The Fee-For-Service Practice: Separate lab fees to reduce stress and increase profits in FFS dentistry

Running a successful fee-for-service practice has its challenges and its joys. One of the ingredients that’s common among most profitable, low stress FFS practices is attention to office numbers and budget. 

As I’ve written several times the past two years, knowing your numbers can make the difference between enjoying your work and being constantly anxious about your inability to pay the bills. I would like to highlight a suggestion to add to your goals that can dramatically lower your stress and improve your bottom line.

I’ve said before that there are two ways dentists pay their bills in a FFS setting—the "what's left over" technique, where you pay yourself with whatever is left after paying all your office bills (a sure recipe for stress), versus the "goal setting and paying yourself according to a well-thought-out budget” process, which reduces uncertainty and increases intentional patient scheduling.

Similarly, there are two ways to set up a fee structure. The first (and in my experience the most common) is calling your buddy down the street and asking them what they charge for a crown, implant, etc. The other way is to evaluate your goals and budget, define your intended profit, and with an eye toward how much time it takes for each procedure, set a fee that makes sense.

A change in lab fee mindset

The common assumption in both these techniques for lab dependent procedures is that the lab fee is built into the total procedure fee. For instance, if your crown fee is $1,500 and your lab fee for the crown is $225, you have $1,275 left to help pay the rent, payroll, insurance … and oh yeah, also pay yourself. 

I used this fee structure for years and I was consistently fooled at the end of the month when it was time to pay bills because I could budget for fixed expenses. But the lab bill, much like dental supplies, is an extremely variable expense. This makes the lab hard to predict in a monthly budget because the more work you do, the higher the lab bill. It can feel at times like you’re chasing your own tail. 

Here’s the scenario I used to find myself in. I’d be thrilled because I had a seemingly excellent collection month due to multiple implant cases and an eight-unit porcelain veneer case. Let's say I had projected making $300K that year, which is $25K a month. Let's say I collected $80K to pay all my bills.

After paying all my bills (rent, payroll, insurance, dental supplies, bank loans, and more) I had $30K and one bill left—the lab bill. Imagine my surprise when I saw that the lab bill was $15K. Remember, I did several implant cases and an eight-unit veneer case. So now, instead of taking home $25K, I was down to $15K. It’s very frustrating! 

The lab fee solution 

The solution to this never-ending frustration is to charge the lab bill separately. The conversation with your patient goes like this: “The cost of the crown on your back tooth is $1,500 plus the lab fee. We estimate the lab fee will be $275.” 

In my experience, patients accept this because it’s just like other medical appointments. When you go to your PCP, you pay for the exam, and the lab work is a separate charge. I keep the collections for the paid lab fees separate, and I even have a separate bank account solely for the lab bill. This way, when I pay my lab bill at the end of the month, I tap into that other account and my take home profit is not affected. This works for all lab-based procedures.

There are several advantages to this arrangement. Beyond the budgetary benefit, the patient has a better understanding of the lab process and becomes a partner in the decision making. The usual challenge is to find an inexpensive lab that also does good work, especially for large cosmetic cases.  

When charging the lab bill separately, I present the choice to the patient and let them decide. I explain about using a local, less expensive lab that does decent work versus an out-of-town lab that does exquisite artistic restorations at twice the price. In my experience, the patient chooses the more expensive lab every time! 

Another plus for charging the lab bill separately come in when you do in-office milling. I do most of my own single unit onlays/crowns and I still charge the lab bill because I’m the lab! I keep the lab fees separate and that’s used to pay the monthly bill for my miller and scanner. In other words, my patients’ lab fees pay for the equipment. In exchange, my patients enjoy the convenience of same-day dentistry in a high-tech environment.

Only FFS practices can do this 

There’s one caveat with this technique: if you participate with insurance companies, this cost saving, stress-reducing approach is not available to you. The contracts that you sign to participate in insurance prohibits you from having a separate lab charge.

I often wondered why this is not routinely taught in dental business courses and I realized that since 90% of dentists participate in some insurance plans, there’s no reason to present this information. 

But I’m here to tell you this has worked for me the past 20 years. I know that any FFS practice can immediately institute charging the lab fee separately. Like any other patient interaction, it works best when presented with positive benefit statements, such as. “We do this for transparency and to give you more options.” And no apologies. 

Operating a successful, profitable FFS practice is an outside-the-box venture, for sure, and charging the lab bill separately is another outside-the-box feature. Good luck and let me know how it works for you!

Editor's note: This article appeared in the January 2026 print edition of Dental Economics magazine. Dentists in North America are eligible for a complimentary print subscription. Sign up here.