Help verifying figures on Income Statement for dental practice?

[Jared_gibbs]

Hello, I'm new here.

I'm trying to get a feel for the finances of a practice.

I understand that these figures will be quite subjective; I would like some advice on whether or not I'm in the ball park. (see attached excel sheet)

I've researched for hours before making this post and have lurked for a few months. I've put together an income statement for a theoretical dental practice so I know what to expect. I could use some input on some of the figures I've found. I'm a former general manager for a restaurant; some of my assumptions come from that experience.

I would love to live in Portland Oregon and open a practice there someday. I've done my best to match my figures to that area (building lease/salaries).

Dental supplies: about $8k/operatory?
http://dentalclinicmanual.com/chapt2/1_1.html

Special considerations for utilities? My restaurant ran about $1k/month.

Lab fees 10% of revenue? I suppose that depends on how many crowns are placed. Perhaps I should break down my revenue calculations per procedure; some advice there would be helpful.
http://smallbusiness.chron.com/average-expenses-dentists-47536.html

Equipment lease: I think the best career path for me after graduating would be to pursue employment as an associate to a DDS planning to sell soon. I'd assume a 65+ year old DDS may or may not have the best of equipment... I'm really throwing out a number of $100k-ish for purchasing new equipment? Principle x 10% APR over 5 years = $25k/year ($2k/month).
http://dentalclinicmanual.com/chapt2/1_1.html
(Half of his "large equipment" budget. Hopefully old DDS will have some salvageable gear...)

Building lease: the practices I found on Portland Craigslist seemed unrealistically low - I found one claiming to be located within a 5 mile radius of 250K people for only $3k/month? My restaurant pad on the busiest street of a 50K population Idahoan town ran more like $7k/month, and that was competitive. I've gone ahead and assumed that figure as the revenue of my restaurant and dental practice are similar - that income potential seems to correlate strongly with lease prices.

$12k/month for scrubs only because I want to hire somebody to have those laundered and maintained for myself and the staff.

I'm having a hard time figuring out the revenue section, and I suppose there is no way of projecting what patient will need what procedure and that seems to make a huge difference. (Section at the top right of the spreadsheet breaks down # patients x avg $ x days of operation/year) Again I should probably break this down into separate procedures. At the moment it is a very rough 8 patients per day (4 - me, 4 to RDH) at an average of $500/patient. Dropping it to $400/patient leaves me a bite-size net income (salary) of $32k/year. My salary needs may be as high as $110k/year (student loan payment could be $80k/year, I'd like at LEAST $30k/year to live on!)

Did I leave out anything significant?

Lengthy post - thank you to anybody that made it this far and for any advice!

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[Daurang]

Why are you only seeing 8 patients a day? If you're seeing only 8 patients a day, you most likely don't need a hygientist. $12k a month for scrub is crazy high; should be more toward zero. Your net salary is too low and should eventually net at least $200k. Getting rid of your hygienist and scrub bill will increase your salary and reduce your overhead drastically.

 

[Cold Front]

Biggest red flag. 8 patients a day. Unless you are doing major cases on all 4 dentist patients, it's a dead end.

How do you plan on living $30k a year? Are you living with parents? Are you walking to work? Are you cooking your own food all the time? Are you avoiding going out on weekends and other trips the entire year?

The U.S. Proverty guideline for four-person family with two adults and two children is poor with annual cash income below $23,283; the threshold for a four-person family with a single parent and three children is $23,364. So $30k a year is not going to work, unless you accept the lifestyle that comes with it.

As for the practice: Come with a better plan or leave in defeat.

 

[THS]

$12k/month for scrubs only because I want to hire somebody to have those laundered and maintained for myself and the staff.

If my scrub budget ever exceeds my take-home pay, I'm giving up.

The average dentist produces around $350 per hour, (though 500 is certainly possible) at 60% overhead. Use that as a guideline. If your numbers are far from that, very carefully analyze your calculations. If you're a member of the ADA, you can download their "Gross Billings" report to show average production, overhead, etc.

 

[OhioDMD]

To give you some actual numbers to play with I have attached my 2010 Profit and Loss. At that time I was a solo practitioner
working 4 days a week, approx 48 weeks a year. I have no mortgage on my office hence the low rent & rental amount (5 op).
On the revenue side my hygienists averaged $103 per pt visit and about 265 ppv for me. I have a mature bread and butter, blue collar general family paractice in a small city. From what I gather my numbers are fairly representative in terms of revenue and percentages in my area also my salaries are competitive for my area of the country. Also note that revenue is what is collected not what is produced although my production and collections generally run 97+% annually.