Understanding the
Lifetime Income Potential
AFTCO Transition Consultants
Most doctors will practice an average of 35 years. The number of years a doctor ultimately practices multiplied by the income he or she earns over that period equals their lifetime income. A doctor’s lifetime income will be greatly affected by career decisions. That may include: buying a practice, joining a practice as an associate, or for those real risk takers, starting a new practice from scratch. But are all of these career choices equally wise? Which has the greatest impact on the doctor’s lifetime income potential?
Let’s say a doctor purchases an established practice and averages net earnings (after expenses) of $200,000 per year. If he remains in practice for 35 years, he could realize a Lifetime Income Potential of $7,000,000!
Now let’s say another doctor decides to go into an associateship without a contract (that’s a recipe for disaster). Once he has determined that he has no future in this arrangement, he leaves to start all over. His first years in practice will most likely only average half the income he would have made by purchasing a practice. The years he spent in the associateship are gone and the income cannot be made up; both the time and income are lost. It’s not that associateships can’t work; it’s just that many of these doctors never get started on the right track. And unfortunately, early missteps negatively affect the lifetime income potential.
Then there is the doctor who wants to gamble his future on trying to start a new practice in today’s incredibly competitive market. If he succeeds in surviving those first three to five years on the minimal income a new practice produces, his lifetime income potential will still be lower than that of the doctor who bought an established practice - maybe by as much as one or two million dollars!
So, as you can see, purchasing an established practice is the best method of maximizing your lifetime income potential. A few years ago, we worked with a new doctor who purchased such a practice, and he earned more than $250,000 the first year. He then bought and merged another practice and was soon netting more than $350,000 (after all expenses and debt service). In three years, he has hired two associates to work for him. His Lifetime Income Potential will exceed $12,000,000. Not bad for a beginner.
You too can maximize your chances for success. All it takes is a little business sense and access to the right information. Just remember, it’s your future. And, yes, millions are at risk. ■
AFTCO the oldest and largest dental practice transition consulting firm in the United States. AFTCO assists dentists with: associateships, how to purchase or sell a dental practice, and making plans for retirement. For more details, visit www.AFTCO.net or call (800) 232-3826.