How to Start a Dental Office

Part 1 - How to start a Dental Office business - Background

Dental offices are a necessary business in a local community because they help provide patients with routine and non-routine preventative and corrective dental care. Most of these procedures help ensure patients stay healthy. Some procedures, like crows, caps, and fillings, correct existing dental problems.

Our guide is in 3 parts:

• Part 1 - How to start a Dental Office business - Background
• Part 2 - Our planner tool to see if this idea is the right fit for you
• Part 3 - Action plan to get started

What are the costs involved in opening a dental office?

When you start a new dental practice, you take on significant costs. The average new practice costs between $250,000 and $500,000.

These costs go towards structural changes and uplift to a new building, equipment buyouts or leases, supplies, and startup staffing needs. To finance all this, a dentist needs to have a strong balance sheet and good credit.

A dental office practice loan may be financed for between 7 and 12 years. Current rates (2017) average 5% APR.

Rent for a 2,000 square-foot office space varies by location. Equipment, supplies, and office furniture may cost up to $150,000. Construction costs can add another $110 per square foot for remodeling. You’ll also need working capital of between $25,000 and $150,000, possibly more depending on your staffing needs.

What are the ongoing expenses for a dental office?

Ongoing expenses for a dentist office include supplies, rent, and labor costs. These are typically fixed expenses, however.

Who is the target market?

Clients and customers are usually the general public. Almost everyone has a need for general teeth cleaning, so dentists operate in a local community, serving that community with basic preventative dental services.

In addition to these services, dentists often perform specialized services for people who have existing dental issues like missing, chipped, or otherwise broken teeth. They may also fill cavities and provide adjustment services (teeth straightening). Ideal patients, in these cases, are ones who have a need for these types of services.

How does a dental office make money?

Dental offices make money by charging patients for dental services. Sometimes, direct billing is used, where patients pay the dentist for services rendered. However, most dental offices also accept insurance so the patient may not pay directly. If they do pay directly under this arrangement, they pay a co-pay amount and the rest is billed to the dental or health insurance company. The insurer then bills the patient for any coinsurance.

The fees are usually a fixed or flat fee for services rendered and may include dental hardware for services like braces, fillings, and caps, crowns, and bridges.

How much can you charge customers?

A teeth cleaning is a routine procedure. If you accept insurance, these services are usually covered in full by the insurance company. The cost without insurance can range from $60 per cleaning up to $150, depending on where your office is located.

Other services, like cavity filling can be completely or partially covered by insurance. For example, a dental office might charge $200 per filling without insurance or $225 with insurance (billed to the insurer).

A wisdom tooth removal may cost up to $750 without insurance, but only $400 with insurance.

Fees for various services are usually a fixed or flat fee, with two tiers: with insurance and without insurance (cash price). Insurance pricing may not always be lower than the cash price.

How much profit can a dental office make?

General practitioners can make up to $2 million in revenue, with a net income of up to 45.29%. If you specialize, you may make more. For example, an oral surgeon may make $3 million, with a net income of 47.59%.

How can you make your business more profitable?

Dentistry is a highly regulated business. Most dentists (90%) are general practitioners. This leaves the industry wide open for specialization. While it does cost more to get into a specialized area, this is your best hope for more money.

Day-to-Day and Growth

What happens during a typical day at a dental office?

Day-to-day activities in a dental office include checking patient charts, meeting with patients and checking hygienists’ work after a routine dental procedure. Most dental offices also staff billing and HR personnel who are responsible for managing the day-to-day affairs of the office, including the financial aspects like patient billing.

Since dentists typically accept insurance, the office needs to be equipped with billing software that can handle this type of billing. Finally, as the owner, you will be responsible for educating your patients on good dental hygiene.

What are some skills and experiences that will help you build a successful dental office?

Dentists must go through a considerable amount of school before being able to legally practice dentistry. The owner of a dental office is almost always a dentist (otherwise, the owner must employ a dentist). Because of this, the first step in starting a dental office is to get a bachelor’s degree. Once that’s accomplished, the next step is to obtain a doctorate in dentistry. During this period, the dentist specializes in a particular area of dentistry.

Next, the dentist must get licensed in their state, and meet the requirements of that state to practice dentistry. One of these requirements is typically a 1 to 2 year residency.

Dentists also must have good business sense and experience if they start their own practice. Many patients also have a negative association with a dentist. Because of this, a dentist needs to know how to design the office and environment in such a way that it makes the experience a little more enjoyable for the patient.

What is the growth potential for a dental office?

Dental offices typically consist of one head dentist, a few hygienists, and a few receptionists. When starting a dental office, you’ll need at least a minimum “core staff” to cover essential services. In addition to the core dental staff, billing and HR are also usually necessary to assist in managing financials and staffing.

Growth depends on the marketplace demand for dental services. In a small town, a dentist may only have one or two offices. In a larger city, it’s not uncommon for a dentist to have partners and numerous locations.

What are some insider tips for jump starting a dental office?

There is no easy way to break into the dentistry business. It’s highly competitive. The best offices are run by dentists with a good business background. Because of this, successful owners are often those who have experience working in a successful dentist office.

Local marketing is key because referrals drive a dentistry, especially in the early years when money is tight.

How and when to build a team

You need to start building a team right away. At minimum you need one head dentist, a few hygienists, and a few receptionists. When funds allow, hire a billing and HR specialist.

Part 2 - Is a Dental Office business the right fit for you?

Part 3 - Action plan to launch your Dental Office business in 90 days