Unlocking Dental Success: 3 Key Questions for Practice Financing!
For many dental school graduates, launching a practice is the ultimate dream—yet the road to ownership can feel like a steep uphill climb, especially with the weight of student debt pressing down. But fear not! With the right strategy and solid support, new dentists can navigate the financial landscape and turn their aspirations into reality.
It’s no secret that a whopping 72% of dentists prefer the thrill of owning a private practice. Why? Because it’s about more than just a paycheck; it’s about fostering long-lasting relationships with patients and creating a legacy of care. As a health-care banker at US Bank, I’ve seen firsthand how owning a practice can pave the way for lasting wealth and a comfortable future—one that extends well into retirement.
Before diving headfirst into the world of financing for your own practice, let’s explore three crucial questions that every aspiring dentist should ponder.
What’s Your Projected Cash Flow?
When considering the launch of a dental practice, collaborating with specialized health-care bankers can make all the difference. These experts offer enticing options, including 10-to-15-year terms on non-real estate loans, which translate to lower monthly payments compared to the five-to-seven-year options available elsewhere. They also provide a full suite of services—think money management, back-office software, and wealth advice—designed to set dentists up for success.
With dental school graduates burdened by an average debt of $293,900, according to the latest statistics, it’s essential to focus on cash flow rather than just the daunting total. Health-care bankers prioritize ensuring that new dentists are generating enough revenue to comfortably meet both their business and personal expenses, including those pesky student loan payments. If your cash flow looks promising, you might just snag 100% financing!
When considering your loan options, bankers will assess your income relative to your expenses. And remember, income-driven repayment (IDR) plans from the US Department of Education can ease your monthly payment woes, aligning payments with your ability to pay rather than the total debt. It’s a smart move for any graduate facing hefty loan balances.
On the brighter side, the income outlook for private practices is looking up! Independent dentists are ramping up procedures and increasing their fee schedules. In fact, the median gross billings for owner dentists hit nearly $800,000 in 2023—a 6% bump from the previous year. Now that’s some good news!
What Type of Practice Will You Start?
One of the most significant decisions you’ll face is whether to build your practice from the ground up or take the plunge and buy an existing one. Both routes have their perks and pitfalls that demand careful consideration.
Launching a brand-new practice means you’ll have the freedom to choose the latest equipment and shape the patient experience without the baggage of past decisions. However, you’ll be starting from scratch, without an established patient base or revenue stream.
On the flip side, purchasing an existing practice gives you immediate access to a roster of patients and a talented team of staff. But be prepared: you may inherit a different treatment style and possibly dated equipment.
Who’s on Your Team?
Starting a practice doesn’t have to be a solo venture. Building a successful dental practice requires a robust support team of experts! In addition to a savvy banker, you’ll want to enlist the help of accountants, attorneys, and consultants with experience in the healthcare arena. They can help design a business plan that maximizes efficiency and profitability—key factors in securing the financing you need.
And once your practice is up and running, these professionals will continue to guide you, ensuring your business flourishes and adapts in an ever-changing landscape.
Today’s dental graduates may face significant debt, but that shouldn’t deter them from pursuing their passion and building a future for themselves and their families. With the right guidance from specialized bankers and industry experts, the dream of practice ownership is well within reach!
Editor’s note: This article appeared in the January 2025 print edition of Dental Economics magazine. Dentists in North America are eligible for a complimentary print subscription. Sign up here.
