Hanging your 'single shingle': Are you ready? Advice for dentists on starting a private practice
Thinking about going out on your own? Pediatric dentist Dr. Robert Elliott gives some advice on hanging your "single shingle."
Congratulations! You’ve decided to take the plunge…or have you?
Dr. Elliott is a pediatric dentist in Cary, North Carolina. You can visit his practice page here: http://www.carypediatricdentistry.com. He is also the founder of Pedo Springboard consulting firm, which can be found at www.pedospringboard.com and https://www.facebook.com/pedospringboard. His full bio may be found below.
I am writing this article in hopes of assisting you during one of the most important decisions of your life: Opening your own private practice! This can be a very frustrating period, due to all of the time, paperwork, telephone calls and “blind” decisions that are involved. Remember, everything you do is a reflection of who you are. Therefore, start early, stay organized, and manage your time efficiently. Your practice will be an extension of you, your personality, and your philosophies, so be creative, prepared, neat, and professional in all that you do!
A proposed timeline of events to help you stay organized could look like this:
1. Choose your space and location
This is your initial vital decision! Your location will either make you or break you. I would recommend getting on board with a commercial realtor in your area. Consider:
- Demographics - You need to do your homework on your area. Look for growth. New neighborhoods, schools, and shopping centers.
- Access for your patients - Is it near a major highway or intersection? Will they be able to find you easily?
- Visibility - Will there be a sign with your name and specialty on it?
- Parking - Will there be adequate parking for your team and patients?
2. Establish a realistic time frame
Your design and construction team will understand what is required to deliver a thoughtful and successful project. Listen to them! Plan ahead and establish a realistic time frame. Once the items in the pre-design phase are completed, I would plan 7-10 months for the build-out of leased space and 12-20 months for full building construction.
Remember: Draft a realistic timeline for design and construction of your new office! Do NOT create additional pressure on yourself by trying to open too quickly. You can always open early if you get done sooner than planned! You are in charge!!!
3. Contact a dental supply company
You need to choose your dental supply company carefully. Their goal is to establish a long-term working relationship with you, while your goal is to find the best possible match with your practice.
Consider the following:
- If they will be supplying your dental equipment as well as your soft supplies
- Their reputation (talk to other dentists)
- What their turnaround time is for delivery of supplies
- If they have a program to assist you in establishing your practice
Some companies have financial planners, loan assistance, a CAD-CAM program that will help you with your floor plans, elevations, etc. Also ask if they will be available to be on-site during the construction and installation phase.
4. Begin initial lease negotiations
You will need to hire an attorney at this point. It is extremely important that you have a thorough understanding of your lease and all written paragraphs. Search out an attorney who has experience with medical and dental lease negotiations. Remember that once you sign your lease, you are at the mercy of the landlord – for the entire period of your fully executed lease! Some items of interest:
- What is the length of your lease?
- Up-fit allowance (a.k.a. “T.I.” or "tenant improvements")
- Commencement date and certificate of occupancy - Ensure that you will not be charged rent if the build-out is not completed by the proposed completion date.
- What is yours?? What is theirs?? If any alterations or improvements are made to the office space, understand if it becomes the property of the landlord. Also, if your cabinets are built in, you may not be able to take those with you if you move.
- Fire and casualty damage
- Sufferance rate
- Relocation during buildout
- Lease execution
- Consumer price Index (CPI) - Basically this is additional rent that the landlord can raise you to. Ensure you have a ceiling of no more than 3% annually and not less than 1%
- Common Area Maintenance (CAM) - This is common space that has to be maintained like hallways, building restrooms, parking lots, landscaping, snow removal, etc.
Don’t sign a lease or close on a piece of property without an evaluation! There’s nothing more disappointing than discovering that the lease space or property you secured is too small to accomplish your office design goals – or worse yet, too large and more money than you needed to spend.
5. Develop business plan/pro-forma
Your business plan is developed to not only eventually guide you through your endeavors, but to initially assist you in convincing a bank to provide your financial banking. Remember that a banking institution may need to be educated on how profitable a dental practice can be. You have to educate them! A framework outline is given below:
A. Executive summary (mission statement, purpose, the service, the market, competition, management team, financial information, conclusion)
B. Statement of objectives and qualifications of principals
C. Description of services to be offered
D. Background of proposed business
E. Marketing plan (product, price, place, promotion – both internal and external)
F. Business plan (goals, inventory, practice income, collections, fees)
G. Loan proposal
H. Loan itemization schedule
- origination expense (architect fees, legal, accounting, practice announcements, first month's rent)
- dental treatment/administrative expenses
- office space expenses (up-fit construction, working capital)
- professional meetings (board review course, board exam, CE)
I. Statement of personal net-worth
J. Income projections for 36 months (profit/loss)
K. Appendices (curriculum vitae, references, proposed floor plan, proposed building lease, tax returns, etc.)
It is highly advisable to have a CPA or Practice Management Consultant review your business plan with you. After modifications, they should be present during your interviews with all financial institutions for clarification and support.
Once you have these in place, you're ready to move on! Here is a list of additional items for consideration.
6. Equipment selection/soft supplies
One of your largest expenses will be the cost of your dental equipment. It is imperative that you estimate as closely as possible the amount you will be budgeting for dental equipment and supplies. You will need this number when figuring your loan request! When meeting with your dental supply representative, plan to spend several hours ordering all of your supplies. Also consider:
- You need to decide if you will be purchasing, renting, or leasing your equipment. Consider depreciation and business expense.
- Weigh the options of up-fitting all of your operatories now (possible discount) or later.
- Will your equipment be built-in? If you move, it may be considered part of your building and you cannot take it with you. (Check your lease!)
- Coordinate with your architect, millwork, plumbing, electrical, etc., sub-contractors all necessary allocations.
- Consider your water delivery system – I would advise a self-contained water system, as the “dental water line contamination” issue is upon us now.
7. Develop theme of office/sketches
This is where you can be an designer…and the doctor too! Let your imagination run free – you have to walk through those doors every day, so create it the way you want to! You want your office to reflect a very comfortable, secure and up-to-date atmosphere.
8. Line drawings for office to architect
It is vital that you convey to your architect your ideas and concepts! Be as specific as you can when it comes to details and images you want to see developed. Put onto paper as many pictures and ideas as you can. When you meet with your architect, explain to him what it is you do and the importance of carrying out your ideas to best represent what it is you are trying to achieve.
Consider a curvilinear design (eliminate as many 90° angles as possible). What is the best flow pattern for patients as well as your team? Remember to plan for the future!! It is much more expensive to go back and redo than it is to plan ahead and be prepared. Most doctors outgrow their dental facility in less than five years. The culprit: short-term planning! The investment in a new office is too significant to ignore future needs. Before starting your project, consider these questions:
- How many operatories do you need today? In the future?
- How many administrative staff are in the business area today? How many do you anticipate in the future?
- How many doctors and clinical staff are in the facility today? How many do you anticipate in the future?
- What new technology do you anticipate introducing into the practice today? In the future?
- How does HIPAA affect how your office will be layed out?
- Storage! Where will all of the soft supplies be stored? This is one of the biggest problem areas that gets minimized or forgotten.
I highly advise talking to as many people as possible and getting their input on your design.
- Colleagues – Ask other dentists who are in private practice to look at your initial plans. Their experience to detail is invaluable!
- Assistants and Hygienists – Have as many clinical team members from other offices evaluate your layout and patient flow. They are the ones who have to do the majority of the running in the office.
- Front Office Team – The administrative side of the practice is the most foreign to us as doctors. You MUST seek advice from as many front office team as possible. They will advise you on what to do and more importantly what not to do!
- Friends – Ask your friends what they like and dislike about their physician and dentist offices and reception rooms.
It is also important to remember that proper zoning ensures an efficient floor plan. The first key when reviewing the dental office plan is to verify that the zones of your dental office are not violated. In other words, spaces that are meant to be together (within one zone) are together – and spaces that are not meant to be together are not together. The zones of the typical dental office are:
- Treatment Zone: operatories, tray prep and sterilization, lab, imaging and x-ray
- Public Zone: reception room, front desk and business area, consultation area, patient toilet
- Private Zone: doctor’s office and toilet, team lounge and toilet, storage and dental mechanical area, server room
An easy way to identify the zone is to color code your floor plan, with each zone a different color. If a disparate color shows up inside the same color zone, you have identified a space that is “out of zone." This signals inefficiency in your floor plan design.
9. Secure personal insurance/begin underwriting process
The bank that will be backing your financial adventure typically will insist that they be named as the primary beneficiary in the unlikely event of your death. Therefore, you will need to secure enough personal insurance to cover your indebtedness. There are many insurance companies available who deal exclusively with medical and dental policies. You will need to begin the underwriting process for the following personal insurance (typically all of these can be offered by the same insurance person):
- Life Insurance – term or whole? Which is best for you at this stage in your life (based on age, etc.)?
- Disability Insurance – These are monies paid to you monthly if you become disabled and cannot perform your job.
- Disability Overhead Insurance (DOI) – These are monies paid to the practice to ensure the office can continue to pay monthly overhead expenses while you are disabled.
10.Initiate up-fit bids on office space
Your commercial realtor should be able to recommend highly qualified general contractors to bid on the build-out of your office. Usually you will want to have 3-5 contractors bid against each other on the final cost of your build-out. This should take no longer than a week. Your commercial realtor will guide you through this process. Again, this is a vital dollar estimate that will be needed to help you decide on your final loan estimate. One word of advice: the lowest bid is NOT always the best choice. Visit other projects that each contractor has completed and interview the owner of each.
11. Financial backing from bank/lender
You will need to interview several financial institutions. As mentioned previously, your accountant or practice management consultant should be present during your interviews with all financial institutions for clarification and support. Points of interest that you want to challenge the financial institutions with:
- Revolving Line of Credit – Request that you only get charged interest on the money you use.
- Length of loan – Usually this will be 5-7 years if you are up fitting in an existing building, based on the amount you borrow. This is the time they expect to have the loan paid in full.
- Interest rate – This should be discussed in detail and is negotiable.
- Interest only payments – Request you want to pay only the interest on the amount of money you have used from your line of credit for the first 12 months. This will give you time to generate an income base when the actual loan payment comes due.
- No penalty for early repayment – Ensure there is no penalty for paying off your loan early!
- No co-signer – Insist that you do NOT need a co-signer. There is no need to bring anyone else into the financial equation.
Although most doctors prepare financial projections, many fail to include all project costs. Be sure to resource a knowledgeable expert for your financial assumptions. Overall project costs should include:
- Hard capital costs: construction, land, landscaping, parking, etc.
- Soft capital costs: professional fees, new furniture, accessories ,and dental equipment. Soft costs are usually about 25% of the anticipated construction costs of the building.
Consider the following formula:
Cost of function + Cost of aesthetics = Overall construction costs
12. Attorney to review completed lease
Have your attorney complete final revisions of your negotiated lease. It is not uncommon for lease negotiations to exchange hands between your attorney and your landlord multiple times. At each of these revisions, make sure you understand what was changed, why it was changed and any implications this may have in the future! A word of caution: be very attentive to the amount of time your attorney spends on revisions. This can become extremely expensive! Ask him/her for your approval prior to discussion with any other individual regarding your lease. Numerous phone calls, meetings, discussion, etc. between your attorney and another party can add up to a disheartening bill!
13. Secure office insurance
It is time to begin the underwriting process for your office insurance. Umbrella policies (where one company underwrites multiple policies) usually are more affordable. Shop around, as there are many companies to choose from. You will need to purchase the following types of insurance:
a. Commercial Liability Office Insurance
Business personal property insurance
Personal property of others
Personal property of premises
Monies and securities
b. Malpractice Insurance
c. Workers Compensation
14. Sign building lease
Once your lease is finalized, you will need to sign it and obtain a copy to be kept in a safe.
Congratulations! Your space is now officially yours! No one can out-bid you and “steal” your office out from under you! Thank your attorney and write him or her a big ol' check!
15. Sign equipment list
Sign your dental equipment and supply list. The equipment order can now be placed and you can begin to give your dental supply company some general dates when equipment should be delivered. Remember that some equipment can take longer to order, ship, and install…so plan ahead!
16. Secure general contractor
Decide on your general contractor and have an initial meeting with him to ensure all questions are clarified. Advise him that you would like to meet with him and any applicable sub-contractor foremen who may have questions regarding a dental up-fit. Advise him you will be calling him to schedule a second meeting with all team players (architect, general contractor, dental equipment manager, etc.) He will have you sign a contract with him – obtain a copy of this contract!
17. Set up meeting with dental supply company, general contractor, all sub-contractors (plumbing, electrical, millwork, etc.), architect, and landlord
Some areas of interest to discuss:
- Imaging (radiograph) room must follow state radiation guidelines
- X-ray controls must be located a certain distance outside of the room with a view window (lead glass)
- Special wiring to accommodate Pan/Ceph and intraoral radiograph unit
- Location of mechanical room (compressor, vacuum system, phone board, computer exchange board)
- Air lines run to sterilization and lab (hand piece for acrylic trimming, lab work, etc.)
- Water lines to lab for model trimmer
- Plumbing, air, and vacuum lines to each dental chair (core drilling through a concrete floor will be required)
- Recessed ultrasonic in sterilization and drainage
- Any sterilization equipment that will be placed in vented drawers
- Special orders for pediatrics (small sinks, urinals, short toilets, etc.)
- Placement of master control switches for vacuum and air compressor
Points of interest to remember and discuss between your team members are:
- Once you feel you have designed the ideal operatory, “construct” the operatory from cut-out cardboard including the dental chair, operatory and assistant stools, cabinets, and counters. This will give you a chance to try it out for size and working space. Do not neglect this step if you are designing an area that is different than what you have used in the past! Ideally, a closed operatory should be 11’ x 11’ if you utilize technology and plan to have seating for a guest in the room.
- Do not neglect ergonomics in designing your operatories and administrative areas. I would recommend working with someone who is knowledgeable on dental operatory layout, as well as doctor, assistant, and patient positioning.
- Make sure you have sufficient electrical outlets strategically placed.
- Plan which way the cabinet doors in the administrative, quiet room, and treatment area will open. The “standard” way may not work for the assistant or receptionist. In some areas, you may not want doors on cabinets. Watch the swing of the cabinets and measure them to make sure they will not hit anything. Consider sliding cabinet doors.
- Remember to design signage for bathrooms and other doors and areas you need to designate.
- Place all light switches in the most convenient locations. Do a walk-thru first before confirming the electrical plan.
- Dental software – make sure all of your video and audio is networked throughout your office
18. Architectto seal and approve plans/elevations
Almost all states will require that an officially certified architect “seal” your plans (have his professional approval). Many dental supply companies offer to draw and design your office on a CAD/CAM machine and can even print out realistic “blueprints," but these are not “official” by the state. You will have to have your architect make these “official." Make certain all cabinetry is drawn as you have requested. If uncertain, have your architect draw a schedule or detail of it. Once it is in the field, it is up to your general contractor to interpret – which can be risky!
19. Up-fit construction
On average, the internal build-out of an office space in an existing building should take no longer than 3-4 months to complete. The dental equipment and chairs can be installed in less than a week.
I cannot stress enough to try and be onsite with your general contractor as much as possible. I was there almost every day! So many minor changes can be made in the field that will save you much headache and expense down the road. Your contractor will have many questions to ask/confirm, and it is important for you to be right in the middle of it all!
You know how you want your office to look, so ensure that every detail is how you want it. You have to walk into this office everyday…make it the way you want it from the beginning!
Common items missed that are costly to fix:
- Door locations and the direction they swing
- All outlets are in correct location (consider all below counters with drop grommets, any above counters should be horizontal and not vertical)
- Location of all light switches, and are 3-way switches in the correct location?
- Counter heights: seated counter height, transaction ledge height, standing counter height, sink height
- Computer monitors mounted on wall and cabling chased below counter to hard drive
- Flat screen TVs with reinforced wall mounting and power and networking cabling behind
- Outlets for microwaves, dishwashers, refrigerators, crock pots, etc., on an island in the kitchen for buffet service
- Computer/phone/network close to desk layout in consult rooms, doctors offices, etc.
20. Interview staff/secure office personnel
It will be up to you to interview and hire your initial team. I hired my practice administrator first, so that the front was covered while I was my own dental assistant for the first few months. This way, someone can answer the phones while you are producing!
21. Marketing of practice
Approximately six weeksprior to opening your office, you will want to send a letter introducing yourself and announcing you will be opening to the following groups:
- Local general dentists
- Local dental specialists
- New home/home relocation companies
Referral pads, business cards, letterhead, envelopes, and all office forms should be developed and in print at this time. You want to be prepared to open your doors and see patients as soon as possible. Remember that your rent begins the day your Certificate of Occupancy (C.O.) is approved!
22. Open doors and see your first patient!
I would advise having your staff in the office two days without seeing any patients. It will take you that long at minimum to ensure:
- Department of Radiation Protection has surveyed your office and approved it with the state
- You have walked through with your contractor and made a punch list of any imperfections you want corrected
- All forms are ready
- All dental supplies are inventoried
- All staff are trained on your dental software
- You have completed “trial runs” without patients, including printing all patient documents to every printer
- All equipment is in working order
- You feel comfortable with your environment
I am reminded on a daily basis that the decision I made was the correct one. Good luck in the pursuit of your dream!
About the author:
Dr. Elliott is from Louisville, Kentucky, where he graduated from the University Of Louisville School Of Dentistry. His pediatric dental residency was completed at the UNC School of Dentistry and UNC Memorial Hospital in Chapel Hill. Dr. Elliott is a Diplomate of the American Board of Pediatric Dentistry and is an Adjunct Clinical Professor at both the University of North Carolina and University of Louisville Schools of Dentistry. In addition, he serves as the State Advisor for the North Carolina Dental Assistants Association. Dr. Elliott lectures throughout the year to other dentists, specialists, dental team members, and residents. In his free time, he has developed and launched his own pediatric dental consulting business, PedoSpringboard, Inc. to help residents and pediatric dentists successfully start their own practices.
Dr. Elliott is a recognized authority on the development of creative and innovative office designs for pediatric dental practices and is often called upon to consult with new office construction. He works with his partner and 12 TEAM members and has been in private practice for 16 years in Cary, North Carolina.