Dr. Rick H. Heard. answers questions about the career path he took after finishing his residency...

2005 Student Event: Scaling to New Heights in Periodontal Practice
STARTING YOUR OWN PRACTICE

Below is an interview with Dr. Rick H. Heard.
PhotoRick H. Heard, D.D.S., is in practice in Victoria, Texas. He completed his periodontal residency at University of San Antonio in 2000.

What is the most rewarding part of what you do everyday?

I get to decide how and what I want to do and once it is done you realize it is because of your efforts, not the product of someone else's system.

What was your plan after graduation?

To enter an associateship and to eventually enter into a partnership or buyout.

What made you consider starting your own practice?

After two associateships, I decided that I was most suited to starting my own practice. I had experienced many different things while an associate, that reinforced my desire to captain my own ship. I had the opportunity to see how a thriving practice operates and critique it from an insider's/outsider's perspective. These experiences allowed me to start off in solo-private practice and avoid some common pitfalls.

What factors affected your plan and decisions about your career and future?

I am practicing in my hometown (Victoria, TX), which was my original intention upon entering dental school. Victoria is a smaller town in south Texas, while my dental school and periodontal training were completed in San Antonio. After 7 years in a larger town, I thought that was the atmosphere I wanted to practice in. After practicing in Dallas for one year, I quickly discovered that I liked a smaller town in terms of lifestyle and family quality of life. So I moved to Victoria and entered an associateship. My father and my wife are both general dentists, and I had grown up around most of the current dentists in town. So there was an immediate familiarity with the practitioners as well as the public.

How did you begin the process of starting your own practice?

I had to first decide if I was going to build or rent a space. Only one other dentist in Victoria rents out space, while all the others have built their own facility. After reviewing the immediate costs involved in building versus renting, I decided renting would be the cheaper alternative and also allow me to start the quickest.

I then went to several potential office buildings in town and looked at available space. Once the proposed location was chosen, I took a schematic to Patterson Dental who designed the office based on what I wanted. They were able to develop the specs based on what I wanted and also provide a very good lay out. This saved money on an architect, but I did find that the contractor required more specific information than what was originally included in the drawings.

At the same time as the office design was underway, I was working on a business proposal to lenders. It included projected numbers from production, costs, initial costs (equipment/supplies/build-out), and working capital. This was probably the most tedious portion of the preparation. I combed through the catalogs and acted as though I were ordering supplies and really only guessing at quantities. (Get a lot of your orders from the equipment / periodontal perspective at the meetings: they have better deals at those times.) The time I started working on the office design to actually acquiring financing with an included business plan was about 6 months. The anticipated build-out was 3 months. I opened one week after finish out completed. I had to push to get this time frame, and realistically it could have been much longer.

What variables influenced your decision on location?

I chose the location based on its proximity to most of the other dentists in town. Other factors that were considered were: easy access, well-known location, look of building, stability of building owner, and other types of businesses located there.

Did you meet with an attorney, practice consultant or accountant before pursuing a loan? Why or why not? What did they do for you and why was it beneficial?

I only met with an attorney for the purpose of setting up a Professional Association. I did meet with my accountant to make sure I was setting up everything correctly for personal and professional advantages. He procured my tax ID number etc.

How did you determine the financial requirements for starting a practice?

I used a balance/cost sheet from my practice administration courses. I placed them into an Excel spreadsheet and used the estimations where necessary when I didn't have the exact quotes from the supply companies, insurance companies etc. I will hand out a CD with all this information on it.

How did you obtain financing?

Again, being from Victoria, I went to my local banker who was more than helpful. I also looked at offers from third party financiers like Sky, etc. I was able to get a better deal from the local bank, and it made more inroads for the community involvement. I was more limited on the opening costs that could be financed. I essentially needed $500,000.00 to startup and make things run. I had the benefit of a family loan combined with the bank loan.

What risks were involved in starting your practice?

My main risk was the concern about leaving my associateship and starting out on my own. I was concerned about back-lash from potential referral sources, which turned out to be needless worrying. I had made it known that I intended to open up on my own and felt there was enough support to do so.

What is your situation now?

I have been practicing on my own for 2 years and have loved every minute of it. You get to make the decisions that affect how the practice will run. Sometimes those decisions are tough and require trial-and-error. However, they make you better.

How did you structure the practice’s finances in the beginning to pay the bills, yourself, staff and to buy equipment, etc.?

I did require working capital to fund everything for the first couple of months until payments were received. I had deferred payments (interest only) on the bank loan for the first 6 months.

What financial issues or considerations came into play when planning for the future?

I have noticed there is less time to do the micromanagement of the practice. You need to have a good staff that is accountable for their job. From this perspective, the collections have to be taken care of. I have begun a practice management program and have completed the marketing program through Levin Group.

You need to consider the practice growth with respect to overhead. As you become busier, your overhead will increase from a supply standpoint as well as the need for more staff.

Using real or fictitious numbers, how did the realities of your finances compare to the plan you originally outlined?

I was able to produce/collect more than my projected numbers by $100,000.00. I was happy with this as my projected numbers were real constraining. I used my projected numbers based on the number of patients I saw as an associate, while in reality I thankfully saw many more than that.

What resources (i.e., people, publications, groups) did you find the most helpful?

I think the Levin Group is good for starting you on the right foot from a marketing and management standpoint. I think the best source of information is probably a local dentist who has "been there done that." There are so many little things that come up with regards to how you can approach situations with patients, practitioners, and regulations. Online resources are excellent as well with the AAP, ADA, and state dental board.

Given what you know now, what might you do differently?

I may have considered the management program earlier as change is hard to implement for everyone. However, you need to gain some experience through trial-and-error to know what will realistically work when presented with some solutions by an outside source.

What suggestions do you have for individuals considering starting their own practice?

Start early with deciding where you would like to practice. Consider the location with regards to: extended family, opportunity, life style etc. Once you've done that get to work on the practice structure. Some people suggest starting small with room to grow from an equipment standpoint. My thoughts are you should probably go for what you want in the beginning (digital x-ray, computers etc) because securing financing for bigger items later will be more difficult and will affect the financial flow more acutely.

What was your biggest mistake starting out?

Not outlining job descriptions well enough for my staff. I wanted a team approach where everyone helps, but if it isn't spelled out some people think it's not their job.

How many employees do you have?

I have 6 employees:1 office manager, 2 at the front desk, 1 hygienist, 1 nurse, and 1 assistant.

What is the most important thing you have learned about managing people?

People respond to positive attitudes. An iron fist will only encourage resentment, while kindness will go a lot further when the going gets tough. I always hate to see a scared staff, and I have experienced that in my associateships. Their loyalty to you and actual desire to see you succeed makes it rewarding for everyone.

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