Dentist Salary of 1.5 million really true?

[DrJeff]

Do you guys think the overhead has changed much in the last 6 years? Is the average still gonna be around 70%?

For the vast majority of offices out there, from new start ups to multi decade established practices, if you're overhead is running at 70% you've either not had a bunch of months of good production and collections or you've been on a big spending spree on new equipment!

Per the info that I get from my accountant, who specializes in dental and medical offices, the average overhead last year for the 300+ dental practices he services generally in New England, overhead was in the 50-55% range. Double checking the overall practice comparison info he gives to his clients each year, the lowest overhead was 37% and the highest was 68%. Granted that's just data from one accounting firm pertaining primarily to New England offices, but from the numbers you hear tossed around by various parctice management folks, those numbers seem to be a fairly accurate cross section of what's going on nationwide these days

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[Daurang]

Or maybe the other way around. Work in NYC, and live in Hoboken or Jersey city, where you can save a buttload on rent. but $50/hour? Damn, this is seriously depressing. Note to self: Never EVER think about working in NYC after Dental school.

This is insulting to say the least. A bridge toll collector or elementary school trash collector makes that much in NYC, with early retirement, huge pension, and Cadillac healthcare for life. If only I had stay working for GM instead of becoming a dentist, I'd be retired now at 40; now I'm stuck paying for their retirement instead!😡

 

[Cold Front]

For the vast majority of offices out there, from new start ups to multi decade established practices, if you're overhead is running at 70% you've either not had a bunch of months of good production and collections or you've been on a big spending spree on new equipment!

Per the info that I get from my accountant, who specializes in dental and medical offices, the average overhead last year for the 300+ dental practices he services generally in New England, overhead was in the 50-55% range. Double checking the overall practice comparison info he gives to his clients each year, the lowest overhead was 37% and the highest was 68%. Granted that's just data from one accounting firm pertaining primarily to New England offices, but from the numbers you hear tossed around by various parctice management folks, those numbers seem to be a fairly accurate cross section of what's going on nationwide these days

It can be much lower, specially if you have a decent monthly production/collection. Daily office overhead should not exceed $600-700 if you divide your monthly expenses by # of working days of the month. This example is for 2 DA's and 1 front desk, no hygienist. This number can be hit with 2-3 patients in the first half of any average morning, or 1 patient who needs RCT/Crown/a unit of CD or PD. The rest of your day should be your own. I'm pretty sure average GP produces 2-3k a day. Most GP's I know hit that number. So, what's the deal for letting the overhead go over 40%? It's just that no one takes cost very seriously, or have no choice in some situations they got themselves into.

 

[Voltron2010]

I was reading the thread about how some dentists were making $1.5 million or close to number.
http://forums.studentdoctor.net/showthread.php?t=238102

I was wondering how this works out since the base salary of dentists in the United States is:

25th%ile Median 75th%ile
$99,257 $117,251 $146,981

I totally understand how the dentists manage to make salaries that are in the upper 6 figures and up, but then how are these numbers possible?

Its true, but it depends on you and your decisions. If you work for someone you will never make a million. YOu need to find a niche and work with it. my friend took a bunch of cosmetic CE courses and earned a fellow ship and does very well, he takes no insurance and just does cosmetics. I own two clinics and I found out that I did well with a certain segment of the population, my patient load increased and I soon hired another dentist. I know have several dentist working for me and they earn about 150,000 a year. But keep in mind that when you work for some one your earning about 30% of your production. so where the 70% , you guessed it the owner, so basically when my docs make money I make money. And its real nice bc just one doc covers the pay for two other docs and then the rest is profit. But before you go off and open a practice work for someone initially just to learn how things work, learn how to fill out claims, take a community college course in book keeping and DONT splurge your first year out. save your money to buy a practice, the more you save the less you borrow which means you profit faster. I used the earning of my first clinic to buy the second clinic and since I didnt borrow from a bank the clinic started to profit in its 7th month. I know a lot of people who splurge and arent doing as well, they got a fancy car, a fancy house fancy clothes and now they just have debt, they make 150,000 a year but have about 120,000 in liabilities (remember taxes) so they cant afford to grow.

 

[whodat4life]

Its true, but it depends on you and your decisions. If you work for someone you will never make a million. YOu need to find a niche and work with it. my friend took a bunch of cosmetic CE courses and earned a fellow ship and does very well, he takes no insurance and just does cosmetics. I own two clinics and I found out that I did well with a certain segment of the population, my patient load increased and I soon hired another dentist. I know have several dentist working for me and they earn about 150,000 a year. But keep in mind that when you work for some one your earning about 30% of your production. so where the 70% , you guessed it the owner, so basically when my docs make money I make money. And its real nice bc just one doc covers the pay for two other docs and then the rest is profit. But before you go off and open a practice work for someone initially just to learn how things work, learn how to fill out claims, take a community college course in book keeping and DONT splurge your first year out. save your money to buy a practice, the more you save the less you borrow which means you profit faster. I used the earning of my first clinic to buy the second clinic and since I didnt borrow from a bank the clinic started to profit in its 7th month. I know a lot of people who splurge and arent doing as well, they got a fancy car, a fancy house fancy clothes and now they just have debt, they make 150,000 a year but have about 120,000 in liabilities (remember taxes) so they cant afford to grow.

Very nice post...I will never understand people that get straight out of school and go crazy. I mean, at some point you want to live because you've worked hard to get to where you are, but if people can just hold off another year or two...they will be in a much better financial position. How long would you recommend a grad with 350k in student loan debt to be an associate before pursuing his/her own private practice?

 

[Msmouth]

I'm an RDH and the office I currently work in has a monthly goal of $150,000.


I temped at an office this morning and they have a board in their break-room that lists everyone's production each day of the month. On the top of the board it says production goal is $240,000 for the month of August.

When you're an employee coming out of school you can't expect numbers like that but if you have an established business with a great staff you can bring in the big money.

 

[mr24]

I'm an RDH and the office I currently work in has a monthly goal of $150,000.


I temped at an office this morning and they have a board in their break-room that lists everyone's production each day of the month. On the top of the board it says production goal is $240,000 for the month of August.

When you're an employee coming out of school you can't expect numbers like that but if you have an established business with a great staff you can bring in the big money.

For the goal of 150k, how much of that (at your office) goes to overhead?

 

[Msmouth]

For the goal of 150k, how much of that (at your office) goes to overhead?

I honestly don't know the answer but I know that the dentist owns the building and collects rent on a separate office. He's been in practice 30 years and has owned this building for most of that time.
He has a dentist working for him as well.
The place is a gold mine who's potential is more than he's willing to tap into......if I had my way I would change some things for sure.

 

[Cold Front]

I'm an RDH and the office I currently work in has a monthly goal of $150,000.


I temped at an office this morning and they have a board in their break-room that lists everyone's production each day of the month. On the top of the board it says production goal is $240,000 for the month of August.

When you're an employee coming out of school you can't expect numbers like that but if you have an established business with a great staff you can bring in the big money.

That is very impressive. Keep in mind, that's just a goal, and what really matters is if the goal is hit or missed.

It is doable. I worked at an office with another doctor where we had similar goal. With hygienist, we were able to hit the goal. Hygienists usually brought in about $30k a month, 2 doctors did about $160k combined, and there was an oral surgeon who came in twice a month who brought in $50k. There was an inhouse lab tech, 3 front desk girls, office manager, 3 assistants. Overhead for this office was about $100k/month (including payroll for both doctors). The owner (Aspen Dental), took well over $100k that month.

There is 1 Aspen Dental office in Michigan that hits $300k/month, that's the highest I have heard. Obviously, the office is in an extremely lucrative market.

Btw- Aspen Dental Oral Surgeons produce $3-5 million a year. They take 50% of what they produce, but they are considered as employees and Aspen does their taxes (unless you are in the top 5, take home ends up under $1 million) and manages their schedule fully. Aspen itself, with about 300 practice nationwide did about $500 million gross in 2010. Hectic life!

 

[diplo123]

I'm an RDH and the office I currently work in has a monthly goal of $150,000.


I temped at an office this morning and they have a board in their break-room that lists everyone's production each day of the month. On the top of the board it says production goal is $240,000 for the month of August.

When you're an employee coming out of school you can't expect numbers like that but if you have an established business with a great staff you can bring in the big money.

Can I ask how many doctors are in the two practices you mentioned above? How many RDH's? Rural, suburban, urban? FFS/PPO/medicaid? Thanks

 

[dentalWorks]

well, I own 3 cell phones stores... will continue studying, but at the moment I have no hurry to do so.
I make more than 150k a year, and planning to bump it up to 500k with a few more stores.
btw, just reading this because my cousin wants to be a dentist. I wanted to be a physician too but it takes to much time. I prefer working for a month taking vacation and working another month and ging to the next place.

Just a question: To open a dental office I dont need to be a dentist, do I? of course I am not going to work as one... just hire a couple..
thanks.
whoa, I just notice I joined this site 6 years ago.. 🙂

I am not 100% sure but I believe....you can't open a healthcare center without a healthcare license... you need to find a dentist to open it for you.

However, you can build a dental building, and rent it out to a dentist (or maybe partner up with him/her). You take care of all the management stuff, he takes care of the healthcare stuffs. I imagine a brand new graduate would jump on this opportunity if the partnership is fair.

I actually know of 1 dentist who does this.... well did it back in the 90s, at one point, he owned 8 dental practices, but didn't work in either one, he just partnered up with other dentists to work in them. I know of him cause my sister was an assistant at one of the offices before getting into dental school.

 

[Msmouth]

Can I ask how many doctors are in the two practices you mentioned above? How many RDH's? Rural, suburban, urban? FFS/PPO/medicaid? Thanks

Both are in the NJ suburbs.
My main office is 2 doctors, they are both gen'l dentists (one owner, one employee). The owner works his ass off and does a lot of ortho (some invisalign but mostly regular ortho) and most of his own RCTs and surgery.
The other (same age) does mostly general dentistry. They both work about 4 days/week and we do 1 or 2 saturdays/month during the school year.
They have double hygiene every day, 3 assistants, office manager, 1.5 front desk and a part-time bookkeeper.

I don't know a lot about the office I temped in but it's a 2 dentist practice and very high end. It was one of the most beautiful offices I've seen thus far. The RDH told me it's usually triple hygiene on Saturdays and double during the week.
They wanted me to give the patients a hot towelette after their cleaning. I felt really silly offering this to each and every patient, especially the men. They also wanted me to fill out a slip with various points of information about each patient for the doctor before he would come in for the exam. I thought this was over-kill and half the time he just glanced at it and came in without reading it. Thanks for the waste of my time!

 

[barbrafd1982]

It depend on which place you have open your clinic or hospital, if it's in a crowded city area than most probably they can earn a lot of money. I know a dentist who earns 100,000k$ per month, he is just running a clinic..
dentist torrance

 

[Daurang]

Here's the '2010 overhead analysis' of 500+ dental offices in the Northeast I just received from two large cpa firms:

DENTIST: $gross/$net/overhead
-------------------------------------------------
general: 836k/308k/66%
endo: 698k/373k/46%
pedo: 1.15M/549k/57%
perio: 970k/403k/59%
os: 1.39M/829k/40%
ortho: 972k/458k/57%

The top solo general dentist in the survey grossed $4.02M with $1.59M net or 60% overhead. There's quite a few practices with 80% overhead, and one with 32% overhead.

 

[PharmaTope]

The overhead is the killer.
Dentists can 'bring in' alot of money, but their take home salary is significantly less.
Insurance, assitants, consumables, practice up keep...it adds up.
Not to mention in some cases a pretty high rent.

true. also, it is a matter of being in the right place at the right time. the guys you hear making tons and tons of money were guys in the right place right time years ago that were able to establish practices, buy real estate, hire people under them, and expand. this is not very likely today in this economy.

 

[Sublimazing]

Here's the '2010 overhead analysis' of 500+ dental offices in the Northeast I just received from two large cpa firms:

DENTIST: $gross/$net/overhead
-------------------------------------------------
general: 836k/308k/66%
endo: 698k/373k/46%
pedo: 1.15M/549k/57%
perio: 970k/403k/59%
os: 1.39M/829k/60%
ortho: 972k/458k/57%

The top solo general dentist in the survey grossed $4.02M with $1.59M net or 60% overhead. There's quite a few practices with 80% overhead, and one with 32% overhead.

Wow, pedo! And 80% overhead is absolutely crazy... You are doing something terribly wrong if your overhead is that high

I would like to see a breakdown of the OS overhead...is that mostly employee wages?

 

[Firm]

Please keep in mind these are earnings for 1 year and not salary. There really is no such thing as salary when you own a business. You can earn $600,000 one year and lose $200,000 because of the economy, competition or both.
Also, high overhead is very common with start up offices. Don't think that you are going to open your office and have money coming in day one. 80% overhead is actually pretty good for a start up. I've seen 100-150% overhead before.

 

[stevesteve121]

Here's the '2010 overhead analysis' of 500+ dental offices in the Northeast I just received from two large cpa firms:

DENTIST: $gross/$net/overhead
-------------------------------------------------
general: 836k/308k/66%
endo: 698k/373k/46%
pedo: 1.15M/549k/57%
perio: 970k/403k/59%
os: 1.39M/829k/60%
ortho: 972k/458k/57%

The top solo general dentist in the survey grossed $4.02M with $1.59M net or 60% overhead. There's quite a few practices with 80% overhead, and one with 32% overhead.

jesus F'ing christ. single GP producing $4mil /year ? how?

also are these figures for each clinic overall or from the (single) owners perspective? ie. if you got 2 pedo's in one office is that figure divided by 2 more or less?

 

[tingting]

Here's the '2010 overhead analysis' of 500+ dental offices in the Northeast I just received from two large cpa firms:

DENTIST: $gross/$net/overhead
-------------------------------------------------
general: 836k/308k/66%
endo: 698k/373k/46%
pedo: 1.15M/549k/57%
perio: 970k/403k/59%
os: 1.39M/829k/60%
ortho: 972k/458k/57%

The top solo general dentist in the survey grossed $4.02M with $1.59M net or 60% overhead. There's quite a few practices with 80% overhead, and one with 32% overhead.

The math isn't correct. For example OS 60% overhead leaves $556k net, and some of the others are wrong too.

 

[jay47]

These can't be solo practices, I have a hard time believing the *average* GP is producing $836k.

Also the math isn't correct. For example OS 60% overhead leaves $556k net, and some of the others are wrong too.

Let me tell you guys from personal experience, dental office income is HIGHLY HIGHLY VARIABLE. It is dependent on the dentist, the office and what type of place they want to run. Think of a small 3 operatory dental office with 2 chairs and 1 hygienist. He/she may make $400K a year and take home $180 (55% overhead). Look at another office with 10 chairs, 2 dentists, and 3-4 hygienists apiece. That practice will produce $1.5 million, with $600K overhead, leaving $450,000 for each dentist. The dentists will take home more than double or triple the previous, and as a general rule, the more production you have, the less your overhead because certain costs are fixed (like staff salary, rent, electricity, etc..).

A big word of advice to all predents is think of the type of people that will be running a dental office. What sort of business acumen do most science majors have? Hardly any, so many offices are very inefficiently run simply because the doc doesn't want to manage costs and staff, because it is a major hassle.

 

[Daurang]

These can't be solo practices, I have a hard time believing the *average* GP is producing $836k.

Also the math isn't correct. For example OS 60% overhead leaves $556k net, and some of the others are wrong too.

You are right but it's due to my typo mistake. OS overhead is 40%, not 60%...thus a profit of $836k net is correct.

I know plenty of solo GP that produced $836k average so yes it it believable; $308K net isn't really that impressive so yes it is believable. I see on the graph quite few offices that produced $1M-$1.7M and two that only collected $200k.

 

[bigbadaboom]

Wal-Mart already has some medical clinics in it. They are staffed by nurse practioners and PA's and have a physician on call should the situation warrant it. They are charge a flat fee of 30 dollars to be seen so you don't need insurance. They are not widespread at the moment and are located in only a few Wal-Marts. I never thought I would see that happen but if it can happen to physicians, it's only a matter of time before some dentist sells out and decides to open his practice in a Wal-Mart with a shingle offerring free clearnings for first time patients. It happened to chiropractors, optometrists and pharmacists. You see dentists practicing in some malls. It's only a matter of time before one of these guys opens up in your neighborhood Wal-Mart and Sams Club!

yup. and when the mid-level provider, aka "dental therapist" start to come out of schools they will be hired up by these types of clinics to do cleanings, fillings, extractions, and even dentures. Why would these clinics hire DDS? just hire these mid level providers and put all the new DDS grads out of work!

the mid level provider bill just got passed in California. As if California new grads don't already have hard time finding work and have to move out of state.

just be a hygienist in California. they average 400+/day with benefit without the responsibility and headache, and doesn't take as long as dental school.

 

[Cold Front]

Here's the '2010 overhead analysis' of 500+ dental offices in the Northeast I just received from two large cpa firms:

DENTIST: $gross/$net/overhead
-------------------------------------------------
general: 836k/308k/66%
endo: 698k/373k/46%
pedo: 1.15M/549k/57%
perio: 970k/403k/59%
os: 1.39M/829k/40%
ortho: 972k/458k/57%

The top solo general dentist in the survey grossed $4.02M with $1.59M net or 60% overhead. There's quite a few practices with 80% overhead, and one with 32% overhead.

I guess somethings which are not mentioned in this data are:

1. Northeast has one of the highest fee schedules (if not the highest) in the country.
2. Northeast is also home to a much more established and senior dentists, it's very difficult for a young dentist to enter that market and open a practice and still hit those numbers (for most places).
3. The overhead in the Northeast is not a good representative of the rest of the country, not to mention higher payrolls and property related costs. All those numbers are significantly lower in the Midwest or almost anywhere else for that matter.

Good info. 👍

 

[ortho lurker]

Here's the '2010 overhead analysis' of 500+ dental offices in the Northeast I just received from two large cpa firms:

DENTIST: $gross/$net/overhead
-------------------------------------------------
general: 836k/308k/66%
endo: 698k/373k/46%
pedo: 1.15M/549k/57%
perio: 970k/403k/59%
os: 1.39M/829k/40%
ortho: 972k/458k/57%

The top solo general dentist in the survey grossed $4.02M with $1.59M net or 60% overhead. There's quite a few practices with 80% overhead, and one with 32% overhead.

The numbers may be skewed because a new dentist starting up will most likely not be able to afford the higher monthly fees from a large cpa firm. When the $ starts rolling in is when it would be advantageous to pay more for an accountant with more expertise to save you more tax dollars. Comparing established practices (with years and years and years of goodwill) to a new grad getting out or to a new practitioner 1 year into their practice is like comparing apples to oranges, Rome was not built in 1 day or 1 year for that matter!!!

 

[yappy]

What you see occuring in walmart is how executives think. They view others as expensive bodies needed to generate revenue and have no respect for any profession but their own. They then build a large coperate infrastructure with inflated salaries + bonus that push down the quality of a good and shift the wealth from the producer to the managers/executives. They represent a tax on every hard working person who produces something valuable.

Spread the word & never work for one!

yup. and when the mid-level provider, aka "dental therapist" start to come out of schools they will be hired up by these types of clinics to do cleanings, fillings, extractions, and even dentures. Why would these clinics hire DDS? just hire these mid level providers and put all the new DDS grads out of work!

the mid level provider bill just got passed in California. As if California new grads don't already have hard time finding work and have to move out of state.

just be a hygienist in California. they average 400+/day with benefit without the responsibility and headache, and doesn't take as long as dental school.

 

[makeitrain6969]

This is a very informative thread..

 

[Daurang]

The numbers may be skewed because a new dentist starting up will most likely not be able to afford the higher monthly fees from a large cpa firm. When the $ starts rolling in is when it would be advantageous to pay more for an accountant with more expertise to save you more tax dollars. Comparing established practices (with years and years and years of goodwill) to a new grad getting out or to a new practitioner 1 year into their practice is like comparing apples to oranges, Rome was not built in 1 day or 1 year for that matter!!!

Yes I'm sure the data is skewed toward more profitable office. Newer smaller office will tend to do their own payroll and even their own taxes. I did my own payroll for a few years but then got tired of Quickbook jacking up their prices and forcing expensive mandaroty software upgrades every two years.

 

[DrDDSman]

Yes I'm sure the data is skewed toward more profitable office. Newer smaller office will tend to do their own payroll and even their own taxes. I did my own payroll for a few years but then got tired of Quickbook jacking up their prices and forcing expensive mandaroty software upgrades every two years.

Out of curiosity, how much do accounting services run for per year for dental ofices? Would experienced dentists recommend leaving it to the pros or is it manageable doing it on your own?

 

[stevesteve121]

Here's the '2010 overhead analysis' of 500+ dental offices in the Northeast I just received from two large cpa firms:

DENTIST: $gross/$net/overhead
-------------------------------------------------
general: 836k/308k/66%
endo: 698k/373k/46%
pedo: 1.15M/549k/57%
perio: 970k/403k/59%
os: 1.39M/829k/40%
ortho: 972k/458k/57%

The top solo general dentist in the survey grossed $4.02M with $1.59M net or 60% overhead. There's quite a few practices with 80% overhead, and one with 32% overhead.

posted this Q above but just gonna bump it.

Are these figures for the owner (single) dentist? or for the entire clinic overall (aggregate of possibly more than one dentist)?

are these figures for what the owner of the clinic is getting?

 

[ortho lurker]

Out of curiosity, how much do accounting services run for per year for dental ofices? Would experienced dentists recommend leaving it to the pros or is it manageable doing it on your own?

Leave it to the pros, one less big headache for you.

 

[Daurang]

posted this Q above but just gonna bump it.

Are these figures for the owner (single) dentist? or for the entire clinic overall (aggregate of possibly more than one dentist)? are these figures for what the owner of the clinic is getting?

The data simply say it's the average for 500+ practice. I guess that means the entire clinic overall; and may include extra dentist or a part-time dentist. A vast majority of gp practice on the graph are grossing and evenly distributed between $500k-$900k. I'm sure the net is what's left for the owner. .

Payroll is $600 per year. Accounting and tax prep is $1800. Many office I know do payroll themselves, but it's simply not worth my time with having to pay to buy/upgrade software every two years and then paying annual subscription.

 

[andyO4you]

we keep talking about overhead .... A great business owner vs a regular one ( lets take for example the business is the same just two different types of management)

one has an overhead of 50% and another one at 80%., overhead makes sense talking about if those two people have the same customer base. The person at 50% manage better, knows how to keep employees working whats necessary, buys products from cheaper places, etc.. But, you cant compare an office that has 1000 clients vs another clinic that has 4000 clients... They may have the same rent, same equipment types and even almost the same number of employees ... the difference is the area! and also they may manage about the same thing. We keep talking about overhead as something that has to do with management alone, actually is just how good is business, location, employees... There are some things that one cant change to save money like paying someone a lot less than they deserve.


Any business making positive at the end of the month is good. No one ask whats the overhead of walmart... yes some make more money than others, mostly are run the same way, and most are never out of stock.. does the overhead differs from other walmart's? yes a lot, but is just the location not how they run it or if they are bad at managing because they have years doing the same thing. Dental offices are the same thing... if business is extremelly well overhead will be very low, lets say 10% ...the same owner of that clinic opens another one in a different place they may have an overhead of 90% are they bad a running the place? nope is just business in that area...

 

[Frank22]

I was reading the thread about how some dentists were making $1.5 million or close to number.
http://forums.studentdoctor.net/showthread.php?t=238102

I was wondering how this works out since the base salary of dentists in the United States is:

25th%ile Median 75th%ile
$99,257 $117,251 $146,981

I totally understand how the dentists manage to make salaries that are in the upper 6 figures and up, but then how are these numbers possible?

A well run solo practice should have an overhead between 50% to 55%. Group practices tend to have higher a higher overhead, and yes, the increased production doesn't entirely negate the increase in fixed overhead due to larger staff size.

As a general rule, there are two ways to increase production: increase the number of patients while maintaining the same production per patient, or increase the production per patient while maintaining the patient base size.

Increasing the patient base results in a higher production (if managed properly), but also an increase in overhead. In other words, net income increases but the profit margin decreases. On the other hand, an increase in production per patient results in an increase in production without an increase in patient size and thus lower overhead and a higher profit margin.

EDIT:

Let's say the dentist has 98% collections and 60% to 65% overhead, for the dentist to net $1.5-M:

$1,500,000/(35/100)/(98/100) = $4,373,178
$1,500,000/(40/100)/(98/100) = $3,826,531

If the dentist is producing $600 per patient, than they would need the following number of patients:

$4,373,178/$600 = 7289 active patients
$3,826,531/$600 = 6378 active patients

A dental practice with around 7,000 active patients would be considered extremely large, and most dentists don't have the management ability to maintain a production of $600 per active patient at such a large scale, so it would be rather improbable for most doctors with a single practice, although certainly reasonable for a dentist with multiple, thriving office locations or a successful cosmetics only practice. A successful entrepreneurial dentist that has what it takes to be both a businessman and a clinician can reasonably expect to take home $500,000 to $1,000,000. Making over one million from dentistry alone is not unheard of, but uncommon.

 

[Cold Front]

Here are the "Basics" from the real world (at least my part of the wold):

1. Collection of 98% is like having 4.0 GPA in school, it's very difficult to attain. On average, it's in the high 80%, so if office grosses $1M, office will collect $850-870k. Insurances are notorious for denying claims after they approve it, some patients will not be able to pay off their balances, credit card payments will cost you Upto 3% upfront fee (American Express is famous for this), etc.

2. Overhead is based on the collection, and on average in the low 60% (meaning there are some offices with 70% and some in the 50%, lower overheads require more effort to attain). So if you collect $850k that year, you would collect about $500k.

3. Additional write offs to lower taxes can be another $100k, adjusting the income down to about $400k.

4. At this level of income, you are already in the current highest income tax bracket, 35%, which is expected to rise to at least 37% after the fiscal cliff is resolved in the coming weeks. So you will end up with about $250k for the year on your tax return from your $1M gross income.

5. Most doctors who produce $1M a year at their office are at the peak of their profession, and are in their 40's. They have high personal expenses; couple of mortgages, family with kids, couple of cars, just about everything else to keep up with their affluent community they live in. The overhead for the $250k take home is maybe 60-70%. Maybe leaving $50k savings for the year.

6. So basically, a doctor worked so hard to save less than $100k from their $1M gross, that's close to the reality from the people I know. You can save more, but again - requires more effort.

A well run solo practice should have an overhead between 50% to 55%. Group practices tend to have higher a higher overhead, and yes, the increased production doesn't entirely negate the increase in fixed overhead due to larger staff size.

As a general rule, there are two ways to increase production: increase the number of patients while maintaining the same production per patient, or increase the production per patient while maintaining the patient base size.

Increasing the patient base results in a higher production (if managed properly), but also an increase in overhead. In other words, net income increases but the profit margin decreases. On the other hand, an increase in production per patient results in an increase in production without an increase in patient size and thus lower overhead and a higher profit margin.

EDIT:

Let's say the dentist has 98% collections and 60% to 65% overhead, for the dentist to net $1.5-M:

$1,500,000/(35/100)/(98/100) = $4,373,178
$1,500,000/(40/100)/(98/100) = $3,826,531

If the dentist is producing $600 per patient, than they would need the following number of patients:

$4,373,178/$600 = 7289 active patients
$3,826,531/$600 = 6378 active patients

A dental practice with around 7,000 active patients would be considered extremely large, and most dentists don't have the management ability to maintain a production of $600 per active patient at such a large scale, so it would be rather improbable for most doctors with a single practice, although certainly reasonable for a dentist with multiple, thriving office locations or a successful cosmetics only practice. A successful entrepreneurial dentist that has what it takes to be both a businessman and a clinician can reasonably expect to take home $500,000 to $1,000,000. Making over one million from dentistry alone is not unheard of, but uncommon.

 

[suarez 7]

4. At this level of income, you are already in the current highest income tax bracket, 35%, which is expected to rise to at least 37% after the fiscal cliff is resolved in the coming weeks. So you will end up with about $250k for the year on your tax return from your $1M gross income.

5. Most doctors who produce $1M a year at their office are at the peak of their profession, and are in their 40's. They have high personal expenses; couple of mortgages, family with kids, couple of cars, just about everything else to keep up with their affluent community they live in. The overhead for the $250k take home is maybe 60-70%. Maybe leaving $50k savings for the year.

6. So basically, a doctor worked so hard to save less than $100k from their $1M gross, that's close to the reality from the people I know. You can save more, but again - requires more effort.

That's it??? I find it laughable that a $250k NET salary will leave you just $50k left in the bank. If you own a 400k home in an area with okay tax rates, 2 cars, kids, etc. it should not take you 200k to manage all of that, otherwise that is poor money management. Unless of course that dentist owns a $1mil home, wines and dines every weekend, goes and splurges during his vacations, has 2 house maids, shops at Neiman Marcus, then yes that would be expected..

 

[little Buddy]

Did anyone stop to think that they may have more than one office to generate a 1.5 mil paycheck. Doesn't the average office generate 90K a month anyways?

 

[Cold Front]

That's it??? I find it laughable that a $250k NET salary will leave you just $50k left in the bank. If you own a 400k home in an area with okay tax rates, 2 cars, kids, etc. it should not take you 200k to manage all of that, otherwise that is poor money management. Unless of course that dentist owns a $1mil home, wines and dines every weekend, goes and splurges during his vacations, has 2 house maids, shops at Neiman Marcus, then yes that would be expected..

Well, it depends on where you live in the country, and the lifestyle you live in. It's easty to think you won't spend that much from a student perspective, but you will see how this plays out when you are in those shoes.

Typical expenses for someone who takes home $250k a year ($20k a month) will surprise you.

1. $300-400k home will mean you pay about $2-3k a month of mortgage, interest, taxes, community fees, and home insurance payments. With Utilities, this number will easily be at $3k.
2. Couple of cars (depends on the type) can easily add up to $1k a month for their financing, insurances and gas expenses. So you already at $4k a month including your home.
3. Huge school loan repayments are now the norm for anyone who graduated the last 5 years, $1.5-2k a month. You are now at about $6k a month so far.
4. If you have kids, at least 2, will easily cost you $2k a month for their expenses. The average kid in this country needs a $1k a month through the age of 18. If you don't have kids/not married, then you don't have this expense, but most do.
5. Your own personal expenses, from grocery shopping to your cell phone to your gym membership, to anything you do with friends, or weekend getaways with a partner can leave you $2k a month, probably more if you are more social. You are now about $8k for the month.
6. Funds for your annual vacations, family even more. Holidays related expenses, etc. Maybe save $500-1k a month.
7. Your retirement contributions? Maybe $1k a month. You already arrived $10k for the month at this point.
8. What if you have alimony? What if you have a serious medical condotion that requires significant medical cost? What if your business goes through a set back for few months and need emergency funds to sustain your life? What if you have couple of pets on top of 2 children family? What if you gamble and you hit local casino or lose bets at your local poker joint? What if you don't produce as much consistently next couple of years out of lack of drive or motivation to enjoy dentistry as you grow older? What if you live in a neighborhood that taxes more for better schools and safer neighborhood? We didn't even mention 2nd mortgage and related expenses, which many people have. Life throws curve balls all the time. You better have more fuel in the tank to stand up to these issues, you can't live from paycheck to paycheck for items 1 to 7.

 

[Frank22]

.

 

[budda10000]

they mean grossing 1.5 mil./year . . . . most dentists have an overhead somewhere around 70%, so do the math or just read the thread 👍

This reply comes a bit late but im tired of seeing thread after thread of people MANGLING accounting lingo.
So for educational purposes:
REVENUES=total payments received
Gross income=Total revenues-Total cost
NET income=gross income-taxes.

the 1.5 million quoted is REVENUES, the incomes generally reported are GROSS
In order to get a very very crude estimate of net income you can use the IRS tax brackets but remember that most dentists are going to be fairly clever about maximizing deductions thus driving down actual taxes paid.
So Pre-dents, while your piling on all these science classes maybe take the time to enroll in basic accounting and business classes while you still have time😉.

 

[Bereno]

This reply comes a bit late but im tired of seeing thread after thread of people MANGLING accounting lingo.
So for educational purposes:
REVENUES=total payments received
Gross income=Total revenues-Total cost
NET income=gross income-taxes.

the 1.5 million quoted is REVENUES, the incomes generally reported are GROSS
In order to get a very very crude estimate of net income you can use the IRS tax brackets but remember that most dentists are going to be fairly clever about maximizing deductions thus driving down actual taxes paid.
So Pre-dents, while your piling on all these science classes maybe take the time to enroll in basic accounting and business classes while you still have time😉.

I've learned to just interpret what people are trying to say in accounting-speak due to this mangling lol

 

[Frank22]

A straightforward answer: yes, you can make good money in dentistry. In fact, you can make a LOT of money in dentistry... But it's never a given; you have to be successful. There's more to life than money; take plenty of vacations a year, cut down on work days and hours, retire, travel the world, spend stupid money, etc. all in all just enjoy life.

 

[Silent Cool]

Here's the '2010 overhead analysis' of 500+ dental offices in the Northeast I just received from two large cpa firms:

DENTIST: $gross/$net/overhead
-------------------------------------------------
general: 836k/308k/66%
endo: 698k/373k/46%
pedo: 1.15M/549k/57%
perio: 970k/403k/59%
os: 1.39M/829k/40%
ortho: 972k/458k/57%

The top solo general dentist in the survey grossed $4.02M with $1.59M net or 60% overhead. There's quite a few practices with 80% overhead, and one with 32% overhead.

These must be doubule-doctor offices. The numbers I saw last for general were about
175K and more like 250K for ortho.

 

[Daurang]

These must be doubule-doctor offices. The numbers I saw last for general were about
175K and more like 250K for ortho.

The numbers you thought you saw are way too low. To make it worthy the trouble of getting your degrees and headache of running your business, the number needs to be significantly higher. A government plum job is a lot more lucrative if all you make is $175K.

 

[yappy]

edit

 

[pinipig523]

Here's the '2010 overhead analysis' of 500+ dental offices in the Northeast I just received from two large cpa firms:

DENTIST: $gross/$net/overhead
-------------------------------------------------
general: 836k/308k/66%
endo: 698k/373k/46%
pedo: 1.15M/549k/57%
perio: 970k/403k/59%
os: 1.39M/829k/40%
ortho: 972k/458k/57%

The top solo general dentist in the survey grossed $4.02M with $1.59M net or 60% overhead. There's quite a few practices with 80% overhead, and one with 32% overhead.

Geez... you guys are banking. 😱

 

[mike3kgt]

Here are the "Basics" from the real world (at least my part of the wold):


5. Most doctors who produce $1M a year at their office are at the peak of their profession, and are in their 40's. They have high personal expenses; couple of mortgages, family with kids, couple of cars, just about everything else to keep up with their affluent community they live in. The overhead for the $250k take home is maybe 60-70%. Maybe leaving $50k savings for the year.

This is very important for the students on this forum to appreciate. Most students I know are banking on at least 150k their first year out just to pay the loans and basic bills. Or they are coming onto these forums to justify their decisions to go into dentistry or feel better about big amounts of loans.

Regardless, I know plenty of docs who are making way more than what people on this forum are reporting. Some work like absolute dogs, some work relaxed... it all depends on where you are, the market forces, and your perceptive on life (including "how much do I need[want]").

Take home: bank on making 100k your first year out with upwards mobility of 180-225k a year. If you work hard, you can make more than that, guaranteed. But remember, there's always a cost (time with family, time on vacations, your back/hands/shoulders) to make big production numbers.

 

[Arijos0222]

It doesn't matter how much dentist make.

They make enough to live comfortably and happily, and if you want to become rich, become a dentist and use the money to invest and then get rich off your investments.

You can make a million dollars a year, but you technically still aren't a millionaire.

A millionaire is someone who's Net Worth is a million dollars or more. Not how much they make a year. You can make a million a year and still have a net worth of 500K.

Apparently a good percentage of millionaires, are accountants or lawyers, from accruing wealth over a period of time.

Time is money, getting out at 25 and investing is better than maybe being an OMFS, getting out in your 30's and and start paying off the debt then when interest has accumulated and you've lost 5 years of potential earnings and investment opportunities.

My uncle is a dentist and talking to him, he has a net worth of approximately 6 million, after owning a couple of restaurants, hair salons, and 4 subways, and having a salary of about 200,000 working only 3 days a week from his dental practice.

He lives in a modest home and drives a newly acquired Mercedes C-Class (he is 41 years old, and he had been driving the same honda accord since he graduated dental school)

Totally different from my dad who is a surgeon and makes probably twice as much as my uncle makes, but has no time to invest and let interest grow within his Roth IRA because he had started putting money in the account at a fairly late age (34)

However we have a big house and a couple of nice cars, but god forbid something happen to my dad's hands... How long could we sustain ourselves? Maybe 2 or 3 years, where i'm sure my uncle with his passive income could support his family for maybe 20 years without working.

Also, the dentist has money saved specifically to pay off his children's college education in cash. Even though my father makes twice as much as he does, time isn't on his side, and a good portion of that money is going towards still paying off his medical school debt.

Your choice....

Have a good day!

 

[Cold Front]

It doesn't matter how much dentist make.

They make enough to live comfortably and happily, and if you want to become rich, become a dentist and use the money to invest and then get rich off your investments.

You can make a million dollars a year, but you technically still aren't a millionaire.

A millionaire is someone who's Net Worth is a million dollars or more. Not how much they make a year. You can make a million a year and still have a net worth of 500K.

Apparently a good percentage of millionaires, are accountants or lawyers, from accruing wealth over a period of time.

Time is money, getting out at 25 and investing is better than maybe being an OMFS, getting out in your 30's and and start paying off the debt then when interest has accumulated and you've lost 5 years of potential earnings and investment opportunities.

My uncle is a dentist and talking to him, he has a net worth of approximately 6 million, after owning a couple of restaurants, hair salons, and 4 subways, and having a salary of about 200,000 working only 3 days a week from his dental practice.

He lives in a modest home and drives a newly acquired Mercedes C-Class (he is 41 years old, and he had been driving the same honda accord since he graduated dental school)

Totally different from my dad who is a surgeon and makes probably twice as much as my uncle makes, but has no time to invest and let interest grow within his Roth IRA because he had started putting money in the account at a fairly late age (34)

However we have a big house and a couple of nice cars, but god forbid something happen to my dad's hands... How long could we sustain ourselves? Maybe 2 or 3 years, where i'm sure my uncle with his passive income could support his family for maybe 20 years without working.

Also, the dentist has money saved specifically to pay off his children's college education in cash. Even though my father makes twice as much as he does, time isn't on his side, and a good portion of that money is going towards still paying off his medical school debt.

Your choice....

Have a good day!

First of all... your uncle did well to attain $6M net worth at age 41, but if this is based on the value of the couple of restaurants, hair salons, and 4 subways (which are all valued based on their year to year performances), I would probably not take that route to get to $6M. Restaurant business is a big headache, and being a franchisee is even bigger headache, and it doesn't totally make you have full control of your business, franchiser has a lot of influence on what exactly happens at those locations, as you already know.

My route to $6M assets would be real estate, a good junk of millionaires in this country are people (like your uncle) who live well under their means, and have tangible assets (actual assets, not wall street based).

I'm personally negotiating a deal with my landlord to buy the building my office is in for $2M, which includes 4 other tenants (national restaurants) in the building. The building has a strong cash flow, and will pay itself, plus generate additional income on the side for me. This is partially to do with the current historic low interest rates banks are offering, other incentives the government and local cities are offering, SBA preferred banks who will also make the deal sweeter if you are owner-occupied.

I'm in my early 30's, and hope to pay this building off within 20 years. Once the building is paid off at 100% off, I'm hoping the building will appreciate maybe another $1M by years 15-20, I can refinance the building and withdraw the full value (say $3M) at 0% tax. There is no tax for the refinancing, so in this hypothetical example, the $3M will not be taxed. What's to stop me from doing the same deal 5 years from now on another building (I would still be in my 30's) and create a $6M assets eventually? Keep in mind, other assets are not included; home, dental offices, SEP IRA, etc.

Again, great post. 👍

 

[Ferneezy]

^^^ update your practice thread please

 

[little Buddy]

It doesn't matter how much dentist make.

They make enough to live comfortably and happily, and if you want to become rich, become a dentist and use the money to invest and then get rich off your investments.

You can make a million dollars a year, but you technically still aren't a millionaire.

A millionaire is someone who's Net Worth is a million dollars or more. Not how much they make a year. You can make a million a year and still have a net worth of 500K.

Apparently a good percentage of millionaires, are accountants or lawyers, from accruing wealth over a period of time.

Time is money, getting out at 25 and investing is better than maybe being an OMFS, getting out in your 30's and and start paying off the debt then when interest has accumulated and you've lost 5 years of potential earnings and investment opportunities.

My uncle is a dentist and talking to him, he has a net worth of approximately 6 million, after owning a couple of restaurants, hair salons, and 4 subways, and having a salary of about 200,000 working only 3 days a week from his dental practice.

He lives in a modest home and drives a newly acquired Mercedes C-Class (he is 41 years old, and he had been driving the same honda accord since he graduated dental school)

Totally different from my dad who is a surgeon and makes probably twice as much as my uncle makes, but has no time to invest and let interest grow within his Roth IRA because he had started putting money in the account at a fairly late age (34)

However we have a big house and a couple of nice cars, but god forbid something happen to my dad's hands... How long could we sustain ourselves? Maybe 2 or 3 years, where i'm sure my uncle with his passive income could support his family for maybe 20 years without working.

Also, the dentist has money saved specifically to pay off his children's college education in cash. Even though my father makes twice as much as he does, time isn't on his side, and a good portion of that money is going towards still paying off his medical school debt.

Your choice....

Have a good day!

I feel like I'm reading Robert Kiyosaki lol.