Anyone build a new dental office from scratch?

[teett]

What are the numbers? Where to start? Any suggestions will be very helpful!

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[charlestweed]

Office 1: I built this office in Nov 2005 and the project was completed in Jan 2006 (slightly over 3 months). I hired the same contractor who built my sister's GP office. He charged my sister $55/square foot. He charged me $65/sf. So the total cost for my 1300sf office space was $85k. This construction cost included everything: design drawing, city permit, cabinets, sinks, tiles, underground plumbing etc. I was totally clueless because this was my very first office. Fortunately, the contractor had a lot of experiences in building offices for doctors and dentists. He knew the requirements for most of the cities in the county. He submitted the design and handled all the city inspections. I didn't need to do anything. I wasn't very picky so the construction went very smoothly.

- Construction cost: $85k
- 5 ortho chairs + 4 side units: $15k. Ortho chairs are cheaper than general dentist chairs.
- Panoramic x ray unit: $0. I leased the unit at $25 per xray image. I later bought it for $14k.
- Xray film processor: $3k
- Apollo Air and Vac units: $6k
- Office sign: $1k. It's cheap because it's a non-neon sign.
- Instruments: $0. I used instruments that I bought for my ortho residency. I sold some of them to my co-residents but I still had some left.....enough for treating 3-4 patients.
- Cox sterilizer: $3k.
- Supplies: $2-3k.
- Furniture: $2k for 20 waiting room chairs. My dad gave me his used desk. I later gave this desk back to my dad because I converted the doctor's office into an additional treatment room.

Total cost: under $120k. I had $55k on my saving account. And I borrowed $75k from the same bank, where I obtained a business loan for my wife's office from.

Office# 2: about 1.5 years ago, I had to move this office #1 to another location because the landlord kicked me out. He had complained that my patients took a lot of the parking spaces and this hurted other stores in the same strip mall. I found an existing 1700sf medical office inside a well maintained professional building. So I asked the same guy who built the office #1 to convert this medical office space to a 7-chair orthodontic office. He charged me $65k. The new landlord gave me $10k for tenant improvement. So the net cost was $55k. The project took 6 months (which was a lot longer than I expected) because his crew had to do another project for another dentist. I didn't have to spend any money on equipments for this office because I moved all the equipment from office #1 to here. The rent is $2400/month, which is $150/month cheaper than what I paid for office #1.

Office#3: I purchased an existing 1400sf 5-chair ortho office from a 60yo ortho in 2009. I paid $165k for it. The rent was $2500/month. It increased to $2700 after 7 years. My wife helped negotiate with the landlord to lower the rent down to $2300/month for another 3 years. After the 3 years expired, I renewed the lease again for another 3 years at $2405/month.

Office #4: construction cost: $0. It's my sister's GP office. She bought a pano/ceph unit for me. I pay her the % of the ortho collection + $25 per xray image.

Office #5: construction cost: $0. It's another GP office. I pay him $1700/month in rent. I bought a refurbished xray unit for $10k + a used Cox sterilizer for $1k on Ebay. There are 7 chairs in this office. I get to use all 7 chairs because I work ont the day (1 Sunday a month) that the GP owner doesn't work.

 

[ToothJockey]

I’m confused, You pay $1700/month rent for only using the office for 1 day/month? So essentially $1700/day?

 

[charlestweed]

I’m confused, You pay $1700/month rent for only using the office for 1 day/month? So essentially $1700/day?

I work there 1 sunday a month. My wife works there 4 days/month. My wife and I can work there every day if we want to but we don't need to because we have other office locations to travel to.

Before renting this office space, my wife had a small 950sf office and I used her office to treat my ortho patients there. And on one day, a good GP friend (my wife's former classmate) approached us and asked if we wanted to rent the office space from him. He said he would charge us the same rent amount ($1700/month) as what we paid to rent the 950sf office. His office is 2.5x larger and it has 7 chairs. We needed a bigger office space so we accepted his offer. No contract signed, no lawyer involved...just a verbal agreement between us. We moved and sold the 950sf office (a leasehold sale) to a new grad ortho.

 

[teett]

Charlestweed, thank you very much for the information!!!

 

[HMI]

What are the numbers? Where to start? Any suggestions will be very helpful!

I've done two offices from scratch and bought another one from a dentist but sold it after a year ( it turns out I do not like old equipment and ugly tasteless cheap looking offices).

I prefer building from scratch because I can put in everything new and with digital Xray and charts and make it nice (Does't have to be boutique dental office but you need to feel good being there).

-First office costed close to $110K, 4 ops, 4 chairs, one portable X-ray, two digital sensors, 7 computers (one being the server), new supplies, autoclave, vacuum, compressor and...... Landlord picked up the tab for construction. Rent started at around $3400 including NNN.

- second office costed little short of $100K (I think $98K) of which roughly $20K was spent on renovation (luxury vinyl flooring and new cabinets and resurfacing older cabinets). It has 4 ops but I only got 3 chairs, one portable xray, one #2 sensor, 6 computers (one is the server), 4 TVs (one in each op so patients can see the Xray and intra-oral pictures on 55" TV) and one in waiting area, one YAMAHA receiver (have to have music in the office), supplies and equipments. Rent $3600 including NNN.

Now, if you want to build from scratch, you need to budget anywhere from $80 to $120 per square foot for the construction, assuming 1000 sq ft that's another $100K added to cost. If you want to save on the construction cost you either have to :

-Ask the landlord for the whole construction cost (very difficult)
or
- do what I did, find a space that used to be a dental office (I found an office that I believe used to be a Perio office), so the plumbing is already done , spend $15-20K to make it nice, buy everything new and go from there. I wouldn't spend money on construction unless you are buying the real estate of the office too.

Also, you need a good team with you ( OM and DA), and don't expect to make money right away, for first 6-8 months you should assume your pay gone be like your office manager or a hygienist on lower end of spectrum, so have your personal expenses under control. Finally, You will need time to build a client base and depending on how you wanna do it there will be advertising cost as well.

 

[teett]

I've done two offices from scratch and bought another one from a dentist but sold it after a year ( it turns out I do not like old equipment and ugly tasteless cheap looking offices).

I prefer building from scratch because I can put in everything new and with digital Xray and charts and make it nice (Does't have to be boutique dental office but you need to feel good being there).

-First office costed close to $110K, 4 ops, 4 chairs, one portable X-ray, two digital sensors, 7 computers (one being the server), new supplies, autoclave, vacuum, compressor and...... Landlord picked up the tab for construction. Rent started at around $3400 including NNN.

- second office costed little short of $100K (I think $98K) of which roughly $20K was spent on renovation (luxury vinyl flooring and new cabinets and resurfacing older cabinets). It has 4 ops but I only got 3 chairs, one portable xray, one #2 sensor, 6 computers (one is the server), 4 TVs (one in each op so patients can see the Xray and intra-oral pictures on 55" TV) and one in waiting area, one YAMAHA receiver (have to have music in the office), supplies and equipments. Rent $3600 including NNN.

Now, if you want to build from scratch, you need to budget anywhere from $80 to $120 per square foot for the construction, assuming 1000 sq ft that's another $100K added to cost. If you want to save on the construction cost you either have to :

-Ask the landlord for the whole construction cost (very difficult)
or
- do what I did, find a space that used to be a dental office (I found an office that I believe used to be a Perio office), so the plumbing is already done , spend $15-20K to make it nice, buy everything new and go from there. I wouldn't spend money on construction unless you are buying the real estate of the office too.

Also, you need a good team with you ( OM and DA), and don't expect to make money right away, for first 6-8 months you should assume your pay gone be like your office manager or a hygienist on lower end of spectrum, so have your personal expenses under control. Finally, You will need time to build a client base and depending on how you wanna do it there will be advertising cost as well.

Thank you sooo much for the information.

I have a few questions.
1. Your first office costed about 110K. Is it only construction cost?
2. In your first office, what is the roughly number for all the equipments and supplies?
3. Is it easy to use the portable x-ray? How is the quality compared to regular x-ray unit?
4. I know that you do not like the old office you bought. How do you see the benefits of having a set of patients from buying an old office? (I currently have an option to buy my boss's office with lots of patients and employee - high overhead)

Thanks a lot 🙂

 

[HMI]

Thank you sooo much for the information.

I have a few questions.
1. Your first office costed about 110K. Is it only construction cost?
I did not spend any money on construction, the landlord did. $110K was the cost of equipment and supplies (including computers and sign). the construction on average will cost you between $80-$120K assuming an average size space (1200 sq ft). Cabinets and permits should be included in the cost.

2. In your first office, what is the roughly number for all the equipments and supplies?
Same as above $110K. Four chairs at $10K each, $13K for supplies, and the rest for computers (including the fee for the IT guy to come and install them), two xray sensors and one portable generator, vacuum , compressor, autoclave. You could get an idea on how much this will cost you by looking at prices online (Pearson or smaller vendors), you could also ask for free stuff like ultrasonic scaler and discount on operatory packages and other big equipments.

3. Is it easy to use the portable x-ray? How is the quality compared to regular x-ray unit?
Yes, I've never had any of my assistants complain, they're becoming smaller and lighter.

4. I know that you do not like the old office you bought. How do you see the benefits of having a set of patients from buying an old office? (I currently have an option to buy my boss's office with lots of patients and employee - high overhead)
Everyone is different when it comes to this, I never saw any benefit because knowing what I know now I don't see any value in paying for charts that might not return or their TX is done and more importantly the seller's Tx philosophy might be different than mine (i.e. seller dentist placing big multi surface fillings and when you recommend a crown they will leave, or they Never needed deep cleaning or a new denture...). Thankfully I went in with a partner and he bought me out. I prefer to spend the money on advertising and bringing in new patients and Tx planning based on my vision ( as I said before, there will be sometime before you built client base and making money so keep this in mind). On the other hand I have friends that bought PPO offices with charts and they say it helps because you have some production on recalls and hygiene and smaller procedures from day one while you're figuring things out. You need to decide what makes sense and works for you. The only recommendation, keep the overhead low (being overstaffed is the main one). You are already working in that office so you know the patient flow and numbers, and the patients know you, so that's a plus. There is definitely value in buying the right office with existing charts, it just wasn't for me. You either gonna spend the money on advertising or existing charts.
Hope this helps.



Thanks a lot 🙂

 

[2TH MVR]

One extremely important advice if using a general contractor who then uses sub-contractors. ALWAYS get partial lein releases for every payment you make. The lein releases should come directly from the Subs ... not the General. If the General contractor goes under or fails to pay the subs ..... YOU as the property owner are responsible for paying the subs regardless if you already paid the General. Non-payment means leins on your property.

 

[Cold Front]

One extremely important advice if using a general contractor who then uses sub-contractors. ALWAYS get partial lein releases for every payment you make. The lein releases should come directly from the Subs ... not the General. If the General contractor goes under or fails to pay the subs ..... YOU as the property owner are responsible for paying the subs regardless if you already paid the General. Non-payment means leins on your property.

My first general contractor had a heart attack during initial phase of construction and I had 0 communication with the subs he used. I had to go back to the drawing board and go with a new GC.


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[ElCubanito]

One extremely important advice if using a general contractor who then uses sub-contractors. ALWAYS get partial lein releases for every payment you make. The lein releases should come directly from the Subs ... not the General. If the General contractor goes under or fails to pay the subs ..... YOU as the property owner are responsible for paying the subs regardless if you already paid the General. Non-payment means leins on your property.

THIS!
I built a start-up from scratch 9 yrs ago. It was a lot of work, it was very profitable, I wouldn't do it again....but just because I don't need the $. Depends how bad you want to hussle.
Bank of America practice solutions finace new builds and they walk you through it. I know a dentist that went this route. My contractor was very unreliable so I ended up finishing the office with illegal immigrants found in Home Depot. He would just show up for the inspections, and I would be covered in dust.

There are PLENTY of standing, and built out offices for sale for less than 100K.

 

[jda02624]

Lots of good information here.

In particular for ortho, would anyone here consider self-contained carts, such as the ones by ASI? (ASIortho.com)
Just wondering if it saves much, if any, on building without water/vacuum to each individual chair. I'm in the early phase of looking at a space and considering doing this instead of in-ground lines.

 

[charlestweed]

Lots of good information here.

In particular for ortho, would anyone here consider self-contained carts, such as the ones by ASI? (ASIortho.com)
Just wondering if it saves much, if any, on building without water/vacuum to each individual chair. I'm in the early phase of looking at a space and considering doing this instead of in-ground lines.

My friend, who is a periodontist, told me that he used to come to do canine exposure for this orthodontist, who used a mobile self-contained cart. This orthodontist had 5 chairs in an open bay but she only used 1 mobile cart and pushed it from chair to chair. According to my friend, the suction and the air were strong enough for him to do the entire canine exposure. If it's good for my perio friend, it should be good enough for ortho use.

Another cheap and quick way is to run the lines above ground if you are concerned about the slighthly loud noise of the mobile cart unit. That's what I did 2 years ago when I converted a medical office to an ortho office. I converted one of the 2 bathrooms into a mechanical room that houses the air and vaccumm units. This is what it looks like:

 

[jda02624]

Thanks CharlesTweed! I appreciate your reply