I have been a dental practice broker over 20 years now after owning a large successful practice for 17 years with my wife and dentist. My daughter graduated from dental school 4 years ago and married a classmate, so the husband-and-wife dentist team structure continues for another generation.
Poised for significant growth, women in dentistry are seeing increasing representation and leadership roles reshaping the profession’s landscape. As more women enter dental schools and advance into specialties and academic positions, they are set to drive innovation and patient care improvements in the industry.
The landscape of dentistry has changed dramatically since my wife, and I graduated from dental school around 1984. Back then, only about 10% of the class was female. Today, about 50% of dental school enrollments are female.
As a member and past president of ADS Transitions, I have been fortunate to stay abreast of the business issues of dentistry from a national viewpoint. My company has been involved in around 100 dental transitions a year since I took over as President in 2002.
Upon review of my last 250 transitions in Northern California, where most of my transitions occur, the percentage of female dentist buyers was approximately 47. However, I understand that this is not the case across the country.
As luck would have it, 1983, the year I graduated from dental school, was the year in which dental graduates peaked in the United States. For about 10 years after that, many dental schools closed. I remember our instructors telling us they felt sorry for us as they believed the golden years of dentistry were over.
That prognostication could not have been more wrong.
I believe I witnessed the golden years of dentistry. Keep that in mind with any prognostication, i.e., private practice is over as the DSOs will take over dentistry. Then starting in the mid-2000s or so, the powers that be realized that we needed more dentists, and the trend was to build for-profit dental schools across the United States.
In 2017, the number of dental graduates surpassed the number of graduates in 1983. As a dental transition specialist, one would conclude that the current climate for practice transitions would be at its greatest levels. After all, the baby boomers are retiring now, and even more young graduates are coming into the profession.
The reality of the current situation in practice transitions is that while the current inventory is the highest it has ever been, as expected by the demographics of retiring baby boomers, we are currently experiencing a shortage of buyers.
My experience in Northern California has been that nearly 50% of the buyers purchasing any of my listed dental practice opportunities are currently female dentist. Having said that, I can also attest that I am experiencing an incredible shortage of buyers for dental practice opportunities across the board.
I would estimate that in the 22 years I have been a dental practice broker, that the interest level for dental practices is down by at least 25-50% compared to 15 years ago.
Search volume “dental practice for sale” from Jan 2015 – May 2024
However, when I was researching articles to post on my updated website, I came across an article I wrote in 2018 titled “Hey Dental Practice Buyers, Where Have You Gone?” Therefore, the current shortage of dental practice buyers has been going on for at least 5 years.
The current shortage of dental practice buyers is due to several factors. Millennials are not as motivated to take on the headaches of dental practice ownership. Many have determined that being an associate will be better for their dentist work/life balance.
New graduates leave dental school with debt as high as $500K if they go to a private dental school. That debt, combined with the podcasts and Google searches available to them has created a fear never experienced in my generation of dentists.
That’s with the exception of that first “Risk Management” course I attended just out of dental school, which made me want to enter a different profession. They are being told in school that they need a “team” of advisors to plan.
While I don’t disagree with that approach, this “team” approach produces more “analysis by paralysis” than the ability to discern information to make a logical decision.
In my humble opinion, they’re not empowered to make a decision. Instead, they are filled with fear.
The DSOs (dental service organizations) are also present in many dental schools, recruiting them for associate positions and then convincing them to purchase minority interests with them. This is essentially binding them with golden handcuffs to stay with their system as long as possible. The young grads become convinced that this is the best way to pay off their student loans.
Associates will take home less than owners for the same amount of production, whether the economy is strong or weak.
Large practices that employ associate dentists do so for the profit potential. There is nothing wrong with this, but it should be common sense that a productive associate is making money for the “house,” and could pay off debt and feed their family better if they took home that extra profit themselves.
Here are the top three pieces of advice I can give you as a broker:
As soon as you produce $2,000 to $3,000 a day on a normal fee schedule, you should be able to take home almost twice the money as an owner than as an associate.
Student loan debt should not be looked at in the same way as dental school debt or other debts. It should be considered as a “return on investment.”
When the profits from the hygiene department and the tax savings are factored in, the average increase in take-home pay for the same amount of dentistry as an owner is about twofold compared to an associate.
While rates are currently rising, they are quite low compared to the 15% interest rate I had to pay when I entered dentistry after graduation.
Even at new rates, the smart “return on investment” is to buy a practice that covers your financial needs, as the greater the profits, the better they translate into the best return on investment.
Of course, the greater the profits, the more the practice will cost, but your take-home amount after debt service will be more with the larger practice.
Your “million-dollar question” in your due diligence is, “how much do I think I can produce with the patient base in this practice.” Your due diligence should reveal whether you may be able to increase revenues or perhaps won’t be able to match what the seller produced.
We all have different skill sets. No matter what your “team of advisors” might tell you, ONLY YOU know how you compare to any dentist you are replacing. Your debt service differential is nominal compared to your skill set with any patient base. The price is nominal compared to what you could produce in a dental practice.
Based on your skill sets compared to the seller’s skill sets, you will find practices that you might double when you take over and other practices where you might be lucky to produce half of what the seller did. Guess what? They will be priced at market metrics for gross receipts and cash flow for the current doctor’s skill sets.
Getting a “steal” on a dental practice where you cannot replicate the seller’s production for whatever reason could be a disaster.
Additionally, “over-paying” for a dental practice where you increase revenues could be the real steal, even in a practice where the buyer might have to take the Delta fee reduction.
Every situation is different. I don’t think it can be denied that female dentists who want kids have more issues to resolve in being a practice owner. I firmly believe gender is not even close to the reasons given above for the decrease of buyers in the transition space.
If a woman desires to be in the healthcare arena, I believe dentistry is the best professional choice.
Opportunities for women in dentistry are vast, and my wife and daughter had an advantage with dentist spouses; however, many options are available for women in dentistry to own a practice and still have that dentist life/work balance.
In fact, my daughter and son-in-law look at the millennial mindset, and their conclusion is they are excited to own multiple practices and provide associateships for all their classmates who don’t choose to be owners for whatever reason.
One prominent dental attorney I know specializes in partnerships for women who are interested in raising families. Our society is perfectly fine with men staying home more if needed to help raise a family.
Despite the challenges in the buyer market, I believe dentistry is the best healthcare profession for women as it provides the most choices. Owning a dental practice provides the best professional, personal, and financial satisfaction compared to being an associate.
Dr. Tim Giroux established his own dental practice in Scottsdale, Arizona, upon graduation from Creighton University, School of Dentistry in 1983. Relocating to Northern California upon selling his highly successful practice after 15 years, Dr. Giroux brings a unique perspective and personal experience in dental associateships, practice start-up, sales, and work-back situations to serve and assist you during your exciting transition! He especially enjoys guiding young dentists and helping them fulfill their dreams when they purchase their own dental practice.
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