As the leader of our Dental Practice Accounting Niche at Goldin Peiser & Peiser, LLP, I have come across a number of dentists who, without thoroughly vetting the process, have purchased a dental practice; often with disastrous results. It is basically the same story I hear from clients: They have decided that they want to be their own bosses but don’t want the baggage that comes with purchasing someone else’s dental practice. They believe that by starting up on their own, they have the freedom to mold it into what they want it to be. They want to decide on the location, the type of patients, and the profile of the staff. They want to control the work day, work week and vacation schedule. Those are all good reasons to go out on their own, but starting a practice from the ground floor is expensive, challenging, and fraught with financial, management, and business decisions.
Know the Questions to Ask
I always advise my clients to ask following before they make any decision:
- Entity Selection – Will it be a corporation or partnership?
- Financing – Where will it come from? How will I find it? Will I qualify? What are the best terms?
- Equipment – What are the benefits of purchasing? What are the benefits of leasing? What are the financial implications? Are there any tax benefits derived from either or both?
- Revenue Stream – What will be your patient base? What percentage of your revenue will come from cash & carry or Medicare? Have you considered additional profit centers for your practice?
- Insurance – What type and how much insurance is needed for my practice? Do I need long-term disability? Do I need life insurance? How much malpractice insurance do I need? What other liabilities do I need to cover?
- Location – Have you researched demographics? Are you willing to move? How accessible is the location? Does you location fit with your patient profile?
- Patient Profile - What is the ideal age distribution of your patients? What is their financial profile?
- Human Resources - Will you staff your office with employees or will they be contract? What are the respective benefits of each? What are the drawbacks?
- Reason for starting a practice – Do you have a clear, thought out reason for starting your own practice? Do you know what you want to accomplish? Have you seriously considered other options?
Get Professional Guidance
The list can go on and on. The key for any dentist considering starting a practice is to seek guidance from a professional who has experience in dental practice transitions. This is one decision you do not want to make on your own. Next blog article – What you need to know when purchasing a dental practice.
For further information about starting a dental practice, contact Erick Cutler, Partner at Goldin Peiser & Peiser, LLP at 214-635-2541.
Note: This content is accurate as of the date published above and is subject to change. Please seek professional advice before acting on any matter contained in this article.