Purchasing and Existing Practice
It is a primary goal of the majority of young dentists to own their own practices. Some graduates will go directly into practice ownership but most will choose to become associate dentists and acquire practices later on.
Dental students are frequently told that buying a practice right out of school is a bad idea. For most it may be but for others, it’s a reasonable possibility. It makes sense that some recent graduates wouldn’t be able to handle a high producing practice directly out of school nor would they be able to receive financing for such purchases. But recent grads in many cases could handle small to medium size practices.
In recent years the impact of higher education costs and higher school debt has impacted the time when young dentists expect to own their first practices. From 2010 to 2018, the number of years that most fourth-year dental students anticipated waiting to own their own practices has gone from two years after graduation to five years after graduation according to polling of D-4 students at The Ohio State University College of Dentistry.
Because of the big run up in school debt, dental students and recent graduates are led to believe that they would be better off working as associate dentists until their school debt is paid down or paid off. The fact of the matter is, in most cases, new practice owners will have a higher net income than what they would earn as associates.
Corporate dentistry needs cheap labor and they need more associates as they gobble up more and more private practices. Is it easier for young dental practitioners to pay off school debt earning $120,000- $150,000 per year working as an associate or earning $250,000- $400,000 per year owning their own practices?
Ask advisors in which you have confidence, mentors and peers if they feel that you are adequately prepared to own your own practice. Ask them in a fair, honest, open and forthright way so that you get a transparent, unbiased response. You do not want to posture with your question or phrase it in such a way to get your desired response. Ask them and leave it wide-open. It is to your benefit to get a straight answer. Don’t have a prideful spirit about taking good advice. If their advice that is contrary to what you want to do, don’t let your emotions allow what they say to go in one ear and out the other.
What do you believe about yourself? Are you fast enough and will you be able to manage the business side of the practice? Your confidence level in your skills and your abilities is probably the best indicator of your readiness to own a practice. Do you have a bit of that entrepreneurial drive that it takes to own your own business?
Good opportunities are hard to find and ideal opportunities are the same as impossible to find. Therefore, it is important to take positive action with limited risk. Taking no action is worse than taking no action at all. Do you want your first practice to be collecting at least $7-800,000, be located in a medium to high income area and have modern technology? If so you and 200 other buyers in your area are probably looking for the same thing! Maybe you should cast a wider net and expand your criteria. Bear in mind that the practice owners you admire today probably did not start off with “cherry” practices. They took something that was less than ideal and they made out of it what they wanted. Doctors who have hesitated to act have jeopardized hundreds of thousands of dollars in lost income!
According to author John Maxwell, people are willing to make changes when they HURT enough, LEARN enough or PROFIT enough (HLP).
Examples of these criteria for you might be:
Do you hurt enough because you need to be your own boss, work in a different environment, have a different philosophy of care, etc.?
Are you educating yourself in preparation for practice ownership?
No matter what your debt level, would having more money to cover cost of living, school debt and investment by owning your own practice be better for you than having less income working as an associate?
Is there at least one of these three criteria in your life that would provide motivation for you to purchase your own practice?
No matter when you take the reins of your first practice, it can be one of the most rewarding options available to you both personally and professionally. The most attractive feature of purchasing an existing practice is immediate patient flow and cash flow. And of course overall earnings are much higher on average for practice owners than associates. There is risk, but there is also reward.