New dentists brace themselves for stiff competition

“IS THAT YOU beeping or the microwave?”

Four of Piano’s 60 or so dentists are sitting around drinking coffee at the French Bakery one morning before heading to their offices when a high-pitched noise sets off their internal alarm systems.

“It’s not me. Are you sure it’s not yours?”

When it has been established that the noise is only a signal that a pastry is now warmed up, the group returns to its principal topic of conversation: the number of dentists in Piano. There are so many dentists in the town of 110,000 that they can hardly tell each other apart, even when their beepers aren’t sounding.

A vacated dentist’s office sits right across from the bakery. Rumors fly as to whether the space is about to hold yet another new dentist; the last thing anybody wants is more competition in this already overcrowded market. Finally, after the conversation has turned to the problems of leasing and the pleasures of recent trips to dental conventions, the breakfast breaks up and each of the four goes his own way.

The tall young dentist with the reddish hair and beard heads over to his office in a similar storefront a couple of miles northeast at Custer and Parker. The sign over the office reads: “Richard J. Chapman, D.D.S.” Across the parking lot is another dentist’s office. When Rick Chapman opened his office three years ago, he became the third dentist on that one corner. Since then, one has left Piano and another (the fourth to compete in this small area) has opened and already sold out to a fifth, who has added a sixth dentist-a specialist-to his practice. Within a mile’s radius, there are eight more general dentists-and if you want to go into the specialists (orthodontists, oral surgeons, etc.) there are still more.

Chapman walks past the small reception area and the two treatment rooms into the larger room at the rear that serves as office, staging room, storeroom and lab. He looks at the chart of the day’s appointments, which his office manager and usual chairside assistant, Karen Hardwick, has prepared. He will be seeing seven patients who will be receiving some sort of major treatment; his hygienist, Marianne Windrow, will be cleaning the teeth of eight more. Chapman regards 20 patients as about the maximum a practice of his size can see in a day, but there are dentists who try to handle 40. It all depends on the way a dentist wants to run his business.

Contrary to what most people assume, being a dentist these days is not an easy life. Exposure to X-rays and chemicals can cause a high rate of premature sterility and miscarriage. Pain in the lower back and even a loss of motion in the left arm are not uncommon hazards of leaning over patients all day. The proverbial fear of dentists (even to the point of nightmares), and the resulting stress it puts on dentists causes the profession to have the highest suicide rate of any occupation. Dentists don’t get called out of bed by emergencies with the same frequency as physicians, but there are plenty of unanticipated toothaches to call them to the office at irregular hours.

But the greatest difficulty for most dentists these days seems to be simply making the kind of living they planned on when they entered the profession. Chapman’s present practice is not precisely what he had envisioned when he moved to Dallas four years ago, but he isn’t unhappy with its progress. He is doing amazingly well for himself, considering the oversupply of dentists in metropolitan areas and especially in suburban communities like Piano.

Piano is one of the fastest-growing towns in Texas, and the average family income is high for a suburb with young, growing families (the kind of environment where young dentists usually want to build practices from scratch). It takes about 1,000 patients to make a viable dental practice and 2,000 to make a really lucrative one. In the United States, only about one-fourth of the population has a personal dentist they see regularly; another one-fourth sees a dentist occasionally. In a more affluent city like Piano, perhaps half the population sees a dentist regularly. So by the law of averages, only about 50 dentists should be able to make a living in Piano (actually fewer, since a number of successful, established dentists have many more than 1,000 patients). What’s happening to those other dentists? Many of the younger ones are barely scraping by, and several have gone out of business. Chapman is proud to have built up his practice of 1,000 or so patients in only three years.

Chapman graduated in 1978 from the dental branch of the University of Texas Health Science Center at San Antonio-one of the three dental schools in Texas that are together turning out about 400 dentists a year. That school was founded by the state on the theory that there was a shortage of dentists in Texas. (There was a shortage in rural areas-and in rural areas there still is one, since most young dentists prefer to live in urban areas and choose to take their chances there despite the competition.)

Another reason that the state chose to turn out more dentists was the hope that increased competition would lower dental rates. So far, it hasn’t turned out like that. Chapman says: “They attempted to flood the market and lower prices, but instead they might actually have increased prices. If a dentist goes into practice and incurs all these expenses and doesn’t have enough patients to spread the costs around, he’s forced to raise prices in order to cover his costs somehow.”

Most people assume that dentists and doctors are rich because everybody has to pay high medical bills. What people don’t always understand is the costs those in the profession have to cover. A single dental chair, for instance, can cost up to $5,000. A “unit” (the equipment for drilling, suction, etc.) is more, so the startup costs for anyone are formidable.

Take Rick Chapman’s own case as an example of what it takes for a dentist to begin a practice in the Eighties. After four years at the University of Houston, Chapman spent four years in dental school. The actual cost of tuition at the state school was low-less than $1,000 a year-since Texas subsidizes its dental schools heavily (unlike other states, such as Colorado, where the University of Colorado charges up to $14,000 a year for tuition in an attempt to make the dentists pay for their own education). Still, there was the substantial cost to Chapman of the loss of income during those years and of supporting himself. Dental school is considerably more expensive than medical school, since a dental student must pay for his own equipment, such as tools and drills-which cost a couple of thousand dollars a year. Books cost perhaps $500 a year and would be much higher if the dental professors didn’t pass out so much duplicated course material in an attempt to keep up with the newest developments in a rapidly changing field.

Although he had worked as a laboratory assistant during dental school and had made some money from the sale of a rental house that he and one of his four brothers had owned together, Chapman left school with a $20,000 debt-all from the dental school years. Like the other graduates of dental school, he faced a choice of ways to make a living when he finished his training.

Six years ago, almost nobody was working in the national dental chain clinics like Horizon and Shepard. Now perhaps 15 to 20 percent of new graduates take such jobs. Chapman has a poor opinion of the care such establishments provide, so he never considered taking this particular option.

Many young dentists begin work as an associate with an established practitioner. Chapman began working in such a capacity in a small town outside San Antonio right out of dental school. He was paid on a production basis and-like most small-town dentists-did well, grossing perhaps $70,000 a year and netting $50,000 a year after expenses he had to pay himself. But for personal reasons, Chapman and his wife Linda wanted to relocate in the Dallas area. He reached an agreement with a McKinney dentist that he says made him think he “had it made”-including provisions for an eventual partnership. But after he arrived in town, rented a small house in Richardson and began the daily trek to McKinney, he found that things didn’t work out so well. He was working on a production basis, and there were no patients. A lot of days of seeing no patients, or one patient who brought in a fee of $20, soon depleted the savings from their San Antonio years. Finally, Chapman and the McKinney dentist had a dispute, and Chapman was fired.

Then the hard part of Chapman’s career began. Most dental associates don’t work on a production basis but get paid a flat daily sum. (The going rate is about $100 to $150 a day.) Some find a full-time associateship, while others work a few days a week until something better comes along. If they are married, their spouses get a job to help pay the bills.

Chapman is philosophical about the life of an associate. “In a way, an associate gets what he deserves. He’s not risking anything, he has no expenses or managerial or employee problems. If he’s on straight salary, he gets paid even if he has no patients all day. Some days I played a lot of solitaire, did crossword puzzles. I really didn’t deserve more, because my attitude was ’it’s just a job.’ In my own office, I know I have a profession. I’ll do back flips to try to succeed, because I know if I work hard I can do $2,000 worth of business a day.”

From the beginning, Chapman’s goal, like that of most young dentists, had been to establish his own practice. Chapman comes from a family with business sense (his father has founded two different gas-plant construction companies in the Houston area), and he knew just what kind of practice he wanted to set up. Thus, even as he realized the risks, he decided to set up his practice in the Piano area because the young population would be more likely to buy his services. He found a plot of land he thought would be ideal for a plush small professional office complex, and persuaded his father and brothers to invest in it with him. In February 1981, his plan to put up a temporary building on the land fell through when he found out it was against the city zoning laws, and the plan to build the permanent office complex (which got as far as architectural plans) never got off the ground.

By June 1981, Chapman had decided to move into his present space (a former ceiling-fan store near the land he and his family had bought) and began designing the interior arrangement of the office. He signed the lease in August, and on October 19, Chapman opened his own practice. To do so, he had to borrow $60,000 at 22 percent interest. “I had to beg a half dozen banks for the money. Finally, three different ones agreed to lend it, but only with the co-signature of my father.”

He had advertised in The Dallas Morning News for an assistant, but got almost no response. Then he tried the Piano Star Courier and got several calls, from which he set up interviews. He was most impressed with Karen Hardwick, but she declined his initial job offer because he wasn’t offering enough money. Later, however, she called back and said she would take the job because she had been frustrated working in other offices and trying to clear up the problems that were there before she came in. She thought that if she started out an office from scratch, she could be assured that the system wouldn’t get into trouble.

Hardwick proved to be a big asset because of her infectious enthusiasm. There were days that Chapman would see only one patient, so he continued to work part-time as an associate for Carrollton dentist Dr. Robert Anderton, D.D.S. Hardwick would call him excitedly when a new patient called the office.

Finally, in June, when Chapman’s practice was 8 months old, Anderton-whom Chapman credits with teaching him a lot about the practice of dentistry-told him he would no longer have the associate’s job. Another of the older dentist’s associates wanted to work full time, and Anderton wouldn’t be needing Chapman. But he added, “Don’t worry about it. You’ll do better in your own practice without this job.” He was right. Chapman’s production doubled immediately-his availability when his patients needed him meant vastly increased business.

During that year, even though Chapman’s business grew at a surprising rate, he grossed less than $60,000. He had no taxable income, thanks in part to the investment tax credit write-offs he could take on all his new equipment. He and Linda essentially lived on her salary, still in their small rented house in Richardson.

During the second full year of the new practice, the office did about $132,000 worth of business-of which Chapman’s take-home pay was about $24,000. During the first six months of 1984, the total amount of the professional fees Chapman collected was $78,727. In addition, he was owed about $20,000 in uncollected fees. He is unabashedly angry about patients who never pay him for his work, such as the woman who told him for months that she was waiting for an insurance form to arrive, when in fact the insurance company had paid her long before and she had spent the money.

The biggest bites out of the $78,727 were the $15,900 he paid his two employees (20.2 percent of the gross), the $1,156 in payroll taxes (1.5 percent) and the $8,843 he paid in laboratory bills (11.2 percent). This last figure is much higher than the average dentist pays, Chapman says, because he has found “a great lab technician” and is willing to pay him premium rates in order to provide his patients with superior crowns and other dental fixtures. Still, a crown (for which Chapman charges $335-rather less than the average in North Dallas for porcelain bonded to gold) costs him $100 for the crown itself, up to $45 for the materials from which he makes the impression and $7.50 for the diamond burr, which he can use on two or three patients-not to speak of the instruments, anesthetic and so on. Supplies cost Chapman about $3,437 during the six-month period, or 4.4 percent of his gross.

Rent cost him $5,265 (6.7 percent). He had made sizable payments on his initial bank loan, so he only paid $856 in interest during those six months. But he took out another bank loan because the previous faster-than-required payback had left him strapped for cash and he needed to invest in more equipment. For the six-month period, he was able to write off $8,591 of his investments as depreciation-10.9 percent of his earnings.

The basic costs for running the office were $2,459 for telephone and other utility bills (2.8 percent) and $2,860 on office supplies (3.6 percent). Insurance cost $718 (0.9 percent) and taxes $157 (0.2 percent). In addition, there were lawyers’ and accountants’ fees, marketing costs (such as flowers and Christmas gifts for those who had made referrals) and the cost of attending a dental continuing-education course, which Chapman considers essential in keeping up with the rapid progress of dentistry.

All this left him $20,637 from which he could pay himself for the first six months of 1984. It is probably considerably less than half his profit for the year, since the winter months are the slowest for a dentist and August (when the kids are about to go back to school) is the peak month. But since these are figures that Chapman’s accountant has prepared for tax purposes, they don’t exactly touch the realities of paying back the loans he has had to take out. In this case, his payments, which are ahead of schedule, have exceeded the allowed depreciation plus interest.

At the end of his third year of practice, Chapman is, by most standards, making a good living. According to a report in the September 1984 Dental Economics, his average income is about average for American dentists, although his overhead is well above average and his net taxable income will be considerably less than average. But the majority of those responding to the Dental Economics survey were established practitioners, and the reality for many young dentists in a highly competitive market like Piano (or like any of the more affluent areas of the Dallas/Fort Worth area) is much more stark, and likely to become worse.

Chapman has seen several of his colleagues give up offices of their own and return to associateships. One of them left Texas in a mood something like despair. He came to Rick’s office seeking a shoulder to cry on, Rick remembers. “He said he couldn’t make more than $700 a month no matter what he did; he just couldn’t get people to come back to him. I asked him, ’Why don’t you go to schools and give dental education programs? Why don’t you wear a coat and tie to the office? Why don’t you write follow-up letters to new patients?’ He just said, ’No, that’s not for me. It’s just not my style.’ When I insisted that he should try writing a new-patient letter, he pulled the excuse that he didn’t have a typewriter, so I lent him mine. His assistant couldn’t even type. When he returned the typewriter to me, he told me he hated dentistry and would do anything else to make a living if he could. But he went to Little Rock and opened up an office there.”

The faster-than-average growth of Chapman’s own practice can be attributed to several causes. His chairside manner is at once reassuring and genial. He is big on jokes, and he hates to see people in pain, so he’ll do anything to avoid hurting them unnecessarily.

“I’m avoiding my midlife crisis of worrying that I haven’t made my big dent in the world by making a lot of little dents in the world. Every time I give an injection and the patient says, ’Why didn’t that hurt?,’ it makes up for the times-two or three a day, sometimes-when people tell me they hate me, although they have never seen me before, simply because I’m a dentist.”

Obviously, Chapman has good business sense. He and his wife bought a house in 1983 and a new car in 1984, and they say they could only afford it because his other business dealings-especially the sale of part of the parcel of land originally bought to build his office on-have brought in some money. In fact, Chapman deliberately schedules patients only four days a week, leaving two half days during which he can attend to his other business matters, such as talking to his bankers and to developers. One dentist friend has told him, “I’ve made a lot more money making deals on the golf course than I ever had in my practice.”

This business expertise exercises a big influence in the way Chapman runs his practice, extending even to small details (he admits that he’s sometimes a bit irrational if he sees his assistant or hygienist carelessly wasting supplies-he has become that sensitive to the costs of things). He put a great deal of thought into choosing a good location, a good physical layout for his office and the right equipment to get the job done. He has also spent a lot of time trying to become known in the community by visiting schools and serving on the bond committee of the Piano Parks and Recreation Board. And he has followed the advice he gave his despairing dentist friend by adopting marketing techniques such as letters to new patients and bonuses to Hardwick if she is successful in getting people into the office for their semiannual checkups.

But finally, he says that his success has come from two things. First is technical competence-there are more degrees of competence and incompetence within the dental profession than most laymen can begin to recognize. To begin with, some dentists simply have good hands. Another dentist can look into a mouth that such a virtuoso has worked on and see the marvels of anatomical structure in the subtle and accurate handwork of his fillings. On the other side of the coin, there is mediocrity and even dishonesty- Chapman has seen cases where patients have come in to seek second opinions on recommendations for work that was clearly unnecessary.

But in the middle range between the dentists with magic hands and those that are incompetent or downright unethical (and it is difficult for a patient to tell whether the one he sees is in the middle or at one of the extremes), there are many ways of trying to improve oneself. Since the growth of knowledge within the field is so rapid (Chapman says, “We are just barely out of the Dark Ages-remember that we just started giving local anesthesia during this century”), Chapman puts a lot of his energy into learning new techniques. There is a revolution in the training given new dentists every few years, and if a dentist doesn’t keep up, his techniques will soon be several generations removed from currently accepted best practice. “TMJ [temperomandibular joint] problems were hardly even mentioned when I was in dental school,” Chapman says. “Now, they’re the hottest topic.” Some states are now requiring continuing education for dentists, but Texas does not. Chapman thinks that the training such courses provide is essential for him to compete.

But you can be very competent and still not be successful as a dentist amid the competition today. Chapman is convinced that the single most important factor that determines whether one succeeds or fails at his business is pretty much the same as in other businesses: having his patients perceive that he and his staff care about them. “Most dentists are introverted. I know I can’t afford to be. I feel like I’m more shy than a lot of people think I am, but I’m willing to do what it takes. I’ll swallow my pride and stick my hand out to people I’m secretly scared to death of.” The jokes Chapman tells, the sense of caring he tries to project, the relaxed aura of his office and the image of a professional wearing a colored shirt and a tie instead of the old-fashioned dentist’s smock are, he says, “the difference between me and someone who comes in in a white coat and says, ’Open your mouth.’ “

There is an evangelistic school of dentistry-the sort of dentist who loves teeth more than people and spends all his energy on pressuring his patients into doing right by their teeth. Chapman has strong beliefs about the value of dentists and the necessity of taking care of one’s mouth, but he sees his role more as psychologist than evangelist. “I believe in no-stress dentistry. When you start putting stress on people, people stop learning. That’s why I’m not going to preach at them to make them feel guilty. It won’t get results.” So instead, Chapman puts his effort into making patients feel comfortable. “I empathize a lot with my patients. If one leaves upset, I am destroyed for the day.”

With Texas’ dental schools still turning out about 400 dentists a year (which is less than a few years ago-the schools are not getting enough qualified applicants), the competition among those starting out in the profession is likely to get more intense. Chapman has these words of advice for those starting out: “If someone has a genuine interest in being a dentist, it’s an excellent way of life. But if they are only interested in getting onto easy street, those days are gone.”


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