Dentists: Does 99 Dollars an Hour Make You a Wealthy Dentist?

Dentists: Does 99 Dollars an Hour Make You a Wealthy Dentist?Dentists make $99.00 an hour, which is more than orthopaedic surgeons but less than nurse anesthetists, according to a study by Suneel B. Bhat, MD, an orthopaedic surgery resident and his colleagues at the Thomas Jefferson University Hospital.

Presented this month at the American Academy of Orthopaedic Surgeons (AAOS) 2012 Annual Meeting, Dr. Bhat’s study found that becoming an orthopaedic surgeon was a “poor financial investment” compared with studying law, dentistry, or anesthesia nursing, according to Medscape Today News.

“Our study, the first direct comparison of the financial return of orthopaedic surgery to other professions, highlights the point that there is a relatively lower financial value incentive for qualified individuals to enter orthopaedics compared to several other professions, which could potentially have far-reaching implications on career choice and subsequent access to care for patients,” the authors concluded.

The Medscape report revealed that the researchers found that dentists earned a cumulative career total of $6,866,796.

That was less than the $10,756,190 made by orthopaedic surgeons, the $8,381,250 made by lawyers, and the $7,338,412 made by nurse anesthetists, but more than the $3,867,504 made by nurse practitioners.

Also published in the report is the amount of debt factored into the study for orthopaedic surgery students, which has increased by $34,000 for public schools and $40,000 in private schools over the past five years.

Since 1984, the medical school tuition has raised in public institutions by 165% and in private institutions 312%. They assumed that educational loans would be deferred until the annual liability was less than 25% of earnings, and that interest on the loans was 8.25%, according to Medscape.

When hourly income was calculated, orthopaedic surgeons made $88.00 per hour, compared to $93.00 for nurse anesthetists, $130.00 for lawyers, $49.00 nurse practitioners, and $99.00 for dentists.

The lingering recession has taken a bite out of dentists’ incomes over the past 4 years with many laying off employees and postponing retirement. The average dentist salary according to the U.S. Government Bureau of Labor Statistics is $74.00 an hour, with some new dentists earning $26.00 per hour at the lower salary range, while dentists at the upper range earn $80.00 per hour.

Another recent study compared the earning of high school graduates who skipped college and grad school expenses and went directly into the trades. The study compared a plumber with no advance educational cost and debt to a physician. The plumber came out ahead on life time earnings.

The real kicker was that the physicians not only got nailed for the extra school costs and debt expense, but were taxed by the government at a higher rate on their delayed earnings.

With the cost of higher education continuing to rise and the amount of student loan debt graduates carry after graduation, do you think dentists leaving dental school today still have the opportunity to become a wealthy dentist?

For more on this study see: Dentists’ Hourly Income Better Than Orthopaedic Surgeons’

Dentists Gamble on Inflation with Triple Net Dental Leases

Dentists Gamble on Inflation with Triple Net Dental LeasesI’ve been telling you about how my father developed shopping centers in the 1970s and how inflation hurt landlords in the 1980s.

The new landlords learned lessons from their bankrupt predecessors, and redrafted their lease agreements to transfer inflation risks to their tenants through the NNN Lease (“triple net lease”).

When long-term tenant agreements of the 1970s began to expire in the 1990s, the landlords revised the previous gross lease agreements to their current standard NNN Lease form.

The triple net lease incorporates rising rents set to Consumer Price Index (CPI) increases and direct flow through of all operating costs to their tenants along with hefty admin fees.

This will make managing through the next inflationary period considerably more difficult for retailers and other tenants, just as it did for the early mall developers in the 1980’s.

Dental Tenants Now Take the Risk

During the economic boom years of the 2000s, the typical landlord form lease agreement evolved in terms of both their complexity and sophistication, with the bulk of new risks being borne by the tenant.

However, few – if any – dental tenants really understood or appreciated the potential inflationary risks they were being asked to absorb should the economy enter into another inflationary period. For many, it wasn’t even a business consideration, as most dentists had not operated a practice through the period of high inflation of the 1970s and early 1980s, and those that did have since retired.

Further, the dentists could only secure good locations through a highly charged competitive environment, encouraged by the landlords, and often manipulated by the brokerage community.

Brace Yourself for the Coming Storm

The result, in my view, is the creation of conditions now set for the “perfect inflationary storm.”

How many times has a dental tenant heard that this is the landlord’s standard form lease and is not subject to change or modification? In the mid-2000s, it was generally a “take it or leave it” proposition for the dentists, with easy money provided to them by bankers to build new practices, and since patient traffic was strong, in most regions, expansion and the growth of new dental offices was everywhere.

However, little consideration was given to incorporating clauses which would have prevented the offloading of inflationary risk from the landlords to the dentists. The focus was on performance and expanding the practice revenues.

Big Changes Since 2008

Dentists post-2008 were spared the greatest risk from inflation, not by having the type of lease agreements their contemporaries of the 1980s had, but rather, by the most dramatic slowdown in U.S. economic activity since the Great Depression of the 1930s.

Staggering base rents, driven by the brokerage community, combined with dramatic declines in consumer sales activity, were directly culpable for the high bankruptcy rates among America’s dental community. At present, many indicators suggest that a slow economic recovery may be underway.

However, there continues to be skepticism among many economists, who believe the current rebound is unsustainable, driven primarily by massive – but temporary – fiscal stimulus promoted by the Federal Reserve. In the past three years, for example, the Fed has injected more liquidity into the U.S. economy than in the previous 25 years, combined.1

As a result, the Fed’s easy money policies may pose greater threats to the long-term health of the U.S. economy than it solves.

You may want to look at it this way: If you factor in the additional liquidity injected by other major central banks, such as the Bank of Japan (BOJ), the European Central Bank (ECB), and the Reserve Bank of England, there has been more new capital introduced into the world economy since 2008, than in all of the previous years, combined.2

Too Much Money?

Never before in human history has so much money entered the world’s economy so quickly, and certainly never before in American history have we tripled the money supply by 300% in less than 4 years. Like a powerful drug promised to cure a potentially near fatal disease, there will be unpredictable and powerful side effects.

History has illustrated, and many economists tell us, that the downside effects of printing money are often substantial. Nobel Prize-winning economist Milton Friedman, for example, has said that “inflation is always and everywhere a monetary phenomenon.”3

Simply put, inflationary pressures can result as much from the loss of a currency’s purchasing power (cost-push inflation), as it can when the demand for goods and services is constrained by limited supplies (demand-pull inflation).3

By increasing the supply of dollars since 2008, without a corresponding rise in Gross Domestic Product (GDP), you will not be able to stave off inflation, inevitably leading to the loss of the dollar’s purchasing power. Indeed, since 2008, GDP has risen by about 3%, while the money supply has risen by over 300%.4

According to best-selling author and economist David Wiedemer, the real cause of inflation is “increasing money supply beyond what is needed to keep up with economic growth.”3

In the past, raising interest rates was generally seen as the best way to control inflation. However, this can no longer be as effective a deterrent as previously used because the GDP in the United States is 70% consumer-driven. The Fed can temporarily delay inflation with a slow and steady rise in interest rates and claim that some inflation is actually good for the economy but cannot prevent it or control it as easily as in the past.

This is setting up our economy for what could be an inflationary period of time longer and more extensive than ever experienced before. Next week, I’ll tell you more… and how dentists can safeguard their practices during inflationary times.

Bibliography1 St. Louis Federal Reserve2 International Monetary Fund3 Widermer, David (2010) “Aftershock”4 GDP Statistics Guide

Could You Run Your Family or Dental Practice This Way?

Could You Run Your Family or Dental Practice This Way?

The following was passed on to me by one of our readers . . .

Interesting Perspective on the American Debt

If you’ve been watching the world news lately, here’s some math to consider…

  • U.S. income: $2,170,000,000,000
  • New debt: $ 1,650,000,000,000
  • Federal budget: $3,820,000,000,000
  • National debt: $14,271,000,000,000
  • Budget cut: $ 2, 100,000,000,000 ( CBO estimated )/ Annualized over 10 years (210,000,000,000)

It helps to think about these numbers in terms that we can relate to. Let’s remove eight zeros from these numbers and pretend this is the family budget for the fictitious Smith family.

  • Total annual income for the Smith family: $21,700
  • Amount of money the Smith family spent: $38,200
  • Amount of new debt added to the credit card: $16,500
  • Outstanding balance on the credit card: $142,710
  • Amount cut from the budget: $210

So in effect last month Congress, or in this example the SMITH family, sat down at the kitchen table and agreed to cut $210 from its annual budget.

What family would cut $210 of spending in order to solve $16,500 in deficit spending?

Now I believe that this does not take into consideration the interest on that credit card!

It is an obvious expression of the frustration almost all of us have with the current political process and the resulting economic mayhem that we are being forced to endure.

At this point the market collapse has seen over one trillion dollars of American investors’ capital investment and dentists’ retirement funding vanish in the last two weeks.

Dental Care: California Medi-Cal Cut Dental Coverage for 3 Million

California Medi-Cal Cut Dental CoverageThe Los Angeles Times is reporting that ever since California cut coverage for 3 million Medi-Cal recipients two years ago, dentists say patients now wait until infections become so severe they must visit emergency rooms or their teeth must be pulled.

In the Los Angeles Times article, Nagaraj Murthy, a dentist in Compton for the past 32 years, states that ever since California cut back dental coverage, he has lost about half of his adult patients because they don’t have money to pay for dental treatments. He doesn’t charge these patients for preliminary comprehensive exams but said he can’t afford to provide free dental treatment.

The highly anticipated healthcare reforms are not expected to help.

California’s Medi-Cal program no longer pays for X-rays, root canals, dentures, fillings or cleanings. As a result, some dental patients are having their teeth pulled instead of repairing or replacing them.

The National Institute of Dental and Craniofacial Research states that 12% of U.S. adults 20 to 64 have not been to the dentist within the past 5 years.

For more on this story see: Reduced State Dental Benefits Create Dire Situation for Patients.

Dental Marketing: Hard Times Increase Dentist Spending (video)

Dental marketing: dentists spend more during recessionWhen it comes to dental marketing, more dentists increase spending during hard times than cut spending on dental practice marketing, this survey found.

“It’s a good idea to keep your name out there. An economic downturn does not mean people will not need dental implants and dental care!” advised one dentist.

While 38% of dentists in this survey say they're increasing marketing and internet dental marketing, only 33% report cutting spending.

Read more: Dentists Increase Dental Marketing in a Recession Economy


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