What Does The Future Hold For Today’s Dental Graduates?

There are so many issues to consider in today’s business climate that some new graduates are puzzled as to what direction to take.

I have studied the work of several leading economists and have concluded that the aging population will have a considerable effect on the dental economy. And there are several factors contributing to emerging trends in dental manpower ratios that will significantly affect the set-up versus purchase decision for new dentists.

It is easy to predict trends when you have the benefit of the past with which to compare. Markets are typically cyclical in nature and the supply and demand of dentists and the need for dental treatments is not unique. The future needs of patients as they age and the pending retirement of baby boomer dentists will have a substantial effect upon the supply and demand of dental services. New dentists must now consider these factors in order to succeed. They should understand these trends prior to making any decision about setting up a new practice, purchasing an established office or entering into associateships and/or post-graduate/academic studies.

Setting Up A New Practice

There are many advantages to setting up a practice of your own after graduation or when leaving an associateship. Not only do you have the opportunity to buy the latest equipment but you can design and decorate your practice how you would like and in a location of your own choosing. As your practice grows, integration of business systems can be handled with relative ease.

And as I discussed in my column in the October issue of Ontario Dentist, there will likely be a long-term reduction in the number of full-time dentists. Coupled with an aging population that will demand more dental treatment, this will lead to increased patient flow and favourable long-term prospects for a new practice today. That increase in patient flow should be seen by 2005.

Though the advantages are numerous, bear in mind that setting up a new practice has its downside as well. Unless you have developed a strong patient base prior to setting out on your own, you will see very few patients in the initial stages of practise. In order to attract new patients, you will likely need to work hours that established dentists often don’t – that is, evenings and weekends. And patient retention may be a problem if you find the need to work elsewhere to subsidize your overhead, making yourself unavailable to your own patients at those times.

There is also a good chance that you will need to rely on a line of credit for the first one or two years to afford living expenses. You may have little or no cash flow, as overhead will exceed revenue. This can be complicated by the fact that bank financing is more difficult to obtain for start-up practices.

You will likely be required to invest 250 to 300 hours of unpaid time to investigate locations and demographics; negotiate a premise lease with the landlord; consult with a lawyer; interview, select and supervise contractors; advertise and interview candidates for staff positions; and create a logo, letterhead, signs, etc. These tasks are called the organizational components of goodwill. The time invested, also known as “sweat equity,” may be in excess of $25,000 (250 hours at $100 per hour). You will not receive any payment in return for it until the practice is sold many years in the future.

Buying A Practice

Unlike starting up a new practice from scratch, buying a practice that has already been established has some definite benefits. For example, a patient base will already exist, allowing you to not only keep busy but maintain cash flow. Because of the collateral, you will have easier access to financing should you need to renovate, upgrade, etc. And you will have an experienced staff that are not only familiar with the patients, but can help integrate you into the practice and assist in the transition. This is especially helpful if the previous owner has not remained for a time to assist with these matters.

What you may run into, however, is that an established practice often has older equipment – both clinical and business-oriented -that may need to be replaced or upgraded. When compared to the benefits of immediate cash flow, this is a minor problem.

As well, the majority of new dentists wish to be in the Toronto area where there is a limited supply of practices for sale. This could result in looking to buy a practice in a location that may not be desirable to you or your lifestyle choices.

In some instances, your clinical philosophies and your personality may differ significantly from your predecessor. This alone is a key reason why purchasers must consider far more than just the economics of a practice purchase.

Entering Into An Associateship

There are three main advantages to associating with another (established) dentist. At the top of that list is the fact that there is no financial commitment required. After years of student loans, the last thing some new dentists want to do is go into more debt just as they are launching their career. An associateship also offers an excellent learning opportunity with an established dentist who may develop into a cherished mentor. And if that is not the case, and you want to move on to new scenery, you have the freedom to relocate as you choose.

The downside, of course, is that as the “new kid on the block,” you will likely be required to work the hours the owner usually will not – often evening and weekends. You may see only the “simple” cases, as the owner may reserve the more complex treatments for himself or herself until trust and confidence are established.

Bear in mind, as well, that the owner also has control over patient flow and income, and you may even have limited job security. When and if you decide to move on, you may have restrictive covenants that limit the area in which you may practise. If you have left the practice to enter into ownership of your own, you may find that you had become comfortable with little or no investment or financial responsibility in associateship. Your income may be lower in the first year or two, making it difficult if you have established a lifestyle around your associate income.


Many new graduates in dentistry decide not to step out into the working world at all, opting to remain in school on a path to research or to earn a specialty certificate or degree.

If choosing a route towards a specialty, be sure to consider the economics. While the cost of post-graduate training is extensive, you put off investment in equipment and leaseholds (typically $175,000-plus), and a long-term premise lease committing to substantial rents.Then, when entering into a private practice as a specialist in another one to four years, you will usually have a higher earning potential. As well, by 2003, there will be more private practices available for purchase from the baby-boomer generation of dentists retiring.

Of course, staying in school also means extra tuition and many more hours of study and research, but these are often of the newest techniques and products. An important factor to be aware of is that, if you choose to remain in academics and eventually teach, there are limited positions available at most universities, a trend that does not seem to be changing.


Whatever you decide to do with the next phase of your dental career, no matter what stage of your career you are at now, you need to understand that the economy for dentistry is changing and the market is forever evolving. We can look forward, with some predictability, to see where the opportunities will be.

You need to look ahead and try to maintain a global “dental economics” perspective.

Ontario Dentist – February 2000