Opening a pracitice first time

[Sam1980DDS]

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Can someone tell me the steps that I have to follow to open my practice:
such as facility license, or anything else that I have to do before opening my practice.
any input wil be appreciated.
thanks

 

[Daurang]

Find your space, check with city hall to make sure it's zoned for dental or doctor office, sign your lease after consulting with an attorney, get a no collateral construction and business loan from Schein/Patterson and they'll come by and design the office to your satisfaction for free. Then call an Asian/Mexican builder rather than the one they recommend since they always do it for so much cheaper. It is very possible to build a 2-chairs (but plumbed for 3 or 4) fully operational practice for under $100K. Go to city hall and sign up your business. Sign up with a couple dental insurance companies. Have your wife, sister, mother, or brother work front desk and assist for the first few months. Don't get expensive unnecessary toys like laser, Cerec machine, the Wand, air abrasion, digital xray, camera, complicated dental software, nitrous oxide, digital caries detector, consultants, etc. because they cut deep into your bottom line and further your debt. It would be nice for everyone to have a Nordtrom-type practice, but there aren't too many rich people so having a Walmart-type practice in keeping everything cheap, basic, and simple works just as good and bring in just as much money from the masses. You should post this question in dentaltown.com to get more detailed assistance.

 

[Sam1980DDS]

Thanksssssssssssssssssssssssss
I really appreciate it..
thanks alot

 

[Daurang]

My pleasure.

 

[I'mFillingFine]

So for the legal portion of opening a business, what else do you have to do besides registering with the city hall? What sorts of financing paperwork/other legal things are required, or is that a whole other story? I guess that's quite a question.

And I'm only a sophomore, so I haven't started browsing dentaltown yet since I don't want to overwhelm myself quite yet. 😀

 

[Daurang]

You will need some 20 different signatures and pay various fees during construction to various government inspectors, you will need approval for an occupancy permit from the fire marshall to open your business, you will need to register with the IRS for a TIN to pay tax, you will need to register for NPI for billing, you will need to register and pay fees for your xray permit, you will need to register and pay fees for your amalgam separator, you will need to train your staff on OSHA regulations, you will need to buy liability insurance, trip and fall insurance, worker's comp insurance, etc. It's just like dental school.

 

[pntbutter]

Find your space, check with city hall to make sure it's zoned for dental or doctor office, sign your lease after consulting with an attorney, get a no collateral construction and business loan from Schein/Patterson and they'll come by and design the office to your satisfaction for free. Then call an Asian/Mexican builder rather than the one they recommend since they always do it for so much cheaper. It is very possible to build a 2-chairs (but plumbed for 3 or 4) fully operational practice for under $100K. Go to city hall and sign up your business. Sign up with a couple dental insurance companies. Have your wife, sister, mother, or brother work front desk and assist for the first few months. Don't get expensive unnecessary toys like laser, Cerec machine, the Wand, air abrasion, digital xray, camera, complicated dental software, nitrous oxide, digital caries detector, consultants, etc. because they cut deep into your bottom line and further your debt. It would be nice for everyone to have a Nordtrom-type practice, but there aren't too many rich people so having a Walmart-type practice in keeping everything cheap, basic, and simple works just as good and bring in just as much money from the masses. You should post this question in dentaltown.com to get more detailed assistance.

wow it's encouraging to hear that you can start up a practice for under 100K, especially with tuition costs sky rocketting. What's the average monthly fees associated with maintaining such a practice?

 

[diagnodent]

Most people I know who open a practice usually spend 300-400k.

 

[Daurang]

Most people I know who open a practice usually spend 300-400k.

That's ridiculously high! Even if you give me $400k I wouldn't know how to spend it all for your office. You can build a HUGE fully upgraded 6000square foot mansion with movie theater in the outskirt of Atlanta for that price.

I built my practice from scratch in an extremely high-cost, heavily unionized major city for less than $100K in 2000. With the current housing market down and contractors hungry for work I am sure it's still possible if I were to do it again. Certain things have gotten more expensive but other things have gotten cheaper so the number would basically be the same. Here's my numbers (with all brand new equipments) from back then:

Construction/hvac/plumbing for 3 chairs...$40000
Two chairs...$15000
Pano... $10,000
Xray ...$3000
Developer...$2500
Sterilizer...$2500
Vacuum/compress...$4000
Desktop/printer $600
Dental software $800
Misc. $5000.

 

[charlestweed]

I paid approx 130k for my 5 op, 1350 sf orthodontic office. I hired the same guy who built my sister's dental office. He did everything: draw office design, applying for building permits, contacting city inspectors, contacting dental supply companies (for chairs, vacuum, air, x ray, film processor hook-ups), installing sinks and cabinets. He charged me 85k for all these. Make sure you find the licensed contractor who has done many medical/dental offices…this helps save a lot of $$$ and headaches.

It is very easy to set up a brand new office. The hardest and most stressful task is to find enough patients to keep you busy in the beginning.

What's the average monthly fees associated with maintaining such a practice?

Approximately 10,000-12,000/month (Rent 2000-3000, business loan repayment 2000-3000, employee salary 3000-5000, utilities 1000, advertisement 1000, misc. 1000).

 

[jstaples]

And I'm only a sophomore, so I haven't started browsing dentaltown yet since I don't want to overwhelm myself quite yet. 😀

Don't sell yourself short. You should be on there at least a couple times a week. SDN is fun, but you will learn so much on DentalTown. You will be in the real world sooner than you think.

 

[I'mFillingFine]

My parents were on the building committee for a new synagogue my congregation built and it was our first experience with contractors. Given, there are many that solely work with building new medical/dental offices, but we found that it was EXTREMELY difficult to keep things under budget. It went well over and we've heard similar stories with anyone building a home or office. How do you make sure they stick to the plan?

 

[Daurang]

My parents were on the building committee for a new synagogue my congregation built and it was our first experience with contractors. Given, there are many that solely work with building new medical/dental offices, but we found that it was EXTREMELY difficult to keep things under budget. It went well over and we've heard similar stories with anyone building a home or office. How do you make sure they stick to the plan?

Always budget for 30% cost overrun. My original total construction quote was $15K but it quickly skyrocketed to $40K. The Henry Schein rep said it was low anyway so I didn't complain.

 

[diagnodent]

Let's all be realistic about this. In a non-rural community the buildout will probably range from $60(extremely low)-120/sq foot. With TI's being given of $10-25/sq foot by the landlord. I know many people who started offices by doing a buildout and equipping the office and at the lowend the loan was for 250k. The average is now about 350k in my area and I do not live in a large city (but not rural) or an expensive city. If you don't have to do a buildout by renting an office that was a previous dental office you can take a much smaller loan out.

 

[charlestweed]

With 250k, you can have a very large 3500 sf office (assuming that you are paying $70 per sf). Why would you need a big office like this? I can have all 5 chairs (4 chairs in an open bay area) in my 1350 sf office. The reception area is large enough for 20+ people. I only paid $63 per sf for my office and this included everything: office design, plumbing, tile, carpets, cabinets, sinks, building permits, fire permits etc. It only took my guy 2.5 months to complete the job.

You should hire the experienced builder. I would go with Daurang’s recommendation: hire the Asian/Mexican builder….they usually do extra things for you at no additional cost. My friend paid almost 100k for her ortho office construction and a lot of things were not done in 6 months. She had to fire her builder and asked my guy to finish the job…..he did not take the job b/c he did not want to deal with the mess that the other guy had created.

 

[Cold Front]

Daurang and charlestweed, how long have you guys been out of d-school before you started your own private practice?

 

[toofshucker]

Let's all be realistic about this. In a non-rural community the buildout will probably range from $60(extremely low)-120/sq foot. With TI's being given of $10-25/sq foot by the landlord. I know many people who started offices by doing a buildout and equipping the office and at the lowend the loan was for 250k. The average is now about 350k in my area and I do not live in a large city (but not rural) or an expensive city. If you don't have to do a buildout by renting an office that was a previous dental office you can take a much smaller loan out.

I think you and durang are right. It all depends on what you feel is right for your office. You can open an office for around 100k, but you must budget very well, and not buy all the expensive extras. Or, you can stick to the average, and get the toys. Remember, Cerec costs 100k.

 

[charlestweed]

Daurang and charlestweed, how long have you guys been out of d-school before you started your own private practice?

Four years. I did not have enough confidence to start a practice after completing my ortho residency. I set up my practice in June 2005 and I am very happy with it. It was the best business decision I’ve ever made.

 

[Daurang]

I had been licensed/working for three months when I found a suitable space. Five months later my practice opened. I felt insulted getting pay $300 a day so I just blindly took the risk and, luckily, it paid off.

 

[I'mFillingFine]

I've slowly been leaning towards building my own practice from scratch. I have so many ideas about various bits of practice management and organization, and it just seems easier to me to start from the beginning. (If I bought out another practice, I feel like I'd be changing so much anyway.)

Anyone have any colleagues that built a practice during a GPR so it was ready to go at the end of the year? I'm glad to hear it can be as short as a few months! And I sort of like the idea of the first patient walking into my brand new office and starting from scratch building up patients from there. I know it can cause a lot of anxiety since it will take years and years to build up enough patients, but you lose so many when absorbing a practice anyway.

Isn't there also an argument that you don't really get too far as an associate for a few years, even though you'll make more than in the first few years of a new practice? I wonder if it evens out after a while.....

 

[I'mFillingFine]

I had been licensed/working for three months when I found a suitable space. Five months later my practice opened. I felt insulted getting pay $300 a day so I just blindly took the risk and, luckily, it paid off.

Were you an associate during those months? And if so, how did the owner feel about your leaving so soon?

 

[Daurang]

I didn't leave. The owner somehow found out my office was 2 miles up the road so she so kindly ask me to take a hike.

 

[OceanDMD]

I didn't leave. The owner somehow found out my office was 2 miles up the road so she so kindly ask me to take a hike.

Do you think it was ethical not informing her about your practice start-up two miles down the road?

 

[diagnodent]

Good job on thinking like a typical dentist. You think changing the culture of an existing practice is hard? Good luck on trying to instill the correct habits into new employees that you have to hire. If your personality/bed side manner is so bad you think you are going to lose many patients by purchasing a practice, then how are you going to keep patients when they come to your new office?

I'm not trying to be mean, but I see so many dentists make stupid business decisions based on illogical thought.

 

[Daurang]

No. I would have told her but she found out only days after I signed the office lease.

 

[armorshell]

Good job on thinking like a typical dentist. You think changing the culture of an existing practice is hard? Good luck on trying to instill the correct habits into new employees that you have to hire. If your personality/bed side manner is so bad you think you are going to lose many patients by purchasing a practice, then how are you going to keep patients when they come to your new office?

I'm not trying to be mean, but I see so many dentists make stupid business decisions based on illogical thought.

I don't see how you think filling's lines of thought are illogical. Inheriting employees and patients who have been working with or seeing the same doctor for any long period of time are going to have a completely different attitude than employees and patients who are signing up with a new doc.

In the former case, it's not the employee or patient who is seeking out a new job or dentist, the change was forced upon them. It's a different situation.

And speaking of chairside manner, that was a pretty inappropriate way to react to a harmless comment. Just because someone disagrees with you doesn't mean that they're wrong or that you're right.

 

[OceanDMD]

Good job on thinking like a typical dentist. You think changing the culture of an existing practice is hard? Good luck on trying to instill the correct habits into new employees that you have to hire. If your personality/bed side manner is so bad you think you are going to lose many patients by purchasing a practice, then how are you going to keep patients when they come to your new office?

I'm not trying to be mean, but I see so many dentists make stupid business decisions based on illogical thought.

Consultants say typically when buying a practice and taking over with the other dentists leaving, 90-95% patient retention. The ones that leave are probably patients you dont want to deal with. There are more dentists forecasted to retire than graduate over the next 10 years. This means practices will be available, and prices may be more reasonable. I am personally for associating/transitioning into an existing practice (WITH PATIENTS AND CASH FLOW) than a start-up. You can always mold and the key is to get the business experience (ie what works and doesnt in areas like marketing and staff management).

 

[diagnodent]

Here is what I am saying....

If you purchase a practice you have existing employees who work by a certain system who know the patients. They could already have a good system and good attitudes, if they don't then you change the system (after 6-12 months) or fire the employee.

If you open from scratch you have to hire employees, train employees, establish a system and hope that everything you have done with no prior experience is correct. This is much harder to do because once again YOU HAVE NO EXPERIENCE in doing any of this.

Running an office is not easy...it takes leadership, common sense, fairness, marketing ability, management, etc. You don't just put out a shingle and think patients are going to come to you and everything will be fine. Do you know how to file an insurance claim, do you know what you want your assistant to do, how do you run a recall system, how do you sell treatment, etc.--you just don't know so how are you going to train and hire people for these positions. As UOP professor Peter Jacobson says, "You don't know, what you don't know"

I am not trying to be mean, just realistic. I was once the same wide-eyed stupid dental student who didn't think about business principles in running an office. I have learned from my ways the hard way and just want dental students to realize it's not as easy as you think.

 

[armorshell]

Well now you've gone and quoted Dr. Jacobsen, so how can I be mad?

I believe there are probably certain times when both methods of practice are indicated, and I hardly think opening a practice from scratch is illogical. You also have to factor in the doctor's personality: some people out there are going to be more comfortable learning everything on their own and doing everything their way, even if it isn't the most air-tight approach from a business perspective.

 

[Daurang]

It's so easy a caveman can do it!🙂

 

[diagnodent]

I don't think opening a practice from scratch is illogical, I thought the reasons given were illogical. It can be done and be done very successfully. I have many friends who did it and they have all been successful. They were also not right out of school/residency--they had all worked for a few years and had many hours of CE.

 

[I'mFillingFine]

Consultants say typically when buying a practice and taking over with the other dentists leaving, 90-95% patient retention. The ones that leave are probably patients you dont want to deal with. There are more dentists forecasted to retire than graduate over the next 10 years. This means practices will be available, and prices may be more reasonable. I am personally for associating/transitioning into an existing practice (WITH PATIENTS AND CASH FLOW) than a start-up. You can always mold and the key is to get the business experience (ie what works and doesnt in areas like marketing and staff management).

Thanks for the info! I had heard a much lower number for retention (more like two-thirds), so this is very encouraging.

 

[DrJeff]

Thanks for the info! I had heard a much lower number for retention (more like two-thirds), so this is very encouraging.

Even if it is "only" 2/3rds, if you're buying a practice with say 1500 current patients, that still gives you 1000 to start with, and they'll tell they're friends about how great you are, and you've suddenly got a brand new patient to start with from scratch. This is often a better scenarion, since many of the existing patients will think that the retiring doc is the greatest ever and if yo go in from day 1 and suggest ALOT of work, they'll be a bit skeptical, especially if the retiring doc had been tell that patient that "they're fine" for the last few years.

I'm a big proponent of buying either into, or outright an existing practice over a brand new start up under most cases, but I think what should matter to the purchasing dentist almost as much as cash flow, is the treatment philosophy of the selling dentist. If you 2 are similar, it will greatly ease the transition and you'll likely have a high retention rate of "old" patients👍, if you 2 are way off in philosophies(especially if you're more "aggressive"), that will make it more difficult with a higher percentage of "old" patients leaving the practice😡

Like I said to start, even if you have a large percentage of patients leaving if/when you come in, you still end up with more of a pool of patients to start with than opening from scratch.

 

[Daurang]

Dr. Jeff...I need to cancel my scheduled meeting with you in Foxboro on December 9. I will be at home taking pain meds instead.🙁

 

[DrJeff]

Dr. Jeff...I need to cancel my scheduled meeting with you in Foxboro on December 9. I will be at home taking pain meds instead.🙁

Didn't see that one coming for the black and gold a mile away. Well atleast you should rebound next Monday with the Dolphins👍 If you happen to loose that one, you might want to consider turning in your "terrible towel"😱

 

[rocknightmare]

dec 9 is going to be okay.. only under .500 teams we lose to🙂

 

[Cold Front]

I'm a big proponent of buying either into, or outright an existing practice over a brand new start up under most cases

Same here. The easier path is the purchase of an existing practice with a historical cashflow. The negotiated purchase price is determined so that the available cashflow will satisfy the overhead of the practice as well as servicing the purchase debt. After debt service, there should be enough money left for reasonable living expenses. The banks will also be more supportive to give you a loan if you go with this option.

Starting from scratch is a great way to save money and all, but you will most likely experience a negative income. That's why most start-up dentists are forced to have an associate job just to pay the overhead of the new office and living expenses.

A lot of dentists are retiring within the next 10 years, hence a lot of existing practices will be on the market. Therefore, it might be as inexpensive as start-up office.

 

[I'mFillingFine]

These are all extremely good points. Thanks to everyone for your input! I know there will be particular need in rural areas (I know some areas that have a handful of dentists for an entire county, and many retiring dentists are pessimistic about selling their practices at all.) So it'd make sense that you can save money at the start, not to mention the fluidity of a well-oiled machine with...you know...patients? from the start?

I'm so excited! Fantasizing about my future office plans helps me get through this period of self doubt as I begin to work with a handpiece for the first time 😉

Any stories out there about decisions among staff as a practice transitions (especially from a retiring dentist to a pretty new one.) Do many choose to stay? Does it depend on where they are in their careers and families? This is assuming the new dentist retains those already employed, of course. In terms of changing philosophies, I imagine that simply depends on how similar the new dentist is to the former.

 

[DrJeff]

Any stories out there about decisions among staff as a practice transitions (especially from a retiring dentist to a pretty new one.) Do many choose to stay? Does it depend on where they are in their careers and families? This is assuming the new dentist retains those already employed, of course. In terms of changing philosophies, I imagine that simply depends on how similar the new dentist is to the former.

The transistion situation has many, many stories across the whole spectrum of good, bad, and indifferent.

The trend in purchases nowadays tends to see a situation where the purchasing dentist will have the selling dentist stay around as either an associate or a minority partner for typically a defined period of time (often 1 to 3 years). This allows the selling dentist to help "introduce" the purchasing dentist to both staff and patients and can often help answer many business questions for a young, purchasing dentist👍 Sometimes this goes smoothly, sometimes the selling dentist will end up having a very difficult time in their new role as the non owner and can make this transisiton time difficult😱

Staff transition: Often, unless an existing staff member wants to quit/retire with the departure of the selling dentist, the entire existing staff will initially be retained. Then over the next few months to years, some of the staff will choose to leave, or you'll end up wanting to fire some, or occasionally even all, of them due to differences in opinion/work ethic/job performance issues, etc, etc, etc.


Patients: as discussed, most end up staying in the practice quite simply because the concept of having to have both a new dentist AND a new office environment is "worse" than just having a new dentist in a familiar office environment.

Even in a "bad" transition, you'll still end up as an owner with ALOT of hands on business experience from the entire practice purchase experience, and thats a GOOD thing👍