School debt and buying a practice

This forum made possible through the generous support of SDN members, donors, and sponsors. Thank you.
Good article, something I've been thinking alot about myself. I'd rather do the dentistry without all the business aspects, but I'm afraid they go hand in hand.
 
...If you don't like business, don't own a practice.
 
Huh, that was pretty interesting. i'd always thought that I'd need to get rid of some of the debt and make some money as an employee before buying a practice. Hmm.
 
I thought it was a really interesting article, and it seemed to make sense. My only concern is the source. I don't know much about the organization that wrote it, but they seem to be in the business of helping doctors/dentists buy and sell practices. I know how interest can compound, but I wonder if it is just that easy...get more loans and do it.

I just wonder what my credit score is going to look like with 250 thousand in debit on it, and what that loan is going to look like?

Also, how many of us are going to be prepared enough to set up shop by ourselves right out of dental school?
 
A dental consulting firm urging you to buy a practice! Imagine that 🙄. I'm sorry but I think this source might be a bit biased.

I think there's more than one avenue out of debt than just buying a practice. With the baby boomers retiring en masse in the near future, don't you think associateship then buying into that practice would be a viable option? What about the federal loan repayment programs?

I think they're being way dramatic.
 
This was certainly a great article - very different from everything I've been reading over the years. I definitely get where the author is coming from and he/she makes several valid points that I myself have never thought of. Like others, I would love to know the source for credibility sake.

It still seems like it makes more sense to at least get your hands wet as an associate for a couple years before jumping into buying a practice. From my experiences, most new grads don't have the confidence yet coming straight out of dental school to be the "boss." I mean how confident can you be when the requirement for some schools is 2-3 molar root canals and even those are hard to come by if their is an endo specialty program at the school (they will preferentially give those patients to complete their own requirements). In addition, I feel like those individuals who haven't spent years and years in the dental industry before dental school ought to put in a couple years in various types of practices and regions to see where their interests lie in terms of serving a specific type of population. Most people generally don't have a feel for this fresh out of school... just my opinion though
 
The author obviously has his own agenda, but after you sift through the dramatics it is interesting to think about. I personally would like to buy a practice straight out of Dental School. I have a lot of business and accounting experience from my previous career however.
 
redchesus said:
A dental consulting firm urging you to buy a practice! Imagine that 🙄. I'm sorry but I think this source might be a bit biased.
Click to expand...
👍 ITA. Buying a practice straight out of school may be a prudent move for some. This particular sales pitch (that's what it is) uses a lot of words to make its simple point, though, and doesn't provide a lot of compelling data in full context. My 2 cents.
 
Last edited:
Advertisement - Members don't see this ad
The only problem is....how are you going to get the money? Banks would not loan to a student without ANY experience (1+ yr required in most cases).

In addition, why would you want to buy a practice outright and immediately without actually working there a good bit? You'll often find things will be a little different than you might be lead to believe if you don't actually work at a place for a while.
 
Yes, the major hurdle will be getting financing, especially in this market. Who knows what it'll be 5 years down the road. I've also considered associating for a year so I can get a bit of experience and feel more comfortable first, but no longer than that. Owning your own practice, in my opinion, is the best investment you can make with the biggest financial returns, especially in the long run. I'm an older non-trad, so saving up for retirement and paying off my school debt quickly is important. I think I can do that better as my own boss.
 
Last edited:
All great points. But what about solo specialist practitioners (endos, omfs, etc) who are looking to retire? How reluctant/eager are they to allow someone fresh out of residency to purchase their practice (on average)? What if he/she hasn't worked with an associate before?
 
As it has already been suggested, since AFTCO is in the business of brokering dental practices, it can hardly qualify as an objective article. One problem with a 250,000 loan is that amortized over 10 years it becomes a ~350,000 debt and amortized over 30 years it balloons to a hefty ~550,000 and that's at a measly 6% interest. Buying a practice certainly can make a lot of sense but it is questionable whether a dentist, fresh out of school, can walk into 715,000 practice and actually achieve that level of production. Servicing a loan of 250,000 over 10 years means having a payment of roughly 3K per month. Throwing in a modest mortgage of roughly equal amount means the monthly payment will be in the range of 6K and that's before insurance, federal/state income tax, property tax and not to mention Snoopy's food and vet bills. Even with an income of 12k/month income, there are some serious holes in the income bucket.
 
Last edited:
For me, it seems like a pretty scary thing to buy into a practice directly out of dental school, without having worked with the staff, or understood really how that practice is run (or how ANY practice is run, really). I know some dentists in my area have hired associates for a year or so and then sold them the practice. That seems smarter to me...
 
SuperTank said:
For me, it seems like a pretty scary thing to buy into a practice directly out of dental school, without having worked with the staff, or understood really how that practice is run (or how ANY practice is run, really).
Click to expand...
I agree.

SuperTank said:
I know some dentists in my area have hired associates for a year or so and then sold them the practice. That seems smarter to me...
Click to expand...
This would be the best case scenario.
 
So when he urges people to buy a practice, he means an existing practice? If it were to be a brand new practice that a graduate built with a loan, how would the graduate obtain a patient base quick enough to meet even his first monthly payment?

And if it's an existing practice, what if it fails due to lack of business sense/experience of the new graduate? Couldn't that ruin the graduate for his/her whole career with $750,000+ in debt and a failing practice?
 
I think the point to take away from the article is that you need to have confidence going into dental school and maintain that confidence coming out. You need to spend 4 years preparing to run a practice, not just learn how to drill teeth. Greater risk always = greater reward...but you can make your situation a lot less risky with diligence in school. There are business seminars and experienced faculty to talk to. I know dentists personally that came out after their 4th year, bought a practice, and were off and running. Sure, it isn't for everyone. But take advantage of opportunities to learn and get ahead before you out of school and swimming in debt.
 
doc toothache, ya nailed it. Thank you.
 
dentalbuzz said:
The author obviously has his own agenda, but after you sift through the dramatics it is interesting to think about. I personally would like to buy a practice straight out of Dental School. I have a lot of business and accounting experience from my previous career however.
Click to expand...

i agree. Im going to come out of dental school debt free, so after my one year gpr i may work for a year or two and than i will either open up my own place or buy a place. One of the main reasons i would love to be a dentist is b.c of the business side it requires to succeed. I know many dentists who can barely make 200k in NY, while others i know who are business oriented, are making over 400k and only 10 miles away from the guy making 200k.
 
Advertisement - Members don't see this ad
^ Debt free? That has to be an extremely good situation to be in!
 
wow - "debt free"... that would be an amazing feeling...
 
doc toothache said:
As it has already been suggested, since AFTCO is in the business of brokering dental practices, it can hardly qualify as an objective article. One problem with a 250,000 loan is that amortized over 10 years it becomes a ~350,000 debt and amortized over 30 years it balloons to a hefty ~550,000 and that's at a measly 6% interest. Buying a practice certainly can make a lot of sense but it is questionable whether a dentist, fresh out of school, can walk into 715,000 practice and actually achieve that level of production. Servicing a loan of 250,000 over 10 years means having a payment of roughly 3K per month. Throwing in a modest mortgage of roughly equal amount means the monthly payment will be in the range of 6K and that's before insurance, federal/state income tax, property tax and not to mention Snoopy's food and vet bills. Even with an income of 12k/month income, there are some serious holes in the income bucket.
Click to expand...

Good point. The success of the practice as a going concern is the ability of the buyer to replicate the productivity of the seller. Beyond the clinical aspect, a new buyer may also be less experienced than the seller in business management. The success of the transaction is largely dependent on how the post-closing transition period is carried out. And most importantly the transaction should also make sense from a financial standpoint....a mature practice selling for a premium should throw off enough discretionary net income to pay for the value of the owner's labor, service debt on the practice loan, and provide a return on investment.
 
You must log in or register to reply here.

Similar threads

Mr.Smile12
Average dental school debt trends
Replies
7
Views
3K
deleted923283
D
Mr.Smile12
San Antonio dentist: a debt repayment story
Replies
5
Views
2K
askadds
A
emilia112
am i blacklisted at this school and others?
Replies
5
Views
1K
Mr.Smile12
Mr.Smile12
A
professional school student loans and BBB
Replies
24
Views
5K
Mr.Smile12
Mr.Smile12
B
Help me with a school list
Replies
5
Views
1K
Baowser
B
Top Bottom