Opening a new “Dental Practice” days are numbered.

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Cold Front

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A lot of people in the dental industry are planning a slow down for dental services this year and in 2021.

This is not a good news for most dentists who want to build a practice from scratch in the next couple of years:

A. The covid19 employment factor: A large number of dentists are currently unemployed and will continue to be unemployed if their employers can’t keep them busy in the coming months, specially for elective cases. A vaccine will eventually help bring this prolonged uncertainty to an end, but the earliest vaccine is scheduled to come online in mid-2021.

B. The credit tightening factor: Lenders have already restricted “new practice” loans to dentists with high student loans, and the current economic climate is making banks be even more cautious about lending in general (mortgages, credit cards, etc), including dentists. If anything, the bar for a practice loan will be higher for a while.

C. The employer sponsored dental insurance market is expected to contract due to companies re-assessing benefits to their employees, and/or many employees choosing to forego dental insurance during a recessionary economy. This will effect the # of new patients in saturated markets and it will be very difficult to open a new practice.

What will be the case to open a new practice in the next couple of years or so?

The risk to open a new practice is at an all time high, both for dentists and lenders.


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Pay off debt quickly as possible? That's only the solution unless all dental personnels band together and start pressuring the ADA to do something.
 
Pay off debt quickly as possible? That's only the solution unless all dental personnels band together and start pressuring the ADA to do something.

Most debt, including student loans, are currently deferred by most young dentists (under age 35). When the payments resume, the loan will be re-ammoratized and will create a higher payment schedule. You need high income and more savings to pay off debt, both are currently on pause, and will be for sometime for most dentists.


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Then. what is your case for this problem? I only see DMOs being the future for dentists if things don't change.
 
Then. what is your case for this problem? I only see DMOs being the future for dentists if things don't change.

I was just observing into the horizon and giving my 2 cents on the upcoming and short-term tectonic shift that will change how “new practice” ownership is traditionally considered.

It will take a lot of balls to open a new practice this year or next.


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What about buying an existing practice? Seems like it would be a buyers market no?
 
What about buying an existing practice? Seems like it would be a buyers market no?

From a risk perspective, lenders always preferred existing and established practice financing over a new practice.

Yes, there will be a wave of existing practices for sale in the coming years. More dentists retiring, some practices going under due to economic hardships by covid19, etc. Lenders will focus their strategies on those products.


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Most debt, including student loans, are currently deferred by most young dentists (under age 35). When the payments resume, the loan will be re-ammoratized and will create a higher payment schedule. You need high income and more savings to pay off debt, both are currently on pause, and will be for sometime for most dentists.


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I thought students loan interest is not happening right now? Why will it create higher payments? I thought that they just forgave the interest for these months? They will bring it back? haha a lot of people in crazy debt are about to be PO.
 
I believe there will be more dentists who want to cut losses and sell their practices on discount in the coming months. They will probably offer owner financing for those that cannot secure a traditional bank loan. The buyer’s market is on the horizon.
 
I thought students loan interest is not happening right now? Why will it create higher payments? I thought that they just forgave the interest for these months? They will bring it back? haha a lot of people in crazy debt are about to be PO.

From what I understand... the student loans maturity date won’t change (the deferred 6 months won’t be added to the tail of the loan), so the deferred amount will be spread over the remaining months/years of the loan. Hence the monthly payments going up after the deferral period.


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I believe there will be more dentists who want to cut losses and sell their practices on discount in the coming months. They will probably offer owner financing for those that cannot secure a traditional bank loan. The buyer’s maker is on the horizon.

According to a recent ADA survey, about half of all dental offices are worried if the lockdown/restrictions (and it’s effects) last for another 2-3 months - they may not financially sustain their office. Many will start to cut their losses much sooner. DentalTown forums have few examples of this. People like [mention]TanMan [/mention]and I are already on the lookout for good deals.

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In the case of buying a practice during these times though how would that work in terms of keeping the doors open when you have no traffic? What kind of practice would you be focused on then?
 
In the case of buying a practice during these times though how would that work in terms of keeping the doors open when you have no traffic? What kind of practice would you be focused on then?
For me it'd be a strictly FFS (payment upfront before treatment) bread and butter practice (fillings and extractions aka single tooth dentistry) with minimal staff. I'd only consider the practice that comes with the building though.
 
Here is a story on how many offices in Florida could shutdown if they don’t re-open in the next 2 months - as high as 47% by June.



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I find it interesting that the thread question relates to opening a new practice...from the ground up. I did this 22 years ago. It was the best thing I ever did professionally, and I never looked back...because I went where there was a need.

Most of the posts in response on this thread relate to crushing debt from dental school (and probably college before that).

My friends, you have been sold a pig in a poke.

As alumni, I would urge that you go to you Alma Mater dental school and tell them that you will not give a single alumni cent to them until they lower their tuition at least 30-50 percent. My tuition in the mid-1980s was $1,700 per quarter (about $4,100 today) for four quarters ($16,400 per year), plus about $6,700.00 ($16,000.00 in 2020) in equipment that we had to buy over the 4 years. I still use some of this equipment.

If you are willing to go anywhere to set up a practice, you will do fine. This might mean going to a small town of 2,000-4,000 people. If you want to practice in a big metropolitan area that is "fun" to live in, forget it. But, if you are willing to go to a place that has a need, you will do great. I know of a number of small towns in my regional area that are desperate for dentists. And believe me, you will be a pillar of the community there.

And don't hang your hat on DMOs (dental maintenance organizations). Besides being unethical and immoral, they will drain your soul. I still remember a case from the mid-1990s in which I had a patient who had a buccal space infection from an infected lower first molar, and I had to call the DMO to get coverage for the odontectomy, and the knucklehead bureaucrat that I got on the phone told me that they would only pay if I also removed the adjacent tooth, which had been also treatment-planned for removal by the patient's dentist. In the name of God!
 
I find it interesting that the thread question relates to opening a new practice...from the ground up. I did this 22 years ago. It was the best thing I ever did professionally, and I never looked back...because I went where there was a need.

Most of the posts in response on this thread relate to crushing debt from dental school (and probably college before that).

My friends, you have been sold a pig in a poke.

As alumni, I would urge that you go to you Alma Mater dental school and tell them that you will not give a single alumni cent to them until they lower their tuition at least 30-50 percent. My tuition in the mid-1980s was $1,700 per quarter (about $4,100 today) for four quarters ($16,400 per year), plus about $6,700.00 ($16,000.00 in 2020) in equipment that we had to buy over the 4 years. I still use some of this equipment.

If you are willing to go anywhere to set up a practice, you will do fine. This might mean going to a small town of 2,000-4,000 people. If you want to practice in a big metropolitan area that is "fun" to live in, forget it. But, if you are willing to go to a place that has a need, you will do great. I know of a number of small towns in my regional area that are desperate for dentists. And believe me, you will be a pillar of the community there.

And don't hang your hat on DMOs (dental maintenance organizations). Besides being unethical and immoral, they will drain your soul. I still remember a case from the mid-1990s in which I had a patient who had a buccal space infection from an infected lower first molar, and I had to call the DMO to get coverage for the odontectomy, and the knucklehead bureaucrat that I got on the phone told me that they would only pay if I also removed the adjacent tooth, which had been also treatment-planned for removal by the patient's dentist. In the name of God!

Amen.
 
Agree with OP. Opening a new practice would be very difficult right now and probably in the next couple of years. If I'm in a new dentist shoes and if ....... I graduated with reasonable debt .... my choices would be.

1. as mentioned above. Go rural. I still believe this choice allows for a more traditional dental practice. Most Corps are in heavily populated areas due to the patients they tend to treat. Yes. rural has it's issues also, but it makes economic sense. Funny story. Years ago ... I started a small ortho practice in a GP office in a rural area of Arizona. Patients were actually paying me with Tamales, Burritos, vegetables, etc. My wife (receptionist) was supposed to collect ACTUAL money, but she ended up befriending everybody and well .... I ate Tamales for a month. 😀 .
BTW. There are NO Corp offices in that small, rural town as of today. I'm no longer there since I got tired of the long drive and eatting Tamales.

2. Saturated area. As much as I despise Corps .... they are here to stay and will only get larger. I cannot see this changing. Therefore ... use Corps to your advantage (like @charlestweed). Have a PT job at a Corp. Have a SMALL, LOW OVERHEAD practice elsewhere. Maybe share space with a specialist whose only at the office for a few days (ortho?). I can tell you .... any specialist would LOVE to have a GP to share space with (as long as the GP isn't directly competing with the specialist). It can be done. But you have to go in with the least amount of money.

Yes. It will be difficult. It's always difficult regardless of the current situation, but it can be done. Just don't put all your resources into a single entity. DIVERSIFY your options.
 
Funny story. Years ago ... I started a small ortho practice in a GP office in a rural area of Arizona. Patients were actually paying me with Tamales, Burritos, vegetables, etc. My wife (receptionist) was supposed to collect ACTUAL money, but she ended up befriending everybody and well .... I ate Tamales for a month. 😀 .
BTW. There are NO Corp offices in that small, rural town as of today. I'm no longer there since I got tired of the long drive and eatting Tamales.

If you were kidnapped by the local crime cartel aka competing dental corporation and given the choice to eat Tamales or death, what would you choose? If you chose death, then the cartel would grant it only after you eat a month of Tamales first. I guess there is no winning against the DSO/DMO.
 
Agree with OP. Opening a new practice would be very difficult right now and probably in the next couple of years. If I'm in a new dentist shoes and if ....... I graduated with reasonable debt .... my choices would be.

1. as mentioned above. Go rural. I still believe this choice allows for a more traditional dental practice. Most Corps are in heavily populated areas due to the patients they tend to treat. Yes. rural has it's issues also, but it makes economic sense. Funny story. Years ago ... I started a small ortho practice in a GP office in a rural area of Arizona. Patients were actually paying me with Tamales, Burritos, vegetables, etc. My wife (receptionist) was supposed to collect ACTUAL money, but she ended up befriending everybody and well .... I ate Tamales for a month. 😀 .
BTW. There are NO Corp offices in that small, rural town as of today. I'm no longer there since I got tired of the long drive and eatting Tamales.

2. Saturated area. As much as I despise Corps .... they are here to stay and will only get larger. I cannot see this changing. Therefore ... use Corps to your advantage (like @charlestweed). Have a PT job at a Corp. Have a SMALL, LOW OVERHEAD practice elsewhere. Maybe share space with a specialist whose only at the office for a few days (ortho?). I can tell you .... any specialist would LOVE to have a GP to share space with (as long as the GP isn't directly competing with the specialist). It can be done. But you have to go in with the least amount of money.

Yes. It will be difficult. It's always difficult regardless of the current situation, but it can be done. Just don't put all your resources into a single entity. DIVERSIFY your options.
Don't major corporate offices very rarely post part-time job listings? 99% of corporate GP job listings I've encountered were for full-time positions. I do agree that it's wise to diversify revenue streams through multiple PT jobs.
 
1. as mentioned above. Go rural. I still believe this choice allows for a more traditional dental practice. Most Corps are in heavily populated areas due to the patients they tend to treat. Yes. rural has it's issues also, but it makes economic sense. Funny story. Years ago ... I started a small ortho practice in a GP office in a rural area of Arizona. Patients were actually paying me with Tamales, Burritos, vegetables, etc. My wife (receptionist) was supposed to collect ACTUAL money, but she ended up befriending everybody and well .... I ate Tamales for a month. 😀 .
BTW. There are NO Corp offices in that small, rural town as of today. I'm no longer there since I got tired of the long drive and eatting Tamales.
This is why I can’t live in a small town. It’s worse than this Covid lockdown. I can’t go outside because the weather is either too hot or too cold. I can’t take my family out for a nice dinner because there are no good restaurants in the area. My wife can’t cook our favorite Asian dishes because there is no Asian supermarket in the area. I can’t drive a nice car because my patients will not like it and there is no service center nearby to maintain it. Can’t buy a house because it doesn’t appreciate in value over time and it’s hard to sell it or rent it out. Too many compromises.....too much sacrifice. I’d rather work harder and get to enjoy all the conveniences of living in a big city. But not too big city (like LA or NYC) because I don’t like to waste my time finding parking spaces or have to pay for parking.
 
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Don't major corporate offices very rarely post part-time job listings? 99% of corporate GP job listings I've encountered were for full-time positions. I do agree that it's wise to diversify revenue streams through multiple PT jobs.
If you are good, you can demand the corp to let you do whatever you want. I currently work with a managing general dentist, who is the one of the top producing dentists in the region. She used to work 6 days/wk for the corp after graduation. Now, she only works 4 days/wk (no Saturday) for them. There are 2 other associate GPs who work with her but the corp manager usually assign difficult (but highly productive) cases for her to perform. She has her own office, which is managed by her husband, who is also a dentist. She works at her own office on Saturdays and certain Sundays (by appointment only). Her daily production is more than what a new grad can produce in a week. She is a good dentist. A lot of the assistants bring their relatives in to see her.
 
It really depends on what regulations come our way in my opinion.
I actually wouldn't mind doing a scratch start IF restrictions prevent us from seeing multiple patients at the same time. Why do you need to buy the older and more established practice with 7 ops and 2,500sft of space? It may not be a bad idea to lease 900 sqft with 2 ops and 1 (maybe 2) employees. The second employee may even work from home and you could add a 3rd op in replace of the waiting room. The startup may even want to consider split shifts with a partner - open 7-7 2 docs, 2 RDAs, 0 hygienists, and 2 remote team members.

It will be very interesting to see how this all unfolds. Lucky to have avoided buying last year.
 
This is why I can’t live in a small town. It’s worse than this Covid lockdown. I can’t go outside because the weather is either too hot or too cold. I can’t take my family out for a nice dinner because there are no good restaurants in the area. My wife can’t cook our favorite Asian dishes because there is no Asian supermarket in the area. I can’t drive a nice car because my patients will not like it and there is no service center nearby to maintain it. Can’t buy a house because it doesn’t appreciate in value over time and it’s hard to sell it or rent it out. Too many compromises.....too much sacrifice. I’d rather work harder and get to enjoy all the conveniences of living in a big city. But not too big city (like LA or NYC) because I don’t like to waste my time finding parking spaces or have to pay for parking.
For those interested in real estate investing, this is very important.
 
I was just observing into the horizon and giving my 2 cents on the upcoming and short-term tectonic shift that will change how “new practice” ownership is traditionally considered.

It will take a lot of balls to open a new practice this year or next.


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Would you buy this fall if you have a loan secured or no?
 
This is why I can’t live in a small town. It’s worse than this Covid lockdown. I can’t go outside because the weather is either too hot or too cold. I can’t take my family out for a nice dinner because there are no good restaurants in the area. My wife can’t cook our favorite Asian dishes because there is no Asian supermarket in the area. I can’t drive a nice car because my patients will not like it and there is no service center nearby to maintain it. Can’t buy a house because it doesn’t appreciate in value over time and it’s hard to sell it or rent it out. Too many compromises.....too much sacrifice. I’d rather work harder and get to enjoy all the conveniences of living in a big city. But not too big city (like LA or NYC) because I don’t like to waste my time finding parking spaces or have to pay for parking.

if you don’t mind me asking. Where do you live?
I pretty much have similar mindset as you. Trying to settle down somewhere after the navy where I can enjoy asian food lol. But I also want a decent pay.
 
if you don’t mind me asking. Where do you live?
I pretty much have similar mindset as you. Trying to settle down somewhere after the navy where I can enjoy asian food lol. But I also want a decent pay.
He lives in Orange County, CA if I remember correctly
 
if you don’t mind me asking. Where do you live?
I pretty much have similar mindset as you. Trying to settle down somewhere after the navy where I can enjoy asian food lol. But I also want a decent pay.

Any city above 200k population in the West Coast, Dallas & Houston TX, or NE will have decent Asian Food. Avoid Midwest, Plains, SE, and Rockies.
 
Would you buy this fall if you have a loan secured or no?

If all the numbers makes sense, sure. But I think in general, the number of new practice/startups will be at a record low for the dental practice industry. I can’t see it happening easily under this economic climate. That’s not to say there won’t be opportunities out there, and if there are - you would have to thread the needle very carefully to do it.


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Also preferably at least 15-20 percent asian population

I'm not sure if the Bay Area, LA, NYC have 15-20% pop. Check out Monterey Park, San Marino, San Gabriel, Rowland Heights in LA, Cupertino in San Jose area, and Flushing NY. Anywhere there is a 99 Ranch Market, you won't go wrong.

If you want to visit an area that is almost all Asian, check out Richmond BC outside of Vancouver. I haven't been to Toronto but I hear they have plenty.
 
I love me some Korean BBQ. Sizzle in Scottsdale is awesome.

Besides LA and Korean towns across the nation, there usually are a lot of Korean presence around military bases.
 
I don’t trust asian restaurants that don’t have a lot of asian customers inside haha. That’s how we judge of asian restaurants are authentic...

Hopefully you don't have a spouse like mine who requires authentic imported Taiwanese ingredients. It gets very expensive. Everything needs to be Taiwanese this, Taiwanese that.
 
Hopefully you don't have a spouse like mine who requires authentic imported Taiwanese ingredients. It gets very expensive. Everything needs to be Taiwanese this, Taiwanese that.

Hahah but I heard Taiwanese women are very nice.. it’s worth it then 😉
 
if you don’t mind me asking. Where do you live?
I pretty much have similar mindset as you. Trying to settle down somewhere after the navy where I can enjoy asian food lol. But I also want a decent pay.

Working as a dentist in a large Asian presence will be very difficult. 1) Usually there are a too many dentists just down the street from you. 2) Usually the rent/property prices are sky high because Asians are property hungry and pay top dollar cash. 3) Usually working on Asians will include haggling for reduced fees or free procedures.
 
Hahah but I heard Taiwanese women are very nice.. it’s worth it then 😉

Incredibly most of my wife's friends aren't so particular or high maintenance with food. It's flying back to Taiwan numerous times with children that can drain your savings. If you're intrigued, befriend more American raised Taiwanese in those locations I mentioned.
 
Working as a dentist in a large Asian presence will be very difficult. 1) Usually there are a too many dentists just down the street from you. 2) Usually the rent/property prices are sky high because Asians are property hungry and pay top dollar cash. 3) Usually working on Asians will include haggling for reduced fees or free procedures.

im talking about 180-200k yearly as an associate. Is that doable in these cities?
 
im talking about 180-200k yearly as an associate. Is that doable in these cities?

$200k sounds like a lot in rural Iowa/Indiana. The homes in the locations I mentioned are easily over a million for a shack. I live in a city way less expensive with a 99 Ranch Market. I used to make over $200k.
 
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I don’t trust asian restaurants that don’t have a lot of asian customers inside haha. That’s how we judge of asian restaurants are authentic...
Same here. Whenever I traveled to another state and looked for a new Asian restaurant to eat, I usually read the reviews that were written by the customers who has Asian last names.
 
Hopefully you don't have a spouse like mine who requires authentic imported Taiwanese ingredients. It gets very expensive. Everything needs to be Taiwanese this, Taiwanese that.
We are spoiled here in CA. I haven't been back to my native country since I left her 30+ years ago. But I have heard from people, who went back regularly, that the foods are better here in CA than in my home country....more meat....bigger portion. We only import the best food from different parts of the world. There are companies here in CA that produce fresh stuff every day like noodles, soy milk, poultry etc.
 
Working as a dentist in a large Asian presence will be very difficult. 1) Usually there are a too many dentists just down the street from you. 2) Usually the rent/property prices are sky high because Asians are property hungry and pay top dollar cash. 3) Usually working on Asians will include haggling for reduced fees or free procedures.
You are right about Asian patients. They haggle. This is one of the things that I am not very proud of. I set up my very first practice in area that I hoped would attract a lot Asian patients because I can speak the language. But only 25% of my patients are Asians. %60 of my patients are Hispanics. I love hispanic patients....they don't complain, they trust and respect the doctors, and they have a lot of kids (ideal for ortho).
 
We are spoiled here in CA. I haven't been back to my native country since I left her 30+ years ago. But I have heard from people, who went back regularly, that the foods are better here in CA than in my home country....more meat....bigger portion. We only import the best food from different parts of the world. There are companies here in CA that produce fresh stuff every day like noodles, soy milk, poultry etc.

Seafood is more plentiful in Taiwan. Taiwanese are more willing to experiment with food and not have to worry about high costs of living like in CA. The meat may be more plentiful in the US but the quality is better in Taiwan. Think 3 months to grow chicken in the US vs 12 mos in Taiwan. I hate going overseas but I dig the food. Besides CA & NY, another location outside of Asia known for incredible Asian food is Richmond/Vancouver BC.
 
You are right about Asian patients. They haggle. This is one of the things that I am not very proud of. I set up my very first practice in area that I hoped would attract a lot Asian patients because I can speak the language. But only 25% of my patients are Asians. %60 of my patients are Hispanics. I love hispanic patients....they don't complain, they trust and respect the doctors, and they have a lot of kids (ideal for ortho).

The Hispanics are awesome. They won't hesitate to pay you despite having to save. Once I speak food to them even with their language difficulties, I win them over. 99/100 they are my best pts and staff.
 
Yup, and it's the best county in CA.....no, it's the best county in the USA.

Nah. I have 2 brother in laws who live in CA. One in Orange County (Ladera Ranch) and the other at Newport Beach. Been there several times. It's OK, but not ideal. The beaches cannot compete with the sugary white beaches on the gulf of Mexico (Florida). Extreme taxes. Real Estate is ridiculous in some areas. How about the ever routine fires in CA? Traffic?

We gets TONS of Californians moving to Arizona. I will always have a place in N. Scottsdale. This area is relatively rural with small urban areas. Plenty of ranches with horses. Very cool. Winter time: golf in the morning, can go skiiing in the afternoon in Flagstaff ... SAME day. You want beaches? Mexico (Rocky Point) is a 4 hr drive away. Our winter weather is unrivalled. Summers .... well ... they suck.

California. Nope. JMHO.
 
Nah. I have 2 brother in laws who live in CA. One in Orange County (Ladera Ranch) and the other at Newport Beach. Been there several times. It's OK, but not ideal. The beaches cannot compete with the sugary white beaches on the gulf of Mexico (Florida). Extreme taxes. Real Estate is ridiculous in some areas. How about the ever routine fires in CA? Traffic?

We gets TONS of Californians moving to Arizona. I will always have a place in N. Scottsdale. This area is relatively rural with small urban areas. Plenty of ranches with horses. Very cool. Winter time: golf in the morning, can go skiiing in the afternoon in Flagstaff ... SAME day. You want beaches? Mexico (Rocky Point) is a 4 hr drive away. Our winter weather is unrivalled. Summers .... well ... they suck.

California. Nope. JMHO.

I will keep N Scottsdale in mind for future retirement. I always loved N California, for scenic drives and beautiful sunsets.


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