START UP from scratch or BUY???

[kerrydds06]

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Ok lets hear it and why.....A good clean fight boys and girls!

I'll go first,
BUY!
you have the patients from day one!

 

[dinesh]

It's according to the price the practice is selling for. Also, even though you pay so much for a pratice, there is no guarantee the patients would stay.

Start from scratch 😉 If you suck it's cheaper.

 

[ItsGavinC]

It's according to the price the practice is selling for. Also, even though you pay so much for a pratice, there is no guarantee the patients would stay.

I'll second that. Some will stay, and some will leave. You can't take a 800 patient base and assume that 800 will be remaining after you purchase.

 

[BigBottomGirl]

Depends on the market. If there is growth in the community and not enough dentists to support it then buy all means start from scratch. If there is no growth and all dentists have a full practice (1500 to 3000 active charts) then you may want to consider buying.

 

[DcS]

Yeah but at the same time you can't start from scratch and not simultaneously work in another office for income unless you have got $$ growing on trees. If will take a good while to pack a full schedule so most times you will schedule 1-2 days in your startup and associate in another practice for the other 3 days. That way you can keep cash flow while slowly building your practice.

Personally, I am going to associate and then open up from scratch. I would not feel comfortable handling the business side of practice without seeing an office first-hand. That is the value of an associateship to me. When it's all said and done, unless it is a great opportunity I will open up on my own. That way, I can train the staff the way I want them to work, not to cater to how they are used to being treated by another doc. You get a clean slate and can set things up how you want it from day 1.

 

[UTDental]

I've researched this question a lot. From what I learned, most practice management consultants say to buy an existing practice. The reason is the immediate cash flow. If you start from scratch, it will take like 4-5 years to catch up to someone who bought a practice. As far as losing patients after the sale, it has been shown that over 90 percent stay with the new doctor. Face it- people get settled in their ways and don't want to trouble themselves with finding a new office (new traffic patterns, parking problems, etc.). As far as training staff and buying new equipment, you can still do that... but it just occurs over a period of time.
From what I can tell, the only way to make a start up worthwhile is if you are moving to a rural location or a location with tons of patients and few dentists. If you are planning on being in the city or suburbs, find a practice to buy for cheap and build it up. I've listened to both sides of this issue and it seems to me practice purchase always makes more sense.

 

[groundhog]

A big issue arises if you need to borrow the money from a bank to start or buy a practice. Without a ton of borrower equity being put on the table as security, banks don't look kindly on loaning out money for start up practices. They prefer to make loans for buyouts which can be justified upon the historical cash flow streams of the targeted practices

 

[seungmka]

depends on GP or Specialist. for GP, buying is a better option since u inherit the pt pool right away. starting new as GP is real tough and will suffer for a few years if the competition is stiff in your area.

for specialists, many prefer to start new since you wont know your referal source when u buy. plus many make a lot of profit that its not so risky to start new.

 

[DcS]

A big issue arises if you need to borrow the money from a bank to start or buy a practice. Without a ton of borrower equity being put on the table as security, banks don't look kindly on loaning out money for start up practices. They prefer to make loans for buyouts which can be justified upon the historical cash flow streams of the targeted practices

Valid points, but here is a tidbit just for informational purposes.

What many dentists do to put up collateral for loans on big purchases like a practice that can exceed 500g is to sign over their life insurance policy to the lender. It is a common practice I just read about it recently in a dental journal. Those are big loans and most people do not have the net worth to get it, so you sign over your insurance policy. Once the loan is payed off over the time period, say 7 years, you get your policy signed back over to your spouse/sig other, etc.

 

[darius99]

Valid points, but here is a tidbit just for informational purposes.

What many dentists do to put up collateral for loans on big purchases like a practice that can exceed 500g is to sign over their life insurance policy to the lender. It is a common practice I just read about it recently in a dental journal. Those are big loans and most people do not have the net worth to get it, so you sign over your insurance policy. Once the loan is payed off over the time period, say 7 years, you get your policy signed back over to your spouse/sig other, etc.

what if u die in the mean time?

 

[Mustt Mustt]

what if u die in the mean time?

It is obvious that the Lonaer/bank will get the loan money from Insurance and give the rest to the spouse/sig other. The sig.other/spouse does get a practice that will be hard to sell and will lose a lot of money. I am sure their loss is more than just money in case of death.

 

[speedy3816]

what about dental "franchises"? i dont think that's the correct name for them...
anyways, i have seen this happening quite a bit where I live, some established doctors are switching over to these "franchises"...

do you guys think this could also be an option for a graduating dentist, or are these not a good idea. i dont know much about this subject, but am curious if anyone knows about any pros/cons to this 😕

 

[BigBottomGirl]

Jusy Say NO to franchises....For the sake the proffesion do your best to stay independent.

 

[Yellow Snow]

Isn't it a common situation to work for six months to two years with a near retiring dentist and slowly take the practice over from him/her eventually buying? This allows the retiree to slowly ween off of a work lifestyle and is obviously good for the incoming associate, especially just out of school as you have time to build up your skills.

I got the idea somewhere that this is pretty common and it always seemed like the way I would want to go. This also allows you to move into a dentist saturated area and still take a piece of the pie.

 

[diagnodent]

Sorry but it doesn't work easily to associate in a practice and then buy it.

I don't know of anyone who did that and it worked out. I know a bunch of people who tried, including me.

The easiest way to the big bucks is to work for a few years for others, learning dentistry and business. And meeting as many dentists you can. Then buy a practice not thru a broker but from a contact.

Starting up is hard unless you are really prepared clincially and business savvy.

 

[UTDental]

I agree. Do you have any suggestions on how to develop contacts for practice purchase without introducing a broker into the situation?

Sorry but it doesn't work easily to associate in a practice and then buy it.

I don't know of anyone who did that and it worked out. I know a bunch of people who tried, including me.

The easiest way to the big bucks is to work for a few years for others, learning dentistry and business. And meeting as many dentists you can. Then buy a practice not thru a broker but from a contact.

Starting up is hard unless you are really prepared clincially and business savvy.

 

[Yellow Snow]

Sorry but it doesn't work easily to associate in a practice and then buy it.

I don't know of anyone who did that and it worked out. I know a bunch of people who tried, including me.

The easiest way to the big bucks is to work for a few years for others, learning dentistry and business. And meeting as many dentists you can. Then buy a practice not thru a broker but from a contact.

Starting up is hard unless you are really prepared clincially and business savvy.

What are the reasons these situations commonly don't work out? Are they mostly interpersonal?

Thanks for the information.