For an orthodontist fresh out of school or looking to strike out on their own, buying or leasing can be a stressful process—but it doesn’t have to be.
By Steven Martinez
For many orthodontists, having a space to call their own to practice and reap the rewards of their labor is the dream. But finding a suitable space with the right conditions can mean the difference between growing a successful business or struggling to stay afloat.
Kerry Cahill, Esq, is a corporate attorney for the Lindabury, McCormick, Estabrook, & Cooper law firm, specializing in healthcare practices. She advises orthodontists who are looking to buy or lease a space.
Whether fresh out of school or experienced and looking to open your practice, choosing a space that complements your goals as a business owner can prevent hassle down the road. One of the first steps Cahill recommends is that doctors begin with self-reflection.
“They have to consider where they are in their career,” says Cahill. “If they’re just starting, they typically need a lot of startup capital to commence their practice. They might be unable to afford to purchase or lease a space big enough for their practice.”
Not unlike a video game that asks you to make choices that have ramifications later in the story, decisions about the size and location have consequences in the future. Betting on yourself can be a strategy for success, but so can preparation.
Cahill says that doctors might start with a smaller space with plans to move later to accommodate growth, but that strategy might not be ideal for everyone. Starting a practice from scratch includes many upfront costs, costs that doctors find they are unable to recoup if they move.
Moving also presents a problem for their clientele, as any change in location might. For this reason, Cahill suggests that it is better to find a location that can be expanded into if it is at all possible.
“If they could find a location to lease or purchase where there’s an opportunity for expansion, that’s preferable because they’re going to invest a lot of capital upfront and [spend time and money] marketing their practice,” says Cahill. “Their client base is going to become familiar with a certain location, and there’s a lot to be said for that because when they relocate, their clients may not choose to continue treatment with them.”
Another critical aspect to consider is whether to lease or purchase. The decision is often made based on available capital and regional pricing. However, purchasing has several added benefits over leasing that should be considered.
One benefit is the stability of location, which becomes a powerful marketing tool for doctors. Patients know where to find you, and when you are already spending money to market your practice, the ability of patients to associate a name with a building can pay dividends.
Another benefit is leasing out space to or partnering with other doctors in a joint practice. Some orthodontists may be wary of taking on other doctors, but the obvious upside is that it offsets costs and has the potential to increase revenues.
Much like someone who rents an apartment compared to a homeowner, leasing can also harm a doctor’s ability to control their situation.
“When they’re leasing the premises, they might not have as much leverage to negotiate the terms of the lease, and they may be responsible for maintenance costs and a lot of the costs and fees that they won’t be able to recoup because they don’t actually own the space,” says Cahill. “At the end of the day, when they move out, the fit-up costs that they invested into the location in order to get their practice up and running, they might not be able to recoup that because they’re not the entity reselling the premises.”
When buying or leasing, there could be unforeseen hurdles that orthodontists should prepare for. Issues like zoning laws and fit-up costs can quickly turn an ideal space into a problem space for the practitioner—one reason why it is wise to retain the services of a professional during this process.
“When you utilize a legal professional, we’re more able and adept and trained to locate and focus on issues that could potentially arise in terms of leasing or purchasing the space,” says Cahill. “The practitioner could purchase a building, but at the end of the day, if the building isn’t able to be used as an orthodontic office, it’s of no value to the practitioner.”
Zoning problems and regulations could be problematic if there are issues with disposing of medical waste on the property or if a building needs some serious work to add electrical and plumbing fixtures to accommodate an orthodontist’s needs. Even if there are workarounds to the problems, knowing about them beforehand could give a doctor a better stance for negotiations with the seller or landlord.
Cahill says it is common for an orthodontist not to account for the upfront costs and time they will incur when getting a space ready to be a functional practice. If it is a standard commercial building, doctors must hire experienced architects or engineers to retrofit the space to accommodate patient bays, offices, and labs. And once the space is ready, it will still need to be approved by the local zoning office. The whole process could take weeks or months to complete, meaning that it will take some time before you can start earning.
All of which puts a premium on the doctor’s ability to get patients in the door as quickly as possible. To that end, before any transactions are made, Cahill advises orthodontists to study the market they are moving into and survey the earning potential of a location.
“I think the one thing that most practitioners should do and don’t do is to invest in surveys regarding the amount of traffic and the potential types of clientele that they can seek to market and advertise to,” says Cahill. “They have to consider the number of potential patients that they can treat at one time, but they have to be aware of the market and the market conditions surrounding the potential practice location.”
For orthodontists in big markets, it can mean not placing your practice close to competitors, and, in rural areas, making sure that you can service enough people from the surrounding locale.
“I would encourage them to do that before they even make an offer or commence negotiation discussions on any lease because they have to ensure that they’re going to have the clientele to service from their practice before they end up committing.”
They say it takes a village to raise a child, but it often takes a small workforce to get a practice up and running. The best preparation a doctor can do for their new space is to get to know the people they must work with to make the vision a reality.
Cahill recommends interviewing everyone from architects and engineers to attorneys to ensure you are comfortable working with them. Some people might come recommended but only by talking with them can you decide whether you will feel comfortable relying on them.
“That’s really important because you have to be comfortable with the advice that you’re given, and you want to have a strong relationship with that person because it’s important to be open with them,” says Cahill. “It’s really a joint effort to effectuate a solid, strong lease agreement or a good contract.”OP