Thoughts on this article: Paying off debt or buying a dental practice

[DentalMamba]

Old article: http://www.practicefinancialgroup.com/buy-dental-practice-student-loans-paid-off/

Going to be graduating next year with 400k in dental student loans. Nice! Anyways been reading around and seeing that instead of tackling the debt right away I should have some assets available to open a practice in 2-3 years and then pay down my debt then. What are your thoughts on this approach?

[Complete_newbie]

Good plan. If you are confident in your ability as a dentist and generating business, I'd follow your plan and think additional debt for practice buying etc.

[Rockiesdoc]

My thoughts on the article:

1- They talk about collecting $800,000 2-3 years out of school.  The average practice produces $500,000.  Out of school, I'd plan on being at $350-450k.  By 3 years out, you might be able to do $650,000 depending on how many hours you work.  The reason is that very few practices are fee-for service.  Plan on signing up for PPOs and/or Medicaid if you want to live in a desirable area.  You'll work more and earn less as a result.  If you're willing to live in a rural area, you'll do better.

2-  They say as an associate you'll make $200,000.  I don't know of any new associates making that much.  Plan on $100,000-$120,000 as an associate.

3-  As an associate, you may receive benefits that you don't get as a practice owner- health insurance, paid vacation, 401k, etc.

Here's what I recommend- associate for 2-3 years in a private practice (not corporate).  Pay attention to the business aspect of the practice and learn as much as you can so you know what you're doing when you buy.  After 3 years, buy an inexpensive practice.  Many good practices producing around $500,000 can be bought for $300,000-$400,000.  If their overhead is at 40%, you'll be way ahead of someone who buys a $1 million practice with 65% overhead.  The smaller practices have room for you to grow it the way you want.  You'll be able to pay off student loans faster at that point.