AMA - Practice startups and early retirement

[Allons-y]

I'm graduating from dental school in 2021. If you are planning on retiring then and want extra help, I would love to work for you.

...please adopt me

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[CanaDMD]

I'm graduating from dental school in 2021. If you are planning on retiring then and want extra help, I would love to work for you.

...please adopt me

No, I asked for adoption first!!!!!

 

[Sanducan]

I think it was somewhere around 60k for construction and 40k+ for equipment. ; That should be more than enough. Your marketing budget scales with the number of patients you can see. There's no point in getting 500NP a month if you can only handle 400.

Marketing budget should be sufficient for a 6ops office. I would warn against going that small in the long term w/o any foreseeable way of expanding. I don't see moving as a viable option because you'll lose patients during the transition. I'm picking up a lot of patients from a dentist that decided to move about 1 mile down the road (good for me, bad for them). You would want to have the option to expand later on; otherwise you'll be stuck at 6ops with minimal room to grow. Especially if you're planning to do a multidoctor office.

So you're saying 7ops with room for expansion would be more ideal? Would that be approximately 4000sqft or would you go bigger?

I'm a little confuse on how you did everything with a little over $100k, even the breakaway practice guys are saying $550k is most ideal for a successful start-up. Did you have a family member who's a contractor? What about plumbing, electrical work, doesn't that cost a lot? Sorry for bombarding you with all the questions.

 

[Rishi Garg]

I'm not sure how helpful this would be. Here's a series of article on starting a dental practice (from a point of view of a UIC dental graduate).
Setting Up Your Practice – The Benefit of Using a Dental Contractor vs. General Contractor

 

[TanMan]

So you're saying 7ops with room for expansion would be more ideal? Would that be approximately 4000sqft or would you go bigger?

I'm a little confuse on how you did everything with a little over $100k, even the breakaway practice guys are saying $550k is most ideal for a successful start-up. Did you have a family member who's a contractor? What about plumbing, electrical work, doesn't that cost a lot? Sorry for bombarding you with all the questions.

I think Breakaway Seminars is a huge scam. I'm not sure why people think that their numbers even make sense. Then again, I really don't care since my competitors are getting scammed, not me. Their loss = my win. Reminds me of an aggregation of all the expensive dentaltown services packaged as one and since it's dental, its gotta be expensive. It's for people who don't know anything about business, don't want to know anything about it, and are willing to pay the "stupid tax" to them.

6-7 ops in 3000 sq ft gives you plenty of room. Plumbing and electrical is cheap. Plumbing cost me about 5k. Plumbing was done into the ceiling and inside the walls. Cheaper and easier to fix than breaking ground. Lets see.. I'm not sure what is expensive in the process.... demo, framing, ethernet drops, electrical, plumbing, HVAC, finishing, etc... Only thing I can think of that might be expensive is nitrous plumbing, but that's why I have carts and I discourage patients who want/need nitrous. I used a general contractor; my contractor is also my landlord. A side note, a difficult landlord with a ton of requirements is someone you should never sign up with.

Anyway, I'm tired, and my answer is a bit disorganized. Let me know if you have any other questions.

 

[Cold Front]

No, you have better things to do with your capital than buy a building/land and break ground. Commercial real estate can make you extra money, but you're in the business of dentistry, not being a landlord.

Edit: RE is slow and steady money as a buy and hold strategy. I want to retire fast, so I don't dabble in real estate holdings, only hard money lending.

This is complete nonsense. You don't get it on RE.

Real estate is key to passive income, retirement income and a good strategy for any portfolio. Almost all successful and high networth individuals have RE investments. Not to mention tax benefits and the zero time that you put into it once you find the right tenants. If you haven't done any RE investments yourself, I would highly recommend you start do so by buying out your landlord or building your own building, and have other tenants pay for the mortgage and charge them management and other fees to pocket additional income.

Take it from a dentist who is doing this, and is collecting $500k a year in commercial RE rental income (outside dentistry).

 

[Cold Front]

From corporate employer and some billing course. I learned how my former employers billed and copied them. PPO billing, learn as you go... see what they pay, who pays, who doesn't, and adapt as needed.

S-Corp

Just FYI for those who don't know what S-Corp is.

In layman terms, S-Corp is designed to help owners to draw a "reasonable" salary and lower self-employment tax liability. This leads to owners abusing the S-Corp by filing (for instance) $1,000 income from their $600k annual business profit. Which means IRS scrutiny and as a result S-Corps are the most audited type of corporation than LLC's and C-Corps. It's a great pass-through route to game the tax system, but it's ripe for abuse, so expect a closer look on your numbers from the IRS. Not implying you specifically, but any account can tell you this.

 

[Grinz]

Take it from a dentist who is doing this, and is collecting $500k a year in commercial RE rental income (outside dentistry).

How many properties do you own to have those numbers? Residential or Commercial? And are you following 1% rule (at the minimum) with these?

 

[TanMan]

This is complete nonsense. You don't get it on RE.

Real estate is key to passive income, retirement income and a good strategy for any portfolio. Almost all successful and high networth individuals have RE investments. Not to mention tax benefits and the zero time that you put into it once you find the right tenants. If you haven't done any RE investments yourself, I would highly recommend you start do so by buying out your landlord or building your own building, and have other tenants pay for the mortgage and charge them management and other fees to pocket additional income.

Take it from a dentist who is doing this, and is collecting $500k a year in commercial RE rental income (outside dentistry).

Yeah.... not unless I have nothing else to do with my money.
When I evaluated real estate as a potential investment, I look at the following factors:
1. Am I building equity, cash flow, or both? If I'm building equity, how much, how fast, and how liquid is it?
2. What percentage of my income is taken by debt servicing, property taxes, maintenance, etc...
3. Risk factors for STNL/MTNL's since we're talking about commercial real estate. CAP rates just aren't that great for a buy and hold strategy, and flipping + 1031's are something I don't really want to do.
4. Passive income for absolute triple nets, but you need to factor in vacancy rates as well. If you're not in a absolute triple net, it's not absolutely passive (double nets, triple net still carry some maintenance costs)
5. Long term v short term. Your strategy works if you're going to do this for a long time. Wtf would I want to buy a building that I have no intention in staying in for the long term. I'm just gonna have an empty 4500 sq ft facility that's going to cost me money if I can't get anyone to rent or buy my office. A lot of these speculative/pro forma returns are factored into the purchasing price already.
6. Depreciation of a property does have tax benefits.

There's multiple sides to this, for most people going through the traditional route, this makes sense. If you're in a rush, this is probably not the best way to accumulate wealth

S-corps do have a higher chance of getting audited, I'll give him that, but I have my reasons on starting as an S-corp.

Anyway, I'm still at work, but I had some downtime. I'm just going to say this, 500k/yr is not much, especially if its not net income. (i'll assume that your debt servicing is not part of the net income equation due to building equity, but part of it is interest). Buying your building can make sense if its cash flow positive, building equity, you have nothing better to do with your capital and you're going to stay there for awhile, but its not as glamorous as the above poster made it. My strategy requires significant liquidity and its hard to get that especially if you're heavily leveraged on a property already., i.e 1mm down on a 10mm property...

Ill try and go more into detail later.

 

[Cold Front]

Yeah.... not unless I have nothing else to do with my money.
When I evaluated real estate as a potential investment, I look at the following factors:
1. Am I building equity, cash flow, or both? If I'm building equity, how much, how fast, and how liquid is it?
2. What percentage of my income is taken by debt servicing, property taxes, maintenance, etc...
3. Risk factors for STNL/MTNL's since we're talking about commercial real estate. CAP rates just aren't that great for a buy and hold strategy, and flipping + 1031's are something I don't really want to do.
4. Passive income for absolute triple nets, but you need to factor in vacancy rates as well. If you're not in a absolute triple net, it's not absolutely passive (double nets, triple net still carry some maintenance costs)
5. Long term v short term. Your strategy works if you're going to do this for a long time. Wtf would I want to buy a building that I have no intention in staying in for the long term. I'm just gonna have an empty 4500 sq ft facility that's going to cost me money if I can't get anyone to rent or buy my office. A lot of these speculative/pro forma returns are factored into the purchasing price already.
6. Depreciation of a property does have tax benefits.

There's multiple sides to this, for most people going through the traditional route, this makes sense. If you're in a rush, this is probably not the best way to accumulate wealth

S-corps do have a higher chance of getting audited, I'll give him that, but I have my reasons on starting as an S-corp.

Anyway, I'm still at work, but I had some downtime. I'm just going to say this, 500k/yr is not much, especially if its not net income. (i'll assume that your debt servicing is not part of the net income equation due to building equity, but part of it is interest). Buying your building can make sense if its cash flow positive, building equity, you have nothing better to do with your capital and you're going to stay there for awhile, but its not as glamorous as the above poster made it. My strategy requires significant liquidity and its hard to get that especially if you're heavily leveraged on a property already., i.e 1mm down on a 10mm property...

Ill try and go more into detail later.

1. You can build "instant" equity in RE as a tangible investment, specially in a market that has room to appreciate in value. The goal of a commercial RE is to not cash out, its to hold on to it as a safe investment. You shouldn't be concerned how liquid it is, this not cash you put into a saving account and you can withdraw it any day you want. It should be seen as your base line investment that can withstand the test of time and economic cycles, specially if you have class A tenants (including your dental office).

2. All taxes, maintenance, insurances, etc are pass through. Which means my dental office pays a share of those cost, and the other tenants do the heavy lifting. But my share of those expenses is reimbursed partially by the management fees I charge to all tenants (which is cheaper for tenants than hiring outside management company). Most tenants have 5-10 years first term leases, and most tenants renew their lease if the building is in a good location, so all those expenses are covered in long term basis.

3. 6%+ cap rates are good and ideal, which is true for any ROI for wherever your money goes to. If you ever sell your RE, you also have the luxury of paying lower taxes on capital gains.

4. See #2. Pass through expenses is standard in the industry. So your net is stable over 5-10 years lease periods, with renewal 5-10 years options giving you even higher net. Also, this net income should not be seen as your primary income as a dentist. It's a passive income that is there to be used to cut back from dentistry.

5. What do you mean by "if you have no intention of staying there long term"? If your practice is doing well, then why leave? If you leave, why not sell it to another dentist and he/she signs 10 years lease and pays you good rent? Your crown jewel office will always be there even if the buying dentist relocates, and you could sell the practice to another dentist with another lease, or you may decide to come back from retirement and work there on limited basis.

6. 39.5 years for commercial buildings to be exact. It's called straight line depreciation. Also, you could refinance a paid off building and take that money out of the building and put it somewhere else with higher yield. Boom!

 

[Franklo]

I apologize if you've already answered this (I haven't found it in the thread) but would you mind saying how old you were when you graduated from dental school? I'm guessing you're shooting for retirement at age 50 correct?

 

[TanMan]

1. You can build "instant" equity in RE as a tangible investment, specially in a market that has room to appreciate in value. The goal of a commercial RE is to not cash out, its to hold on to it as a safe investment. You shouldn't be concerned how liquid it is, this not cash you put into a saving account and you can withdraw it any day you want. It should be seen as your base line investment that can withstand the test of time and economic cycles, specially if you have class A tenants (including your dental office).

2. All taxes, maintenance, insurances, etc are pass through. Which means my dental office pays a share of those cost, and the other tenants do the heavy lifting. But my share of those expenses is reimbursed partially by the management fees I charge to all tenants (which is cheaper for tenants than hiring outside management company). Most tenants have 5-10 years first term leases, and most tenants renew their lease if the building is in a good location, so all those expenses are covered in long term basis.

3. 6%+ cap rates are good and ideal, which is true for any ROI for wherever your money goes to. If you ever sell your RE, you also have the luxury of paying lower taxes on capital gains.

4. See #2. Pass through expenses is standard in the industry. So your net is stable over 5-10 years lease periods, with renewal 5-10 years options giving you even higher net. Also, this net income should not be seen as your primary income as a dentist. It's a passive income that is there to be used to cut back from dentistry.

5. What do you mean by "if you have no intention of staying there long term"? If your practice is doing well, then why leave? If you leave, why not sell it to another dentist and he/she signs 10 years lease and pays you good rent? Your crown jewel office will always be there even if the buying dentist relocates, and you could sell the practice to another dentist with another lease, or you may decide to come back from retirement and work there on limited basis.

6. 39.5 years for commercial buildings to be exact. It's called straight line depreciation. Also, you could refinance a paid off building and take that money out of the building and put it somewhere else with higher yield. Boom!

Alright, you are bringing up points that I am aware of, but I think you may be missing the point of this entire thread... early retirement.

1. I am very concerned about liquidity because investment opportunities come by and need to be acted upon immediately
2. That's the point of triple net, but the returns are still insufficient for my needs, which leads into point 3. I'm not as worried about taxes as I need my money sooner than later and I may be in a tax disadvantage, but my returns make up for it
4. There's this talk of passive income, I'm in a ramping up stage of building fast and quick capital to invest later on. My businesses are paying me right now to reinvest into other businesses.
5. I'll make this clear, I want to leave because I don't want to practice for a long time. I work to live, not live to work. As I mentioned before in a different thread, I don't want to be that guy who enjoys his wealth when he's 50+. I want to have so much capital and money, that I wouldn't care if I could sell my office or just abandon it. I have my own reasons for this, and if you want to work for 30+ years as a dentist, more power to you. I really don't want to do this for the long term. I don't think there's much of a difference b/w 10MM vs 100MM in terms of lifestyle. I bought a large house under the advice of my lawyer, but I don't even use most of the house. I'm not aiming to be the richest dentist in the planet. I just want to have enough money to afford creature comforts for the rest of my life. Maybe real estate will play a role later on, but for now, I'll pass since I have other businesses that yield a LOT more than real estate.
6. Long time for depreciation. Maybe if I could expense or deduct the whole amount or distribute it among the years.

I understand that there's pride in owning properties; something tangible, etc... but I have no kids. Even if I had kids, I wouldn't give them anything unless they can prove that they can be financially better than me. If all my kids were failures, I would just donate my money to charity or create a foundation.

So... what is the point of this whole back and forth? There's more than one way to approach retirement. Clearly, you seem to be very fond of real estate as I am not. Your strategy works for most dentists, just not for me at this time. Now if you tell me how I can utilize real estate to retire from dentistry permanently in 3 years, then I'd be glad to take your advice.

I apologize if you've already answered this (I haven't found it in the thread) but would you mind saying how old you were when you graduated from dental school? I'm guessing you're shooting for retirement at age 50 correct?

I graduated at 26 (stupid decisions in life made me reroute and take a bit longer). I am aiming to retire at around 35 - 36

 

[Cold Front]

Alright, you are bringing up points that I am aware of, but I think you may be missing the point of this entire thread... early retirement.

1. I am very concerned about liquidity because investment opportunities come by and need to be acted upon immediately
2. That's the point of triple net, but the returns are still insufficient for my needs, which leads into point 3. I'm not as worried about taxes as I need my money sooner than later and I may be in a tax disadvantage, but my returns make up for it
4. There's this talk of passive income, I'm in a ramping up stage of building fast and quick capital to invest later on. My businesses are paying me right now to reinvest into other businesses.
5. I'll make this clear, I want to leave because I don't want to practice for a long time. I work to live, not live to work. As I mentioned before in a different thread, I don't want to be that guy who enjoys his wealth when he's 50+. I want to have so much capital and money, that I wouldn't care if I could sell my office or just abandon it. I have my own reasons for this, and if you want to work for 30+ years as a dentist, more power to you. I really don't want to do this for the long term. I don't think there's much of a difference b/w 10MM vs 100MM in terms of lifestyle. I bought a large house under the advice of my lawyer, but I don't even use most of the house. I'm not aiming to be the richest dentist in the planet. I just want to have enough money to afford creature comforts for the rest of my life. Maybe real estate will play a role later on, but for now, I'll pass since I have other businesses that yield a LOT more than real estate.
6. Long time for depreciation. Maybe if I could expense or deduct the whole amount or distribute it among the years.

I understand that there's pride in owning properties; something tangible, etc... but I have no kids. Even if I had kids, I wouldn't give them anything unless they can prove that they can be financially better than me. If all my kids were failures, I would just donate my money to charity or create a foundation.

So... what is the point of this whole back and forth? There's more than one way to approach retirement. Clearly, you seem to be very fond of real estate as I am not. Your strategy works for most dentists, just not for me at this time. Now if you tell me how I can utilize real estate to retire from dentistry permanently in 3 years, then I'd be glad to take your advice.


I graduated at 26 (stupid decisions in life made me reroute and take a bit longer). I am aiming to retire at around 35 - 36

You seem to be ambitious in your own way. I'm 38 and I had the option to retire early, but I would be bored to death, but instead enjoy helping people through dentistry. I work 4 days a week and take long weekend breaks to travel, or sit on my roof top patio next to the fireplace with my wife, friends, or family instead. Everyone has their own path in life and should enjoy it by retiring early or keep working. To me, social life I have at work and off work are very rewarding. My employees and I are all about the same age, and we do enjoy coming to work and look forward to each other just for those few days a week at the office.

Congrats on your success!

 

[Franklo]

Alright, you are bringing up points that I am aware of, but I think you may be missing the point of this entire thread... early retirement.

1. I am very concerned about liquidity because investment opportunities come by and need to be acted upon immediately
2. That's the point of triple net, but the returns are still insufficient for my needs, which leads into point 3. I'm not as worried about taxes as I need my money sooner than later and I may be in a tax disadvantage, but my returns make up for it
4. There's this talk of passive income, I'm in a ramping up stage of building fast and quick capital to invest later on. My businesses are paying me right now to reinvest into other businesses.
5. I'll make this clear, I want to leave because I don't want to practice for a long time. I work to live, not live to work. As I mentioned before in a different thread, I don't want to be that guy who enjoys his wealth when he's 50+. I want to have so much capital and money, that I wouldn't care if I could sell my office or just abandon it. I have my own reasons for this, and if you want to work for 30+ years as a dentist, more power to you. I really don't want to do this for the long term. I don't think there's much of a difference b/w 10MM vs 100MM in terms of lifestyle. I bought a large house under the advice of my lawyer, but I don't even use most of the house. I'm not aiming to be the richest dentist in the planet. I just want to have enough money to afford creature comforts for the rest of my life. Maybe real estate will play a role later on, but for now, I'll pass since I have other businesses that yield a LOT more than real estate.
6. Long time for depreciation. Maybe if I could expense or deduct the whole amount or distribute it among the years.

I understand that there's pride in owning properties; something tangible, etc... but I have no kids. Even if I had kids, I wouldn't give them anything unless they can prove that they can be financially better than me. If all my kids were failures, I would just donate my money to charity or create a foundation.

So... what is the point of this whole back and forth? There's more than one way to approach retirement. Clearly, you seem to be very fond of real estate as I am not. Your strategy works for most dentists, just not for me at this time. Now if you tell me how I can utilize real estate to retire from dentistry permanently in 3 years, then I'd be glad to take your advice.


I graduated at 26 (stupid decisions in life made me reroute and take a bit longer). I am aiming to retire at around 35 - 36

Wait if you graduated at 26 that means you got in right after undergrad right?? What do you mean you were late?

 

[Sanducan]

I think Breakaway Seminars is a huge scam. I'm not sure why people think that their numbers even make sense. Then again, I really don't care since my competitors are getting scammed, not me. Their loss = my win. Reminds me of an aggregation of all the expensive dentaltown services packaged as one and since it's dental, its gotta be expensive. It's for people who don't know anything about business, don't want to know anything about it, and are willing to pay the "stupid tax" to them.

6-7 ops in 3000 sq ft gives you plenty of room. Plumbing and electrical is cheap. Plumbing cost me about 5k. Plumbing was done into the ceiling and inside the walls. Cheaper and easier to fix than breaking ground. Lets see.. I'm not sure what is expensive in the process.... demo, framing, ethernet drops, electrical, plumbing, HVAC, finishing, etc... Only thing I can think of that might be expensive is nitrous plumbing, but that's why I have carts and I discourage patients who want/need nitrous. I used a general contractor; my contractor is also my landlord. A side note, a difficult landlord with a ton of requirements is someone you should never sign up with.

Anyway, I'm tired, and my answer is a bit disorganized. Let me know if you have any other questions.

Wow, you just destroyed every belief I held dearly regarding startup cost. I am an uber advocate for the breakaway style, and highly respect Scott Leune. I guess that's all I had as a reference point when it comes to costs. But if you're saying it can be way cheaper, then you got my ears.

My goal was to work for a year as an associate, and midway through my associate-ship, get a loan and hopefully finish the startup before my one year contract ends. Then work in the startup part time while still keeping an associate position somewhere. But if I can do a startup for less than $150k, I can probably do the startup earlier. What do you think?

Couple questions:
1. What do you think about finishing 3ops and plumbing 4 for expansion?
2. How much was your plan and design cost, and are you factoring those costs in the $100K?
3. Did you use a lease negotiator, and did you get TI monies?
4. Did you have a dental lawyer, dental CPA, and the full jazz before you started building?
5. What size are your operatories in sqft?
6. Is it essential for a dental contractor to do the build-out, a lot of people claim regular contractors delay the startup because they are not familiar with the building codes
7. Did you do any DIY in the practice?
8. How many employees did you hire on day one of opening?
9. Do you think you can bring down your overhead even more?
10. How do you man the phones?

Sorry for all the questions, just want to learn as much from you as I can.

 

[TanMan]

Wait if you graduated at 26 that means you got in right after undergrad right?? What do you mean you were late?

Started with pharm, decided it was not for me, had to go get my bs degree.

 

[TanMan]

You seem to be ambitious in your own way. I'm 38 and I had the option to retire early, but I would be bored to death, but instead enjoy helping people through dentistry. I work 4 days a week and take long weekend breaks to travel, or sit on my roof top patio next to the fireplace with my wife, friends, or family instead. Everyone has their own path in life and should enjoy it by retiring early or keep working. To me, social life I have at work and off work are very rewarding. My employees and I are all about the same age, and we do enjoy coming to work and look forward to each other just for those few days a week at the office.

Congrats on your success!

I guess I'm not as altruistic; I love getting people out of pain, but I wouldn't make it my life's mission. I don't hear that often, that staff look forward to seeing each other, especially when there's drama. Off work, when we have company vacations, quarterly dinners, etc... different story, but in those events, I tend to weed out subversive elements of the staff. Rarely happens, but eventually, I get rid of those people and keep the core strong. My staff and I are bound by the pursuit of money.

Wow, you just destroyed every belief I held dearly regarding startup cost. I am an uber advocate for the breakaway style, and highly respect Scott Leune. I guess that's all I had as a reference point when it comes to costs. But if you're saying it can be way cheaper, then you got my ears.

My goal was to work for a year as an associate, and midway through my associate-ship, get a loan and hopefully finish the startup before my one year contract ends. Then work in the startup part time while still keeping an associate position somewhere. But if I can do a startup for less than $150k, I can probably do the startup earlier. What do you think?

Couple questions:
1. What do you think about finishing 3ops and plumbing 4 for expansion?
2. How much was your plan and design cost, and are you factoring those costs in the $100K?
3. Did you use a lease negotiator, and did you get TI monies?
4. Did you have a dental lawyer, dental CPA, and the full jazz before you started building?
5. What size are your operatories in sqft?
6. Is it essential for a dental contractor to do the build-out, a lot of people claim regular contractors delay the startup because they are not familiar with the building codes
7. Did you do any DIY in the practice?
8. How many employees did you hire on day one of opening?
9. Do you think you can bring down your overhead even more?
10. How do you man the phones?

Sorry for all the questions, just want to learn as much from you as I can.

I think its a good plan. I was a PITA in the corporate world and always pushing their buttons, if you keep a low profile, you can do both simultaneously. Not forever though, you need to make the leap to go full time at some point. Getting fired pushed me there pretty quickly. They even fedex'd a threatening letter, just laughed it off.

1. 3 ops is not enough. Rapid growth means you need a lot more rooms from the start. The time to get new chairs installed can mean quite a bit of potentially lost income (100k+/mo), especially if you're reaching heavy seasons such as december.
2. Plan/design - if you're referring to MEP/architect/plans, I think it was 800-1200 dollars
3. No lease negotiator, no TI money. I negotiated the lease down myself, and told them that I am not paying rent until construction complete. my construction was cheap anyway.
4. Hell no. The fact that you precede each one of those with dental means you think that they are special. They are not, nor are they worth the cost. Only ill-informed people will use them for a startup and pay the stupid tax.
5. 10x10 (100 sq ft)
6. No no no.... NO. The speed of your contractor depends on the contractor, their workload, and connections with the city inspectors. The more hooked up they are, the faster the process goes. It's the way of life. Example, the day they finished the electrical for inspection, they had an inspector there the same day to approve for the next step.
7. Yes. Server, initial ethernet drops, and computer/network setup.
8. I think 5... need to check on that
9. Yes, but I'm not greedy. I share the wealth with my staff, and I'm not cheap in terms of using inferior materials. In a way, my staff are like my children. I don't expect them to be DA's for the rest of their lives. If I can sell my office, I'll probably give them all scholarships to whatever they want to study, but we'll see.
10. I have someone at the phones from 8-7 everyday to answer calls (1 call converted into an appointment is worth a minimum of 149 to me, even if they get nothing else done). On the days off, I have my billers answer calls, submit claims/preauths, verify insurance, etc... Days on, I have 2 front, 3 billers; they can all answer the calls. If the schedule falls apart, I have a total of 8 phones so that I can have all my staff get on the phones and start calling people to come in.

 

[schmoob]

1. You can build "instant" equity in RE as a tangible investment, specially in a market that has room to appreciate in value. The goal of a commercial RE is to not cash out, its to hold on to it as a safe investment. You shouldn't be concerned how liquid it is, this not cash you put into a saving account and you can withdraw it any day you want. It should be seen as your base line investment that can withstand the test of time and economic cycles, specially if you have class A tenants (including your dental office).

2. All taxes, maintenance, insurances, etc are pass through. Which means my dental office pays a share of those cost, and the other tenants do the heavy lifting. But my share of those expenses is reimbursed partially by the management fees I charge to all tenants (which is cheaper for tenants than hiring outside management company). Most tenants have 5-10 years first term leases, and most tenants renew their lease if the building is in a good location, so all those expenses are covered in long term basis.

3. 6%+ cap rates are good and ideal, which is true for any ROI for wherever your money goes to. If you ever sell your RE, you also have the luxury of paying lower taxes on capital gains.

4. See #2. Pass through expenses is standard in the industry. So your net is stable over 5-10 years lease periods, with renewal 5-10 years options giving you even higher net. Also, this net income should not be seen as your primary income as a dentist. It's a passive income that is there to be used to cut back from dentistry.

5. What do you mean by "if you have no intention of staying there long term"? If your practice is doing well, then why leave? If you leave, why not sell it to another dentist and he/she signs 10 years lease and pays you good rent? Your crown jewel office will always be there even if the buying dentist relocates, and you could sell the practice to another dentist with another lease, or you may decide to come back from retirement and work there on limited basis.

6. 39.5 years for commercial buildings to be exact. It's called straight line depreciation. Also, you could refinance a paid off building and take that money out of the building and put it somewhere else with higher yield. Boom!

Alright, you are bringing up points that I am aware of, but I think you may be missing the point of this entire thread... early retirement.

1. I am very concerned about liquidity because investment opportunities come by and need to be acted upon immediately
2. That's the point of triple net, but the returns are still insufficient for my needs, which leads into point 3. I'm not as worried about taxes as I need my money sooner than later and I may be in a tax disadvantage, but my returns make up for it
4. There's this talk of passive income, I'm in a ramping up stage of building fast and quick capital to invest later on. My businesses are paying me right now to reinvest into other businesses.
5. I'll make this clear, I want to leave because I don't want to practice for a long time. I work to live, not live to work. As I mentioned before in a different thread, I don't want to be that guy who enjoys his wealth when he's 50+. I want to have so much capital and money, that I wouldn't care if I could sell my office or just abandon it. I have my own reasons for this, and if you want to work for 30+ years as a dentist, more power to you. I really don't want to do this for the long term. I don't think there's much of a difference b/w 10MM vs 100MM in terms of lifestyle. I bought a large house under the advice of my lawyer, but I don't even use most of the house. I'm not aiming to be the richest dentist in the planet. I just want to have enough money to afford creature comforts for the rest of my life. Maybe real estate will play a role later on, but for now, I'll pass since I have other businesses that yield a LOT more than real estate.
6. Long time for depreciation. Maybe if I could expense or deduct the whole amount or distribute it among the years.

I understand that there's pride in owning properties; something tangible, etc... but I have no kids. Even if I had kids, I wouldn't give them anything unless they can prove that they can be financially better than me. If all my kids were failures, I would just donate my money to charity or create a foundation.

So... what is the point of this whole back and forth? There's more than one way to approach retirement. Clearly, you seem to be very fond of real estate as I am not. Your strategy works for most dentists, just not for me at this time. Now if you tell me how I can utilize real estate to retire from dentistry permanently in 3 years, then I'd be glad to take your advice.


I graduated at 26 (stupid decisions in life made me reroute and take a bit longer). I am aiming to retire at around 35 - 36

For #6 (both of you), would it make more sense to use a different depreciation schedule? Maybe you know better than I do, but can you apply MACRS to commercial?
Also @TanMan you should also be using the depreciation of your equipment as a tax break. You seem to know what you are doing, so if you are already doing so I apologize.
Thank you to @Cold Front as well. This is definitely information to keep in mind.

 

[Cold Front]

For #6 (both of you), would it make more sense to use a different depreciation schedule? Maybe you know better than I do, but can you apply MACRS to commercial?
Also @TanMan you should also be using the depreciation of your equipment as a tax break. You seem to know what you are doing, so if you are already doing so I apologize.
Thank you to @Cold Front as well. This is definitely information to keep in mind.

Yes and No. Certain aspects of a commercial building related expenses (say you bought the building with machinery or other items... I don't know, like the building came with a truck, or a monument sign or awnings, etc) can be used for MACRS, so that MACRS depreciation schedule begins with a declining balance method with emphasis for those expenses, then switches to a straight line schedule to finish the schedule for the building structure itself. Again, you have to be able to clarify between the 2 for the IRS, creatively.

 

[Sanducan]

Yes and No. Certain aspects of a commercial building related expenses (say you bought the building with machinery or other items... I don't know, like the building came with a truck, or a monument sign or awnings, etc) can be used for MACRS, so that MACRS depreciation schedule begins with a declining balance method with emphasis for those expenses, then switches to a straight line schedule to finish the schedule for the building structure itself. Again, you have to be able to clarify between the 2 for the IRS, creatively.

@Cold Front, as a practice owner can you reduce your tax bill through straight line depreciation of your chairs, Pano, x-ray machines, or even hand pieces?

 

[schmoob]

@Cold Front, as a practice owner can you reduce your tax bill through straight line depreciation of your chairs, Pano, x-ray machines, or even hand pieces?

Yes, until you get to residual value.

 

[Sanducan]

Yes, until you get to residual value.

So can you use say 20% residual value for all your equipment over say a 12 year depreciation period, or do you have to pain painstakingly derive a percentage of residual value and depreciation period for every single item in your office?

 

[schmoob]

So can you use say 20% residual value for all your equipment over say a 12 year depreciation period, or do you have to pain painstakingly derive a percentage of residual value and depreciation period for every single item in your office?

Yep, sorry. Different items have longer/shorter lifespans. Some depreciate fast and some slow.

 

[Sanducan]

I guess I'm not as altruistic; I love getting people out of pain, but I wouldn't make it my life's mission. I don't hear that often, that staff look forward to seeing each other, especially when there's drama. Off work, when we have company vacations, quarterly dinners, etc... different story, but in those events, I tend to weed out subversive elements of the staff. Rarely happens, but eventually, I get rid of those people and keep the core strong. My staff and I are bound by the pursuit of money.



I think its a good plan. I was a PITA in the corporate world and always pushing their buttons, if you keep a low profile, you can do both simultaneously. Not forever though, you need to make the leap to go full time at some point. Getting fired pushed me there pretty quickly. They even fedex'd a threatening letter, just laughed it off.

1. 3 ops is not enough. Rapid growth means you need a lot more rooms from the start. The time to get new chairs installed can mean quite a bit of potentially lost income (100k+/mo), especially if you're reaching heavy seasons such as december.
2. Plan/design - if you're referring to MEP/architect/plans, I think it was 800-1200 dollars
3. No lease negotiator, no TI money. I negotiated the lease down myself, and told them that I am not paying rent until construction complete. my construction was cheap anyway.
4. Hell no. The fact that you precede each one of those with dental means you think that they are special. They are not, nor are they worth the cost. Only ill-informed people will use them for a startup and pay the stupid tax.
5. 10x10 (100 sq ft)
6. No no no.... NO. The speed of your contractor depends on the contractor, their workload, and connections with the city inspectors. The more hooked up they are, the faster the process goes. It's the way of life. Example, the day they finished the electrical for inspection, they had an inspector there the same day to approve for the next step.
7. Yes. Server, initial ethernet drops, and computer/network setup.
8. I think 5... need to check on that
9. Yes, but I'm not greedy. I share the wealth with my staff, and I'm not cheap in terms of using inferior materials. In a way, my staff are like my children. I don't expect them to be DA's for the rest of their lives. If I can sell my office, I'll probably give them all scholarships to whatever they want to study, but we'll see.
10. I have someone at the phones from 8-7 everyday to answer calls (1 call converted into an appointment is worth a minimum of 149 to me, even if they get nothing else done). On the days off, I have my billers answer calls, submit claims/preauths, verify insurance, etc... Days on, I have 2 front, 3 billers; they can all answer the calls. If the schedule falls apart, I have a total of 8 phones so that I can have all my staff get on the phones and start calling people to come in.

Thank you for this!

 

[TanMan]

For #6 (both of you), would it make more sense to use a different depreciation schedule? Maybe you know better than I do, but can you apply MACRS to commercial?
Also @TanMan you should also be using the depreciation of your equipment as a tax break. You seem to know what you are doing, so if you are already doing so I apologize.
Thank you to @Cold Front as well. This is definitely information to keep in mind.

I don't really have property as part of my portfolio, so I can't give you firsthand experience as to how MARCS works for commercial property/land.

I primarily use section 179 since the cost of equipment needs to offset a significant AGI; there are some equipment that's depreciated, but I leave that to my accountant. Due to the short term nature of my retirement plan, I don't really have the time/advantage of using depreciation or accelerated depreciation; I need the liquidity, need to lower my taxes, but also need to free up as much capital as possible for immediate use.

I'm assuming we're only talking about dental offices, but it gets a little more difficult once you have other businesses and you need to leverage your office for other investments.

 

[schmoob]

I don't really have property as part of my portfolio, so I can't give you firsthand experience as to how MARCS works for commercial property/land.

I primarily use section 179 since the cost of equipment needs to offset a significant AGI; there are some equipment that's depreciated, but I leave that to my accountant. Due to the short term nature of my retirement plan, I don't really have the time/advantage of using depreciation or accelerated depreciation; I need the liquidity, need to lower my taxes, but also need to free up as much capital as possible for immediate use.

I'm assuming we're only talking about dental offices, but it gets a little more difficult once you have other businesses and you need to leverage your office for other investments.

Wouldn't the aggressive nature of an accelerated depreciation schedule on your equipment lower your AGI now, thus giving you more of the liquidity you're after? In theory...

I'm not sure if you mentioned if your plan is to sell the practice once it's time to call it quits or not. If it is, I do not know how the depreciation of your equipment would impact your tax liabities based on your capital gains. Tbh I forgot all this stuff haha.

 

[cheesyfries]

Where can I learn about all this accounting/business mumbo jumbo? Which books or courses do y'all recommend?

 

[Typical Average Student]

Would you advise against purchasing a large stand-alone office on a busy corner straight out of dental school (8-9 ops)? Or is there too much risk in getting a large office straight out? (I've read a post of another guy who purchased an office big enough for 8, but only built 4 and as he grew his business, he would punch out the walls to expand and build more ops, I assume this would be more expensive in the long run but I would like to hear what you recommend.) I know it's fairly enthusiastic to expect a large amount of patients... but the location seems perfect.

My main concern is building an office, purchasing all the supplies, and ultimately failing to bring in patients to warrant 8 ops. I will be going into private practice with my fiancee and we are fortunate enough to have the opportunity to be mentored by her parents and learn the ropes when we come out so we'll be learning and practicing at the same time, hopefully to gain speed fast enough to run the office ourselves.

This is a concern for me as I know a couple who opened an office in Washington state, spent almost 750k to build it from ground up with custom everything and eventually did not produce enough patients to maintain the office, forcing them to sell it for a fraction of their costs. Albeit they didn't do as much advertisement as you did... I read all of your posts and it seems like advertising is the biggest factor, so I will definitely look more into that when the time comes.

(PS: I also would like to know more about the books/mentorship/classes/seminars/anything you used to help you learn about the business aspect. I took a private practice insurance elective in school but other than that... I've just been spending a lot of time on DT and SDN to try to learn anything I can but books and stuff definitely help. Thanks!)

 

[TanMan]

Would you advise against purchasing a large stand-alone office on a busy corner straight out of dental school (8-9 ops)? Or is there too much risk in getting a large office straight out? (I've read a post of another guy who purchased an office big enough for 8, but only built 4 and as he grew his business, he would punch out the walls to expand and build more ops, I assume this would be more expensive in the long run but I would like to hear what you recommend.) I know it's fairly enthusiastic to expect a large amount of patients... but the location seems perfect.

My main concern is building an office, purchasing all the supplies, and ultimately failing to bring in patients to warrant 8 ops. I will be going into private practice with my fiancee and we are fortunate enough to have the opportunity to be mentored by her parents and learn the ropes when we come out so we'll be learning and practicing at the same time, hopefully to gain speed fast enough to run the office ourselves.

This is a concern for me as I know a couple who opened an office in Washington state, spent almost 750k to build it from ground up with custom everything and eventually did not produce enough patients to maintain the office, forcing them to sell it for a fraction of their costs. Albeit they didn't do as much advertisement as you did... I read all of your posts and it seems like advertising is the biggest factor, so I will definitely look more into that when the time comes.

(PS: I also would like to know more about the books/mentorship/classes/seminars/anything you used to help you learn about the business aspect. I took a private practice insurance elective in school but other than that... I've just been spending a lot of time on DT and SDN to try to learn anything I can but books and stuff definitely help. Thanks!)

If the price is right, buy it. Depending on your speed, 8-9 ops may be the sweet spot, not enough, or too much. I think it makes sense to start with around 6 rooms, then expand more. That perfect location you mention may seem perfect on the outside, but the most important aspect is how easy it is to deal with the landlord, the price of the office, and cost of rent.

That's the risk you take with building an office that's a little larger; Your profitability and production depend on two primary factors on the (patient supply side): ability to bring patients in, and ability to convert those patients into treatment.

For the first factor (bringing patients in), one of the biggest rookie mistakes is trying to bring in all kinds of patients in hopes that you can convert them. You can either attract patients by price, convenience, or quality. Price is probably the worst, since poor patients tend to jump around looking for the best deals, and quality is hard to convey when everyone else is screaming that they are the best with their technology, training, etc... Easiest to target is convenience, but you need to work beyond bank hours. Advertising is just the means to get the message out there, build your brand name equity. Don't ever do free exams...

Second part depends on how many patients you're getting into your office. I am very lucky that I have more than enough patients that I don't care so much about converting patients. If they want it, get it, if not, gtfo. You can be in the position of not being able to attract enough patients, just enough, or too much. If you dont attract enough patients, you either need to increase your conversion rate into treatment or upsell (not very ethical, but another business choice you need to make). If you have too many patients, its a good position to be in. Main pitfall is quality can decrease, waiting time can increase. Now, there's pros and cons to this, as I've referred to as patient/practice darwinism. Those that don't want to wait are usually pickier patients. I don't mind ever seeing them again. I believe that in certain social circles, like attracts like, and if they have attitudes we don't like as patients, they'll spread the word to others that don't like to wait. So far, this philosophy has worked for me. That's why I avoid promoting social media. Those that build their empire on social media can see it crumble just as easily. Also, you tend to attract pickier and more annoying patients.

Summary of my patient system: Attract lots of good quality patients (paying, not picky, no BS), weed out bad quality patients (no money, too many demands, esthetic obsessed, medicare/medicaid).

I don't trust dental seminars since they are often trying to sell the dentist's dream of seeing a few patients a day and making lots of money on higher end procedures by using their systems/products/services. The first question I always ask someone soliciting is why should I change my current system that's working to your system that's unknown for me right now, and can I make more money than what i'm pulling in. As for books, can't recall any books that I've read that pertains to dental business. Most of my system is based on trial and error, and working at my family's food service business for most of my life. From an operational standpoint, Dentistry is a service, and queuing systems might be something you want to look into. Essentially, you need to know how to manage large amounts of patients, be aware of who's in, who's out, what needs to be done, where you can jump between downtimes, in a continually changing clinical environment. If you can manage that, you're halfway there. The other half is administrative and advertising. Advertising was trial and error, and understanding the demographic you want to attract. Administrative is billing, insurance verification, etc... I hired people who already knew that. I just learned from them, so I can monitor and keep track.

 

[Cold Front]

@Cold Front, as a practice owner can you reduce your tax bill through straight line depreciation of your chairs, Pano, x-ray machines, or even hand pieces?

Yes, absolutely.

Congress sets the limit for section 179 depreciation every year for your new/purchased equipment. I don't know what the current limit is now, but when I graduated back in 2010, the economy was in really bad shape, so the limit was $500k, and congress was trying to reduce it to $250k couple of years ago. So let's say you purchased $300k worth of equipment today, and section 179 limit is $500k, you can depreciate all $300k against your taxes at once or over 7 years period. You would choose the best route to utilitze section 179 of the tax code for your business from there.

 

[periopocket]

Do you really think you'll retire in 5 years? What are your plans after you retire?


Sent from my iPhone using SDN mobile

 

[TanMan]

Do you really think you'll retire in 5 years? What are your plans after you retire?


Sent from my iPhone using SDN mobile

Hopefully in less time. Make money in other ways that's easier. Live life to its fullest, maybe when I'm bored with life, I'll have kids.

 

[redhotchiligochu]

Where can I learn about all this accounting/business mumbo jumbo? Which books or courses do y'all recommend?

Definitely not in dental school

 

[Steins;Gate]

OP, you should have gone into ortho.

-least physically demanding specialty (can handle large volume of patients each day)
-ability to open multiple offices with lowest overhead out of all specialties and easier to deal with patient base
-less dependent on referrals compared to OS/perio/endo (i.e. can directly advertise to the public)

Could you elaborate on how low the overhead is? I thought endo had the lowest overhead?

 

[TanMan]

OP, you should have gone into ortho.

-least physically demanding specialty (can handle large volume of patients each day)
-ability to open multiple offices with lowest overhead out of all specialties and easier to deal with patient base
-less dependent on referrals compared to OS/perio/endo (i.e. can directly advertise to the public)

I'll give you some reasons why I don't want to do ortho.
1. I make enough money to not have to do ortho. If its about the money, I'd say go GP over ortho.
2. I like instant money. GP is instant money, ortho takes a while to finish treatment.
3. Multiple offices (see previous posts about profitability)
4. I get plenty of referrals from orthos that know I won't take their patients and I also encourage them to go through with their ortho treatment. My orthos send me quality patients (i.e SRP patients, endo patients, etc...) that are private pay, already committed to ortho treatment, but need perio, endo, etc...
5. I find ortho to be absolutely boring. If I live to be 50, I don't want to spend another 4% of my life doing something I find boring. Also, under the 50 assumption, dental school took 8% of my life already.
6. It is less physically demanding, but I'm taking the approach of condensing 30+ yrs of practice within a few years time span. I could probably have an team of ortho assistants to see more patients, but I'm already here and I wouldn't change my mind even if I could.

Anyway, I hate ortho, I was not a gunner and probably not enthusiastic enough to work hard in getting into an ortho residency, and I'm making just enough money to be happy. I don't know how much an orthodontist can make, but I know that during the whole Texas medicaid ortho boom, they were making millions per year.

A common theme I'm seeing in the threads and PM's is overhead. Overhead is important, but production is just as important.

 

[Cold Front]

If the price is right, buy it. Depending on your speed, 8-9 ops may be the sweet spot, not enough, or too much. I think it makes sense to start with around 6 rooms, then expand more. That perfect location you mention may seem perfect on the outside, but the most important aspect is how easy it is to deal with the landlord, the price of the office, and cost of rent.

That's the risk you take with building an office that's a little larger; Your profitability and production depend on two primary factors on the (patient supply side): ability to bring patients in, and ability to convert those patients into treatment.

For the first factor (bringing patients in), one of the biggest rookie mistakes is trying to bring in all kinds of patients in hopes that you can convert them. You can either attract patients by price, convenience, or quality. Price is probably the worst, since poor patients tend to jump around looking for the best deals, and quality is hard to convey when everyone else is screaming that they are the best with their technology, training, etc... Easiest to target is convenience, but you need to work beyond bank hours. Advertising is just the means to get the message out there, build your brand name equity. Don't ever do free exams...

Second part depends on how many patients you're getting into your office. I am very lucky that I have more than enough patients that I don't care so much about converting patients. If they want it, get it, if not, gtfo. You can be in the position of not being able to attract enough patients, just enough, or too much. If you dont attract enough patients, you either need to increase your conversion rate into treatment or upsell (not very ethical, but another business choice you need to make). If you have too many patients, its a good position to be in. Main pitfall is quality can decrease, waiting time can increase. Now, there's pros and cons to this, as I've referred to as patient/practice darwinism. Those that don't want to wait are usually pickier patients. I don't mind ever seeing them again. I believe that in certain social circles, like attracts like, and if they have attitudes we don't like as patients, they'll spread the word to others that don't like to wait. So far, this philosophy has worked for me. That's why I avoid promoting social media. Those that build their empire on social media can see it crumble just as easily. Also, you tend to attract pickier and more annoying patients.

Summary of my patient system: Attract lots of good quality patients (paying, not picky, no BS), weed out bad quality patients (no money, too many demands, esthetic obsessed, medicare/medicaid).

I don't trust dental seminars since they are often trying to sell the dentist's dream of seeing a few patients a day and making lots of money on higher end procedures by using their systems/products/services. The first question I always ask someone soliciting is why should I change my current system that's working to your system that's unknown for me right now, and can I make more money than what i'm pulling in. As for books, can't recall any books that I've read that pertains to dental business. Most of my system is based on trial and error, and working at my family's food service business for most of my life. From an operational standpoint, Dentistry is a service, and queuing systems might be something you want to look into. Essentially, you need to know how to manage large amounts of patients, be aware of who's in, who's out, what needs to be done, where you can jump between downtimes, in a continually changing clinical environment. If you can manage that, you're halfway there. The other half is administrative and advertising. Advertising was trial and error, and understanding the demographic you want to attract. Administrative is billing, insurance verification, etc... I hired people who already knew that. I just learned from them, so I can monitor and keep track.

I didn't look it up... but is your office in urban or small town America?

Your suggestion about attracting "quality" patients only is easier said done in large cities, with a lot of competition shooting for the same goal. It would only work in deep suburbs and beyond. I have nothing against your system, but even corporate dentistry (who is much smarter than us) are going after all patients to be in their chairs and eventually trim them down to 30% of those patients accepting treatments. You can't just simply do the same outside your office, even with referring doctors doing the heavy lifting for you, quality patients are not identifiable from their clinic needs only, because each patient has a unique "personal" needs and financial decisions that go behind those needs, regardless of what a dentist thinks.

Case in point... Truck drivers are best "cash" paying patients in my office. International students (Saudis, Kuwait, etc) have the best "PPO" insurances ($5-10k limits), any patients with severe pain is the best "pay now" patient, pediatric patients are the best "holidays break" patients. You get the picture?

Another case in point... I walked into a local Best Buy the other day with my wife, shopping for new TV. We didn't plan to buy a TV that day, but the TVs rep spent 30-45 mins showing us all different brands, from screen thickness to processors and so on. The guy did such a great job, we have decided to buy a Sony XBR Bravia 65 in 4k OLED tv (if you are looking up the price by now, you would get a sticker shock). The guy calls his manager to introduce us, and manager gives a mini speech on his appreciation and offers bottles of water to me and my wife. They then throw in freebies into the purchase and so on. The point here is... there was no way Best Buy could weed me out of other customers buying TVs that day, not even in the first 30 mins of me being in the store, because the decision came in very very last minute. So any patient can be that $5k treatment patient, but it takes at least a skill to give any patient a "chance" rather than segregate them to quality and non-quality patients.

Always leave "what's in your wallet?" mentality out of the equation, make the patient feel empowered and let them do the rest.

 

[TanMan]

I didn't look it up... but is your office in urban or small town America?

Your suggestion about attracting "quality" patients only is easier said done in large cities, with a lot of competition shooting for the same goal. It would only work in deep suburbs and beyond. I have nothing against your system, but even corporate dentistry (who is much smarter than us) are going after all patients to be in their chairs and eventually trim them down to 30% of those patients accepting treatments. You can't just simply do the same outside your office, even with referring doctors doing the heavy lifting for you, quality patients are not identifiable from their clinic needs only, because each patient has a unique "personal" needs and financial decisions that go behind those needs, regardless of what a dentist thinks.

Case in point... Truck drivers are best "cash" paying patients in my office. International students (Saudis, Kuwait, etc) have the best "PPO" insurances ($5-10k limits), any patients with severe pain is the best "pay now" patient, pediatric patients are the best "holidays break" patients. You get the picture?

Another case in point... I walked into a local Best Buy the other day with my wife, shopping for new TV. We didn't plan to buy a TV that day, but the TVs rep spent 30-45 mins showing us all different brands, from screen thickness to processors and so on. The guy did such a great job, we have decided to buy a Sony XBR Bravia 65 in 4k OLED tv (if you are looking up the price by now, you would get a sticker shock). The guy calls his manager to introduce us, and manager gives a mini speech on his appreciation and offers bottles of water to me and my wife. They then throw in freebies into the purchase and so on. The point here is... there was no way Best Buy could weed me out of other customers buying TVs that day, not even in the first 30 mins of me being in the store, because the decision came in very very last minute. So any patient can be that $5k treatment patient, but it takes at least a skill to give any patient a "chance" rather than segregate them to quality and non-quality patients.

Always leave "what's in your wallet?" mentality out of the equation, make the patient feel empowered and let them do the rest.

I'm in the suburbs of a a midsized city (tri-county area is about 1.3 million population). I think corporate dentistry have more financial resources, but they are not smarter than us. Also, their main disadvantage is that the corporate structure is not able to react as fast as we can to market conditions. Their size is also their inefficiency.

I'm starting work right now, so I'll give a quick response now, more detailed later:
When I first started, I'd take any patients because anyone that walked in was potential $$. However, we quickly grew out of that phase, and when we started getting a lot more patients we could be more selective. Now, if I were to hypothetically average the time wasters vs those that would accept treatment, I have it down to where I am able to get enough patients while weeding the time wasters out. The second phase of the practice growth is to weed out undesirables (and the hopes that they would pay or accept treatment). I hope it makes sense that eventually, you have to weed out potential undesirables in order to keep growing your office with less headache. The prime goal is to get only good quality patients while keeping the headache patients away.

Now, you have mentioned that you don't necessarily know what's a good or bad patient, but I do have systems in place to weed out the statistically BAD patient. Examples would be medicare/medicaid patients (expect everything to be free), cheap patients (those that ask a million questions about price or are obviously price hunting), those that are picky (million questions and nitpicks everything), those that are a*holes to your staff (I never tolerate that and if they can't respect my staff, they probably don't respect me which is not good for doctor-patient relationship), etc...

I gotta go, will go more on details about these systems later on.

 

[deleted696582]

Sony XBR Bravia 65 in 4k OLED tv

Sticker shock confirmed.

 

[TanMan]

I didn't look it up... but is your office in urban or small town America?

Your suggestion about attracting "quality" patients only is easier said done in large cities, with a lot of competition shooting for the same goal. It would only work in deep suburbs and beyond. I have nothing against your system, but even corporate dentistry (who is much smarter than us) are going after all patients to be in their chairs and eventually trim them down to 30% of those patients accepting treatments. You can't just simply do the same outside your office, even with referring doctors doing the heavy lifting for you, quality patients are not identifiable from their clinic needs only, because each patient has a unique "personal" needs and financial decisions that go behind those needs, regardless of what a dentist thinks.

Case in point... Truck drivers are best "cash" paying patients in my office. International students (Saudis, Kuwait, etc) have the best "PPO" insurances ($5-10k limits), any patients with severe pain is the best "pay now" patient, pediatric patients are the best "holidays break" patients. You get the picture?

Another case in point... I walked into a local Best Buy the other day with my wife, shopping for new TV. We didn't plan to buy a TV that day, but the TVs rep spent 30-45 mins showing us all different brands, from screen thickness to processors and so on. The guy did such a great job, we have decided to buy a Sony XBR Bravia 65 in 4k OLED tv (if you are looking up the price by now, you would get a sticker shock). The guy calls his manager to introduce us, and manager gives a mini speech on his appreciation and offers bottles of water to me and my wife. They then throw in freebies into the purchase and so on. The point here is... there was no way Best Buy could weed me out of other customers buying TVs that day, not even in the first 30 mins of me being in the store, because the decision came in very very last minute. So any patient can be that $5k treatment patient, but it takes at least a skill to give any patient a "chance" rather than segregate them to quality and non-quality patients.

Always leave "what's in your wallet?" mentality out of the equation, make the patient feel empowered and let them do the rest.

Just finished work... here it goes:

Comparing us to best buy is totally different. There are definitely time wasting patients, and those that have potential to be good; as a professional service, we are in a better position to weed them out since we're not selling a product with mass appeal, but providing a service that requires us to be in the forefront of interacting with patients. With that respect, my time is worth more money than someone selling a product such as a TV.

The story of not judging a patient has good morals and some business sense to it, and would make sense if you needed to fill up your schedule with hopes that you could convert every patient to that level of comprehensive treatment. I get what you're saying with your example, but we setup some barriers to screen out the riff-raff such as high exam fees to ensure that we're going to get paying patients. If you have patients complaining about the exam fees, what makes you think you're gonna get them to do treatment if they are price motivated. On the flip side, if you offer free exams, you'll get a ton of patients in the hopes you'll convert them, but you're a lot less likely to get money from treatment and you lost money from staying open.

Medicare/medicaid - these patients come in the mentality that their dental services should be free. Already sets up a hostile environment, and medicare patients tend to have a ton of medications that bog down the examination process. Cheap + complicated = loss. Medicaid patients just break their appts a lot and pediatric trauma is not very profitable. Easy way to screen: Don't take them. Most older people have medicare and they usually don't want to pay. There's older patients that don't have medicare and are willing to pay. Those are the ones that you should be getting (although still more complicated because of medical history)

The ones that are harder to screen are the ones that are picky. Now, you probably think i'm a scab in that all I want are easy money patients, but that's pretty much all I really want. How do you screen out picky people? Don't bend to their will, if they still insist on going to your office, just refer them out saying you can't meet their expectations or you are not trained sufficiently to take their case well. I try not to do any cases where they are picky.

A lot of these screenings occur over the phone. Not every patient is a good patient unless you're short on patients. I'll turn down a 10k+ case if the patient is going to cause me a lot of headache in the long run and I also don't want to be overrun by patients with a million questions when I have other patients to tend to.

With my dataset, I already know which insurances are good, and we've dropped all the bad insurances in my area already. That's another way to screen out insurance-driven patients that don't want to spend anything beyond what their insurance covers. I find that to be one of the most annoying patient when every other question is, "does my insurance cover that". HMO patients tend to do that more, and some of a specific insurance. I have seen some of those 10k max insurance, but the better judge is whether they are going to pay or not.

The patients you have listed, I don't see any reason not to see them, and they wouldn't be screened out of my filtering process (except for peds, only good for recalls). I think we're thinking about this in two different ways. Your method seems to be more for getting/converting patients by not screening them, and mine is more by filtering good ones ensuring a high success rate while staying at max or near max capacity. I argue that not every patient is a good patient, and if I can fill my patient schedule with good patients, rather than a shotgun approach and see what sticks, I have more profit and less headache. Emergency patients are usually the best hourly production rate, so I'll always take those (unless kids, I usually don't do treatment on young kids or trauma on children). I think the mindset depends on which stage your practice is at.

Reading the last sentence about giving every patient a chance - unfortunately, time is limited, and if I were to accomodate everyone, I'd be losing money since I'd be using up a lot of my time on patients that are (by experience), not good patients. There might be an exception or two, but I'd rather have it as a rule, than exception by which I should be operating my office.

 

[Wingie]

"

Now, you probably think i'm a scab in that all I want are easy money patients, but that's pretty much all I really want.

"

 

[InformMe123]

What's your tips for learning more business as a dental student in preparation?

 

[Steins;Gate]

50%, which from the hearsay is roughly neck and neck with endo overhead

Do you mind if I PM you some questions? I can't seem to be able to start a conversation with you.

 

[Cold Front]

I'm in the suburbs of a a midsized city (tri-county area is about 1.3 million population). I think corporate dentistry have more financial resources, but they are not smarter than us. Also, their main disadvantage is that the corporate structure is not able to react as fast as we can to market conditions. Their size is also their inefficiency.

I'm starting work right now, so I'll give a quick response now, more detailed later:
When I first started, I'd take any patients because anyone that walked in was potential $$. However, we quickly grew out of that phase, and when we started getting a lot more patients we could be more selective. Now, if I were to hypothetically average the time wasters vs those that would accept treatment, I have it down to where I am able to get enough patients while weeding the time wasters out. The second phase of the practice growth is to weed out undesirables (and the hopes that they would pay or accept treatment). I hope it makes sense that eventually, you have to weed out potential undesirables in order to keep growing your office with less headache. The prime goal is to get only good quality patients while keeping the headache patients away.

Now, you have mentioned that you don't necessarily know what's a good or bad patient, but I do have systems in place to weed out the statistically BAD patient. Examples would be medicare/medicaid patients (expect everything to be free), cheap patients (those that ask a million questions about price or are obviously price hunting), those that are picky (million questions and nitpicks everything), those that are a*holes to your staff (I never tolerate that and if they can't respect my staff, they probably don't respect me which is not good for doctor-patient relationship), etc...

I gotta go, will go more on details about these systems later on.

I'm not sure if you have corporate dentistry experience, but I did, and I stand by them being smarter than us because they have very business savvy individuals that make efficient decisions to help their businesses run far better than a solo practice. I'm not implying they do better dentistry or have better chair side manners, but they are simply more business smart to take their first office and turned it to 300-500 locations. If you disagree, I would be happy to give you the number of my last corporate employer and you can help them understand why we solo dentists are so much "better" in the business aspects of dentistry.

Regarding weeding out bad patients, I don't even know how we ended up using the word "bad" on people. It's almost like we love money so much, that we forgot to see in humanity and simply choose to see everything in green. I was born in a third world country, grew up in Europe, and make a good living here in this country, so I'm just more sensitive to the tunnel vision aspect of most businesses in this country. Mind you, United Airlines cared less about that passenger doctor they banged up in their plane, all because greed (or to quote you, "easy money") played part of not seeing him as a person and just seat 52B passenger that needs to make a way for their own convenience/or employees. So, this is not to imply that I'm frustrated by the approach of good common sense business, but to do it at a level where we are making society adjust to us (or their wallets) to an extreme degree, is a bit of a disappointment to the profession and yourself. If we wake up every morning to simply just chase more money, then we are losing some
moral ground to help the communities we serve.

Like I said, I have a different view of life, based on my life experiences, and I love money, but I enjoy helping people/patients as much as I love money. I got everything I have today to be thankful for them (the patients, regardless of their financial situation) for being part of the process that lead me to where I am today. Have I done some pro bono stuff in my office? Yes. Have I let go a patient who didn't have the full amount and wrote off the rest? Yes. Am I in the top 1% in society? Yes. Do I really care if I made $50k less next year? Not really. Because the big picture for me is to balance everything out and not just base "everything" I do on the "bottom line" on my financial statements.

 

[TanMan]

Do you have a medical condition that restricts your lifespan to 50?

In all seriousness, you mention that you went all-in with your reserve fund for marketing after getting laid off by the chain, which according to you was a huge gamble. What would have been your plan B had your marketing gambit not paid off?

No, I assume that my health will start declining around that age and quality of life will drop. Plan B would be to work part time for another office doing all their endos until I can buildup the sufficient reserve.

I'm not sure if you have corporate dentistry experience, but I did, and I stand by them being smarter than us because they have very business savvy individuals that make efficient decisions to help their businesses run far more quickly than a solo practice. I'm not implying they do better dentistry or have better chair side manners, but they are simply more business smart to take their first office and turned it to 300-500 locations. If you disagree, I would be glad to give you the number of my last corporate employer and help them understand why we solo dentists are so much better in the business aspects of dentistry.

Regarding weeding out bad patients, I don't even know how we ended up using the word "bad" on people. It's almost like we love money so much, that we forgot to see in humanity and simply choose to see everything in green. I was born in a third world country, grew up in Europe, and make a good living here in this country, so I'm just more sensitive to the tunnel vision aspect of most businesses in this country. Mind you, United Airlines cared less about that passenger doctor they banged up in their plane, all because greed (or to quote you, "easy money") played part of not seeing him as a person and just seat 52B passenger that needs to make a way for their own convenience/or employees. So, this is not to imply that I'm frustrated by the approach of good common sense business, but to do it at a level where we are making society adjust to us (or their wallets) to an extreme degree, is a bit of a disappointment to the profession and yourself. If we wake up every morning to simply just chase more money, then we are losing some
moral ground to help the communities we serve.

Like I said, I have a different view of life, based on my life experiences, and I love money, but I enjoy helping people/patients as much as I love money. I got everything I have today to be thankful for them (the patients, regardless of their financial situation) for being part of the process that lead me to where I am today. Have I done some pro bono stuff in my office? Yes. Have I let go a patient who didn't have the full amount and wrote off the rest? Yes. Am I in the top 1% in society? Yes. Do I really care if I made $50k less next year? Not really. Because the big picture for me is to balance everything out and not just base "everything" I do on the "bottom line" on my financial statements.

I have worked for corporate. Taking their office from 1 office to 300+ locations requires significant capital infusion. That capital infusion can come from either providing notes or equity. The quality of your dentistry does not equate to financial success. I still disagree, but I have no interest in telling them why we're better because its a whole different ballgame. I know and understand their organizational structure and from that, its still a very bureaucratic business model. Anyway, I think I've mentioned why I don't really care to expanding my dental business; there's just better ways of making money. If I was born with money, I would probably have never gone into dentistry.

With regards to tunnel vision, making money is a part of life. Its the means for the end. Do you really want to suddenly wake up in your 60's and realize that you don't have that much time left? That's why I'm not taking it easy. We are probably at the top 1%, but we have different goals in mind. Today reminded me how much I hate this profession sometimes (very annoying patients). So... its these types of days that make me want to retire even faster. I'm just glad that I have good front staff to buffer me as much as possible from them.

Am I greedy and selfish for thinking like this? Probably. If you look at it based on that model of service to the communities, then we are headed towards the socialized medicine(dentistry). If you look at it based on a market exchange of currency and services, we are doing nothing more than exchanging services for money and coincidentally helping a person. The reality exists in between these two extremes. What determines this is whether dentistry is considered a necessity or a privilege. I don't nickel and dime every patient, but I also don't want patients who are going to give me problems financially or clinically. Who doesn't want their job to be easy and profitable? If your doctor said they weren't comfortable doing xxx procedure, would you force them to do it (regardless of any reason)? The patients are responsible for the success that we have, but we also provide a service to them. It's not like they are giving us money for free. Goes back to exchange of money for services.

I feel like this response will not necessarily satisfy your response, but I think we are in two different mindsets. I don't think there's a right or wrong answer here; just different viewpoints.

Edit: I don't do probono services because if word gets around, others might expect it in my office.

 

[lmkappo4]

Any tips for demographics analysis? You mentioned you did it yourself. Where would you start getting the info about offices taking PPO/HMOs, etc. - is that through calling the insurance companies?

 

[Sanducan]

What are your thoughts on taking an Endo CE course in my 4th year of dental school, and which course would you recommend?

 

[TanMan]

Any tips for demographics analysis? You mentioned you did it yourself. Where would you start getting the info about offices taking PPO/HMOs, etc. - is that through calling the insurance companies?

Demographic analysis depends on the type of practice you're striving for. Analysis depends if you're going for a medicaid mill, ppo office, high end office, community/low income office, etc... That's the first question you should answer. A broad demographic analysis usually picks ppo office as a default, but not necessarily the office you want to run OR not the type of office you want to run in a given area. Once you answer that first question, then you can setup criteria in terms of dentist(of your practice type)/population(or practice target type), map out the dentists in your desired area (don't setup next to them, stay away from most of them if you can), income (lower, middle, middle-upper, upper), single/married/childless couples/transitional workers, etc... There's a lot of criteria and there's some that are controversial and I won't be discussing here (use your imagination)

What are your thoughts on taking an Endo CE course in my 4th year of dental school, and which course would you recommend?

Endo CE course can be very helpful if your school doesn't train you in endo. I'm skeptical about university based CE courses since a lot of them is just a rehash of dental school endo mixed in with a bit of graduate endodontic program. I did no formal training beyond dental school (just a lot of practice) and experience is the best way to develop your skill. You'll eventually learn to be able to feel apical constrictions, have better tactile sensation, read the pulpal floor map better, know when to expect an MB2(find it about 75% of the time) or three root premolar. You'll have failures with endodontics, learning from them is the most important part. I retreated a failing endo from 2 years ago... the reason it failed, I missed a DB2. So far, my 3.5 year failure rate is about 1%. Stuff like that makes you rethink what you're doing and become a better clinician. The best system I've found so far is the Waveone Gold.

I did watch a DVD by Ruddle and thought it was a great starting point. Never attended his courses, but I would think that they have the potential to be good.

 

[deleted696582]

Have you ever had pre-dental students shadow you? Or is your day so fast paced that you don't even bother with them?

 

[TanMan]

Have you ever had pre-dental students shadow you? Or is your day so fast paced that you don't even bother with them?

Yes. Once that I can remember. I usually don't see them the whole day or I'm not aware of their presence.

How many lawyers, financial advisors, and accountants do you have on your payroll? And do you manage your own wealth or delegate it to private bank's wealth management services? What's your game plan with your practice once you retire (selling or hiring associates and keeping it afloat?) Are you gonna live in misery once you hit 50?

It's also interesting how your practice philosophy is risk averse (no medicaid/medicare, no implants, no IV sedation etc), whereas your investment philosophy is polar opposite.

I have 2 lawyers and 2 accountants. I manage my own wealth. Going to sell or abandon the practice when I'm done; maybe hire a dentist if I'm bored and still ok with dentistry. So... the answer is I'm not sure yet. I'm going to travel the world and enjoy the rest of my life after retirement. Hopefully my health doesn't decline after 50.

Yep... don't kill the golden goose that lays your eggs. Why do all those things when I don't have to? I believe that a lot of dentists end up taking those headaches because they are unable to gather sufficient patients/production volume to keep them occupied or they think its a great selling point but still goes back to insufficient number/volume of patients. I really don't want to have more headache since I have to be the front for these patients. As dentists/business owners, we have to think about the type of practice and patients we want to attract. This is why I could never be a prosthodontist - all the patients that I don't want would come to me. As I've discussed previously in this thread, there's problems with medicaid/medicare, esthetic, picky patients, sedation patients, etc... If you have the luxury and volume not to do those cases, you'll decrease your stress and liability. Increasing difficulty does not necessarily mean increased hourly return if you factor in time and potential liability. Sedation is not what they make it out to be, especially when they advertise those courses. I did a few of them... and man were they massive time wasters. You'll attract a lot of crazies if you advertise sedation. We make an assumption that sedation makes the procedure so much easier, but our profession is more than just a procedure... there's a patient attached to it and when you do massive cases under sedation, you're pretty much married to that patient for awhile. That's not the kind of patient you want in your practice in the long term as they are the picky ones that just use up a lot of your chair time. If you love that kind of practice, then go for it. If you want a low stress practice, avoid sedation patients. On the flip side, if all you care about is the treatment and ignore the patient afterwards, you can probably make a lot of money through large cases only, but your front will take the brunt of the complaints and issues from these types of patients. I really do not want to practice like that; it makes the work environment just feel more like work than anything else.

Something I have not mentioned yet on this thread (I think): The flexibility of the GP - you're not going to get referred terrible cases, annoying/difficult cases, and you can choose to practice the way you want to.

I see dentistry as a service and with some risks. Also, I have to be one-on-one with every patient that goes through the door. For my sanity, I want to reduce the stress as much as possible. With investments, I'm not providing one-on-one services. Purely financial investments that would hopefully make my capital grow to where I no longer need to do dentistry. It is a gamble, so far so good, lets hope it continues. This goes back to what your goal is in life. At this rate, a 10-20% ROI is not going to cut it with the current capital that I have right now, maybe when I hit about 10+. To determine what you want, you have to think of the lifestyle that you want, and how much cash flow will you need for the rest of your life.

 

[Sanducan]

So what are the procedures you do on a daily? I think you mentioned some previously so those are bolded and underlined, but I just want to make sure. Here's a list, please feel free to add the ones you do that's not there, and explain why you don't do the rest. I already know why you don't do sedation from your previous post.

1. 3rd molar extraction (full and partially bony)?
2. Crown and bridge
3. Crowns
4. Fillings
5. Cerec (onlay, inlay)?
6. Simple Extractions (D7140) How do you know when to bill for (D7210)?
7. Veneers?
8. SRP in Hygiene?
9. Molar endo
10. Invisalign or 6-month braces?
11. Peds?