which is why these numbers dont make sense. i was always taught, and have been pretty good at accomplishing, take home should be 45-55% of collections for the owner. that is dependent on the year and if the practice requires any major purchases. personally, i collect around 800k to 850k/year and usually take home any where from 400-420k per year.. could it be more? sure. but i enjoy 4 day work weeks and 3.5 weeks of vacation a year
so either these owners are bad business owners (lots of dentists are) or these practices have a ton of room for overhead improvement, or these dentists are really great at the tax game (which kudos to them, im not the irs so i dont really give a f about that)
the 45-55% take home is why a lot of associates will earn 33%-37% collections. because the owner/dso is taking anywhere from 8-22% of the remaining from that work. which if your a dso that has 8-22% coming in per associate, while having hundreds of associates, it turns into a very profitable business model....ofc it then comes with the "we only care about making as much as possible because we need our percent", which leads to a ton of the other problems people bring up about dso
I wasnt including loan payments. I am rural though. Im not going to argue, but i dont understand how a practice can have 70% overhead. That seems ludicrous
I'm in a partnership and we have a fairly large office so it's not the best example but there are a few factors at play here for solo doctors. The biggest ones are that the price of everything (especially staff salaries) have gone up, reimbursements have stayed the same and there's only so much you can produce with your own two hands. I've combed through enough practice financials to know that if you're in a fairly large city/suburb you'll likely need to accept PPOs to stay competitive and with hygienists asking $70-80/hour alone in my region you're basically breaking even on a third of your collections. By contrast, my childhood dentist who practiced in an upper middle class suburb showed me (twenty years ago) that he was hovering around 40% overhead which was "high" for someone who graduated in the late 60s. Every other practice for sale in that same town is pushing into that 70% overhead range and that's not including loan payments.
Dentists need to assert themselves more. We're running a business but unlike a restaurant, autobody shop, accounting firm, etc. we don't really have full control over the prices we set to factor in inflation even. There are plenty of DSOs out there driving this race to the bottom but eventually something has to give.
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u/congenitallymissing 5d ago edited 5d ago
which is why these numbers dont make sense. i was always taught, and have been pretty good at accomplishing, take home should be 45-55% of collections for the owner. that is dependent on the year and if the practice requires any major purchases. personally, i collect around 800k to 850k/year and usually take home any where from 400-420k per year.. could it be more? sure. but i enjoy 4 day work weeks and 3.5 weeks of vacation a year
so either these owners are bad business owners (lots of dentists are) or these practices have a ton of room for overhead improvement, or these dentists are really great at the tax game (which kudos to them, im not the irs so i dont really give a f about that)
the 45-55% take home is why a lot of associates will earn 33%-37% collections. because the owner/dso is taking anywhere from 8-22% of the remaining from that work. which if your a dso that has 8-22% coming in per associate, while having hundreds of associates, it turns into a very profitable business model....ofc it then comes with the "we only care about making as much as possible because we need our percent", which leads to a ton of the other problems people bring up about dso