You made it. You are a licensed dentist . You’ve spent the last 8 years and $300,000- $500,000 to get to this point. You have lost 8 of your primary earning years to become a doctor. Let’s assume you were able to earn $65,000 per year for those 8 years or $520,000. The lost income plus the investment in your education places you in the hole $800,000-$1 million dollars. This is your ground zero and that doesn’t consider the eight year period of compounding you lost by not saving for your retirement . That is a large hole and a lot to recoup!
So What Are Your Choices?
1. Work as an associate employee dentist earning 25% of your personal collected production.
This is after the insurance companies’ discounted fees . You will be expected to be in network with many insurance PPO’s meaning your production will be reduced 25- 40% and sometimes more. As an example : An associate dentist produces $500,000 in billings and has the insurance reimbursements reduced 30% . The dentist’s collections are actually $350,000 . So 25% of $350,000 equals $87,500 . That is what’s left over after adjusting for the low in-network insurance reimbursements. This is your net taxable income which you will pay taxes on and because you are not an owner.You will get no write- offs.
If you think you can produce $ 1 million dollars of collected production just double the above figures. That is a lot of work and a tall order for a young dentist.
You will be expected to check large numbers of hygiene patients while still trying to produce your dentistry. The profit from hygiene goes to the practice owner. In a well run practice the hygiene profit is typically $125,000 per full time equivalent hygienist . The practice profit from your direct collected production will total 10-15 % and that will go to the owner . In our example, that would equal $35,000- $52,500 .
As the owner you would net 40% of your in network adjusted $350,000 or $140,000 add $125,000 net per hygienist . This yields $265,000 . 3X that of an associate . As owner you would likely limit the in network PPO’s you participate in.
As an employee dentist , you will have little to no control over your schedule , supplies, staff, or the lab you use and you may have to pay half your lab bill. If you work for corporate dentistry, you will have to sign a nondisparagement clause in their contract meaning you can’t speak poorly of them. As an associate you will have a restrictive covenant limiting where you can practice should you leave.
In the end, you will be helping someone else achieve their dream of practice success while you are perpetuating your burnout. You will work twice as hard and make 3 times less than the owner.
You can find associate positions paying 30% of your collected production but the above will still apply.
I urge you to ask around . How do doctors like working for corporate dentistry? Are they happy?
Independent DSO Trend
Today many private owner dentists are trying to become mini DSO’s by expanding their practices into multiple locations causing them to juggle significant overhead and debt, but that is an article for another day.. Most of these doctor owners have never had associates and are inexperienced in how to handle them or the staffing and scheduling requirements. You need a large patient base and a sizeable new patient flow to support an associate dentist. The owner must be willing to relinquish control and mentor the associate. It’s no wonder that 90% of associateships fail.
2. Own your Practice
Control your destiny. Earn more while working less . You will work hard but you will reap 100% OF THEREWARDS!Chooseyour staff , lab , supplies. Practice the way YOU WANT Start a 401 K . Contribute the max . You will want to RETIRE one day.
In order to best service your student loan debt you will need to buy a practice . Buying a good cash flowing practice will pay for itself out of the cash generated from the practice profit which includes the hygiene profit to the owner.
The Bonus
You will also receive 33% off the practice price via tax write-offs as the owner.
You worry : CAN I GET LOAN?
Absolutely !!! Lenders will lend 100% of the purchase price including working capital. Dentistry has an extremely low default rate. Lenders will compete for your business.
You CAN LEARN the Business of Dentistry . Find a mentor /consultant. They can fast track your success and will pay for themselves many times over !! They will hold you accountable. ! You owe it to yourself and your family to own your practice . Focus on the rewards of success !
YOU CAN DO IT!!!