Accelerate Your Road to Financial Independence by Practicing in a Small Town or Rural Area

Originally published on TheDentistsNetwork.Net

By Thomas L. Snyder, DMD, MBA

Dental school debt remains a major financial burden for the majority of dental school graduates. If you are facing many years of student loan repayment, there is an option to consider that may help you accelerate your ability to pay off your loans and build a future retirement nest egg. Consider practicing in a small town or rural area where many patients are facing access to dental care issues. The number of dental health professional shortage areas in the U.S. (as defined as one dentist per 5,000 people) has grown from 1,853 shortage areas in 2001 to 5,833 shortage areas in 2018, thus representing a 315% increase! These shortage areas consist of over 57 million people. So, why have these shortage areas grown to such a high number?  

Based on our experience, dentists in these small towns and rural areas are finding it increasingly difficult to recruit an associate candidate or a potential purchaser for their practices. So, as these doctors retire without a successor, the problem only gets worse. The primary reason for this imbalance is that the majority of today’s dental graduates now desire to practice in and live in suburban and/or urban (metro) areas. Granted these areas may provide more social and cultural opportunities than smaller towns and rural areas, but from a professional point of view it may make good business sense for a young dentist to reconsider their career strategy. Here are several points to consider:

Competition in Metro Areas

With many markets already saturated with dentists, young practitioners are discovering that well-paying associate positions are harder to come by. Finding a suitable practice to purchase also may pose to be a real challenge since we still have more dentists graduating than retiring each year, thus it is still a “seller’s’ market”. Rather than let an economic opportunity pass you, consider purchasing a practice in a small town or rural area.  Practice values are considerably lower than comparable practices in metro areas. You will have to borrow less for a practice acquisition loan as well as getting a better return on your investment.  The reality is that dentists in these areas have been doing quite well financially as many of their communities have been underserved for years. Consequently, patient demand is quite high. Therefore, less dentist competition means more economic opportunity for you!

National and State Loan Repayment Plans 

The National Health Service Corps offers a good loan repayment program plan for agreeing to practice in an underserved area. You can get up to $ 50,000 in loan repayments for a commitment of two years of service. Numerous states are providing additional financial assistance with their own loan repayment programs for shortage areas. These programs also offer competitive salary and fringe benefit packages.   

High Practice Profitability

When valuing rural and small-town practices, we find that most of them rarely experience operating overhead over 50%. This is true for two primary reasons; first, the cost of labor is certainly less than in metro areas and secondly, so are occupancy costs. Thus, purchasing a professional building in these locales can be a tremendous financial investment for a doctor wishing to purchase a practice along with the real estate, as real estate is much less than metro areas. Even if one decides to rent initially, the facility expense ratio will be significantly lower as well. So, achieving higher net profit allows you to build personal wealth more rapidly by having more disposable income to accelerate loan repayments as well as having the additional cash flow to fund a retirement plan. Therefore, you can get a “jump start” on the road to financial independence as compared to many of your dental school classmates who want to practice in metro areas.

Mid-Career Life Style Changes

Seeking practice opportunities in small towns and rural areas is not just limited to recent grads. Some dentists who have practiced in a metro area can become tired of the rat race and yearn to simplify their lives. So, for someone in the practice who wishes to slow down the pace, increase income, and reduce stress, relocating to a small town or rural area may be the best solution. So. in conclusion, think long and hard about considering a small town or rural area as the place to begin or finish your dental career!

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