Is bigger always better?

June 1, 2019

Bigger isn’t necessarily better in dental practice. In fact, the most important factor in success is quality growth that puts service and staffing first.

Affinity Bank has financed nearly $500 million to dentists during the past 16 years, entering financial information into a high-performing metrics database. Thousands of data points, in conjunction with discussions with dentists from the past decade, provide insights into the characteristics of high-performing dentists (HPDs) (table 1).

Table 1: Summary of Affinity Bank’s high-performing metrics


*NOI %

*NOI $

Average clients




Larger clients




Most efficient clients




Applying a marginal federal tax rate of 33% and estimating a state tax rate of 6% on the incremental income, larger clients are netting only $24,000 more annually than the most efficient clients. At the same time, the extra $2,000 per month is often associated with higher debt (risk), higher stress, additional hours worked each week (meaning less family time), more personnel issues, and generally a lower level of happiness.

Understand that dentists are not being advised against growing their businesses. The point is to avoid growth for the sake of growth. Quality growth has the most favorable impact on a practice and its bottom line. Profitability is not linear; as a percentage of collections, it typically decreases with size. A dentist can generate a 38% net operating income (NOI) on the first $1 million. However, this percentage typically dips to 15%–20% on the second million.

Like driving across the country without a map, things can become quite bumpy without adequate planning. While no journey goes exactly as anticipated, research can be beneficial in negotiating rough terrain. As CEO, you must consider the full scope of considerations, gather all of the relevant information, and make an independent decision based on a calculation of risk and reward. Unlike many other professions, a very good living can be made without taking undue risk.

Common characteristics of HPDs

1. HPDs put service before money, connecting on a personal level with both staff and patients. Their focus is on providing exceptional patient care, while knowing that the money will follow. Their treatment plan acceptance far exceeds the average. Paradoxically, those who place money above service don’t perform as well. All of us can tell when someone genuinely cares for us versus being “sold” something.

2. HPDs work in the business and on the business. It’s not easy to be CEO, head of business development, and lead practitioner, all at the same time. While they may have trusted advisers, HPDs are on a mission to continually learn how to more effectively lead their businesses. The data is clear—dentists who regularly attend study clubs and are involved in the industry outperform those who do not.

3. Even in the age of efficiencies, HPDs pay their staff above-average wages and expect above-average performances. They understand that their staff is not a cost but their most valuable asset. They inherently follow the Disney model: happy staff = happy patients = a great business.

4. HPDs are disciplined by amortizing their loans as quickly as possible. Many dentists in their mid-30s gave themselves an $85,000-a-year raise by paying off their $500,000 practice loan in seven years. There will always be legitimate reasons to extend your loans, so it’s a good idea to have your payment auto debited. You won’t miss it if you don’t see it.

5. HPDs live to work—not the other way around. They understand that patient care and profitability are not mutually exclusive.

What made you successful with your first office or million dollars of production may not be as scalable with your second office or second million dollars. It’s not easy to actively produce and manage any multimillion-dollar business. There is a level of stress with any business venture. However, this is not a reason not to move forward if the challenges are short-term in nature.

Plan accordingly and know that the dynamics will require different leadership and management skills. Know yourself, your risk tolerance, and the work-life balance you are seeking to achieve. Otherwise, you might end up at your planned destination wondering how you can get back to where you started.

ED COONEY, CPA, is one of the founders of Atlanta Business Bank, now Affinity Bank, for which he currently serves as president. Cooney has been involved in the banking industry for nearly 20 years. He has served as chief financial officer, chief credit officer, and senior loan officer during his career. He’s a member of the Georgia Bankers Association’s Community Bank Board and the Community Bankers Association of Georgia Board. Cooney enjoys competing against the large regional banks.

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