Around the year 2000, an article was published in the ADA journal projected that an increasing number of retiring dentists from the baby boomer generation coupled with an increasing population could result in a shortage of dentists serving the public’s needs. Since then, perhaps in response to that projection, there has been a rise in dental school enrollment and four new dental schools have opened. However, the dental market is hardly suffering from a shortage, as the increased demand for dentists does not equate to a profusion of ideal opportunities. While the factors predicted may be accurate, additional factors in the dental market are currently affecting demand for new dentists. These factors include location and type of position available.
Most dental school graduates prefer to live in cities and suburbs, not in rural America, resulting in greater competition in the more populated parts of the country. As the demand for acquiring a practice in a preferred city has gone up, the purchase price in those cities has also gone up. By contrast, in rural areas (population less than 25,000), a lack of interested purchasers is driving the prices down. Therefore, a shortage is not occurring in the more populated areas but in the rural areas. This trend is even more evident in certain states, including California, Utah, Idaho, Colorado, Arizona, and Nevada.
Beyond the location concerns, the availability of associate positions, buy-ins and buy-outs in Colorado, Utah, and many other states, is less than the demand for those positions. Without those traditional opportunities to join an existing practice, the number of start-ups has increased in high growth areas. Currently, the number of new dentists exceeds the number of dentists retiring or moving away, making the dental marketplace in Colorado, Utah and other states very competitive. Consequently, the projected nationwide “shortage of dentists” is not likely to reach the more populated areas of Colorado any time soon, while Wyoming and rural areas of Colorado are beginning to experience a shortage and will continue to feel the effects.
Compounded with the location and availability factors, are the changes to the dental market by Insurance companies and Dental Management Service Organizations (DMSOs). Consumers and their employers who want to save money are choosing PPO plans and in-network dentists. Subsequently, patient loyalty often follows the dollar, not the dentist. DMSOs and similar types of practices are growing due to their wide acceptance of these plans and due to extensive marketing their services to the public. With more practices doing external marketing, and more patients looking for in-network providers, traditional fee-for-service practices are feeling the pinch of decreased patient flow. Fewer patients are choosing to stay with and be treated out-of-network by their current dentist on a fee-for-service basis, especially when the economy is slow. While some may decide to return to their fee-for-service dentist over time, the fact remains that more and more consumers choose providers who accept their insurance plan.
Due to this trend, traditional fee-for-service type practices are decreasing every year and PPOs and DMSOs are proliferating the market. Without a sufficient capacity of patients to support an associate, it is more difficult for dental practices to offer traditional associateships that would lead to a buy-in or buy-out. In most cases, a dentist’s choices are limited to doing an immediate buy out (because he or she will need to see all the patients to make it financially), joining a DMSO, working for public health or military, or starting a new practice.
The first task for a dentist wishing to practice in a certain area is to learn about what practice opportunities are available. Start with the opportunities listed on our web site at www.ctc-associates.com. Additional resources include reviewing publications, gathering information online, speaking with colleagues, contacting practice brokers, and sending letters to dentists in the area. However, it takes time to find an opportunity that feels “just right”. Therefore, some dentists opt for working for one of the corporate-type clinics or public health clinics until another opportunity arises. Many dentists try to lock up a relatively “for-sure” associate position somewhere (even in an area that may not be their first choice to live). If they are willing to live in or commute to a less preferred areas for a year or two, having a position like that lined up can put their minds at ease and takes the stress off while they search for a more ideal and permanent opportunity. Furthermore, if they end up needing to take the position, at least they are employed and can gain experience and earn income while they continue their search for a more ideal and permanent opportunity.
Often times, a dentist graduating from school or finishing a residency program wants to dive into a buy-out or start-up situation. However, these options are often overwhelming. In some cases, it is more advantageous for a new doctor to build clinical and business confidence in an existing practice before venturing into ownership. For these doctors, an associateship is often ideal. We receive a multitude of associateship requests, and about 80% of them express desire for a traditional fee-for-service practice, new high-tech equipment, in a good location, in a new part of town, and the option to buy-in or buy-out within a few years. Unfortunately, there are few positions that fit this description, and it could be a long wait until the “ideal” practice opportunity comes along. What, then, can one do to gain the clinical confidence and business savvy necessary to feel comfortable with ownership?
Working in a position that you know is temporary allows you the time to check out where you would like to eventually live, to see the different practice opportunities that are available, to learn from your associates’ techniques or behavior (be they good or bad), and to begin to form your personal style and preferences, all without having your back against the wall financially. After you have gotten your feet wet in this kind of a situation, ownership becomes a logical next step. Should you then look for an associateship with ownership potential, purchase an existing practice, or start a new one?
Practice transitions (sales or associate buy-ins) usually occur in well-established areas of town that may not be ideal for a new dentist. The high growth areas of town are more attractive to new dentists, since the population is closer to their age, housing is newer, there are usually more people without a dentist, and in most cases the facility is closer to your expectations. However, opportunities for traditional practice transitions like associate buy-ins or buy-outs are difficult to find in these newer areas. Traditional retirement from practice or other life events may trigger a practice sale, but most younger dentists in those areas are still growing their practices and are not ready for a practice transition, and with few transition opportunities, the wait for such a practice sale may be long. For these reasons, some practitioners decide to start a new practice.
If you are unable to locate an opportunity in an area in which you would like to practice, you may want to investigate the option of starting a practice from scratch. Careful planning is essential if you are to succeed in this endeavor, as the risks of starting a new practice are commensurate with the great rewards therein. The good news is that there are experts who specialize in consulting new dentists throughout the process of starting a new practice. If you want to increase your odds for success, we suggest you contact Marie Wuthrich, who specializes in dental practice start-ups. She can be reached at firstname.lastname@example.org or 720-219-4766.
If you are looking for associateship positions, we suggest the following options:
State clinics: 303-761-1977
Federal clinics (eg. The Federal Bureau of Prisons at www.bop.gov/jobs/hsd/index.jsp )
DMSOs (Dental Management Service Organizations);
Perfect Teeth at www.BDMA-PerfectTeeth.com
Bright Now at www.brightnow.com
Dental One (Rich Nicely at 972-755-0836) at www.dental-one.com
Franchise: Comfort Dental at www.comfortdentalpartners.com
Medicaid Offices: 877-367-0960
Online at www.uchsc.edu/sod/ then click on opportunity listings
Colorado Dental Association Classified at www.cdaonline.org and click on classified ads
Another viable option is to send letters to dentists in the area in which you are looking to practice. You can obtain a list from the Colorado Department of Licensing at www.dora.state.co.us/dental/. It is very helpful to have basic computer skills, as you can then import the data into a spreadsheet and sort the data by zip code. If you want to increase the odds of the recipient opening your letter, it is best to hand-write their address on the envelope. Keep the letter short and to the point, and then attach a CV to the letter. The Yahoo yellow pages can also be helpful. This site allows you to search by city for dentists in your area (type on location, then doctors, then dentistry). If you are a ADA member, then you have access to their listing via the internet.
If you are investigating an area, www.data-city.com and www.dataplace.org are helpful, and if you’re not sure where you want to live, www.findyourspot.com can be of great assistance. Also, for a $50 fee, Dr Eric Solomon will do a demographic study in the area you want to practice. You can reach him at email@example.com. For a more comprehensive demographic report, contact Scott McDonald at firstname.lastname@example.org.
Now for some information on how we work. There is no initial fee for checking out any opportunities that we have listed. We try our best to address any concerns and/or questions you may have about our opportunities in a timely manner. Please keep in mind that the opportunities we have listed may not meet your needs and/or expectations. Note that the most desirable practices will be on the market for only a short period of time, thus, making it difficult to find the right opportunity at the right time. When an excellent opportunity does come along, there may only be a short window to act upon such an opportunity. As much as we would like you to pursue the opportunities we have available, you really need to explore all opportunities that come available through other sources and other brokers.
The most important part of this search is what to do when you locate an opportunity that you are interested in. How do you know its rights for you and if it is structured fairly for all parties concerned? That is where we at CTC Associates feel confident that we can help out. The first step when working with a client, is to spend 1-2 hours reviewing an opportunity for a client and help the client understand the value and feasibility of that opportunity (that charge is $275 per hour). If our client decides to go forward, then we either can continue to charge $275/hr for our services on the project or we can charge a tiered flat fee to be paid at the time of closing and as part of the financing. Note that with the fee-for performance option, we take part of the risk, because if the transaction does not close we do not receive compensation for the services rendered. Also, fee-for-performance fee does not include the cost of doing an appraisal. This fee is usually $2,500 to $3,500 and in most cases, is paid by the seller. In the case of hourly billing, we receive compensation regardless of whether the transaction closes or not.
I hope this information as been beneficial. If I can be of further assistance, please do not hesitate to contact me.
Larry M. Chatterley