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How to Start a Dental Practice

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One of the most important decisions you can make in your dentistry career is whether to work at an established practice or to start your own. As with any other major life decision, there are pros and cons to whichever option you choose. On the one hand, working for someone else provides a steady paycheck and an opportunity to observe how a practice operates; it is also less likely to result in administrative responsibilities. On the other hand, having your own practice allows for more professional autonomy, is potentially more lucrative, and gives you the freedom to decide all aspects of your business, such as which dental methodologies to use, whom to hire, and what future goals you wish to achieve.

If you've decided that the time is right to strike out on your own, you’re ready to put an action plan together. The Small Business Association recommends the following steps as you prepare to open your practice.

Step 1: Develop a Business Plan

A dental practice is a business, and successful businesses develop a plan. Before you begin drafting your business plan, ask yourself these questions:

  • Describe your potential dental practice in detail. For example, do you want a broad practice where you do everything and become a super GP, or do you want a narrow practice where you focus on one or two procedures and refer out other services? Consider this logically, based on the community's needs and on what will make you the most productive as a dentist.
  • Do you have an actionable market plan?
  • What other dentists are in the area? What are they doing right and wrong?
  • How much will you charge? Which insurance will you accept? What payment plans will you offer?
  • How do you plan to grow?

You'll also need to include financial information in your business plan, including where you'll obtain the money for your startup costs and when you expect to break even. As part of your business plan, develop a timeline for shorter-term milestones as well as for five- and ten-year goals.

Step 2: Follow a Startup Checklist

Several other items are involved in establishing your practice before you can see the first patient. Develop a checklist or use one from a state dental association. Generally speaking, you'll need to do the following:

  • Find an attorney, accountant, bank, and insurer for business liability coverage and hazards.
  • Learn about your loan options and prepare in advance the information and documents you’ll need when talking about financing. Most lenders, for instance, will want to see a formal business plan.
  • Decide, with the help of your team of experts, what type of business structure you'll have (C-Corp, S-Corp, or partnership, for example).
  • Obtain an Employer Identification Number.
  • Learn how to read financial statements.
  • Determine how you'll manage payment plans and insurance.
  • Choose a credit card processor.
  • Obtain all the necessary permits and licenses.

Step 3: Find an Office

Base the size and location of your office on your ten-year plan. In other words, consider where you'd like your practice to be in ten years when choosing your office space.

When choosing a location for your office, one important aspect to consider is the number of other dentists in the general area that perform the same services, according to Joel Meyerson, DDS, dentist, business coach, and head of content of Bootcamp.com. This is called saturation. In Meyerson’s Youtube video on the topic, he explains that the average population to dentist ratio is 1640 to 1, so one strategy is to find a location where the ratio is higher than that.

Saturation, however, isn't the full story. You can create a custom Google map, then superimpose that onto Google Earth. This lets you determine whether a new subdivision may be in the works or where main highways are. By using this strategy, you may find a good location for a dental practice regardless of overall saturation numbers, Meyerson notes.

Ensure the location you choose is accessible by the population you hope to serve. You'll need adequate parking for patients and staff or close reasonable proximity to public transportation stops. A location near the main thoroughfare is helpful because passers-by will see your signage more quickly. Finally, you'll need to make sure that local zoning allows the location to be used for a dental office.

To determine the appropriate square footage measurements, decide how many operatories (or spaces for dentists to work) are necessary to reach the financial goals in that ten-year plan. According to Dental Economics, an ideally sized operatory is approximately 10.5 feet by 12 feet. This space provides enough room for the dental chair; clearance around the chair for all patients, including those in wheelchairs; room for both dentist and assistant to work; and cabinetry. You'll also need a reception area, waiting area, restrooms, labs, staff areas, panoramic x-ray area, developing room, and supply areas. A formula to calculate the square footage required for all of these areas is found in the Safety Net Dental Clinic Manual.

Step 4: Hire Staff

You'll need at least a minimal staff before your first patient arrives. Most dental practices start with one assistant and a receptionist. The general formula is one front-desk person for every $350,000 to $400,000 of production. The formula for assistants/hygienists is one for every $250,000 of revenue.

Hiring the right employee is an art rather than a science; however, you can improve your chances of hiring the best person for your practice.

  • Consider carefully what attributes and education someone needs to perform optimally in the position, and design a process to discover which applicants have these.
  • Define the roles and responsibilities of the position before you begin recruiting, and be clear about them with each applicant.
  • Put in place onboarding procedures to train the employee.
  • Spend some time with the person before you hire them; for example, consider asking them in for more than one interview. Verify references.
  • Hire based on whether the person can fulfill the roles and responsibilities of the position, not simply because you like the person or believe your personalities mesh easily.

Learn what to pay your dental team

Step 5: Recruit Patients

Now you're ready to recruit new patients or add to those you already have. Building a practice around ideal patients rather than many unsuitable patients is generally more productive.

"Dentists often say I need more patients. In reality, most have plenty," says business coach Heidi Mount. "Run your reports to show all the patients not scheduled. Yes, many dentists are marketed to all the wrong patients and need to rebrand their offices. Many dentists were desperate and signed up for every insurance plan or list they could get on and offered discounted exams and cleanings. Bad move when wanting to work a normal amount of hours and have some free time. Listen, you are a dentist, and you should be paid a fair market value for your services. It is important to attract your ideal patients. You know, the ones that you enjoy working on."

Once you've decided who your ideal patients are, develop a logo and marketing strategies that will reach that population efficiently.

Staying on Track

Oversee your financials and productivity numbers to be sure you are achieving your goals. Make changes and updates to your plan as necessary. If you see you're running into challenges, reach out to experts to get help.

Frequently Asked Questions

How much does starting a practice cost?

According to Dentistry IQ, the average new practice costs about $500,000 for structural upfit, supplies, and equipment. Most dentists take out 7- to 12-year loans to finance their practice. Assuming a 5 percent interest rate, monthly payments would range from $4,625 to $7,067 depending on the term. With the overhead associated with a dental office, you would need between $14,000 and $21,000 in monthly revenues to cover the debt. Some lenders offer startup practices an option to make interest-only payments for the first 6 to 12 months; however, the monthly payments in subsequent months will be higher.

How do I decide whether I should start my own practice?

Opening a practice isn't for everyone. Ask yourself whether you're interested in running all aspects of the practice rather than just coming to work every day and performing a service. Are you willing to market to obtain patients? How much financial savvy do you have: for example, can you read a balance sheet? Do you have prior personnel management experience that can help you? And will you sleep at night knowing that you need to fill the schedule with patients to cover your debts and receive a paycheck? If the answer to these questions is yes, then you may be ready to start your own practice.

What kind of insurance should I consider?

Whether you rent or own your equipment, property insurance can help protect your investment. If you own the building where your practice is located, you definitely want to consider property as well as general liability insurance, and if you rent your landlord may require you have those. In today's litigious environment, you'll also want to have dental malpractice insurance--and in some places you even are required to prove that you have it to be able to practice. Ideally, you would have a malpractice policy that covers everyone in your practice, including , dental assistants, hygienists, and dentists wherever they are licensed to practice. You should also confirm that your malpractice insurance also covers every professional service you provide, including consulting, teaching, and performing dental work on patients.

Can I achieve success while still having a personal life?

"How you define success will be different from everyone," Meyerson notes in his Youtube video. "For me, a successful dental practice and a successful career does not feel like work. A place I want to go during the day. I'd keep adjusting my day until that's the case, whether that means changing how I schedule appointments, who I work with, and the environment. Having time for your personal life is as easy as you want it to be.”

You can develop strategies that allow you to earn a good living and take time off. A successful dental practice need not preclude you from having a balanced life.

Summing It Up

If you’re looking for more resources to help you on your way, the ADA or your state dental association are great places to start. Business coaches who are dentists or who understand dentistry are also resources. The Small Business Association provides resources on developing a business plan, marketing, and understanding financials.

Having your own dental practice can be challenging, but it also brings great rewards. If you do your homework, are well prepared, and are willing to accept help and advice from experts along the way, you can improve your chances of having the practice of your dreams.

The views expressed in this article are those of the author and do not necessarily reflect those of Berxi™ or Berkshire Hathaway Specialty Insurance Company. This article (subject to change without notice) is for informational purposes only, and does not constitute professional advice.

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