Above what income level as an associate is it not worth being an owner?

[LaughingGas]

I understand that as an owner, you have more tax benefits and more write offs but also much added stress. I am just curious strictly by income level.

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[allDAT]

Other factors come into play such as workload, commute time, flexibility to control daily schedule, traffic patterns, spouse’s career goals, and health status of family members.

For example, if you produce 1M as an associate and make 300k, how would it sound if you could make 400k while producing just 700k in dentistry and having hygiene produce 300k?

Or how about you make 300k as an associate doing 1.2M (25%) collections 5 days a week and have an opportunity to buy a practice where you’ll make 230k with a practice collecting 650k open 3 days a week?

Would you take a 100k pay cut to save 2 hours of commute time each day? What about an hour?

Or how about your child has a health condition that requires treatment at a children’s hospital monthly and outpatient services biweekly by highly specialized physicians? How does that 400k middle of no where job sound now?

So many things in our lives influence the decisions we make and our income is just one factor.

Ownership isn’t for everyone, but some people will never feel any sense of accomplishment while working for someone else. Some itches have to be scratched and taking risks has upsides and downsides, but I don’t meet many dentists who flat out regret owning an office while I do know many miserable associates. If you own an office in a desirable area, you can always sell it (but maybe not at a price you want).

 

[LaughingGas]

Other factors come into play such as workload, commute time, flexibility to control daily schedule, traffic patterns, spouse’s career goals, and health status of family members.

For example, if you produce 1M as an associate and make 300k, how would it sound if you could make 400k while producing just 700k in dentistry and having hygiene produce 300k?

Or how about you make 300k as an associate doing 1.2M (25%) collections 5 days a week and have an opportunity to buy a practice where you’ll make 230k with a practice collecting 650k open 3 days a week?

Would you take a 100k pay cut to save 2 hours of commute time each day? What about an hour?

Or how about your child has a health condition that requires treatment at a children’s hospital monthly and outpatient services biweekly by highly specialized physicians? How does that 400k middle of no where job sound now?

So many things in our lives influence the decisions we make and our income is just one factor.

Ownership isn’t for everyone, but some people will never feel any sense of accomplishment while working for someone else. Some itches have to be scratched and taking risks has upsides and downsides, but I don’t meet many dentists who flat out regret owning an office while I do know many miserable associates. If you own an office in a desirable area, you can always sell it (but maybe not at a price you want).

There will be no end to discussion when you bring above points, which I do agree. I am simply curious only based on numbers/gross income.

 

[allDAT]

Just circling back to this real quick. I think one of the things that commonly comes up is that if you're an associate, you don't have to deal with the day-to-day operations/management of the dental office. In my experience, that really is not the case. The staff will still come to you with complaints, they won't listen to your requests because you don't sign their paychecks, and there's a constant questioning of the office's hierarchy. You may be able to avoid the hassles associated with ownership, but if you're a big producer, you probably can't. For example, if you're producing 1M/year and making 300-350k, you better believe you're involved in hiring/firing/training/managing inventory etc because if you don't have what you need to work or your assistants call out sick you're not producing either.

The second misconception is that you can take a lot of time off as an associate. This usually isn't true either, if you try and take a month off, most offices will be looking for your replacement unless you're in a protected class of employees and they're worried about legal consequences. I recently looked at an office to buy that the owner wanted to sell because the associate was going on maternity leave in 3 months (the owner is disabled so she can't take over the full patient load herself). I wasn't interested because I don't like the situation, but it's a good office, and someone will buy it. That associate won't have a job to come back to.

 

[charlestweed]

The second misconception is that you can take a lot of time off as an associate. This usually isn't true either, if you try and take a month off, most offices will be looking for your replacement unless you're in a protected class of employees and they're worried about legal consequences. I recently looked at an office to buy that the owner wanted to sell because the associate was going on maternity leave in 3 months (the owner is disabled so she can't take over the full patient load herself). I wasn't interested because I don't like the situation, but it's a good office, and someone will buy it. That associate won't have a job to come back to.

This associate dentist should have no problem finding another job at a different office. Unemployment in dentistry doesn’t exist, unless the doctor is too lazy to find work. If I were in the owner’s shoes, I too would sell the practice ASAP before it starts to lose its value due to a significant drop in production and loss of patients (caused by the absence of the associate dentist). When my GP friend died suddenly (on his 50th birthday) from a heart attack, his wife had to sell the practice right away for the same reason that I mentioned in the previous sentence. Without production, can't pay rents, staff salaries and other fixed expenses.

The managing dentist, who works at the same corp with me, had taken a maternity leave 3 times and she can keep her job. In an oversaturation market like SoCal, it’s not too hard to look for a temp dentist while the main dentist is on a maternity leave.

Most workers in America don’t take a whole month off, except for medical problems. Most successful GP owners I know don’t take a whole month off because they would lose a lot of walk-in patients to other competitors in the area. In order to maintain the success of the practice, you have to continue to work hard and keep your patients happy.

 

[TanMan]

I understand that as an owner, you have more tax benefits and more write offs but also much added stress. I am just curious strictly by income level.

Depends on how hard you have to work at any given income level. My answer probably changes depending on my mood, but I try to look at it from different angles. The stress from ownership is negated by the increase of workload to produce the same level of income from ownership from an associate perspective.

This answer depends on your lifestyle/short-term+long-term financial demands, physical capabilities, and time. What's your timeline of working as a dentist? How much are you able to save at X income level? Can you physically produce at X income level? Does your life outside of dentistry demand time away at X income level or Y life circumstances? How much do you need for retirement and how long can you sustain X income level to meet the retirement goal.

This is just my opinion, and not necessarily the right answer for everyone, but I'd say 1MM @ 26-30 hours a week, min/max. This alludes to what the real question should be, at what income level would it be worth being an employee and how many hours would be demanded from me? I could get paid 1MM, but it's not worth it at all to have to work 60 hours a week.

 

[allDAT]

Tanman has some good points.

For most dentists, they really should be owning the office to profit from hygiene but you have to weigh your life’s circumstances.

With that said, if you can find a gig in the public sector where you make 275-350k a year with full benefits and 25-30 days of PTO plus holidays while seeing just 6-12 patients a day, and maybe a day of admin work, you should probably stay put if your don’t have a long commute and can enjoy your family after work.

 

[yappy]

With that said, if you can find a gig in the public sector where you make 275-350k a year with full benefits and 25-30 days of PTO plus holidays while seeing just 6-12 patients a day, and maybe a day of admin work, you should probably stay put if your don’t have a long commute and can enjoy your family after work.

where can I find a job like this without specializing?

 

[LaughingGas]

where can I find a job like this without specializing?

my thoughts exactly

 

[Rambunctious]

To me job security is the main reason for ownership. It doesn't matter if your salary as an associate is 400K or even a million a year, if you can be replacement in a heartbeat, it's not worth it.

 

[allDAT]

where can I find a job like this without specializing?

California prison system.
Some tribal clincis
A dental school

 

[LaughingGas]

To me job security is the main reason for ownership. It doesn't matter if your salary as an associate is 400K or even a million a year, if you can be replacement in a heartbeat, it's not worth it.

Very valid points.

 

[2TH MVR]

It's a valid question, but @allDAT summed it up nicely.
It's complicated. Depends on the individual. Depends on the area.
You can't put up a salary poll and expect any real useful answers. 300K in rural areas could mean your affluent. 300K in NYC or Miami could mean your average or poor lol.

What I don't understand is this either/or option. If you are young, full of energy, plenty of time on your side ....... do BOTH. It will be obvious to you what the answer will be. I did this 4-5 yrs ago. Got burn't out with private practice and TRIED Corp dentistry. I worked at my private practice 4 days/week and worked 2 days/week at the DSO. 6 days a week. I did this for 6 months. A trial period to see what I wanted to do. In the end ... the decision was clear for myself. Sold my practice and worked for the DSO. No regrets at all. But I had accumulated wealth through years of private practice.

It's like one of the posters comment. 20 yrs down the road ... you don't want to have regret that you never tried private practice.

 

[LaughingGas]

It's a valid question, but @allDAT summed it up nicely.
It's complicated. Depends on the individual. Depends on the area.
You can't put up a salary poll and expect any real useful answers. 300K in rural areas could mean your affluent. 300K in NYC or Miami could mean your average or poor lol.

What I don't understand is this either/or option. If you are young, full of energy, plenty of time on your side ....... do BOTH. It will be obvious to you what the answer will be. I did this 4-5 yrs ago. Got burn't out with private practice and TRIED Corp dentistry. I worked at my private practice 4 days/week and worked 2 days/week at the DSO. 6 days a week. I did this for 6 months. A trial period to see what I wanted to do. In the end ... the decision was clear for myself. Sold my practice and worked for the DSO. No regrets at all. But I had accumulated wealth through years of private practice.

It's like one of the posters comment. 20 yrs down the road ... you don't want to have regret that you never tried private practice.

Thanks for sharing you experience. I am by no means trying to use this info at all to either stay as an associate or own.

 

[pubhealthdent]

where can I find a job like this without specializing?

$280k + full benefits, 30 days off + 8 holidays, + $50k state loan repayment (2 yr commitment for loan repayment). Seeing 12ish pts/day in public health. Definitely not the norm but for me this makes me not want to go into ownership/private practice

 

[2thDoc11]

$280k + full benefits, 30 days off + 8 holidays, + $50k state loan repayment (2 yr commitment for loan repayment). Seeing 12ish pts/day in public health. Definitely not the norm but for me this makes me not want to go into ownership/private practice

What part of the country are you in?

 

[pubhealthdent]

What part of the country are you in?

Upper midwest. Very rural

 

[2thDoc11]

Upper midwest. Very rural

Gotchya! I’m a ND resident planning on coming back so I’m always curious how new grads are doing in this part of the country.. I only ever hear about the typical Cali, NYC, Miami type situation

 

[pubhealthdent]

Gotchya! I’m a ND resident planning on coming back so I’m always curious how new grads are doing in this part of the country.. I only ever hear about the typical Cali, NYC, Miami type situation

Can't beat the low COL paired with the higher salaries (in public health) up in this neck of the woods!

 

[LaughingGas]

Upper midwest. Very rural

What kind of procedures do you mainly do?

 

[pubhealthdent]

What kind of procedures do you mainly do?

Typical public health stuff - mostly dentures, extractions and fillings. minimal fixed prosth

 

[cluelessdr]

$280k + full benefits, 30 days off + 8 holidays, + $50k state loan repayment (2 yr commitment for loan repayment). Seeing 12ish pts/day in public health. Definitely not the norm but for me this makes me not want to go into ownership/private practice

is this compensation the norm if you go rural where you are? how rural are we talking? are you the only doc? id love to know more if you can message me!

 

[pubhealthdent]

is this compensation the norm if you go rural where you are? how rural are we talking? are you the only doc? id love to know more if you can message me!

For the health system I'm employed by, this is probably close to the norm. I practice in a town with population 2000 with two other docs in my clinic. I'm about 2.5 hours from 3 different large metropolitan areas. Feel free to message me with any other questions

 

[2thDoc11]

For the health system I'm employed by, this is probably close to the norm. I practice in a town with population 2000 with two other docs in my clinic. I'm about 2.5 hours from 3 different large metropolitan areas. Feel free to message me with any other questions

Are you fresh out of school or is that after a few years of building your skill set?

 

[pubhealthdent]

Are you fresh out of school or is that after a few years of building your skill set?

I'm three years out. First year salary was just south of 200k. No gpr/aegd

 

[charlestweed]

Try not to take out a large business loan to build (or to purchase) a practice and try to keep the overhead as low as possible. The dentist in this video only has $185k student loan debt but he took out a whopping $800k to set up his practice. That’s nearly $1 million in total debt. That’s worse than someone who has $500k student loan debt and has a practice debt of $2-300k. The sad thing is his net income is only $250k/year. My sister earned more than this when she first started her own practice from scratch. She only took out $150k to build her office. At the beginning when her office was slow, my sister worked 3 days/wk at her new office and 4 days/wk for the corp. Because the amount of practice loan was so little, she paid it off easily and quit her associate job in less than 3 years. Now at 48, she only works 3.5 days/wk and 4-5 hours a day. She treats one patient at a time…no more jumping from chairs to chairs like when she worked at the corp.

When Do I Pay Off My $800,000 Debt? - YouTube

 

[TanMan]

Try not to take out a large business loan to build (or to purchase) a practice and try to keep the overhead as low as possible. The dentist in this video only has $185k student loan debt but he took out a whopping $800k to set up his practice. That’s nearly $1 million in total debt. That’s worse than someone who has $500k student loan debt and has a practice debt of $2-300k. The sad thing is his net income is only $250k/year. My sister earned more than this when she first started her own practice from scratch. She only took out $150k to build her office. At the beginning when her office was slow, my sister worked 3 days/wk at her new office and 4 days/wk for the corp. Because the amount of practice loan was so little, she paid it off easily and quit her associate job in less than 3 years. Now at 48, she only works 3.5 days/wk and 4-5 hours a day. She treats one patient at a time…no more jumping from chairs to chairs like when she worked at the corp.

When Do I Pay Off My $800,000 Debt? - YouTube

Important takeaway lesson: The more you spend on your education and/or practice doesn't always directly translate to an increase in net income. That's unfortunate for that person who's only making 250k (pre-tax, excluding debt service I presume, and living expenses) out of their 800k debt. He could've made 250k w/o accumulating 600k in practice debt, or done it under 100k.

Edit: There are exceptions to spending on your practice. There are some technologies/expansions that increase profitability, but not every "technology/infrastructure upgrade" leads to increased profitability.

 

[Screwtape]

Try not to take out a large business loan to build (or to purchase) a practice and try to keep the overhead as low as possible. The dentist in this video only has $185k student loan debt but he took out a whopping $800k to set up his practice. That’s nearly $1 million in total debt. That’s worse than someone who has $500k student loan debt and has a practice debt of $2-300k. The sad thing is his net income is only $250k/year. My sister earned more than this when she first started her own practice from scratch. She only took out $150k to build her office. At the beginning when her office was slow, my sister worked 3 days/wk at her new office and 4 days/wk for the corp. Because the amount of practice loan was so little, she paid it off easily and quit her associate job in less than 3 years. Now at 48, she only works 3.5 days/wk and 4-5 hours a day. She treats one patient at a time…no more jumping from chairs to chairs like when she worked at the corp.

When Do I Pay Off My $800,000 Debt? - YouTube

I would agree and disagree. If you are doing a start up then it’s wise to keep costs down since you start with zero cash flow (actually negative). However that’s not the case when acquiring a practice. Would you rather pay $2 million to net $1 million (50% OH), or would you rather pay $500k to net $250k (50% OH). I don’t know about you but I’d rather net $1M vs $250k. These types of scenarios are common when you start looking at practices. Always look at expected net after practice loan payment. But don’t let big numbers scare you. It usually makes more sense to buy a highly productive practice (if you can match the production) at a slight premium vs buying a low producing office at a discount. This is why corporate offices are gobbling up private practices and growing fast.

 

[charlestweed]

I would agree and disagree. If you are doing a start up then it’s wise to keep costs down since you start with zero cash flow (actually negative). However that’s not the case when acquiring a practice. Would you rather pay $2 million to net $1 million (50% OH), or would you rather pay $500k to net $250k (50% OH). I don’t know about you but I’d rather net $1M vs $250k. These types of scenarios are common when you start looking at practices. Always look at expected net after practice loan payment. But don’t let big numbers scare you. It usually makes more sense to buy a highly productive practice (if you can match the production) at a slight premium vs buying a low producing office at a discount. This is why corporate offices are gobbling up private practices and growing fast.

The problem is it’s not cheap to acquire a practice that generates $2 million gross income (or $166k or month or $7-8k in production per day consistently).. The selling price would easily be around $1.5-2 millions. The monthly repayment amount for the practice loan would be $20-25k a month for the next 10 years. Another problem is in order to produce that much amount every year, it’s impossible to keep the overhead below or at 50%, unless you are fast and efficient like Tanman and you don’t need to bring in any associate dentist to help you. Such high production office requires a lot of money to run and to maintain…large staff (to keep the high maintenance patients happy), high supply cost, high lab cost, advertisement cost, associate dentist salary, high monthly rent for a desirable location, frequent equipment repairs, yearly susbscriptions that you can’t cancel etc. There are so many unknown variables when purchase an existing practice. It’s hard to find a good practice to buy because the owners don’t sell their practices when they are doing well, unless they have a health problem. The good one is usually sold quickly because everybody wants to buy it. Most owners sell their practices because they are too old (and slow) to produce....and they can no longer afford to pay the staff, who are usually overpaid and have low motivation to work hard for the owner (because they've been with the owner for so long).

I’d rather go with a safer cheaper route, which is starting one from scratch for $100-150k and keeping the associate job to maintain the positive cashflow. It’s like buying an expensive $100-150k car. In case I don’t succeed, I just walk away (or sell it to another doctor) with minimal loss.

 

[Mauricio45]

You have to look at what you value more in life: Money or lifestyle. You can't have both.

Yes, you can make more money as an owner but then you have to deal with ownership headaches (staff issues, equipment, patient complaints, etc). It's a 24/7 job.

Whereas, in associateships, I'm content with staying in a "low paying" 250K cushy associateship job working 4.5 days and not worry about owner headaches. It's very nice to come home at the end of the day and relax.

At some point in life especially as you get older, money isn't everything.

 

[Screwtape]

The problem is it’s not cheap to acquire a practice that generates $2 million gross income (or $166k or month or $7-8k in production per day consistently).. The selling price would easily be around $1.5-2 millions. The monthly repayment amount for the practice loan would be $20-25k a month for the next 10 years. Another problem is in order to produce that much amount every year, it’s impossible to keep the overhead below or at 50%, unless you are fast and efficient like Tanman and you don’t need to bring in any associate dentist to help you. Such high production office requires a lot of money to run and to maintain…large staff (to keep the high maintenance patients happy), high supply cost, high lab cost, advertisement cost, associate dentist salary, high monthly rent for a desirable location, frequent equipment repairs, yearly susbscriptions that you can’t cancel etc. There are so many unknown variables when purchase an existing practice. It’s hard to find a good practice to buy because the owners don’t sell their practices when they are doing well, unless they have a health problem. The good one is usually sold quickly because everybody wants to buy it. Most owners sell their practices because they are too old (and slow) to produce....and they can no longer afford to pay the staff, who are usually overpaid and have low motivation to work hard for the owner (because they've been with the owner for so long).

I’d rather go with a safer cheaper route, which is starting one from scratch for $100-150k and keeping the associate job to maintain the positive cashflow. It’s like buying an expensive $100-150k car. In case I don’t succeed, I just walk away (or sell it to another doctor) with minimal loss.

Sure a $2 million practice would cost $20k a month loan-wise but at 50% OH you’d be pre-tax netting $83k. So $60k+ a month before taxes (owner taxes which are way better than associate taxes), not too shabby. 50%-ish OH is much more common in higher producing offices since some costs are fixed and most other costs scale down with volume compared to production. I pulled $2 million out of a hat for easy math. The math usually makes more sense for practices doing $800k or more in collections.
Most consultants/dental CPAs/dental attorneys will say buying a good cash flowing practice >>> scratch start up. The numbers just don’t support your suggestion on average.
I am a recent owner, and I looked at a few practices. There are bad ones for sale no doubt. And the good ones go for a premium. But they can be worth it. And for what it’s worth the two practices I was down to both were running OH at ~50% (both 2 partner practices).

 

[Screwtape]

You have to look at what you value more in life: Money or lifestyle. You can't have both.

Yes, you can make more money as an owner but then you have to deal with ownership headaches (staff issues, equipment, patient complaints, etc). It's a 24/7 job.

Whereas, in associateships, I'm content with staying in a "low paying" 250K cushy associateship job working 4.5 days and not worry about owner headaches. It's very nice to come home at the end of the day and relax.

At some point in life especially as you get older, money isn't everything.

Disagree with this. Seems like you’ve been drinking a little of the DSO kool-aid overestimating the “headaches of ownership and the 24/7 job”. Ownership in the right practice with good people and systems in place is gonna be ~10% more admin work/head aches, but 100%+ more pay. Owner dentists definitely can have both money and a great lifestyle. Associates can too though. You just work for every dime you make, owner dentists don’t.

 

[yappy]

Disagree with this. Seems like you’ve been drinking a little of the DSO kool-aid overestimating the “headaches of ownership and the 24/7 job”. Ownership in the right practice with good people and systems in place is gonna be ~10% more admin work/head aches, but 100%+ more pay. Owner dentists definitely can have both money and a great lifestyle. Associates can too though. You just work for every dime you make, owner dentists don’t.

I do a lot of ownership/supervisor duties at the DSO I work at. It’s really easy. Anyone with common sense can do it.

 

[2TH MVR]

Sure a $2 million practice would cost $20k a month loan-wise but at 50% OH you’d be pre-tax netting $83k. So $60k+ a month before taxes (owner taxes which are way better than associate taxes), not too shabby. 50%-ish OH is much more common in higher producing offices since some costs are fixed and most other costs scale down with volume compared to production. I pulled $2 million out of a hat for easy math. The math usually makes more sense for practices doing $800k or more in collections.
Most consultants/dental CPAs/dental attorneys will say buying a good cash flowing practice >>> scratch start up. The numbers just don’t support your suggestion on average.
I am a recent owner, and I looked at a few practices. There are bad ones for sale no doubt. And the good ones go for a premium. But they can be worth it. And for what it’s worth the two practices I was down to both were running OH at ~50% (both 2 partner practices).

Yeah. I'm with @charlestweed on this one. I get it that GOOD general practices are worth more than ortho practices. But based on what I know and have seen through the years ...... I would lean towards a medium sized practice. But everyone including yourself has a different level of risk tolerance. I don't think a new grad right out of school has what it takes to run a multi-million dollar practice. You sound like you have more business sense. Does the hi dollar practice have systems in place where the dentist is just plugged in? Or is it the charisma, brains, personality of the owner dentist that is responsible for the success of that practice? Again the location is everything. Is this mega practice located in a rural/semi rural area with little competition? Personally .... I would never buy a high dollar practice in a saturated, urban setting.

Also ..... pretty rare for GPs practices to be around 50% overhead. Probably need to see the actual numbers. Most GP practices are in the 60's% if not higher.

You have to look at what you value more in life: Money or lifestyle. You can't have both.

Yes, you can make more money as an owner but then you have to deal with ownership headaches (staff issues, equipment, patient complaints, etc). It's a 24/7 job.

Whereas, in associateships, I'm content with staying in a "low paying" 250K cushy associateship job working 4.5 days and not worry about owner headaches. It's very nice to come home at the end of the day and relax.

At some point in life especially as you get older, money isn't everything.

If you are rural or semi rural .... why not open a small, well -thought out practice? Keep your DSO job. I would do this just to keep your options open for the future. Everyone makes dental ownership like it requires immense time and effort. Well ... it does, but it is easily doable. It's not hard to open a small practice. If I was young and full of energy ..... do BOTH. DSO and a small practice. Your DSO job has very little upward mobility in income. But your private practice can grow and earn future equity. Just do it on the cheap ala Charles. That way there is less stress while you are growing the practice. Think of it as being an adventure. A new challenge.

 

[gryffindor]

I realized after a few months of working after my GPR that I was not cut out to be an associate. I had to be the boss. There isn't any amount of money that could sway my decision. I had lean years in my startup and others in the field were always telling me about in-house ortho positions that were available if I wanted a side job. I said no because I couldn't stand the thought of going back to doing what I felt was compromised ortho treatment out of some GP's spare operatory. At one point I realized that I was lucky that I had fallen into a career that offers a path to entrepreneurship. 17 year old me had no idea of how a business works and it's turned out to be a perfect fit for my personality.

However I do seem to encounter more and more new grads just looking for a job. It's like they're being scared along the way that they can't be a boss, they should just stick to being a dentist.