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Long-term Thinking Key for Clinicians


What strategies help dentists earn the most over the course of a career?

why a long-term plan is essential to the dentist's financial success


Money, money, money. It’s always in the back of our minds, but sometimes it should really be front of mind. You may have pursued dentistry in order to help patients, but along the way you’ve accrued a sizeable debt, and that’s why a long-term plan is essential to your financial success. The profession can be very lucrative, but only for those who know how to navigate it. Besides allowing you to repay loans, making a little extra money never hurts. But that’s only half the battle: if you want to maximize your income, you must constantly evolve.

According to Bruce Bryen, CPA, CVA, a valuation expert at Baratz & Associates, there are 2 ways to achieve that goal: by “making the most money and…keeping the most money.”

The road to success starts with your first step out of dental school. What types of dentistry do you want to practice, and where? Where should you invest time and money? What equipment and technology might benefit you the most? What is going to have the biggest impact on your bottom line in 20 years? Should you invest time and money on a subspeciality?

The DSO Decision
Until recently, most students envisioned starting as an associate and someday becoming their own boss. However, with the rise of dental service organizations (DSOs), there are other opportunities available to new DMDs. Data from the Health Policy Institute of the American Dental Association says that, in 2019, 10% of dentists over 50 and 20% of those under 35 worked at DSOs—an increase from 2015 of 5% and 16%, respectively. With this trend comes a decline in private practices: in 2005, 49% of dentists under 35 were in private practice, but in 2019, only 31% were.1

DSOs pay good starting salaries, which can be tempting for those with student-loan obligations in the neighborhood of half a million dollars. Besides, working for a DSO removes nonclinical responsibilities, freeing up more of your time.

“A DSO is a great opportunity for someone who wants to earn a significant amount of money now but…not worry about [it] down the road,” Bryen says. “It’s a great thing, particularly if you’re younger or…at the end of your career. If a person wants to make a lot of money immediately, without the responsibility of building for an acquisition or a partnership…[a] DSO is the best way to go.”

Although clinicians at DSOs are likely to receive annual pay increases, they may never earn as much as a practice owner. They can benefit, of course, from the paid vacations, health insurance coverage, and retirement plans that a private practice may not be able to match, but they can also expect to eventually hit a ceiling in terms of salary and external opportunities. For instance, they may find it difficult to leave the DSO system and become a partner elsewhere because they lack administrative skills.

“The DSO is…not for everybody,” Bryen points out. “If you’re just interested in the clinical skills, you’re going to be doing what you’re doing forever. That’s not necessarily bad; you may make $200,000 a year to start. But after 10 years go by and you’re…making [only] $225,000, you may start thinking it’s not for you,” he explains. “That’s where the person working at a DSO needs to be careful.”

Dentists at DSOs can expect to hit peak income within 5 to 14 years of starting, but after that, their salaries decrease in comparison with those of private clinicians, who see continuous growth over the course of their careers, according to Bryen. To avoid stagnation, dentists working at DSOs should “learn about other aspects of the business,” Bryen advises. Then “you’ve got a better chance to progress; that’s when you’re really going to make some money.”

Joining a DSO upon graduation may be tempting, but private practice is the most lucrative option in the long run. As associates, dentists can develop business as well as clinical skills. They will make less than at a DSO (probably around 30% of collections), but they will get an idea of how a practice is run and thus will be able to make informed decisions about ownership. If they decide to buy or start a practice, they’ve got a leg up on the financial side of things over a dentist at a DSO.

“If you want to build for the future, you should go work for somebody,” Bryen asserts. “You may not make as much money as the person going to work for the DSO, and you’re going to take on more responsibility…. But, if you want to build, if you want to buy a practice someday, then you’ve got to take on the responsibility of learning [about] accounting, insurance, etc.”

Although the long-term benefits may be impressive, your first few years probably won’t be easy, as purchasing or setting up a practice comes with costs of its own. “You’re definitely looking at some investments to get off the ground,” Bryen admits. “But you’ll make it if you stick to it and embrace the responsibility. There’s no question that over time the dentist will build the equity to allow them to do other things, like purchase a vacation home or whatever they dream of.”

You’ll get that mountain cabin or beach house because you’ll be able to leverage the practice to borrow money. After all, once dentists become owners, they’re building equity year over year as they pay down loans. Once debts are discharged, a successful practice will be extremely valuable.

“Dentists that buy a practice have something they are building, whereas with the DSO, they’ve got a good salary, but when they owe $300,000…, they’re using a big portion of that salary to pay down the debt,” Bryen says. “It’s good they’re paying down the debt, but unlike the dentist…buying the practice, they don’t have…[an] asset.”

In addition, owners may be taking home half the collections, and when it’s time to sell, they may be able to ask for up to 100% of collections, not a bad nest egg at the end of a career.

Continuing Education
Irrespective of the path a dentist takes, staying abreast of the latest in technology and techniques is also critical to ensuring business success. Investing in education keeps you at the forefront of the profession and sets you apart from the competition. It may require investments of money and time, but it’s worth it in the long run.

“The continuing education and study clubs are critical—and not just for what you’re going to learn, but for who you’re going to meet, and what you’ll learn from them. Maybe somebody’s doing something that you’re not doing; well, then you’re going to learn.”

Continuing education isn’t limited to clinical skills, however. Understanding business is equally important for an owner. Although there are seminars that can teach you how to run a business, Bryen recommends retaining a good dental CPA. If you do, “you’re going to learn from that person about how to conduct your business. If you don’t have a good dental CPA, you’re missing something, and it’s going to cost you a lot of money.”

Dental CPAs are attuned to the needs of the industry and understand that many dentists, although clinically adept, are a bit lost when it comes to business, largely because they were not taught business in school and don’t have someone to show them how it’s done. A good dental CPA can be that guide, especially one who has worked with other practices.

“They [dental CPAs] can take what they’ve seen in other practices and apply it to yours,” he says. “And that will make the practice grow, while also teaching…dentists the skills to run their business. If you’ve got somebody that’s good, it’s important to take advantage of what that person knows. That’s what is going to make you a lot of money.”

Partnering with a dental CPA can also ensure that dentists get the appropriate guidance early on. There are always risks attendant to borrowing large amounts of money (like the capital to buy a practice), but a team of experts can mitigate those risks.

“A dental CPA, a lawyer—these professionals can look at the agreements and tell you what to look out for. The financials can tell you an awful lot, and you’ll need people to point out the different facets of the business deal. When you buy a house, you hire someone to tell you what’s wrong with it. It’s the same thing; the dental practice evaluator can tell you what they see, and sometimes they aren’t obvious things.”

Respect and Reputation
Whether you decide to work for a DSO or hang out your own shingle, the capstone of success is patient satisfaction, more so than business acumen and clinical excellence. Although it may not seem like it at first, building—and maintaining—a happy, loyal patient base is the best way to keep your chair (and thus your savings account) full.

“The reputation of the dentist is really an important thing,” Bryen notes. “Being respectful and having your staff understand how to treat patients is key.… This means running on time and ensuring you…speak with each patient. If you don’t give the patients the respect they deserve, it’s going to backfire.”

This is particularly important because often patients will simply go elsewhere instead of raising a complaint. If you’re always 30 minutes late, you’re wasting the patient’s time, and they are less likely to return. Don’t wait for a patient to complain before making improvements: they may not be comfortable telling you about their frustration. You are responsible for recognizing—and rectifying—any problems.

“From a noneconomic standpoint, this is the kind of thing that can hurt…relationships and stop referrals,” Bryen warns. “The dentist or the hygienist may be terrific…, but waiting a long time…is…upsetting, and it’s going to hurt the dentist because word of mouth is the best referral source.” In the end, it is your reputation that guarantees your financial well-being.

1. HPI: shifting practice patterns. American Dental Association. December 3, 2021. Accessed April 12, 2023. https://www.ada.org/publications/new-dentist-news/2021/december/hpi-shifting-practice-patterns

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