Yeah there are a few paths I could see for an eventual owner/partner
1. Associate till I'm comfortable with jumping into solo ownership -> Buy existing practice
2. Associate to Partnership route where you start out as an associate then become partner with a buy in or sweat equity
3. Associate -> startup + keep an associate side gig for income while my startup practice grows
4. Buy a practice right out of school with no other experience (I personally wouldn't be comfortable with this)
The first 2 routes seem financially safer, but they both have their downsides such as the inability to implement your own philosophy or having 100% autonomy (especially in a partnership)
#3 is what most dentists on here seem to do. It probably gives you the most autonomy/most control over your business. You can control your rent, your overhead, your staff, your philosophy etc. But you always live with the risk of your startup failing (aka your practice never takes off)
There is also option 5
5. Corp -> ownership within the DSO
Maybe this model will become more popular as corps get larger within dentistry. I don't consider this true ownership because it seems like the corp is the actual owner and you just work there.
This is an excellent post. In my own dental class, none of the people who opened their own practice from scratch had any long-term problems. Conversely, the stories that I have heard about problems were people who bought a (general) practice from a solo practitioner, and people who joined a group.
My two best friends in school became associates in practices with their home town dentists. Both of them were going to eventually buy the guys out, and both of them were hosed with this. They both did not like the lack of control that they had in the care they gave the patient. The staff were not working for them, as they were not signing the paychecks. One of the selling dentists had overworked the patients in his practice in the previous year to boost the production, and this raised the price of the practice. When my friend came in, he could not meet the note, because the patients had already done the big crown and bridge, and he had to declare bankruptcy. Uffda.
Friends that I had who joined a group found that everything was up to a vote among the partners. When you are an associate, and you are told that you cannot do something because you were outvoted, that is a hard pill to swallow. One friend developed a medical problem, and his partners were not sympathetic at all.
One important point from me in buying a practice is to understand the difference between a stock purchase and an asset purchase.
A stock purchase is favorable to the seller. With a stock purchase, the seller only has to pay capital gains tax. The buyer inherits all of the former owner's corporate liability. So, if a year after the seller leaves, one of the employees decides to sue for sexual harrasment that was committed by the seller, the buyer is on the legal hook for that.
With an asset purchase, the buyer does not inherit corporate liability, but the seller has to pay tax at his or her personal rate, which tends to be astronomical compared to the capital gains rate.
If you are a seller, you want to sell stock. If you are a buyer, you want to buy assets. When you join a group practice, it is usually a combination of stock and assets.
Remember, everything is fair in love, war, real estate, and dental practice purchases.
Hence another reason to consider starting from scratch.
Having said that, there is nothing wrong with working as an associate for a few years to get your feet on the ground, get a sense of what you like and don't like, and what is important to you in practice. I did this. I worked for six years in three different practices before I decided to open my own.
In my own practice, I NEVER dread going into work, because it is patient centered, and I don't' worry about keeping someone else happy with my production. I don't drive a super nice car, but I have a 2005 Chevy Suburban with a snowplow. I bought it new, it is on its third engine, and it has 300,000 miles. The positive about this is that I was able to drop my gym membership and stop working on the abs. There is nothing more masculine looking than a Suburban with a snowplow. And I have had the time to go to lots of youth hockey events.
Also, I am not that impressed with practice management consultants' advice on joining a practice. We interviewed a guy for our group, and he showed us the letter he had received from a consultant about our contract offer. I looked the consultant up online, and I have kids older than him. This consultant told him nothing of these pitfalls that I mentioned, at least not in the letter. I would recommend a business attorney who is very familiar with this sort of thing.
