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A Strategic Outline For Starting A Dental Practice (With Examples)

Growth and Operations

A Strategic Outline For Starting A Dental Practice (With Examples)

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Updated: Nov 12, 2019

Starting a dental practice can be daunting. Not only do you need to obtain medical licenses and credentials to run a practice, but you also need to acquire dental equipment, apply for funding, and assemble an experienced team. 

Fortunately, opening a dental practice has the potential for major payoff. Starting your own practice can give you more control over your schedule, more influence over patient care, and more freedom to offer different services. 

To learn more about how to open a dental office, check out our detailed guide. These seven tips can help you gain the confidence you need to get started. 

1. Figure out your financing needs for starting a dental practice

The first step to starting a dental practice is figuring out how much money it takes. Start-up costs for a dentist office can range from $200,000 to over half a million, depending on the size, specialty, and location of your practice. Typical start-up costs include: a down payment or deposit to buy or lease an office space, remodeling costs to change the office design, furniture, equipment, supplies, consultant and legal fees, and insurance. 

That doesn’t include operating costs once you open your doors. According to a 2017 survey from the American Dental Association and Health Policy Institute, the average expenses for a dental practice add up to $443,730 a year. This includes payroll, mortgage payments or rent, taxes, marketing, inventory, and utilities. 

Keep in mind that it takes time to build up your patient base and become profitable. That’s why it’s a good idea to budget for an extra six months of operating expenses when considering your finance needs. 

Meet with a professional

Once you have a better idea of what it costs to open and run a dental practice, make an appointment with an accountant to review your personal finances. In addition to looking at your bank statements and credit score, discuss any remaining student loan debt you have from dental school. 

Get a loan to start a dental practice

From there, you can start exploring your options for obtaining a practice loan. Bank loans or small business loans backed by the Small Business Administration (SBA) generally offer lower interest rates, but they’re harder to qualify for. You usually have to submit a business plan and wait up to three months to receive an initial response. 

If you go through an online lender, though, the process is much easier. You typically only need one to two years of tax returns and a few recent bank statements to apply. Plus, you can often hear back within a few hours or a few days, depending on the lender. 

2. Get licensed and credentialed

Starting a medical practice requires certain state licenses and permits. Some of the application and licensure processes can take several months, so it’s helpful to start right away. 

State medical board licensing

The first step is getting licensed by your state medical board. Each state has different requirements, but you usually need to provide certain personal information, show evidence of your dental school degree, and submit exam records. The American Dental Association has more information about getting licensed. 

Apply for an NPI

The second step is applying for a national provider identifier number (NPI), which allows insurance companies to track you. You can apply for an NPI on the National Plan and Provider Enumeration System website. 

Get insurance

The third step is buying insurance. In addition to purchasing general liability insurance, life insurance, and disability insurance, you also need to invest in malpractice insurance, which helps protect you if a patient claims wrongdoing. If you join the American Student Dental Association, you may be eligible for discounts on disability, life, and malpractice insurance. 

Get credentialed

Next, you need to get credentialed with different insurers so you can be a recognized dental care provider and accept insurance from your patients. During the credentialing process, you’ll have to provide your NPI number, insurance information, and state license. Depending on the state you practice in, you may also need to provide additional licenses. You can start the credentialing process by visiting the American Dental Association website. 

Apply for a DEA number

Finally, if you plan to prescribe or give medication to your patients, you’re required to apply for a DEA number through the U.S. Drug Enforcement Administration.

3. Choose a business structure

Once you’re licensed and credentialed, you can register your dental practice and choose a business structure. There are a handful of business structures to choose from, but the two most common types for dental practices are limited liability corporations (LLCs) and S corporations. 

LLC

An LLC is a legal entity separate from the owner of the business. If you’re the sole owner of your dental practice, your business will be treated as a corporation. However, if you’re one of two or more practice owners, the LLC will be classified as a partnership. 

In either case, an LLC gives you more protection from personal liability in case you come up against lawsuits or bankruptcy. Your profits and losses can also go straight to your personal income without being subject to corporate taxes. However, as the owner of an LLC, you’re technically self-employed, so you have to pay self-employment taxes. 

S corp

An S corp, on the other hand, is a type of corporation that lets profits go straight to the owner’s personal income without facing tax regulations. Certain states have different requirements for S corps, like taxing profits above a certain limit, for example. To qualify as an S corp and not just a standard corporation, you need to meet certain criteria

The business structure you choose dictates your tax payments, paperwork, and profit distribution, so it’s important to consult both a healthcare attorney and an accountant to help you review your options. 

Once you determine your business structure, you can apply for an employer identification number, register your business, and register for state and local taxes

4. Consider the location, clientele, and competition of your dental practice

The location of your practice has a direct effect on your profit potential and patient base, so it’s crucial to be strategic when setting up shop. 

Ideally, you want to open a practice close to where your target patients live and work, but the location should also be convenient for you and your staff. Plus, the office itself should be well-equipped, easily accessible by public transport or car, and close to parking and other amenities. 

Cost is also a key factor. Starting a practice in a city with a higher cost of living can increase your expenses and eat into your profits. However, practicing in a pricier area can also expose you to higher-paying patients or more opportunities for growth. 

You also need to think about your competition. Starting a dental practice where there are limited options for dentist offices — and services offered — can increase your potential patient base. However, if there are multiple successful dental practices operating in the area you’re interested in and offering the same services, you may want to consider settling somewhere with less competition. 

It may be difficult to find an office that meets every item on your list. So, aim to narrow down your options based on budget, proximity to patients, and long-term potential. 

5. Obtain the equipment and supplies you need when starting a dental practice

In addition to buying medicine and patient care supplies like toothbrushes, you also need to purchase an abundance of specialized dental equipment to start a practice. Make a list of the equipment you’ll need for starting a dental practice, including:

  • Dental patient chairs
  • X-ray machine
  • Operatory cabinetry
  • Operatory lights
  • Sterilization equipment
  • Utility equipment
  • Hygiene tools
  • Surgical microscopes
  • Dental lasers
  • 3D imaging systems

Depending on the services you offer — whether you only do teeth cleanings, for example, or specialize in endodontic work, too — you may need even more machines or technology. Plus, owning and operating certain equipment, like X-ray machines, requires a special permit. So, it’s important to check with your state health department before making any purchases.  

After you make a list of dental equipment, consider the other medical office equipment and tech you’ll need. Think: computers, point-of-sale software, billing service software, and medical practice management software. One such type is electronic health record software, which stores patient records and payment information in one place. 

Your dental equipment will likely account for at least one-third of your total start-up costs, so it’s a good idea to explore your options for funding. Applying for an equipment loan can help you pay for big-ticket items without tying up your cash flow. 

6. Assemble a team

When you’re starting a new dental practice, you need staff who can help you gain traction and build a positive reputation in your community. 

The number of people you hire depends on the size of your practice. In general, it’s smart to start out with at least one or two hires to ensure you’re not overwhelmed when patients start showing up. If you’re the lead dentist, consider bringing on a dental hygienist to assist with teeth cleaning. Additionally, consider hiring an office manager who can schedule appointments and handle billing and payment processes. 

Beyond looking for people with the right background and skills, search for competent, flexible employees who can commit to working for at least a year as you build up the practice. You can always hire additional staff as you grow. But, replacing someone who’s not a good fit can cost you time and money. 

7. Focus on starting a dental practice off on the right foot with marketing

The key to a starting a dental practice and having a successful opening is strategic marketing. Once you choose an office space and set a date to open your doors, start spreading the word about your practice. 

To start, focus on building a website that lists your services, operating hours, insurance information, and treatment costs. You can optimize your website for search by including the names of the city and region where you practice. Also be sure to include keywords relating to dentistry.  

To expand your reach, aim to do a handful of different types of marketing. You can create an Instagram or Facebook account for your practice, for example. Also, you can hang flyers in local coffee shops and community centers, send out mailers, and place online ads. 

Don’t underestimate the power of in-person marketing, either. Try visiting local schools and offices to hand out business cards. You can also give presentations on the importance of oral hygiene, or extend an offer for discounts on the first teeth cleaning. 

Figuring out how to open a dental practice takes strategy, persistence, and financing, but following these steps can help put you on a path toward success.

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