Best buy-in method for specialty (OMFS) partnership?

[Captain Underplants]

Hello All,

Curious on what the thoughts are about the best/fairest way to buy into a OMFS practice is. Reason i'm asking is some of the people I've interviewed with have left an open window as to how I chose to buy in (after the associate-ship). Are there pros/cons to a specific method? Any method to avoid? the options I've heard

1- cash valuation - take a loan from the bank for the practice value and you're done.
2- Sweat equity - Work your way into the partnership by having some of your salary deducted every year until you meet a predefined amount
3- Unknown equity? - This was a little stranger, but having a staggered agreement where year 1 30% of your net goes to buy in, Year 2 25% to buy in, Year 3 20% Year 4 15%, year 5 10 % (the issue here is there is no predefined amount of what's given to the buy in, so is it fair? thoughts?)
4- Bonus pooling towards buy in (kind of vague but basically trying to figure out a setup where the buy in is mostly paid through your incentive/bonus, rather than salary).

Any thoughts on what works best/ vs what doesn't work? What have you heard of?


Thanks

---

Members don't see this ad.

 

[gryffindor]

Are you buying in to become a partner at 50% or less?

 

[Captain Underplants]

Likely a 1/3 partner vs possible 1/2 down the line

 

[Wahoowah]

I would just run the numbers and see what makes sense for you. If your note comes from the practice, will there be an interest rate? How would that compare to a bank? I think more important than the structure is what kind of rights you have as a partner. What say do you have in investments, hiring additional doctors, etc? What would it look like if something happened and you wanted to cash out? At what valuation would that depend on?

 

[bergus95]

T

Hello All,

Curious on what the thoughts are about the best/fairest way to buy into a OMFS practice is. Reason i'm asking is some of the people I've interviewed with have left an open window as to how I chose to buy in (after the associate-ship). Are there pros/cons to a specific method? Any method to avoid? the options I've heard

1- cash valuation - take a loan from the bank for the practice value and you're done.
2- Sweat equity - Work your way into the partnership by having some of your salary deducted every year until you meet a predefined amount
3- Unknown equity? - This was a little stranger, but having a staggered agreement where year 1 30% of your net goes to buy in, Year 2 25% to buy in, Year 3 20% Year 4 15%, year 5 10 % (the issue here is there is no predefined amount of what's given to the buy in, so is it fair? thoughts?)
4- Bonus pooling towards buy in (kind of vague but basically trying to figure out a setup where the buy in is mostly paid through your incentive/bonus, rather than salary).

Any thoughts on what works best/ vs what doesn't work? What have you heard of?


Thanks

no one really talks about this enough

 

[Captain Underplants]

I would just run the numbers and see what makes sense for you. If your note comes from the practice, will there be an interest rate? How would that compare to a bank? I think more important than the structure is what kind of rights you have as a partner. What say do you have in investments, hiring additional doctors, etc? What would it look like if something happened and you wanted to cash out? At what valuation would that depend on?

Fair questions, I should know the answer to, but I honestly don't; the end goal is to be an equal 50 % or 33% (with three partners), that I assume would mean equal say. A buyout is usually structured on the last years production paid over X amount of months/years.

My understanding is that the benefit of coming from your bonuses/salary is that it's often interest free, and sometimes even pre-tax.

T

no one really talks about this enough

It's unfortuante, because you spend X amount of years in training, and have all sorts of private practice people come talk to you; but they don't even tell you what they charge for an implant, let alone what the best money methods are.

 

[desertrat12]

I agree and wish more was spoken about this. General dentistry has such an abundance of resources from podcasts to conferences all about the business aspects of practice, but OMFS is pretty sparse (unless I’ve missed something).

 

[Deep Impact]

I was given option 1 and 2 from my previous partnership. I chose option 2, and set payment was deducted from my pay every 2 weeks over the life of the loan. Interest rate was lower for me to go with option 2 and it was a a big chunk of change, essentially lowered my take home pay to that of an associate. I was banking on profit sharing and bonuses to make up for that and to feel like a partner. It was painful but it worked for my budget. We live in a modest home and I drove a cheap car. I know the bank option would allow me to stretch the payment for many more years at higher interest but the take home would’ve been way more. So, I think it depends on your situation and your budget…oh and in house financing doesn’t show up in your credit report. I’m not sure if having a loan that’s as much as a decent house on the credit report is a good thing per se.

 

[avangusva]

I like the discussion! Thanks for bringing it up.

In my opinion, it's really a numbers game. You'd have to consider the final cost over the life of the buy-in/loan. Something to consider in the era of Private Equity (USOSM, Allied, OMSPartners, etc) is how quickly things can change. For example, if you're doing a sweat equity buy-in, I'd be very weary to confirm the contract specifically discusses the possibility of selling to PE and how that affects you as you have yet to be fully vested in the buy in.

Personally, I'd get a loan and buy in outright making me equal partner at that exact time. Although financially probably less responsible compared to a sweat equity buy-in, it would leave no questions about where you stand within the practice and therefore in the decisions being made on a day to day basis.

 

[bergus95]

I like the discussion! Thanks for bringing it up.

In my opinion, it's really a numbers game. You'd have to consider the final cost over the life of the buy-in/loan. Something to consider in the era of Private Equity (USOSM, Allied, OMSPartners, etc) is how quickly things can change. For example, if you're doing a sweat equity buy-in, I'd be very weary to confirm the contract specifically discusses the possibility of selling to PE and how that affects you as you have yet to be fully vested in the buy in.

Personally, I'd get a loan and buy in outright making me equal partner at that exact time. Although financially probably less responsible compared to a sweat equity buy-in, it would leave no questions about where you stand within the practice and therefore in the decisions being made on a day to day basis.

Why not just work corporate for 2 years and buy the practice outright at this rate?

 

[desertrat12]

Off topic…but considering some of the corporate salaries I’ve seen, especially in areas you are needed, are very competitive. So much so that it makes me seriously wonder what benefits private has over corporate financially speaking, especially if you are involved in a long expensive buy in. There are certainly lifestyle/autonomy/breadth of cases/etc benefits for private practice. But the ability to come out of residency with a very competitive salary and allowing you to immediately begin with retirement savings at a significant rate is certainly tempting. Definitely there are ethical considerations in travel OMFS practice. But some of these buy ins I’ve see are crazy. Saw one the other day that was north of 2 million. That’s a serious gamble for a young surgeon.

 

[yappy]

Why not just work corporate for 2 years and buy the practice outright at this rate?

Loans are not taxed. Interest is deducted

 

[avangusva]

Why not just work corporate for 2 years and buy the practice outright at this rate?

That's a different model. Partnership usually means there is at least one (or more) other surgeons in a group practice setting. That has advantages and disadvantages. For me personally, I am joining a "broad scope" practice that has a strong level 1 trauma hospital presence, a heavy orthognathic surgery practice, and multiple senior partners that will serve as mentors. There's a huge value in that for me.

Corporate is probably the most efficient way to earn a lot of money. And I have had a lot of friends/prior residents who use it to amass wealth, pay loans, and buy practices. That's one option!

 

[avangusva]

Off topic…but considering some of the corporate salaries I’ve seen, especially in areas you are needed, are very competitive. So much so that it makes me seriously wonder what benefits private has over corporate financially speaking, especially if you are involved in a long expensive buy in. There are certainly lifestyle/autonomy/breadth of cases/etc benefits for private practice. But the ability to come out of residency with a very competitive salary and allowing you to immediately begin with retirement savings at a significant rate is certainly tempting. Definitely there are ethical considerations in travel OMFS practice. But some of these buy ins I’ve see are crazy. Saw one the other day that was north of 2 million. That’s a serious gamble for a young surgeon.

There is a lot to be said regarding that specific discussion of corporate vs private. I eluded to some of the points in my previous reply above.

Corporate has pros and cons, just like every other opportunity (solo private practice, buying vs building new, associate/partnership, hell even private equity vs not, etc). No way to deny the income potential, that's for sure. But it's typically labor intensive, requires traveling, and frankly many burn-out after a couple years. At a certain point it becomes less about the dollar amount you bring home and more about quality of life, personal and professional fulfillment.

 

[Captain Underplants]

I was given option 1 and 2 from my previous partnership. I chose option 2, and set payment was deducted from my pay every 2 weeks over the life of the loan. Interest rate was lower for me to go with option 2 and it was a a big chunk of change, essentially lowered my take home pay to that of an associate. I was banking on profit sharing and bonuses to make up for that and to feel like a partner. It was painful but it worked for my budget. We live in a modest home and I drove a cheap car. I know the bank option would allow me to stretch the payment for many more years at higher interest but the take home would’ve been way more. So, I think it depends on your situation and your budget…oh and in house financing doesn’t show up in your credit report. I’m not sure if having a loan that’s as much as a decent house on the credit report is a good thing per se.

Thanks for sharing; I think the biggest point you made is that the in house loan won't show on your credit, which means ideally it won't set back your personal life goals of owning a home or starting your family life back any further than residency already did.

I like the discussion! Thanks for bringing it up.

In my opinion, it's really a numbers game. You'd have to consider the final cost over the life of the buy-in/loan. Something to consider in the era of Private Equity (USOSM, Allied, OMSPartners, etc) is how quickly things can change. For example, if you're doing a sweat equity buy-in, I'd be very weary to confirm the contract specifically discusses the possibility of selling to PE and how that affects you as you have yet to be fully vested in the buy in.

Personally, I'd get a loan and buy in outright making me equal partner at that exact time. Although financially probably less responsible compared to a sweat equity buy-in, it would leave no questions about where you stand within the practice and therefore in the decisions being made on a day to day basis.

Good point, thankfully I know the owner has zero intention of ever selling to a corporate, but I do like the allure of being an instant partner (basically overnight); vs the longer process, some people do treat you as a partner as soon as you being buying in so i guess it all depends on how it's structured.

 

[Flossaraptor]

Off topic…but considering some of the corporate salaries I’ve seen, especially in areas you are needed, are very competitive. So much so that it makes me seriously wonder what benefits private has over corporate financially speaking, especially if you are involved in a long expensive buy in. There are certainly lifestyle/autonomy/breadth of cases/etc benefits for private practice. But the ability to come out of residency with a very competitive salary and allowing you to immediately begin with retirement savings at a significant rate is certainly tempting. Definitely there are ethical considerations in travel OMFS practice. But some of these buy ins I’ve see are crazy. Saw one the other day that was north of 2 million. That’s a serious gamble for a young surgeon.

What kind of corporate salaries are out there and does it involve traveling to multiple locations?

 

[bergus95]

What kind of corporate salaries are out there and does it involve traveling to multiple locations?

500-750k first year, 1mill+ 5 years out for full time isn’t unheard of. It isn’t without it cons though. Travel. Physical Demand. Lack of autonomy. Narrow scope of practice are among the reasons.

 

[702]

What kind of corporate salaries are out there and does it involve traveling to multiple locations?

350k 1st year.

 

[bergus95]

350k 1st year.

250-350k plus bonus is typical for PP associate with path to partnership. If 350k is the offer for full time corporate, run.

 

[Captain Underplants]

350k 1st year.

More like 500k for newly grad.

 

[desertrat12]

More like 500k for newly grad.

This is roughly what I’ve been seeing as well give or take a bit…

What are people seeing for their income range following buy-in to a private practice?

 

[bergus95]

I’m glad we are having these discussions, while often considered a taboo topic I think they position us to be more powerful negotiators

 

[Captain Underplants]

Simliarly if anyone has any feedback about the best way to structure themselves when joining the workforce (LLC, vs S-Corp etc) that would be much appreciated. I've tried looking into a dental oriented CPA but they're hard to come by, even for just a consultation.

 

[avangusva]

This is roughly what I’ve been seeing as well give or take a bit…

What are people seeing for their income range following buy-in to a private practice?

Following buy-in is highly dependent on the practices. You need to consider the production and overhead of the practice itself. Also depends on the practice model, some are eat what you kill vs split right down the middle vs some sort of hybrid.

If it's an eat what you kill model, whatever you collect subtracted from overhead is your take home. Ultimately it will likely equate to equal to or greater than most of the numbers mentioned above for corporate work.

 

[desertrat12]

Following buy-in is highly dependent on the practices. You need to consider the production and overhead of the practice itself. Also depends on the practice model, some are eat what you kill vs split right down the middle vs some sort of hybrid.

If it's an eat what you kill model, whatever you collect subtracted from overhead is your take home. Ultimately it will likely equate to equal to or greater than most of the numbers mentioned above for corporate work.

Thanks! …we’re fortunate that the money is fairly good whichever route chosen. The pull to corporate is easy to understand though. Good money, right out of residency, with no huge commitment compared to less money (at least temporarily), more debt, and locking you in to something you cross your fingers and Hope works out.

I can’t believe I’m becoming pro corporate. My dental school self would be so disappointed lol. But committing to a buy in is becoming a tough sell, at least to me. If non corporate is your goal, and you have some business sense/willingness to learn/hustle, it almost seems worth it to forgo a long expensive buy in with people you Hope are telling you the truth, and instead start your own. Both scenarios will result in less money up front, but at least on one side you know who you are getting into business with…I’m probably a little jaded from some of the unfortunate private buy in stories I’ve heard recently though. Perhaps many work out great in the end.

 

[Deep Impact]

I would also suggest hiring a competent CPA to review the books. You don’t want to be surprised later on once you signed everything that there is shared debt, and inflated numbers to get you on board. Even if you think you can trust the partners, I would recommend hiring a competent lawyer and CPA to look over the details. If they balk at that, it’s time to run. I’ve learned the hard way and paid the price with time and money due to my stupidity early in my career…

Also, partnerships can fail for whatever reason. I would pay particular attention to the next town over and crow fly straight line distance to your restriction mileage. If your restriction is less than the next town over where you can possibly restart somewhere, it’ll make life easier and you likely will be in better position to jump ship if needed. Just be careful what you sign and don’t let the excitement of the opportunity blind you. I can’t stress doing the proper homework enough before you enter into a partnership agreement. It’s honestly not too different than marriage and divorces can be ugly as well. There are many honest colleagues out there but there are those who persistently prey on young surgeons and dentists. Remember, you wouldn’t be offered partnership just for your benefit…I’m super jaded but I’ve been scarred.

 

[White_Sponge_Nevus]

While maybe not the original topic of this thread I just wanted to share some of my thoughts on corporate (I'm still in residency, just what I've heard/seen from others).

The pay in corporate is great, there's no disputing that. But it certainly isn't all sunshine and rainbows, and not because "all corporate is evil" or whatever bad rap it gets.

Cons

1) Life on the road is hard. It is not the private practice model where you have 1-3 offices you rotate through and general dentists feed into your practice. You're hopping around to each individual office. You could be going to 8 or 9 or even more and depending on your state that could entail a lot of time on the road. Even if the expenses for driving/hotel/food are reimbursed, that's a young person's game and can get old fast

2) Patient population. The patient population in corporate is more similar to residency than it is in private practice, i.e. people in that socioeconomic class don't prophylactically remove their thirds in butter soft 17 year old bone with roots that aren't fully formed. They wait until they become symptomatic in their 30s, and delay it as long as they can due to finances, anxiety etc. They will also do everything they can to avoid the fee for sedation. The lay up thirds that are the goal of all practices are less abundant in corporate. Older patients who desire sedation are very likely to have a lot of co-morbidities and less likely to a 65 year old accountant or engineer who is an ASA II recreational 5k runner whose LDL is borderline. Patients lining up for multiple implants are less abundant.

3) Patient evaluation/complication management by GPs: since you are essentially itinerant, you're not evaluating patients before the procedure, and you're rarely in one office long enough to send a patient with complications to where you'll be that day. This would be a non issue in group private practice, since your partner would be taking care of it, but in corporate it will be a GP. Further, it will likely be a GP who is either fresh out of school without having done any post-graduate training, or is at the very least, relatively inexperienced. Sure, there are some good & experienced GPs who choose to work corporate for whatever reason, but it's less likely. You'll run into a lot of patients who are not appropriate for in office sedation who were promised it, and cases will get cancelled and patients will be pissed, also making your schedule less lucrative that day. It would take leg work on your part to go back and verify everyone on your schedule is appropriate, which is fine if you're willing to do it, but the complication management aspect isn't great.

4) Equipment: all your emergency drugs, reversal agents, airway equipment, physical instruments you prefer etc will have to be transported from office to office unless you want to rely on 8 different sets of DAs, office managers etc to have everything ready for you when you roll in. I'm sure this is just a small nuisance and everybody manages to get by just fine, but another thing to think about

Pros

• no kissing butt for referrals, the GPs in house are going to refer to you regardless
• lucrative
• no stress of managing the business aspect, staff etc
• patient population can be a plus in some sense, in that depending on your area they can be thankful, down to earth, blue collar people to whom you are offering a service they otherwise couldn't afford. Also less likely to be Karens

If anyone who has ever actually worked OMFS in corporate or knows more than I do is welcome to contribute but this is just my $0.02

 

[Deep Impact]

I’ve done both. You can search my previous threads on my take. Let me say though not every corporate practice is run the same way and practice philosophies do differ. There are places where you aren’t itinerant. And same goes for private practices. There are private practices who basically operate based on all the insurances they accept including Medicaid to fill their schedule. More than you think. Those nice suburban fee for service practices may seem like common place but you’d be surprised. This also would depend on the market. If you can swing it, starting your own practice I think trumps everything else…just from what I’ve experienced and seen.

 

[maruprime]

The best buy-in pathway is to become an equal partner as soon as possible, so you can reap the financial benefits right from your starting date. The problem is that not many graduates have $500-800k in cash to become 50% owner. You have to do the calculation yourself. How much money will you have to borrow, what is the interest rate, what is the monthly payment? Calculate how much money you expect to make as an equal partner. Then compare that to how much money you will make if you are only a 30% equity-holder (year 1), 55% equity-holder (year 2), etc. Then do whatever is more profitable.

The next thing to think about is, how do you know this partnership will work? Will you mesh well with the owners? Will they treat you as equals (you are low man on the totem pole all over again)? Do you have the same treatment philosophy, work ethic, likes/dislikes in terms of equipment/brand? Believe it or not, these smalls things make or break relationships. This is only known after you've worked for them for a few months to get a feel for the relationship.

 

[maruprime]

While maybe not the original topic of this thread I just wanted to share some of my thoughts on corporate (I'm still in residency, just what I've heard/seen from others).

The pay in corporate is great, there's no disputing that. But it certainly isn't all sunshine and rainbows, and not because "all corporate is evil" or whatever bad rap it gets.

Cons

1) Life on the road is hard. It is not the private practice model where you have 1-3 offices you rotate through and general dentists feed into your practice. You're hopping around to each individual office. You could be going to 8 or 9 or even more and depending on your state that could entail a lot of time on the road. Even if the expenses for driving/hotel/food are reimbursed, that's a young person's game and can get old fast

2) Patient population. The patient population in corporate is more similar to residency than it is in private practice, i.e. people in that socioeconomic class don't prophylactically remove their thirds in butter soft 17 year old bone with roots that aren't fully formed. They wait until they become symptomatic in their 30s, and delay it as long as they can due to finances, anxiety etc. They will also do everything they can to avoid the fee for sedation. The lay up thirds that are the goal of all practices are less abundant in corporate. Older patients who desire sedation are very likely to have a lot of co-morbidities and less likely to a 65 year old accountant or engineer who is an ASA II recreational 5k runner whose LDL is borderline. Patients lining up for multiple implants are less abundant.

3) Patient evaluation/complication management by GPs: since you are essentially itinerant, you're not evaluating patients before the procedure, and you're rarely in one office long enough to send a patient with complications to where you'll be that day. This would be a non issue in group private practice, since your partner would be taking care of it, but in corporate it will be a GP. Further, it will likely be a GP who is either fresh out of school without having done any post-graduate training, or is at the very least, relatively inexperienced. Sure, there are some good & experienced GPs who choose to work corporate for whatever reason, but it's less likely. You'll run into a lot of patients who are not appropriate for in office sedation who were promised it, and cases will get cancelled and patients will be pissed, also making your schedule less lucrative that day. It would take leg work on your part to go back and verify everyone on your schedule is appropriate, which is fine if you're willing to do it, but the complication management aspect isn't great.

4) Equipment: all your emergency drugs, reversal agents, airway equipment, physical instruments you prefer etc will have to be transported from office to office unless you want to rely on 8 different sets of DAs, office managers etc to have everything ready for you when you roll in. I'm sure this is just a small nuisance and everybody manages to get by just fine, but another thing to think about

Pros

• no kissing butt for referrals, the GPs in house are going to refer to you regardless
• lucrative
• no stress of managing the business aspect, staff etc
• patient population can be a plus in some sense, in that depending on your area they can be thankful, down to earth, blue collar people to whom you are offering a service they otherwise couldn't afford. Also less likely to be Karens

If anyone who has ever actually worked OMFS in corporate or knows more than I do is welcome to contribute but this is just my $0.02

I'd love to contribute here. There are 2 types of corporations, one is a general dental office, such as PDS/Aspen, that has general dentists and the surgeon comes 1-4 times a month. Another type is an OMS corporation, these are surgery offices that only employ surgeons. I've worked for both; I've worked for PDS and western dental, I've worked for private practices, and I've worked in OMS corporate offices (I'd define this is being a company that owns more than 5 dedicated OMS offices in a city, although this is not an actual definition).

Travel isn't bad for me. I'm from California; a normal drive to work in traffic is 1.5 hours. They don't send you more than 75 miles from your home; that's in my contract. You can go to very distant offices if you choose to.

The patient pool at all medicaid offices is young. It will be 13-40 year olds for wisdom teeth. They don't schedule single teeth for the OMS; only full mouth, wisdom teeth, and single teeth extraction with immediate implant. Medicaid pays $80 for a simple extraction in California depending on your zip code (yes dentical reimbursement differs by zip code). So no office manager will ever put a single tooth on your schedule. The general dentist does that one. In a general corporation you don't do the consultation, and you don't do the postop.

In an OMS corporation you do the consultation, surgery, and see all your own postops. OMS corporation offices usually have you traveling between 1-2 offices, 3 days here, 3 days there. You are the only doctor at these 2-3 offices. The offices are open 5 days a week, but the surgeon is only there 2-3 days a week, and the front desk is there 5-6 days a week to answer phones and fill up the schedule. However, they are always advertised as being open 5 days a week. They have different names just like PDS does (Valley Oral and Facial Surgery, Creekside Oral and Facial Surgery, Spruceside Oral and Facial Surgery, or my favorite Facial Spectrum Spa Cosmetic Oral and Maxillofacial Surgery). All patients are medicaid or HMO (specialty HMO works differently than capitation).

Equipment: a general dental corporation makes you buy your own equipment. You are a contractor. You have to bring your own drill (bien air is $10,000 just for the motor), EKG (mindray costs $4000), burs, bur guards, molt #9, elevators, forceps. When you sign up, the company gives you a list of mandatory equipment and the initial cost to buy this yourself is about $50-60,000. You can't borrow this money from the company, you have to take a loan out for it. You also need to order drugs for yourself and get a carrying case and know the rules. You cannot drive with a multi-dose vial of pierce fentanyl, you can only legally drive with a hard case with a lock with an unopened bottle of fentanyl/ketamine/propofol. You have to get a different DEA for each office you work in. An OMS corporation does not require any of this, they have everything at the office for you. The offset is that you get a higher percentage of collections working at a general office compared to working at OMS-exclusive offices.

 

[White_Sponge_Nevus]

I'd love to contribute here. There are 2 types of corporations, one is a general dental office, such as PDS/Aspen, that has general dentists and the surgeon comes 1-4 times a month. Another type is an OMS corporation, these are surgery offices that only employ surgeons. I've worked for both; I've worked for PDS and western dental, I've worked for private practices, and I've worked in OMS corporate offices (I'd define this is being a company that owns more than 5 dedicated OMS offices in a city, although this is not an actual definition).

Travel isn't bad for me. I'm from California; a normal drive to work in traffic is 1.5 hours. They don't send you more than 75 miles from your home; that's in my contract. You can go to very distant offices if you choose to.

The patient pool at all medicaid offices is young. It will be 13-40 year olds for wisdom teeth. They don't schedule single teeth for the OMS; only full mouth, wisdom teeth, and single teeth extraction with immediate implant. Medicaid pays $80 for a simple extraction in California depending on your zip code (yes dentical reimbursement differs by zip code). So no office manager will ever put a single tooth on your schedule. The general dentist does that one. In a general corporation you don't do the consultation, and you don't do the postop.

In an OMS corporation you do the consultation, surgery, and see all your own postops. OMS corporation offices usually have you traveling between 1-2 offices, 3 days here, 3 days there. You are the only doctor at these 2-3 offices. The offices are open 5 days a week, but the surgeon is only there 2-3 days a week, and the front desk is there 5-6 days a week to answer phones and fill up the schedule. However, they are always advertised as being open 5 days a week. They have different names just like PDS does (Valley Oral and Facial Surgery, Creekside Oral and Facial Surgery, Spruceside Oral and Facial Surgery, or my favorite Facial Spectrum Spa Cosmetic Oral and Maxillofacial Surgery). All patients are medicaid or HMO (specialty HMO works differently than capitation).

Equipment: a general dental corporation makes you buy your own equipment. You are a contractor. You have to bring your own drill (bien air is $10,000 just for the motor), EKG (mindray costs $4000), burs, bur guards, molt #9, elevators, forceps. When you sign up, the company gives you a list of mandatory equipment and the initial cost to buy this yourself is about $50-60,000. You can't borrow this money from the company, you have to take a loan out for it. You also need to order drugs for yourself and get a carrying case and know the rules. You cannot drive with a multi-dose vial of pierce fentanyl, you can only legally drive with a hard case with a lock with an unopened bottle of fentanyl/ketamine/propofol. You have to get a different DEA for each office you work in. An OMS corporation does not require any of this, they have everything at the office for you. The offset is that you get a higher percentage of collections working at a general office compared to working at OMS-exclusive offices.

This is very helpful and interesting, thank you. As you can probably tell, my anecdotal evidence was based off the general office model. Way less familiarity with the OMS corp model (which sounds better in my subjective opinion)

 

[desertrat12]

This is all great. Keep it coming. Nice to get some clear info of the real world… seems like a potentially great way to go is dso right out of training, get a financial footing and do a start up/purchase out right a practice as you start to burn out of dso style

 

[2TH MVR]

Just a few more points for those entering into a partnership. Been mentioned before. Talk to a tax CPA/attorney regarding the future tax considerations of buying into a partnership.

Usually a bank loan is lent on assets. Not typically goodwill. So future tax write offs on your bank note are usually asset depreciation. This gets tricky when the other partners are already depreciating the SAME assets.

The same goes if your future partners agree to finance your buy in. I can assure you that the agreement, tax consequences will always favor the senior partners.

Another point is people usually think that when you take out a business loan. The ENTIRE loan amount (principal and interest) is a business write-off. The interest is, but the principal amount is not. Remember. Assuming an Asset purchase .... the tax write off is in the current and future depreciation of the purchased assets. You cannot double dip and write off both the principal amount used to pay for those assets AND the asset depreciation.

Again. All of this gets tricky with these partnership buy ins. You need to consult a tax attorney/acct before agreeing to these agreements.

Yeah. Seems alot simpler to work Corp and start/buy your OWN practice.

 

[bergus95]

That is the question right? If the eventual goal is a conventional PP setup, what is the best route to get there? 2-3 year associatship with partnership/buyin following or DSO, save up and buy?

 

[bergus95]

Is PDS mainly PPO/FFS?

 

[Wahoowah]

No they take a lot of HMOs too, no medicaid though.

 

[desertrat12]

Regarding “conventional” pp…our landscape is significantly different than older OMFS… with the ever increasing rise of dso and idso, we run the risk of having our referral sources being acquired by a dso and loosing their referrals. So along with the discussion of what’s the best route to conventional pp, we need to consider what a modern pp setup looks like that can compete in a market place of continual consolidation, changing referral patterns, and itinerant surgeons. I don’t know the answer to this, but I imagine practices going forward will need to adapt in ways we never had had to before. Also staying rural may insulate you from a lot of these changes at least for a while.

 

[702]

Regarding “conventional” pp…our landscape is significantly than older OMFS… with the ever increasing rise of dso and idso, we run the risk of having our referral sources being acquired by a dso and loosing their referrals. So along with the discussion of what’s the best route to conventional pp, we need to consider what a modern pp setup looks like that can compete in a market place of continual consolidation, changing referral patterns, and itinerant surgeons. I don’t know the answer to this, but I imagine practices going forward will need to adapt in ways we never had had to before. Also staying rural may insulate you from a lot of these changes at least for a while.

Great point.

 

[George Lincoln]

Hello All,

Curious on what the thoughts are about the best/fairest way to buy into a OMFS practice is. Reason i'm asking is some of the people I've interviewed with have left an open window as to how I chose to buy in (after the associate-ship). Are there pros/cons to a specific method? Any method to avoid? the options I've heard

1- cash valuation - take a loan from the bank for the practice value and you're done.
2- Sweat equity - Work your way into the partnership by having some of your salary deducted every year until you meet a predefined amount
3- Unknown equity? - This was a little stranger, but having a staggered agreement where year 1 30% of your net goes to buy in, Year 2 25% to buy in, Year 3 20% Year 4 15%, year 5 10 % (the issue here is there is no predefined amount of what's given to the buy in, so is it fair? thoughts?)
4- Bonus pooling towards buy in (kind of vague but basically trying to figure out a setup where the buy in is mostly paid through your incentive/bonus, rather than salary).

Any thoughts on what works best/ vs what doesn't work? What have you heard of?
Your information is too vague to make an assessment. What is the long term here? What percentage of the practice will you own and who is the managing partner? What is your buy out when you want to leave. What powers will you have or not have? Some practices have clear corporate structure and others not so much. with just an understanding between partners. This can get messy when someone has to retire due to health reasons or death. So I prefer it well outlined, but you never can prepare for everything, so you need to be with ethical people.

 

[Musicman323]

Here are some POP earning numbers for those who are interested. It does contain speciality numbers that may help.
This would be the gross earning potential for 20 or so practices.

 

[bergus95]

Here are some POP earning numbers for those who are interested. It does contain speciality numbers that may help.
This would be the gross earning potential for 20 or so practices.

Haha can you decipher what that would mean for Oral Surgery?

 

[osteotomy01]

This is off topic, but as I see a number of early to mid-career OMSs here--I was hoping to hear some input.

Does anyone have any experience with demographic/market analysis companies to assess whether or not a specific area is suitable for a new OMS practice? Most consulting firms I see are aimed at optimizing an existing OMS practice or aimed at general dentists starting a new practice. I have looked at existing tools like the census bureau and "ADA find a dentist" to assess the area. However, putting it all together and knowing whether or not a specific area is a good or bad idea is something that I'm not well-versed in.

 

[Wahoowah]

This is off topic, but as I see a number of early to mid-career OMSs here--I was hoping to hear some input.

Does anyone have any experience with demographic/market analysis companies to assess whether or not a specific area is suitable for a new OMS practice? Most consulting firms I see are aimed at optimizing an existing OMS practice or aimed at general dentists starting a new practice. I have looked at existing tools like the census bureau and "ADA find a dentist" to assess the area. However, putting it all together and knowing whether or not a specific area is a good or bad idea is something that I'm not well-versed in.

I think the factors in demo analysis for a dental practice such as dentist/pop, street visibility, household income, etc are much less relevant for specialists. As a specialist your customer is really the general dentist - so I would focus on areas where the GPs are being underserved. It helps to have contacts that know the local dental market really well. Ultimately recognize that in doing a scratch start you are competing with other offices that have well established referral bases so it will take some time to garner trust and build relationships with those dentists. Being reliable and taking good care of your GPs patients are far more important, in my opinion, than demographics.

 

[osteotomy01]

Any comments on what it's like to work for practices owned by private equity groups? Any better or worse than DSOs?

 

[maruprime]

Any comments on what it's like to work for practices owned by private equity groups? Any better or worse than DSOs?

Working for an OMS office owned by a big equity group like Allied OMS or Beacon OMS is 100x better than working for a DSO chain such as PDS, western dental, aspen, heartland, etc. Those are generalist offices. Their operatories are small, they probably don't have etCO2, their assistants mostly do fillings and crowns, they assist a surgeon once every 2 weeks. They have 3 handpieces and when you run behind you will have to use an angled high speed handpiece which they promise you is a "surgical handpiece" but it's not. I have worked for PDS and western dental and I have worked for Beacon OMS. That's my 2 cents.

To answer your question demographic research: I also opened my own OMS office from scratch. I hired a consulting company, paid for demogrpahic study. I find now that it was useless and wrong The ratio of 30,000 people to 1 surgeon is wrong. The ratio of 10 dentists to 1 surgeon is wrong. You need to google map your location, see how many oral surgeons are within 1 mile, 5 miles, 10 mile radius from your location. Google those OMS websites, look at what insurance they accept, how old those surgeons are, how many associates they have. Then google how many chains are in a 1 mile, 5, mile, 10 mile radius from your office, because those chains all have specialists too. Then go to delta dental's webiste, "find a doctor," and type in your zip code and see how many traveling OMS are accepting delta dental or cigna or metlife in your zip code. That will tell you how many surgeons actually work in your zip code. Then you need to make an excel sheet with every single dentist 1 mile, 5 mile, 10 mile radius from your office. Call them and ask if they have an oral surgeon they refer to. If you have 50 dentists in 10 miles, and 25 of them already refer to a surgeon, then you really only have 25 dentists on your excel list. If is almost impossible to change referral patterns. The demographic companies give you a 30 page PDF showing average household income, average spent on healthcare, ethnic distribution. None of this stuff matters. The only thing that actually did matter is what percent of population has HMO dental and medicaid. Disclaimer, this is for southern California. My friend opened in Virginia and he collected $80,000 his first month open working just 2 days a week while he worked at a chain 3 days a week and did no demographic research at all. He lived there so he knew there was a need for a surgeon.

In short, I'd either buy an existing OMS office, become equal partner with another OMS, or only open an office from scratch if I know there is no competing oral surgeon within a 5-10 mile radius. The demographic research that you'd pay $2300 for is useless.

 

[osteotomy01]

Working for an OMS office owned by a big equity group like Allied OMS or Beacon OMS is 100x better than working for a DSO chain such as PDS, western dental, aspen, heartland, etc. Those are generalist offices. Their operatories are small, they probably don't have etCO2, their assistants mostly do fillings and crowns, they assist a surgeon once every 2 weeks. They have 3 handpieces and when you run behind you will have to use an angled high speed handpiece which they promise you is a "surgical handpiece" but it's not. I have worked for PDS and western dental and I have worked for Beacon OMS. That's my 2 cents.

To answer your question demographic research: I also opened my own OMS office from scratch. I hired a consulting company, paid for demogrpahic study. I find now that it was useless and wrong The ratio of 30,000 people to 1 surgeon is wrong. The ratio of 10 dentists to 1 surgeon is wrong. You need to google map your location, see how many oral surgeons are within 1 mile, 5 miles, 10 mile radius from your location. Google those OMS websites, look at what insurance they accept, how old those surgeons are, how many associates they have. Then google how many chains are in a 1 mile, 5, mile, 10 mile radius from your office, because those chains all have specialists too. Then go to delta dental's webiste, "find a doctor," and type in your zip code and see how many traveling OMS are accepting delta dental or cigna or metlife in your zip code. That will tell you how many surgeons actually work in your zip code. Then you need to make an excel sheet with every single dentist 1 mile, 5 mile, 10 mile radius from your office. Call them and ask if they have an oral surgeon they refer to. If you have 50 dentists in 10 miles, and 25 of them already refer to a surgeon, then you really only have 25 dentists on your excel list. If is almost impossible to change referral patterns. The demographic companies give you a 30 page PDF showing average household income, average spent on healthcare, ethnic distribution. None of this stuff matters. The only thing that actually did matter is what percent of population has HMO dental and medicaid. Disclaimer, this is for southern California. My friend opened in Virginia and he collected $80,000 his first month open working just 2 days a week while he worked at a chain 3 days a week and did no demographic research at all. He lived there so he knew there was a need for a surgeon.

In short, I'd either buy an existing OMS office, become equal partner with another OMS, or only open an office from scratch if I know there is no competing oral surgeon within a 5-10 mile radius. The demographic research that you'd pay $2300 for is useless.

Thanks for this, having worked as an associate several times and been asked to market. I'd agree established referral patterns are extremely hard to break.

What made you leave a Beacon OMS associated practice to start your own? I've only heard things such as "you'll be stuck at 32% for your entire life and never really own anything..."

 

[annonymousOFMS]

My experience practicing for several years post residency is that no buy in you will ever be offered is fair. Maybe 1 out of every 20 practices will truly offer to make you a equal “partner” but usually it’s a rare set of circumstances.

Most “partnerships” have 1 or more docs who will either keep a larger percentage of the equity, or own the property and charge the rest of the practice obscene rent, not have to take call like everyone else or work as hard as everyone else, and still make the most money. “Partnership” is really just a fine line with them giving you just enough to make it worth staying, but them still coming out on top.

Corporate comes with its own set of problems. Both ethical and otherwise. But financially it’s definitely the better option.

 

[702]

My experience practicing for several years post residency is that no buy in you will ever be offered is fair. Maybe 1 out of every 20 practices will truly offer to make you a equal “partner” but usually it’s a rare set of circumstances.

Most “partnerships” have 1 or more docs who will either keep a larger percentage of the equity, or own the property and charge the rest of the practice obscene rent, not have to take call like everyone else or work as hard as everyone else, and still make the most money. “Partnership” is really just a fine line with them giving you just enough to make it worth staying, but them still coming out on top.

Corporate comes with its own set of problems. Both ethical and otherwise. But financially it’s definitely the better option.

Corporate is financially better than being a partner? Interesting.

 

[annonymousOFMS]

Corporate is financially better than being a partner? Interesting

 

[annonymousOFMS]

Yes in my experience it’s better.