2,000,000 practice

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So it seems that, in general, an extremely large or "monster" dental practice is one that produces $2,000,000 a year in gross revenue as a consensus for a general practice. My question is, for a 2 million dollar practice what would generally be the overhead and how much can the dentist expect to take home?

I've seen $2M practice with 80% overhead. Is it better to gross $600k with 30% overhead or to gross $2M with 80% overhead? Which is better for your longevity and quality of life? In business, how much net profit and cash you put away under your mattress at the end of the day is the only number that count.

Well isn't any type of dental practice with 80% overhead terribly run? I'd think that the more a dentist produces the lower the overhead percentage should be as most overhead is fixed.

that's usually how it goes frank, but how much you take home is very dependent on how much over-head is.

Usually medium size practices tend to better than huge practices from my limited experience with a few dentists.

A monster practice also takes monster capital, which most dentists who open up their first practice don't have.

Plus you have to remember its better to own a small practice than to be renting a huge practice.

At the end of the day, take home pay is very dependent on how much you produce and where you are. If you a quick dentist in a practice you may take home 180 k. if you are a slow dentist you may only take home 90. Speed and quality matter.

How "fast" is fast? I have shadowed in 3 offices and observed 4 other dentists at a free clinic. I have always heard this and have payed special attention to how fast they were working. So far none of them have seemed that fast to me; because, my back ground is in emergency medicine where you must place a line, draw up meds, splint, or intubate etc. a patient in the shortest amount of time possible. You're always trying to spend no more than 10 min on scene and always have the "golden" hour in the back of your head. Or you feel the clock ticking on that chest pain patient because the amount of heart muscle that dies is directly related to how quickly you can get them to a cath lab.

Overall it has seemed that most dentists tended to take their time and do things efficiently but by no means did it seem as though they were in any sort of hurry while treating the patient. What would be considered fast, average, and slow for a 2 surface filling, extraction and crown prep&temp?

Well, a practice is the name of a business, e.g., "X Family Dental," an office is merely where the practice is located. All too often, however, the dentist that owns the practice also owns the office.

More money, more problems.

Originally Posted by Cold Front

More money, more problems.

true story

Originally Posted by iluvdentistry

true story

The more you produce the more pressure there is to produce. How did you get a $2 million practice? You invested a lot of money into a facility that can support that patient load. You hired lots of staff to support that patient load. You put out lots of advertising to get and maintain that patient load.
I agree, it's better to have a 30% margin on $600,000 than a 20% margin on $2,000,000. If business drops 25% on both practices, one is still profitable the other is in the whole. Generally it is easier to get patients to support a $600,000 practice than get patients to support a $2,000,000. I would bet it is more that 3.33 times harder.

your average practice is going to be 500k-1m grossing with 65% OH. Once you get to 2m you probably have associates so the calc will be much different. Assuming your associate is doing 750k of the production and youre paying him 35%, youre taking home , in a very large ballpark, 440 a year before practice note and taxes. After practice note about 380k. These are very rough estimates.

Originally Posted by Lethstang

your average practice is going to be 500k-1m grossing with 65% OH. Once you get to 2m you probably have associates so the calc will be much different. Assuming your associate is doing 750k of the production and youre paying him 35%, youre taking home , in a very large ballpark, 440 a year before practice note and taxes. After practice note about 380k. These are very rough estimates.

If you've got an associate doing 750k of production a year (over 60K a month, 15k a week), my only question then would be why is that associate still an associate and not either a partner or out on his/her own?

750k a year of production isn't a figure that would be mentioned seemingly non chalantly in about 98% of practices in the country.

Under most circumstances, if you've got a general practice this is grossing 2 million a year, you're likely looking at a situation where there's atleast 2 full time dentists that combined are in the 1.3 to 1.5 million of production range and a hygiene department that is doing a solid 600K of production and under most circumstances that will require atleast a solid 4k active patients, with probably 30-50+ new patients a month walking through the door.

Originally Posted by yappy

How "fast" is fast? I have shadowed in 3 offices and observed 4 other dentists at a free clinic. I have always heard this and have payed special attention to how fast they were working. So far none of them have seemed that fast to me; because, my back ground is in emergency medicine where you must place a line, draw up meds, splint, or intubate etc. a patient in the shortest amount of time possible. You're always trying to spend no more than 10 min on scene and always have the "golden" hour in the back of your head. Or you feel the clock ticking on that chest pain patient because the amount of heart muscle that dies is directly related to how quickly you can get them to a cath lab.

Overall it has seemed that most dentists tended to take their time and do things efficiently but by no means did it seem as though they were in any sort of hurry while treating the patient. What would be considered fast, average, and slow for a 2 surface filling, extraction and crown prep&temp?

As my mentor would put it, I spend half of my life waiting for the pt to get numb.

Sometimes it takes longer for them to get numb than to actually fill the damn thing.

Originally Posted by DrJeff

If you've got an associate doing 750k of production a year (over 60K a month, 15k a week), my only question then would be why is that associate still an associate and not either a partner or out on his/her own?

750k a year of production isn't a figure that would be mentioned seemingly non chalantly in about 98% of practices in the country.

Under most circumstances, if you've got a general practice this is grossing 2 million a year, you're likely looking at a situation where there's atleast 2 full time dentists that combined are in the 1.3 to 1.5 million of production range and a hygiene department that is doing a solid 600K of production and under most circumstances that will require atleast a solid 4k active patients, with probably 30-50+ new patients a month walking through the door.

ah yes thankyou dr jeff. I neglected hygiene for sure.

Originally Posted by Lethstang

ah yes thankyou dr jeff. I neglected hygiene for sure.

As a GP, you learn (and earn ) quite quickly that an active hygiene component to your practice is an integral part of its financial success

Originally Posted by DrJeff

If you've got an associate doing 750k of production a year (over 60K a month, 15k a week), my only question then would be why is that associate still an associate and not either a partner or out on his/her own?

750k a year of production isn't a figure that would be mentioned seemingly non chalantly in about 98% of practices in the country..

I'm an associate that produces more than 15K a week and currently plan to stick it out at least 4 more years, unless the perfect opportunity comes up. I get a very good percentage of what I produce, I'm learning a ton from my boss about how to be a better clinician and how to run a business, and I'm treated well.

The biggest reason I'm not looking to buy something right now is the massive student debt load that I'm carrying. If I were to add a practice loan on top of that and then end up owning a practice that only produces 400-450K, by the time all the bills would be paid for the practice, practice loan, and my student loans, I'd have just enough money left over to pay a psychiatrist to help me deal with all the money related stress. Sticking it out in a high paying associate position allows me to maintain a good lifestyle, save a ton, and pay a ton toward debt without being stressed out by money at all.

That's great uthscaalum. Would you say you're in a unique position with such a good gig or do you know of others who have been able to obtain similar opportunities?

Originally Posted by uthscsaalum

I'm an associate that produces more than 15K a week and currently plan to stick it out at least 4 more years, unless the perfect opportunity comes up. I get a very good percentage of what I produce, I'm learning a ton from my boss about how to be a better clinician and how to run a business, and I'm treated well.

The biggest reason I'm not looking to buy something right now is the massive student debt load that I'm carrying. If I were to add a practice loan on top of that and then end up owning a practice that only produces 400-450K, by the time all the bills would be paid for the practice, practice loan, and my student loans, I'd have just enough money left over to pay a psychiatrist to help me deal with all the money related stress. Sticking it out in a high paying associate position allows me to maintain a good lifestyle, save a ton, and pay a ton toward debt without being stressed out by money at all.

Originally Posted by uthscsaalum

I'm an associate that produces more than 15K a week and currently plan to stick it out at least 4 more years, unless the perfect opportunity comes up. I get a very good percentage of what I produce, I'm learning a ton from my boss about how to be a better clinician and how to run a business, and I'

The biggest reason I'm not looking to buy something right now is the massive student debt load that I'm carrying. If I were to add a practice loan on top of that and then end up owning a practice that only produces 400-450K, by the time all the bills would be paid for the practice, practice loan, and my student loans, I'd have just enough money left over to pay a psychiatrist to help me deal with all the money related stress. Sticking it out in a high paying associate position allows me to maintain a good lifestyle, save a ton, and pay a ton toward debt without being stressed out by money at all.

I'm only a predental student (although I've read a great deal about the business of dentistry) and I appreciate your advice, but I disagree with you no one point: in your position, you can't afford NOT to buy a practice. That is because in your position you need as large an income as possible to pay off your student loans, and the only way you'll maximize that is by purchasing a practice. That is because as an associate you'll normally make 20% to 25% of your production minus lab. As a practice owner you'll usually make 40% of the production of the ENTIRE practice after lab is payed. In general the dentist you work for is making a minimum of 240% what you're making if not much more. You will get yourself into debt buying a practice later on, and even after you pay your debt (which is payed before taxes) you will make much more than an associate. Although I should note that if you're producing 15K a month and receiving a good percentage of collections you're probably making exceptional money for an associate.

Originally Posted by Frank22

I'm only a predental student (although I've read a great deal about the business of dentistry) and I appreciate your advice, but I disagree with you no one point: in your position, you can't afford NOT to buy a practice. That is because in your position you need as large an income as possible to pay off your student loans, and the only way you'll maximize that is by purchasing a practice. That is because as an associate you'll normally make 20% to 25% of your production minus lab. As a practice owner you'll usually make 40% of the production of the ENTIRE practice after lab is payed. In general the dentist you work for is making a minimum of 240% what you're making if not much more. You will get yourself into debt buying a practice later on, and even after you pay your debt (which is payed before taxes) you will make much more than an associate. Although I should note that if you're producing 15K a month and receiving a good percentage of collections you're probably making exceptional money for an associate.

20-25% of his production now will be more than 40% of production as an owner of an office with no/few patients.

Originally Posted by Frank22

I'm only a predental student (although I've read a great deal about the business of dentistry) and I appreciate your advice, but I disagree with you no one point: in your position, you can't afford NOT to buy a practice. That is because in your position you need as large an income as possible to pay off your student loans, and the only way you'll maximize that is by purchasing a practice. That is because as an associate you'll normally make 20% to 25% of your production minus lab. As a practice owner you'll usually make 40% of the production of the ENTIRE practice after lab is payed. In general the dentist you work for is making a minimum of 240% what you're making if not much more. You will get yourself into debt buying a practice later on, and even after you pay your debt (which is payed before taxes) you will make much more than an associate. Although I should note that if you're producing 15K a month and receiving a good percentage of collections you're probably making exceptional money for an associate.

Where are you getting your number from...The 240% is what im most interested in.

Originally Posted by uthscsaalum

I'm an associate that produces more than 15K a week and currently plan to stick it out at least 4 more years, unless the perfect opportunity comes up. I get a very good percentage of what I produce, I'm learning a ton from my boss about how to be a better clinician and how to run a business, and I'm treated well.

The biggest reason I'm not looking to buy something right now is the massive student debt load that I'm carrying. If I were to add a practice loan on top of that and then end up owning a practice that only produces 400-450K, by the time all the bills would be paid for the practice, practice loan, and my student loans, I'd have just enough money left over to pay a psychiatrist to help me deal with all the money related stress. Sticking it out in a high paying associate position allows me to maintain a good lifestyle, save a ton, and pay a ton toward debt without being stressed out by money at all.

My first job at a dental chain company also paid me very well (much more than what many of my associate GP colleagues made) but it still took me nearly 4 years to finally have the courage to start my own office from scratch. The one thing that concerned me most was the drop in income because I had to cut down my associate days at the dental chain (so I could spend time to take care of the new office) and the additional business loan that I had to borrow.

I should have done this a lot sooner since my wife also generated a very healthy income. The fear of business failure, the unwillingness to take risk, and hassle of going from door to door to meet the referring GPs prevented me from starting my own business sooner.

I was afraid to go door to door too. The first 3 years, I didn't do it and struggled. Then I did it and got told no. Then all these doctors started referring. I should have done it from day 1.

Firm, that's why I (and seemingly anyone knowledgeable on the business of dentistry would recommend buying an existing practice so as to capitalize on an existing patient base). Theleatherwalle, the 240% comes from the fact that 40% of income from a practice's gross production is equivalent to 60% of the doctor's operative work (in a practice where hygiene production is a third of total revenues, which is the norm). So if an associate is receiving 25% of their collections with no lab, than you divide the practice owner's 60% by the associate's 25% to get 240%. Of course, often lab is deducted from an associate's collections and overhead is often lower than 60% so a practice owner can easily exceed 300% of an associate's income so long as they know what they're doing as a businessperson(which, I regret to say, most dentists have no idea how to run a business effectively).

I think you are dividing when you should be multiplying. .6x.4=.24

No; I divided 0.6 by 0.25 to find how many times a GP that owned their own practice would make than an associate that produced as much on 25% collections. In fact, an associate would be in a rather ideal situation if the dentist they were working for only made 240% what they did.

Originally Posted by Frank22

Firm, that's why I (and seemingly anyone knowledgeable on the business of dentistry would recommend buying an existing practice so as to capitalize on an existing patient base).

I totally disagree. The market dictates who will be successful in the business of dentistry, not start-up versus existing purchase. Anyone knowledgeable in the business of dentistry should know this important rule.

Originally Posted by Cold Front

I totally disagree. The market dictates who will be successful in the business of dentistry, not start-up versus existing purchase. Anyone knowledgeable in the business of dentistry should know this important rule.

No; a dentist's competences as a businessperson will determine how successful they are as an owner of a practice. Capitalizing on an existing patient base is seemingly always preferred over starting up a practice from scratch, which is a risky endeavor and can lead to months or even years of lean years. In other words, in seemingly any market purchasing an existing practice is preferred over startup except in secluded rural areas and other such extremes.

Originally Posted by Frank22

No; a dentist's competences as a businessperson will determine how successful they are as an owner of a practice. Capitalizing on an existing patient base is seemingly always preferred over starting up a practice from scratch, which is a risky endeavor and can lead to months or even years of lean years. In other words, in seemingly any market purchasing an existing practice is preferred over startup except in secluded rural areas and other such extremes.

The most competent dentist in the world with the perfect practice will not make good PROFIT if the market he's in is saturated by tons of dentists and demographics with small purchasing power. A dentist with zero business skills can build a start-up in an area with a huge demand for a dentist, and he or she could be flooded by patients at his office at his or her grand opening day.

You can have Harvard MBA, and have tons of business skills from Fortune 500 companies, but the MARKET dictates the success of your office before your personal skills. If you don't understand this concept, pay big bucks and learn the hard way.

Not everyone wants to dig $500K-$1Million (an ENORMOUS amount) deeper in debt to buy a practice. There are those, like Coldfront and and me, that can build a brand new practice from scratch for less than $100k and bring it up to profitability in 3 months. Less debt equals less overhead equals less worry. Why not just build it across the street from the retiring dentist since 40% of existing patients typically move elsewhere after ownership transfer anyway? It's no coincidence CVS and Walgreen are always across from each other.

Originally Posted by Daurang

Not everyone wants to dig $500K-$1Million (an ENORMOUS amount) deeper in debt to buy a practice. There are those, like Coldfront and and me, that can build a brand new practice from scratch for less than $100k and bring it up to profitability in 3 months. Less debt equals less overhead equals less worry. Why not just build it across the street from the retiring dentist since 40% of existing patients typically move elsewhere after ownership transfer anyway? It's no coincidence CVS and Walgreen are always across from each other.

I know someone from my school who graduated with huge debt, who then got married and started a family (which is a good thing) and bought a big house, etc. and is now sitting on over $1 million debt. This person is now planing on buying a practice (not building one) at a peak value, which will raise their debt even more. You can live within your means and still own a practice and do well as much as someone who bought an expensive practice, as long as you pick the right MARKET.

The CVS and Walgreens effect is a great example. Each corporation analyzes the local market area to determine where the best location for a drug store would be, based on traffic, proximity to residential neighborhoods, etc. It's hardly surprising that they often come up with the same answer.

You can be the biggest and smartest bear on a river, but if you are not in the right spot, you will never get those tasty salmons.

Originally Posted by Cold Front

The most competent dentist in the world with the perfect practice will not make good PROFIT if the market he's in is saturated by tons of dentists and demographics with small purchasing power. A dentist with zero business skills can build a start-up in an area with a huge demand for a dentist, and he or she could be flooded by patients at his office at his or her grand opening day.

You can have Harvard MBA, and have tons of business skills from Fortune 500 companies, but the MARKET dictates the success of your office before your personal skills. If you don't understand this concept, pay big bucks and learn the hard way.

You are producing a pseudo argument---a dentist that's a competent businessperson will not put build a practice in a hyper saturated market. Any dentist that has an MBA from Harvard or any school would understand market dynamics. In other words, choosing the right market is an aspect of being a good businessperson. And I would much rather invest $500,000 in an existing maintenance practice and grow it to a million dollar practice than invest $500,000 on a start up practice with no patients, in which case you do succeed it will almost always require a great deal of Medicaid patients.

One of my dentist mentors has shared with me a lot about this: run demographics and hire a firm to look at the community you want to practice in. This is exactly what he did while doing random chain jobs before starting a practice. According to him he "lived like a spartan and saved" in preparation.

Rather than buying an existing practice he took his market research and broke new ground to build a whole medical building. This was only 4 years ago but now he has a very busy private practice [4 hygiene + 3 op chairs] and other medical professionals renting out the other spaces - physical therapy, Internal medicine, orthodontics, and a pediatric office. They did the math right because the area is a little on the frontiers of town but has proximity to affluent burbs and shopping centers. I hear the plaza referenced all over town at my church and at coffee shops.

It seems like if you pick the right location you can make some a solid investment.

Originally Posted by Cold Front

The CVS and Walgreens effect is a great example. Each corporation analyzes the local market area to determine where the best location for a drug store would be, based on traffic, proximity to residential neighborhoods, etc. It's hardly surprising that they often come up with the same answer.

Originally Posted by Frank22

And I would much rather invest $500,000 in an existing maintenance practice and grow it to a million dollar practice than invest $500,000 on a start up practice with no patients, in which case you do succeed it will almost always require a great deal of Medicaid patients.

Who say you need to build $500K practice? My advice here for the past couple years is never to build a $500K startup. Build a $80K startup and grow it into a $1Mil practice like I did. You pay your loan quickly and soon your overhead will be 25% because you didn't overspent.

Don't buy anything at peak because you will always overpay, whether it's stock, car, housing, dental office. I'm sure you have the advantage of sure money flow with buying an existing office. But with my $80K practice I had no worry if only have one patient a day.

Originally Posted by Frank22

You are producing a pseudo argument---a dentist that's a competent businessperson will not put build a practice in a hyper saturated market. Any dentist that has an MBA from Harvard or any school would understand market dynamics. In other words, choosing the right market is an aspect of being a good businessperson. And I would much rather invest $500,000 in an existing maintenance practice and grow it to a million dollar practice than invest $500,000 on a start up practice with no patients, in which case you do succeed it will almost always require a great deal of Medicaid patients.

Pseudo argument. You are getting a real world advice from me and others here, no theories. So if you believe spending $500k on an existing and turn into a million dollar gig is better than $100k start-up and turning into a million dollar office (as seen in Daurang's example)? Go ahead and dive in.

I have never heard of $500k start-up, unless it included an empty lot, and you built a big building that can accommodate your office and other potential tenants. But $500k to build just the dental space?

Originally Posted by Cold Front

Pseudo argument. You are getting a real world advice from me and others here, no theories. So if you believe spending $500k on an existing and turn into a million dollar gig is better than $100k start-up and turning into a million dollar office (as seen in Daurang's example)? Go ahead and dive in.

I have never heard of $500k start-up, unless it included an empty lot, and you built a big building that can accommodate your office and other potential tenants. But $500k to build just the dental space?

Well, my point is that part of being a good businessperson, and a very fundamental one at that, is understanding the market. I appreciate the advice regardless, after all I still have a long way to go.

Originally Posted by yappy

That's great uthscaalum. Would you say you're in a unique position with such a good gig or do you know of others who have been able to obtain similar opportunities?

I know several young dentists producing as much and a lot more than me and making more than me. Most don't get as big of a percentage of their production as me, but my production is nothing special, in my opinion. It has more to do with the boss having made a good name for himself and being a good businessman than me being a great associate. With all of that being said, between my production and the high percentage of negotiated in my contract, I probably make well above the mean for associates with my experience, but that had more to do with putting in the effort to find the right opportunity than me being any better than anyone else that only makes half of what I make.

ents.Who say you need to build $500K practice? My advice here for the past couple years is never to build a $500K startup. Build a $80K startup and grow it into a $1Mil practice like I did. You pay your loan quickly and soon your overhead will be 25% because you didn't overspent.

Don't buy anything at peak because you will always overpay, whether it's stock, car, housing, dental office. I'm sure you have the advantage of sure money flow with buying an existing office. But with my $80K practice I had no worry if only have one patient a day.

I definitely need to look more into this 80K startup. I didn't know such a thing existed. I could maybe work 4 then 3 days as an associate trying to fill a two day schedule at my place and still earn a bunch as an associate.

The reality is that less than 1% of dentists own an office that collects 2 million. Less than 5% of dentists collect more than 1 million. If u get to that point u won't be asking questions o this stupid forum.

I would be surprised if even 1 percent of dentists made over a million. The truth is to be have that kind of practice you have to be lucky, talented, and a host of other things. Most of us just don't have that ability.

I seriously doubt that less than 5% of dentists collect over a million. The average for specialists is over 1 million, and general dentists do it all the time.

Originally Posted by Frank22

I seriously doubt that less than 5% of dentists collect over a million. The average for specialists is over 1 million, and general dentists do it all the time.

I think this is wrong.

Originally Posted by Lethstang

I think this is wrong.

No, it doesn't sound wrong. Collecting over one million and netting over one million are two different things.

Originally Posted by trinstudent

No, it doesn't sound wrong. Collecting over one million and netting over one million are two different things.

my fault. i read it backwards.

Whichever way you look at it is wrong. Less than 5% of dentists collect $1 mill which means they profit much less than that.

Provide a source for your statistic; I don't believe it.

lol provide yours. or just look at the ADA website. The top dentists were doing 750K the specialist about 1 million.

Im pretty sure those ada numbers provided were either the mean or median. A lot of dentist do less than that which suggests a lot do more.

Originally Posted by theleatherwalle

lol provide yours. or just look at the ADA website. The top dentists were doing 750K the specialist about 1 million.

Those were average gross billings for general dentists and specialists, respectively. The ADA numbers simply support my opinion.

*facepalm*

The ada numbers are only from dentists who respond. Someone has already proven that only about 10-15% of dentist filled out that form. They were all office owners. So they would be at the tippity top of the list.

Search function is your friend.

No one has proven that the numbers are inflated, and they are not office owners, they are practice owners. just because a dentist chooses to respond does not mean that they are making far in excess to what is proposed. Many dentists stated in a other thread that grossing over a million is not that difficult. *facepalm* so no, they re not at the tippy top of the list. Only dentists that own their own practice would have gross billings anyway, so the fact that they're all practice owners doesn't mean anything.

Ive been hanging around here a few years, and while there arent stats to back up my declaration, Ive constantly read over and over from working dentists that theyre not really sure why the listed salaries for dentists are so low.