Practice Ownership Options: Solo Practice or Partnership?
When you’re thinking about buying a dental practice, there are two primary paths to ownership: solo practice or partnership. Will you buy 100% of the practice or less than 100%?
We are all familiar with these ownership models, especially as group practices gain popularity. 30 years ago, nearly all practices were operated by a solo dentist. Today, as practices grow, the owner dentist may decide to bring on additional dentists to continue growing the practice.
As such, you’re likely to have the opportunity to purchase part of a practice. This blog post compares the two most basic forms of dental practice ownership.
The Downsides of Associates and Associating
Associates can work well in clinics designed for associates. They can also work well in private practice if the associate never intends to buy a practice at all.
The problem comes with short term associates who say they want to buy your practice. Too often, an associate buy-in position doesn’t work out, and both doctors have to make costly changes. I believe the failure rate is close to 90%, but the ADA suggests the failure rate is *only* 70% … bad odds either way!
If you want to practice as an associate with the option to buy down the line, I highly recommend that you work out all the details prior to joining the practice as an associate. Don’t work in the practice for a few years, and only then begin to consider a purchase. If discuss the terms of a future sale up front, you’ll be much more likely to succeed.
And if you’re looking to buy into a practice, starting as an associate is probably not the best way to go. If you do want to “test drive a practice,” I suggest you have clear conversations with the seller prior to associating!
From a lot of experience, I firmly believe you do not need to practice together for a few years before buying into a practice. In fact, the longer you work together without a financial buy-in, the more likely the potential purchase will not happen.
Benefits of Solo Practice
The benefits of solo practice include more autonomy, the ability to make all the business and clinical decisions yourself, hiring and firing, marketing, scheduling, etc. Some doctors worry about vacation coverage or having someone around to discuss clinical cases with, but solo practices can work fine for vacations. I used to take 6 or 7 separate weeks off per year and very few of the patients even knew we were gone because they were not scheduled that week and we didn’t have many emergencies.
My dental friends were happy to cover any emergencies … and they were happy to discuss cases with me over lunch or at our local study clubs. I believe it’s easier to be a solo doctor (probably because that’s what I did successfully and feel comfortable with), but it’s not for everyone.
The Benefits of Partnerships
The number of group practices is increasing in California. While 61% of dental offices nationally are non-DSO (Dental Service Organization) solo practices (and about 66% in California), just about 35% of the dentists in California work in solo practice. We believe that both solo and group practices offer great ownership opportunities for dentists, as long as the group practice is formed as a well-structured partnership.
The benefits of partnerships include having someone to cover for you when you take a vacation, someone to discuss clinical cases with, and someone to share management decisions with. I’ve been in good and bad partnerships. While the good ones can be great, the bad ones can be extremely difficult. Just like getting married, when you’re joining or creating a partnership, it needs to be done cautiously, carefully, and with plenty of good advisors around you.
Either of these models can work well. It really depends on what you prefer!