Ask the Expert: What are my financial paths to practice ownership?

Dear Dr. Jerkins: I’m a few years out of dental school and unsure about my long-term path. One mentor encourages early practice ownership, while another says dental support organizations and associate roles make ownership unnecessary. I like the idea of control and financial upside, but the risk feels intimidating this early. Is practice ownership still worth it, and how do I know which path is right for me?
 — On the Fence

Dear On the Fence: Your uncertainty is completely normal and healthy. Dentistry offers more career paths than it did a generation ago, and there’s no longer a single “right” answer. Still, even with DSOs and flexible associate roles, ownership remains important for dentists who want autonomy, long-term wealth creation and a stronger retirement strategy.

Why ownership matters

Ownership remains the most direct way to build equity in dentistry. Owners consistently report greater lifetime earnings and more control over clinical decisions than long-term associates.

The key difference is that ownership creates an asset. Practice owners build equity in a salable business, often with meaningful tax advantages. Some also can own their practice real estate, adding another appreciating asset over time. As an associate, you’re earning income, but once you stop working, the income stops too.

Getting the timing right

For dentists early in their careers, the timing is often better than it feels. Patient demand remains steady, financing is accessible and lenders still view dental practices as relatively low risk. The real question isn’t if ownership works, but which path fits your goals and risk tolerance.

Three paths to ownership
 
1. Buying an existing practice
This is the most common route. You’re acquiring a functioning business with established patients, staff and predictable cash flow. Based on Panacea Financial transaction data, most healthy solo general practices trade at roughly 65%-85% of prior-year collections, with EBITDA multiples in the 3.5-5.5 times range. EBITDA, or Earnings Before Interest, Taxes, Depreciation and Amortization, is a measure of profit before certain expenses. Multiples show how buyers value that profit. The upside is faster stability; the tradeoff is inheriting existing systems and culture.

2. Starting a practice from scratch
Startups offer full control but require patience and capital. Practices often take 18-24 months to reach 70%-80% of target collections. Construction typically runs $250,000-$500,000, equipment adds $100,000-$200,000 and working capital varies by practice type. For dentists who want a blank slate and can tolerate a slower ramp, startups can be rewarding but tend to be a more stressful option.

3. Buy-ins or partnerships
This path sits in the middle. You gradually acquire equity in an established practice, often through a phased earn-in. Structure, price and ownership percentage vary widely based on valuation and transition design, making this a strong option for dentists already embedded in a practice.

DSO equity tracks

Some DSOs offer equity tracks. These can provide financial upside, but it’s important to distinguish between equity in a management entity and ownership of patient goodwill.

Important financial markers

Before committing to any path, three financial markers matter most:

• Overhead: Middle-range general dentistry practices typically run 58%-68%. Overhead is generally divided into fixed costs (rent, insurance, administration) and variable costs (staff, labs, supplies). When overhead goes above 70%, margins shrink quickly unless justified.

• Loan coverage: Lenders typically want to see enough excess cash flow from the practice to cover all business and personal debt obligations. A loan coverage ratio of at least 1.25 times is what they’ll look for.

• Liquidity: Most lenders will expect $50,000-$75,000 in cash remaining after closing as a buffer for inevitable surprises.

Which pathway is right for you?

Most dentists start as associates to build skills and learn how a practice operates. Over time, many want more control, financial upside and autonomy. Ownership then becomes a natural next step.

Ownership isn’t for everyone, but for dentists with a clear plan and long-term vision, it remains one of the most reliable and rewarding ways to build both a career and lasting wealth.

Dr. Jerkins is the president and co-founder of Panacea Financial and a practicing physician in Little Rock, Arkansas. Panacea Financial is endorsed by ADA Member Advantage as the exclusive provider of practice financing. It is a division of Primis Bank and insured by the Federal Deposit Insurance Corporation.