValues.net_production) }}
Collections for Period being evaluated
$
Collections for the last 12 trailing months.
$
Collections from the last 12 months will allow us to tell you your “production story” in the report. While you may be evaluating only 6 months of data for this calculator, providing this 12 month collection $ will allow us to share this story with you
Net Collections % {{ calculatedValues.net_collections }} %
Collections GAP % {{ calculatedValues.collections_gap }} %
Total Business Expenses
$
This found on your Profit/Loss Statement
Owners’ Salary and Benefits
$
Of the above expenses, how much of that is the owners' salary and benefits?
Associates Salary and Benefits
$
How much of the total expenses are associate dentists’ salary and benefits?
Overhead $ {{ formatToUSDRaw(calculatedValues.overhead) }}
Overhead % {{ calculatedValues.overhead_percent }}%
Net profit $ {{ formatToUSDRaw(calculatedValues.net_profit) }}
How much did you pay in loans through your company?
$
These are found on cash flow statements, not the P/L
How much did you take in distributions to supplement your W2 Salary?
$
These are found on cash flow statements, not the P/L
How much was expenses on your P/L for depreciation and/or amortization?
$
Personal data
First Name
Last Name
Email
Practice Name
Role in practice
GAPs Analysis for {{ inputData.first_name }} {{ inputData.last_name }} during {{ inputData.time_horizon }} months time period
Effort GAP
The effort gap highlights the difference between what you produce and the amount of production that you can collect on. Your effort GAP consists of all your adjustments or write offs from your true master fee schedule.
Gross Production {{ formatToUSDRaw(inputData.gross_production) }}
Adjustments {{ formatToUSDRaw(inputData.write_offs_total) }} This is the dollar value of production that has left your practice in this Effort GAP. This production is no longer collectible.
Your Effort Gap {{ calculatedValues.writes_off_percent }} %
Net Production. {{ formatToUSDRaw(calculatedValues.net_production) }} This is your collectable amount or your revenue potential
You find yourself in the Low Effort Gap = High Profit Margin - Congrats
This lower effort GAP normally is symbolic of being a FFS practice. You have achieved the potential to realize a very high profit margin. As a FFS practice, your write offs at this point are normally only charitable care, some membership discounts, and other elective write offs.
Moderate Profit Margin
Your Effort Gap is in the Moderate Range. This means that you are writing off a significant portion of your production yet your patient base includes enough FFS patients resulting in your Gap falling in the 10% - 20%. Dentists with Effort Gaps in this range still have the potential for good overall true profit margins but it now relies heavily on the remaining GAPs.
High Effort Gap
Your Effort Gap is high due to your contracted insurance write offs. As this number climbs closer to 30%, it becomes increasingly difficult to realize a true profit margin in your business. You are in the High Volume/Low Margin business model and you might be finding that even despite working harder and longer, your take home pay barely increases. You also are likely to find that your overhead is higher than average and your team compensation % is likely well north of 30%. Why is this? Your gross production is your output or potential. Your practice is built to produce that much dentistry and it costs money to produce that dentistry. However, your net production is your maximum revenue potential and that is significantly less. The problem is while your fixed and variable expenses are a function of your output or gross production, your overhead % is a function of your revenue. While minimizing overhead expenses is always a good idea, in your case, the quickest path to a healthy overhead % is through a reduced effort gap.
Very High Effort Gap
Your Effort Gap is in the very high range likely due to elevated write offs in both contracted insurance write offs and elective write offs. At this level of write offs, it will be near impossible to realize a positive true profit margin. You are in the High Volume/Low Margin business model and you might be finding that even despite working harder and longer, your take home pay doesn’t increase, maybe even seems to be decreasing. You also are likely to find that your overhead is higher than average and your team compensation % is likely well north of 30%. Why is this? First, with ongoing inflation and year over year increase in costs of doing business, your already negligible profit margin shrinks even more. Your gross production is your output or potential. Your practice is built to produce that much dentistry and it costs money to produce that dentistry. However, your net production is your maximum revenue potential and that is significantly less. The problem is while your fixed and variable expenses are a function of your output or gross production, your overhead % is a function of your revenue. When you spin your wheels faster to produce more dentistry, your lack of profit margin fails to turn that added work into significant profit.

Your Production Story


Your Annual Patient Value is {{ formatToUSDRaw((inputData.collections_last_12_months / inputData.active_patients).toFixed(0)) }}
A high effort gap is often connected to a low APV and vice versa. A low APV <$400 tells us that you do a little bit of dentistry on lots of patients in order to get to your gross production. A high APV > $1000 would then mean that you do a lot of dentistry on much fewer patients. Many practices lie somewhere in between. Two different practices both with the same exact collections can have vastly different production stories with varying effort and volume needed to achieve the same collections.
Collections GAP This gap highlights the gap between your collectable production and how much you actually brought in as revenue to your practice. The difference between your collection % and 100% is the GAP.
Net Production {{ formatToUSDRaw(calculatedValues.net_production) }}
Collections {{ formatToUSDRaw(inputData.actual_revenue) }}
Collections % {{ calculatedValues.net_collections }}%
GAP (The difference between your collections % and 100%) {{ calculatedValues.collections_gap }}%
Your Collections Gap is {{ calculatedValues.collections_gap }}% for 2023. This gap means that {{ formatToUSDRaw(((calculatedValues.collections_gap / 100) * calculatedValues.net_production).toFixed(2)) }} was not collected that should have been collected. Production not collected comes right out of your profit as a business owner. Why? You’ve already paid expenses to produce that dentistry. Regardless of your Effort Gap and business model you are competing in, your goal is to collect 100% of your net production.
You have no collection gap. Good work! Keep an eye on this metric to always ensure you collect 100% of your net production.
Overhead GAP Your overhead GAP is simply your overhead business expenses.
This is calculated as a % of your actual revenue of collections.
Remember, when you have wide Effort and Collections GAPs, it will be very difficult to maintain a healthy overhead. We recommend a target of 60% or less for overhead.
This overhead includes all your business expenses minus your Owner’s and Associate’s compensation. We recommend a target overhead of 60%. However, we find that correcting an overhead % is normally more a function of correcting GAP 1 and 2 and less a function of spending less money.
Overhead: {{ formatToUSDRaw(calculatedValues.overhead) }}
Overhead %: {{ calculatedValues.overhead_percent }}%
Cash Flow GAP You’ll see your net profit below. You’ll see this same number at the bottom of your Profit and Loss Statement. This value is your taxable income. You might be wondering why you don’t experience that amount flowing to your personal bank account? The reason? The cash flow gap or “below the line” expenses. These expenses are NOT seen on the Profit and Loss Statement. Rather, they are found on the cash flow statement. If you indicated yes to loans, distributions, or quarterly estimated tax payments, then you have a cash flow gap you must be aware of and manage.
Gross Profit Before Doctors get paid. {{ formatToUSDRaw(inputData.actual_revenue - calculatedValues.overhead) }}
Owners Salary and Beneftis {{ formatToUSDRaw(inputData.owner_salary) }}
Associates Salary {{ formatToUSDRaw(inputData.associates_salary) }}
Net Profit {{ formatToUSDRaw(inputData.actual_revenue - calculatedValues.overhead - inputData.owner_salary - inputData.associates_salary) }}

Congratulations!

You have completed the first step of your Financial Gaps Analysis. The Net Profit amount above is your taxable pass through income according to the IRS.

The next step is to calculate your True Profit. What is True Profit? It is the amount of after tax, actual money, that you can deposit in your personal bank account and use to live on, save, or invest for retirement.

In order to do this, you'll need to pull a cash flow statement and determine if you do any of the following:

  1. Pay any loans paid through the practice
  2. Take Distributions out of the practice
  3. Claim any amortization or depreciation

What is your next step?

First, access our Financial GAPs at a Glance Tool for instructions on how to do this. This tool is accessible to our BPA Premium Members. You can sign up for $99/mo here.

We coach private practice dentists just like you. This is what we do. If you want our help or just want to see what that would look like, set up a call with us here. Don't worry! This isn't a sales call but rather just a call to learn about you and discuss where we might be able to help you and your practice.