Orthodontics and debt

[CaliDDS1986]

Thought this was a good article for anyone considering ortho.

Debt and the New Orthodontist
by Marc Bernard Ackerman, DMD, MBA, FACD

Mr McGuire: I want to say one word to you. Just one word.
Benjamin: Yes, sir.
Mr McGuire: Are you listening?
Benjamin: Yes, I am.
Mr. McGuire: Plastics.
Benjamin: Exactly how do you mean?
Mr McGuire: There’s a great future in plastics. Think about it. Will you think about it?

The Graduate (1967)

It’s that time of year again. The e-mails, the letters, and the cold call voicemails are beginning to arrive. They all pretty much sound the same. “Dear Dr Ackerman: I am the best thing ever, so hire me. PS: I need to be paid $1,500 per day to start, and you need to finance my ultimate purchase of your practice because I am dead broke. PPS: I am coming to your town regardless of whether you hire me, and I will be happy to work as an itinerant orthodontist for multiple general dental practices as long as they pay me what I want.”

Beautiful. These annual missives don’t give you a whole lot of warm and fuzzy feelings about the future of the orthodontic specialty. The first two questions that come to mind when I read one of these letters are 1) who advised this person to study orthodontics in the first place; and 2) how much has this person borrowed to become a university-trained orthodontist? Well, after a few years of thinking about it, spending 3 years teaching in one of the most expensive orthodontic residency programs in the United States, reading some 2011 survey data,1 and doing some elementary-school math, I think some answers to these questions are self-evident.

The current orthodontic resident population (in the US, Puerto Rico, and Canada) is 1,035. After they complete residency, their plans include the following:

• purchase a practice (54%);
• work as an employee (25%);
• launch a startup (11%);
• go into academics (4%);
• enter the military (3%), and
• other (3%).

Among this same population, first-year income expectations are as follows:

• 8% expect less than $100,000;
• 37% expect $100,000 to $150,000;
• 41% expect $150,000 to $200,000; and
• 14% expect more than $200,000.

Meanwhile, orthodontic resident debt at graduation is well into six figures:

• 26% owe less than $100,000;
• 15% owe $100,000 to $200,000;
• 22% owe $200,000 to $300,000;
• 19% owe $300,000 to $400,000; and
• 18% owe more than $400,000.

Right now, the AAO Practice Opportunities Services listings include 457 orthodontists seeking a practice and 153 practices offered, for a shortfall of 304.

Reality Check
Let’s look at two possible scenarios. Orthodontic Graduate A has $250,000 debt at 7% interest with a 10-year repayment.

• Gross income: $150,000.
• Net income per month: $8,250.
• Debt repayment per month: $3,000.
• Money for living per month: $5,250.
• Ability to borrow for a practice or home purchase: marginal.

Orthodontic Graduate B has $500,000 debt at 7% interest with a 10-year repayment.

• Gross income: $150,000.
• Net income per month: $8,250
• Debt repayment per month: $6,000.
• Money for living per month: $2,250.
• Ability to borrow for a practice or home purchase: unlikely.

The Facts

• There are more orthodontic graduates per year than jobs available.
• The mean debt of graduates is very high and rising.
• Compared to the traditional 10-year loan payback, new graduates are looking at loan repayment over 20 years or longer.
• Tuition at public and private universities has increased at a greater rate than the consumer price index.
• There are approximately 65 accredited orthodontic residency programs in the United States, with more 3-year programs than 2-year programs.
• The number of residency positions has significantly increased in the past decade.
• There are two tiers of orthodontic residency programs. First-tier programs pay residents a stipend or charge a lower tuition, while second-tier programs charge up to $80,000 per year for tuition.
• Individuals are not the only buyers of orthodontic residency positions. Some schools have initiated programs with foreign governments to reserve positions for international dentists at a “premium” tuition.
• Some fiscally mismanaged dental schools and universities are dependent on orthodontic tuition revenue to keep their doors open.

So who can afford to be a university-trained orthodontist in 2012? I would argue that, conservatively speaking, about two out of three current orthodontic residents could actually afford it. In fact, if an expert in finance were to sit down and calculate a 30-year net present value (present value of future cash flows) of an orthodontic education for each of the current residents in the United States, he would probably come up with a neutral or negative net present value for at least a third of them.

Why? In simple terms, you cannot rack up enormous debt that causes large year-over-year future cash outflows, have a modest amount of future cash inflows for the first 5 to 7 years of practice, and at the same time want to live a lifestyle that includes early practice ownership, home ownership, and hobbies requiring disposable income. So essentially, if the prospective orthodontic resident borrowed the same amount of cash but invested it in something that gave a return of 7% rather than investing in a dental/orthodontic education, he or she would have a better chance of reaching the desired lifestyle and financial targets for retirement.

An orthodontic resident who recently attended the AAO lobbying junket in Washington, DC, related the following encounter. In one of the breakfasts with senior leadership, he confided in a well-known orthodontic politician that he was deeply concerned about his impending $600,000 debt at graduation. The senior leader responded, “I have never met a poor orthodontist, so don’t worry!”

As they say in Alcoholics Anonymous, the first step in recovery is to admit that you have a problem. I suggest we start discussing student debt transparently and in large public forums that include organized orthodontic leadership, academic dental leadership, and the lending industry. If not, you can rest assured that in a short time, annual missives from soon-to-be graduates will stop coming to orthodontist’s inboxes and start arriving in far more sinister places.

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[Silent Cool]

Thought this was a good article for anyone considering ortho.

Debt and the New Orthodontist
by Marc Bernard Ackerman, DMD, MBA, FACD

Mr McGuire: I want to say one word to you. Just one word.
Benjamin: Yes, sir.
Mr McGuire: Are you listening?
Benjamin: Yes, I am.
Mr. McGuire: Plastics.
Benjamin: Exactly how do you mean?
Mr McGuire: There’s a great future in plastics. Think about it. Will you think about it?

The Graduate (1967)

It’s that time of year again. The e-mails, the letters, and the cold call voicemails are beginning to arrive. They all pretty much sound the same. “Dear Dr Ackerman: I am the best thing ever, so hire me. PS: I need to be paid $1,500 per day to start, and you need to finance my ultimate purchase of your practice because I am dead broke. PPS: I am coming to your town regardless of whether you hire me, and I will be happy to work as an itinerant orthodontist for multiple general dental practices as long as they pay me what I want.”

Beautiful. These annual missives don’t give you a whole lot of warm and fuzzy feelings about the future of the orthodontic specialty. The first two questions that come to mind when I read one of these letters are 1) who advised this person to study orthodontics in the first place; and 2) how much has this person borrowed to become a university-trained orthodontist? Well, after a few years of thinking about it, spending 3 years teaching in one of the most expensive orthodontic residency programs in the United States, reading some 2011 survey data,1 and doing some elementary-school math, I think some answers to these questions are self-evident.

The current orthodontic resident population (in the US, Puerto Rico, and Canada) is 1,035. After they complete residency, their plans include the following:

• purchase a practice (54%);
• work as an employee (25%);
• launch a startup (11%);
• go into academics (4%);
• enter the military (3%), and
• other (3%).

Among this same population, first-year income expectations are as follows:

• 8% expect less than $100,000;
• 37% expect $100,000 to $150,000;
• 41% expect $150,000 to $200,000; and
• 14% expect more than $200,000.

Meanwhile, orthodontic resident debt at graduation is well into six figures:

• 26% owe less than $100,000;
• 15% owe $100,000 to $200,000;
• 22% owe $200,000 to $300,000;
• 19% owe $300,000 to $400,000; and
• 18% owe more than $400,000.

Right now, the AAO Practice Opportunities Services listings include 457 orthodontists seeking a practice and 153 practices offered, for a shortfall of 304.

Reality Check
Let’s look at two possible scenarios. Orthodontic Graduate A has $250,000 debt at 7% interest with a 10-year repayment.

• Gross income: $150,000.
• Net income per month: $8,250.
• Debt repayment per month: $3,000.
• Money for living per month: $5,250.
• Ability to borrow for a practice or home purchase: marginal.

Orthodontic Graduate B has $500,000 debt at 7% interest with a 10-year repayment.

• Gross income: $150,000.
• Net income per month: $8,250
• Debt repayment per month: $6,000.
• Money for living per month: $2,250.
• Ability to borrow for a practice or home purchase: unlikely.

The Facts

• There are more orthodontic graduates per year than jobs available.
• The mean debt of graduates is very high and rising.
• Compared to the traditional 10-year loan payback, new graduates are looking at loan repayment over 20 years or longer.
• Tuition at public and private universities has increased at a greater rate than the consumer price index.
• There are approximately 65 accredited orthodontic residency programs in the United States, with more 3-year programs than 2-year programs.
• The number of residency positions has significantly increased in the past decade.
• There are two tiers of orthodontic residency programs. First-tier programs pay residents a stipend or charge a lower tuition, while second-tier programs charge up to $80,000 per year for tuition.
• Individuals are not the only buyers of orthodontic residency positions. Some schools have initiated programs with foreign governments to reserve positions for international dentists at a “premium” tuition.
• Some fiscally mismanaged dental schools and universities are dependent on orthodontic tuition revenue to keep their doors open.

So who can afford to be a university-trained orthodontist in 2012? I would argue that, conservatively speaking, about two out of three current orthodontic residents could actually afford it. In fact, if an expert in finance were to sit down and calculate a 30-year net present value (present value of future cash flows) of an orthodontic education for each of the current residents in the United States, he would probably come up with a neutral or negative net present value for at least a third of them.

Why? In simple terms, you cannot rack up enormous debt that causes large year-over-year future cash outflows, have a modest amount of future cash inflows for the first 5 to 7 years of practice, and at the same time want to live a lifestyle that includes early practice ownership, home ownership, and hobbies requiring disposable income. So essentially, if the prospective orthodontic resident borrowed the same amount of cash but invested it in something that gave a return of 7% rather than investing in a dental/orthodontic education, he or she would have a better chance of reaching the desired lifestyle and financial targets for retirement.

An orthodontic resident who recently attended the AAO lobbying junket in Washington, DC, related the following encounter. In one of the breakfasts with senior leadership, he confided in a well-known orthodontic politician that he was deeply concerned about his impending $600,000 debt at graduation. The senior leader responded, “I have never met a poor orthodontist, so don’t worry!”

As they say in Alcoholics Anonymous, the first step in recovery is to admit that you have a problem. I suggest we start discussing student debt transparently and in large public forums that include organized orthodontic leadership, academic dental leadership, and the lending industry. If not, you can rest assured that in a short time, annual missives from soon-to-be graduates will stop coming to orthodontist’s inboxes and start arriving in far more sinister places.

Yup.

@Shunwei can tell you all about supply and demand.

But @charlestweed will tell you how amazing the roses smell.

Let me break it down for you:

1) Orthodontics is the easiest job in the world. As such, many older practitioners linger in the market. That causes saturation itself. Combine that with the increasing number of graduates fueled by the federal government's willingness to fund....anything educationally.

2) I think your estimates for debt are low. Even a public dental school will run 250K. Combine that with the fact that most ortho programs charge tuition and you can see that the debt is closer to 500K--from public schools all the way through. For an example, see SUNY Buffalo dental and ortho tuition. Likewise, the debt is also double for private schools. Most private schools for a DDS will run you about 500K. Many will charge 100K+ per year for ortho tuition and living. That takes many students with even a modest amount of undergraduate debt to ~1 million.

3) I agree with everything on your Facts list.

4) There are many anecdotes in these forums about orthodontists who did well. That is because their supply was severely limited twenty years ago. Students today and in the recent past are making decisions based on supply/demand conditions that were present but not longer are and not realizing that they can't service 1 million dollars of debt. There are also many students whose parents are paying for this crap. YMMV.

 

[CaliDDS1986]

Yup.

@Shunwei can tell you all about supply and demand.

But @charlestweed will tell you how amazing the roses smell.

Let me break it down for you:

1) Orthodontics is the easiest job in the world. As such, many older practitioners linger in the market. That causes saturation itself. Combine that with the increasing number of graduates fueled by the federal government's willingness to fund....anything educationally.

2) I think your estimates for debt are low. Even a public dental school will run 250K. Combine that with the fact that most ortho programs charge tuition and you can see that the debt is closer to 500K--from public schools all the way through. For an example, see SUNY Buffalo dental and ortho tuition. Likewise, the debt is also double for private schools. Most private schools for a DDS will run you about 500K. Many will charge 100K+ per year for ortho tuition and living. That takes many students with even a modest amount of undergraduate debt to ~1 million.

3) I agree with everything on your Facts list.

4) There are many anecdotes in these forums about orthodontists who did well. That is because their supply was severely limited twenty years ago. Students today and in the recent past are making decisions based on supply/demand conditions that were present but not longer are and not realizing that they can't service 1 million dollars of debt. There are also many students whose parents are paying for this crap. YMMV.

I agree with your points. I did not make the points above, it was some orthodontist who wrote that article. The ROI on the residency has to be break even at best. If he is estimating a gross of 150k for ortho that's basically what a GP will make. How much are you willing to pay and take a hit on salary not to be a GP? That's the real question.

 

[comatose]

This article is serious BS. There is more of a demand for ortho than general dentistry because there are way way less orthodontists. And also an orthodontist making 150k is not the norm at all. Most average 300k. The ones I personally know are doing much better than that. This guys debt figures are also off. The debt is closer to a half mil.

 

[CaliDDS1986]

This article is serious BS. There is more of a demand for ortho than general dentistry because there are way way less orthodontists. And also an orthodontist making 150k is not the norm at all. Most average 300k. The ones I personally know are doing much better than that. This guys debt figures are also off. The debt is closer to a half mil.

I got no dog in the fight. Im a GP too, but I dont know any new grads pulling 300k for ortho. My buddy who is on Orthotown (the ortho version of dentaltown) said that the orthos on there talk about the doom and gloom and none of the younger guys (rare exceptions obviously) are doing anymore than 150k. I really dont think it is just speculation anymore that it is a very tough field now.

 

[comatose]

Well maybe west coast is different. Two Orthos I know are making 400k+ before taxes.

 

[CaliDDS1986]

Well maybe west coast is different. Two Orthos I know are making 400k+ before taxes.

Maybe, could be true, I'm not really sure. I debated ortho before I became a GP and some days I think what it would have been like if I had gone to ortho residency (you know those days when you have the PITA denture or RCT). You daydream about being an ortho, but then you read articles like this and makes you feel better that maybe it was a better financial choice to be a GP.

 

[nuk]

If all the care is for money, then I would agree that GP might be enough.

However, there are other factors that are involved when one decides to do specialty; ie, quality of life, prestige, interest, etc.

 

[charlestweed]

Many people (my patients, my patients' parents, my GP friends, my nieces and nephews etc), who look at the easy job that I have, the cars that I drive, and the house that I live in, think orthodontics is really a dream job. It only takes me a few seconds to look at the mouth and the assistants do the rest of the work. The total doctor's time for an entire 2-year case is only about 1-1.5 hours. For these reasons, they want their kids to study to become an orthodontist like me. What these people don't realize is to get to where I am today, I had to lose many of my youth years to study as hard as I could (since English isn't my first language). While other kids in my class were out partying, I spent my time doing research and studying for the board exam. I didn't stop working hard after I completed my ortho residency in the early 2000s. I worked 6 days/week for corporate chains to save money to set up my own office. After finishing my 9am-6pm job at the chain offices, I went straight to my own newly built office to work there until 9pm. I didn't stop working hard after I paid off my student loans in 5 years. Now, I own 4 ortho offices and I still continue work part time for the corporate chain....that's 22 days a month. The good thing about ortho is I never feel exhausted by the end of the work day. It's actually very rewarding to have patients who always appreciate what you've done for them.

A new ortho grad, who claimed that he/she doesn't make more than 150k/year as an orthodontist, probably only has a part time job. To get 6 days/week job, I had to drive to 6 different offices. It's not just ortho. That's the way it is for all dental specialists. They have to travel. There are jobs available but many new grads are not willing to accept them. Some refuse to work for corporate chains because they think these places are evil. Some refuse to do in-house ortho at GP offices because they feel the salary offers are too low. Some refuse to work for another orthodontist because the owner orthodontist is too bossy. Some refuse to drive more than 1 hour to work etc.

The point I try to make here is shadowing at an ortho office will not give you enough info about what the profession is like. There are a lot of hard work behind the scene. Doing ortho procedures is fun and easy but having a successful ortho practice requires a lot of hard work.

 

[DDS2017]

Just because you're an orthodontist does not mean you're going to be living the life. It takes hard work, motivation, sacrifice and ambition to start living the orthodontist life style that you see. To get to where @charlestweed is, is not an easy task, especially if English is not your first language. For that I would like to applaud you Charles and you deserve the life you live now.

 

[charlestweed]

Thank you DDS2017 and those of you who hit the "like" button. I am very grateful for the opportunities that this great country has given me. I thank the men and women in uniform who have sacrificed their lives to defend our freedom. I thank my ortho program director for believing in me. And I also thank all my patients for trusting me.

 

[LFA20]

Many people (my patients, my patients' parents, my GP friends, my nieces and nephews etc), who look at the easy job that I have, the cars that I drive, and the house that I live in, think orthodontics is really a dream job. It only takes me a few seconds to look at the mouth and the assistants do the rest of the work. The total doctor's time for an entire 2-year case is only about 1-1.5 hours. For these reasons, they want their kids to study to become an orthodontist like me. What these people don't realize is to get to where I am today, I had to lose many of my youth years to study as hard as I could (since English isn't my first language). While other kids in my class were out partying, I spent my time doing research and studying for the board exam. I didn't stop working hard after I completed my ortho residency in the early 2000s. I worked 6 days/week for corporate chains to save money to set up my own office. After finishing my 9am-6pm job at the chain offices, I went straight to my own newly built office to work there until 9pm. I didn't stop working hard after I paid off my student loans in 5 years. Now, I own 4 ortho offices and I still continue work part time for the corporate chain....that's 22 days a month. The good thing about ortho is I never feel exhausted by the end of the work day. It's actually very rewarding to have patients who always appreciate what you've done for them.

A new ortho grad, who claimed that he/she doesn't make more than 150k/year as an orthodontist, probably only has a part time job. To get 6 days/week job, I had to drive to 6 different offices. It's not just ortho. That's the way it is for all dental specialists. They have to travel. There are jobs available but many new grads are not willing to accept them. Some refuse to work for corporate chains because they think these places are evil. Some refuse to do in-house ortho at GP offices because they feel the salary offers are too low. Some refuse to work for another orthodontist because the owner orthodontist is too bossy. Some refuse to drive more than 1 hour to work etc.

The point I try to make here is shadowing at an ortho office will not give you enough info about what the profession is like. There are a lot of hard work behind the scene. Doing ortho procedures is fun and easy but having a successful ortho practice requires a lot of hard work.

As someone who immigrated to this country at the age of 15, I feel very inspired by your post

 

[Firm]

Well maybe west coast is different. Two Orthos I know are making 400k+ before taxes.

There is always the guy that knows someone killing it. Show me a tax return.

 

[Firm]

Many people (my patients, my patients' parents, my GP friends, my nieces and nephews etc), who look at the easy job that I have, the cars that I drive, and the house that I live in, think orthodontics is really a dream job. It only takes me a few seconds to look at the mouth and the assistants do the rest of the work. The total doctor's time for an entire 2-year case is only about 1-1.5 hours. For these reasons, they want their kids to study to become an orthodontist like me. What these people don't realize is to get to where I am today, I had to lose many of my youth years to study as hard as I could (since English isn't my first language). While other kids in my class were out partying, I spent my time doing research and studying for the board exam. I didn't stop working hard after I completed my ortho residency in the early 2000s. I worked 6 days/week for corporate chains to save money to set up my own office. After finishing my 9am-6pm job at the chain offices, I went straight to my own newly built office to work there until 9pm. I didn't stop working hard after I paid off my student loans in 5 years. Now, I own 4 ortho offices and I still continue work part time for the corporate chain....that's 22 days a month. The good thing about ortho is I never feel exhausted by the end of the work day. It's actually very rewarding to have patients who always appreciate what you've done for them.

A new ortho grad, who claimed that he/she doesn't make more than 150k/year as an orthodontist, probably only has a part time job. To get 6 days/week job, I had to drive to 6 different offices. It's not just ortho. That's the way it is for all dental specialists. They have to travel. There are jobs available but many new grads are not willing to accept them. Some refuse to work for corporate chains because they think these places are evil. Some refuse to do in-house ortho at GP offices because they feel the salary offers are too low. Some refuse to work for another orthodontist because the owner orthodontist is too bossy. Some refuse to drive more than 1 hour to work etc.

The point I try to make here is shadowing at an ortho office will not give you enough info about what the profession is like. There are a lot of hard work behind the scene. Doing ortho procedures is fun and easy but having a successful ortho practice requires a lot of hard work.

Good point about the travel. I worked in 12 GP/Pedo/Ortho offices total, as many as 6 at one time. I've had to fly and drive to get to work. People only see what you have or that the work is easy but most don't see that I had to drive assistants 3 hours to and from (6 hours) work at a GPs office while working 8 hours.

 

[OG1]

I am killing it!!! My dog ate my tax return.

Seriously though - I lucked out when I graduated and was able to buy a good practice and eventually grow it. Servicing $500k in school debt has been a burden, though.

The #1 advice I give to anyone considering dental school: Apply to the 10 cheapest schools possible and live frugally. I learned this lesson the hard way with my dental school debt; when I applied to ortho I applied to 30+ schools and lucked into a 2 year program that paid tuition. Still came out with $500k in debt.