Opening or starting a medical, dental or veterinary practice can be a complex process. Financing that practice can add complexity, especially if you have limited knowledge about the basic requirements needed to obtain a practice loan. 

Educating yourself as you prepare for or begin the process can give you greater confidence as you search for the right lending partner. In this article, we break down what liquidity is, why it is important, and how it can affect what you can buy.

What is liquidity? 

Liquidity refers to “the efficiency or ease with which an asset or security can be converted into ready cash without affecting its market price,” according to Investopedia. 

When assessing a doctor’s liquidity for a practice loan, banks consider savings, stocks, bonds, mutual funds, and any money you can take out of an account without penalty.

What is not considered liquidity? 

Since liquidity is money that can be taken out of an account without penalty, liquidity does not include retirement accounts, like 401(k)s, IRAs, Roth IRAs. It also doesn’t include any equity you have in your home.

Why is liquidity important in practice ownership? 

Liquidity is important because it protects from the risk that the practice doesn’t perform well right away, especially when building a patient base and streamlining productivity and profitability. New practice owners will still have personal and practice bills to pay, so it is important to have cash on hand if needed.

If you only have enough savings to cover a month or two of expenses, you may put yourself and your business in a tough position, and your practice could quickly go out of business.

How does liquidity affect the ability to purchase a practice? 

When buying a practice, a lender will consider how much cash or savings the loan applicant has. The more liquidity a prospective practice owner has, the more eligible they are for a larger loan—depending on other factors as well.

How much liquidity does a doctor need before buying a practice? 

Banks typically require 10% of the practice price in liquidity. Some banks, like Panacea Financial, look at each applicant’s personal financial statement in more detail to come up with a liquidity number or requirement, based on that individual.

Tips for maximizing liquidity

Especially for young doctors just a few years out of school, it can be tough to have the significant liquidity needed to buy a practice. We see trends in doctors who struggle with having adequate liquidity. Here are some tips that may help you find the liquidity you need to purchase your practice:

• Save your money. When preparing to buy a practice, instead of paying down student or other loans, you may want to save your money. Though your loan balance may be high, banks often prefer to see high debt and high liquidity than low debt and low liquidity. Your lending eligibility often weighs more heavily on cash flow and savings than debt load.
• Balance your retirement savings. Many people put a lot of their excess funds into their retirement accounts, but if you plan to buy a practice, this could hurt your lending eligibility. Because retirement savings don’t factor into your liquidity, keeping more funds in savings and investment accounts may be a better option.

Finding a practice loan that works for you

Liquidity is just one aspect of how lenders assess prospective practice owners, but it is a common reason for financing challenges. If liquidity is holding you back from funding your dream of practice ownership, a lender that can understand your unique circumstances, like Panacea, may be the right partner for you.

We see each lending applicant as an individual and use their personal financial statements to determine a liquidity requirement. If you’re ready to begin the practice ownership process, we can help you start, buy or grow your practice. Start your application today!

We regularly share content that could help you on the journey to practice ownership. To learn more, visit our Resources page, or check out one of our curated articles:

• Finding A Practice Lender & Bank: Choosing Wisely Today For Your Practice Tomorrow
• How To Get An 800 Credit Score As A Doctor
• Pros and Cons: Starting a Dental Practice vs. Buying an Existing Practice
• How Does Debt-To-Income Ratio Affect Doctors?

Dr. Jamine Ifedi, DDS, MBA, opened his Charlotte-based dental practice, Empire Dental Group, with the help of Panacea Financial. What led him to practice ownership is a lesson in finding passion and purpose in the community around you. Read his story here.

Finding passion

Dr. Ifedi earned a bachelor’s degree in healthcare administration from East Carolina University as a foundation to his dreams of becoming a doctor. Throughout his undergraduate study, Dr. Ifedi considered both dentistry and medicine, specifically obstetrics and gynecology, often leaning more toward the medical path. 

His parents encouraged him to pursue medicine, but as he shadowed physicians and interacted with dentists and dental students at ECU, he said he was still unable to decide which path to go. 

Dr. Ifedi said as a man of faith, he would let God decide. He took both the medical and dental school entrance exams.

“Whichever one I do better on, that’s where I’m going,” Dr. Ifedi said. “Once I saw the [Dental Admission Test] results come back, I said, ‘I’m going to be a dentist.’”

After deciding on dentistry, Dr. Ifedi earned his MBA while researching and applying for dental school, eventually attending University of North Carolina – Chapel Hill.

Seeking purpose

Before graduating from UNC, Dr. Ifedi said he considered what setting he wanted to practice in after completing his education. Even though he didn’t attend ECU for dental school, he said a message from his alma mater stuck with him — go to the underserved.

With a goal to serve his community well, Dr. Ifedi said he wanted to learn from complex situations and needs at the advice of his mentors. 

“They said, ‘For you to be able to serve your community best, you want to make sure you have seen the complexity of different situations, so you can pull from a lot of different experiences,’” Dr. Ifedi said. “And that’s what I did.”

This purpose led him to working part time at two different dental practices, eventually morphing into a path of travel dentistry. At the time, travel dentistry wasn’t a well-established career path, but Dr. Ifedi paved his own way by going where he found a need — at nursing homes and long-term living facilities.

Putting it into practice

Dr. Ifedi knew going into dental school that he wanted to be a practice owner. He knew he wanted the opportunity to train and grow staff members and develop leaders.

Growing up, he said he didn’t have many role models in dentistry, but throughout school he was able to find dental practice owners who showed him what ownership looked like. 

“You do have a lot more say,” Dr. Ifedi said about what he learned. “You do have a lot more control, but at the same time you are the responsible party. Whatever comes out of your practice is on you, and I thrive with that kind of responsibility because it helps me empower the team to let them know when I’m more empowered, you’re more empowered.”

Six months into his work as a travel dentist, Dr. Ifedi decided it was time to work toward ownership. He sent out over 500 mailers to dentists in the Charlotte area (his hometown). 

After six months of waiting for responses, he had received nothing back. He said the day he gave up on hoping for a response was the day his broker called with a practice. The practice owner had closed the doors, so a smooth transition with existing patients wasn’t possible. 

Dr. Ifedi said that didn’t intimidate him. He began negotiating on price and deciding on financing options, something he began doing months before he found a practice to purchase. 

“A lot of people think that you have to make a big decision when it’s time to make a big decision,” Dr. Ifedi said. “But a big decision is made up of a bunch of small decisions.”

Because of this philosophy, Dr. Ifedi began exploring his options when he first started moving toward ownership. He found Panacea Financial by listening to a podcast and decided to open a personal checking account to understand how we function and help our customers. 

After learning that he was given access to the 24/7 Concierge Desk, he said he wanted to see if our services were as advertised. He said he called the Concierge Desk, and a real person actually picked up. He said after that call, he knew Panacea was a good option for his future banking and lending needs.

When it came time to choose his practice lender, he said it came down to two options. He was needing to finance both the practice purchase and real estate. Though both lending options initially said they could finance both needs, Dr. Ifedi said when it came down to it the other lender wasn’t able to deliver as promised.

Additionally, unlike the ability to contact the Panacea team at any time, Dr. Ifedi had trouble getting in contact with the other lender.

“It seems simple, but being able to pick up a phone and get the answers you need is literally the difference between a deal happening or not happening,” Dr. Ifedi said.

Not wanting to consider an SBA loan or other option as suggested by the other lender, Dr. Ifedi spoke with Rob Borcherding, Vice President – Regional Healthcare Manager, on the Panacea Practice Solutions team. Dr. Ifedi said Rob laid out the steps to lending, and “Every step he said, is every step we did.”

Dr. Ifedi said he appreciated working with a lender that actually understood the needs and career life cycle of dentists. Despite him only being out of school for a short amount of time, Rob said Dr. Ifedi’s real world experience made him a good candidate for the loan.

“Dr. Ifedi did his undergrad in healthcare management, worked in healthcare management, got his MBA, decided to go back to dental school, then showed us post-training production reports,” Rob said. “Within the first nine months of coming out of school, he demonstrated a great clinical gift.” 

Dr. Ifedi said the ability for the Panacea team to look at his experience holistically stood out to him.

“To be able to connect those dots and really look at me as an individual and as a person really told me that Panacea is about making sure it’s a good fit,” Dr. Ifedi said. “I’m sure if it wasn’t, they would have sat me down and said, ‘Maybe you need six more months [before becoming a practice owner].”

Dr. Ifedi said he presented the Panacea team with a final dollar amount needed for his practice, then Rob called him back 45 minutes later to tell him the good news — he was about to become a practice owner. Rob said Panacea’s approval of Dr. Ifedi’s loan made sense to the team for many reasons.

“What made Dr. Ifedi’s situation unique was that he was purchasing the building that was a former dental specialist and because of the business plan Dr. Ifedi had and his ability to be a great clinician, it was common sense to support him with making his dreams come true,” Rob said.

Now, Dr. Ifedi owns Empire Dental Group in Charlotte, serving patients daily. In addition to Dr. Ifedi’s own expertise, he has been able to amass a great deal of talent around him. His wife, Dawn Ifedi, RDA, serves as both his dental hygienist and clinical lead while his brother, Kingsley Ifedi, CPA, is his chief financial officer. Dr. Ifedi says he is a firm believer in surrounding yourself with people who are smarter than you in certain areas to facilitate growth. 

Despite taking on this new role as practice owner, he hasn’t left the role he started his career in — traveling to underserved areas. He said he couldn’t give it up after investing in his patients and learning their stories. Through serving in two areas, at his practice and traveling, Dr. Ifedi said he felt he had a purpose.

“It feels like on a weekly basis I get to help so many different patients, and through helping them, they’re helping me,” Dr. Ifedi said. “They’re giving me my sense of fulfillment.”

How we help

Panacea was founded by doctors to help other doctors nationwide like Dr. Ifedi. If there is any way we could help you in your career or practice goals, please reach out today!

The policymakers forecasted continued interest rate increases by an additional 0.5% through 2023, which by design would make borrowing more expensive and should decrease the amount of money in circulation and lower inflation.

So let’s take a closer look on how rising interest rates can affect you in your daily life.

How do rising interest rates affect my credit card?

Credit card companies typically base rates on banks’ prime rates which move in tandem with the Fed, which means your borrowing costs are increasing. 

The average credit card interest rate as of July 15, 2022 is 22.91%, the highest rate since August 2019. In comparison, the average rate last year was 16.45%.

The best way to handle the increased interest rates on credit cards is to pay off your balance in full each month. If you are unable to pay your balance off each month, consider acquiring extra funds through other methods with lower interest rates, like personal loans.

How do rising interest rates affect my personal loan?

Personal loans are not always affected the same as other consumer products. The impact depends on whether you already have a loan or are looking to get one and whether the loan rate is fixed or variable.

Fixed vs. variable loan interest rates

Most personal loans are fixed-rate loans, meaning your annual percentage rate is not dependent on market factors. Once you obtain a fixed-rate personal loan, your rate will stay the same over the course of the loan. 

For those who already have personal loans, this means you don’t have to worry about these rate increases, but for those currently in the market for one, higher rates could impact your decision.

Is now a good time to get a personal loan for doctors?

Though rates are high, they may get higher over the next few months. If you are in need of a personal loan, getting one now could save you from that higher rate if rates increase. If you aren’t sure if you need a loan, we recommend not rushing into the process simply to lock in a low rate.  

If you are in need of extra cash without the ability to pay off your need each month, personal loans are a better option than the most common alternative, high-interest credit cards. Credit card rates are also increasing significantly and could result in significantly increased interest expense over time.

How do rising interest rates affect my student loans?

The rising interest rates shouldn’t have a significant effect on federal student loan borrowers at this time, but those with private loans could expect increasing rates. 

How will rising rates affect my federal student loans?

The student loan payment moratorium that began in March 2020 has been extended to 2023. All federal student loans have had a set interest rate of 0% and therefore aren’t affected by rising rates at this time. Additionally, federal student loans have been bound by fixed rates since 2006. Only federal borrowers who received a variable-rate student loan before July 2006 would experience a higher rate.

How will rising rates affect my private student loans?

On the other hand, private student loans are not bound by a moratorium thus they will be likely affected by the rising rates, depending on the terms. If you have a variable-rate private student loan, you will experience higher interest rates and the fixed rates you are being offered are likely to increase as well.

One way to manage these rising rates is by refinancing to a lower, fixed-rate loan before rates increase. Check out our guide to finding out if refinancing would be right for you.  

How do rising interest rates affect my high-yield savings account?

As interest rates rise on consumer loans and other products, they also increase on high-yield savings accounts, meaning you earn more. 

Depending on your bank, you can expect an increase in your annual percentage yield (APY). The higher your APY, the more money you will make passively.

What should I expect with Federal Reserve rate increases?

The Federal Reserve uses rate increases to bring inflation to a more reasonable and sustainable rate. These increases attempt to shrink the supply of money available to make purchases, making money more expensive.

As interest rates rise, consumers typically slow their spending, especially on major purchases, because of the substantial rates that will affect a loan long term. 

Though rising rates are a hopeful step toward a less volatile economy, some worry these actions could tip the economy into a recession. An example of this happened in 1980 and 1981. During this time, inflation rose to 14% and the Fed raised rates to 19%. This pushed the country into a severe recession but remedied the extreme inflation rates consumers were battling.

There is no certain way to predict what effect rising rates will have on the economy, but ideally, they will lead to a soft landing where the economy slows enough to temper employment and wage increases without entering a recession.

How Panacea Financial can help you deal with rising interest rates?

Despite the ever changing economy, Panacea Financial is committed to working in the interest of our customers. That is why we offer competitive rates on personal loans, practice loans and student loan refinancing. We also just raised our rates on our high-yield savings accounts to help you grow your money faster as you save.

If you are feeling overwhelmed by the thought of adapting your budget and financial plan to the changing economy, we can connect you with a financial or wealth advisor through our Build Your Team program.

Panacea Financial, a division of Primis. Member FDIC.

As a dental practice owner, deciding to incorporate new technology and equipment is a step toward improving efficiency and quality of care for your patients. 

Before you take that step to invest in new technology, here are four things to consider so you can be prepared and knowledgeable about your purchase.  

Take a deeper look at how the equipment will benefit your practice

New equipment can benefit your dental practice drastically. Before making your purchase, consider how the equipment will help your practice in the following ways:  

How will your purchase differentiate your practice?  

Having the latest equipment can help your practice stay ahead in a competitive market. Consider if this technology/equipment is something you can market to your target patients in order to increase the appeal of your practice.  

Additionally, acquiring new equipment may allow you to offer new services. New services means additional income and less referring out to other dental specialists.  

How will it appeal to patients?  

Patients are used to modern technology, and this can also be leveraged to appeal to your patient base from a marketing perspective. Personal devices like phones and laptops are constantly evolving, and patients typically keep up with the latest and greatest. How can you cater to their needs? Are there softwares and equipment that will help you keep up with the changing times?  

Creating more efficiency for your practice is great, but being more patient friendly with their time and improving their personal experience could be even more beneficial. Making a trip to the dentist more seamless or more educational can improve case acceptance, patient satisfaction, and ultimately lead to more future business with referrals or marketable reviews. 

What’s my ROI?

You may experience sticker shock when first shopping for equipment, but looking at a potential purchase holistically can give you a better idea of how it will benefit your dental practice. A new piece of equipment may allow you to see more patients, streamline front office processes, or offer more services to your community.  

These improvements may increase profits, but it should be worth the expense. If you decide the technology is something your practice could use, it should ultimately pay for itself with the increased production or efficiency. That is why a thorough review is so important — to ensure it will do just that.  

Will updating to reliable equipment save you time?  

As your equipment ages, maintenance requires time, effort and money to ensure you are able to serve your patients well. With outdated equipment, you may lose money when necessary equipment is unusable. Updating to newer, more reliable equipment can maximize your money and time instead of experiencing frequent maintenance needs.  

How will it attract or help retain great employees?  

Equipment quality and services offered can be a deciding factor for some potential employees. Newer and more modern equipment that allows staff to work efficiently and effectively can help you stay competitive when hiring.  

It could also show your existing and future employees that you’re committed to investing in the practice that they are also investing their future in. New equipment can signify that you’re looking to the future to make sure your patients get that higher quality of care.  

Speak with your CPA to understand tax implications  

You probably already know this if you’re a practice owner, but if you are not a practice owner, you should know that depreciation is one of the biggest tax benefits of running a practice, as it reduces your tax liability each year. For example, Section 179 can result in a tax deduction on qualifying equipment and software for up to $1,080,000, which could help lower your taxable income and increase cash flow.  

An industry-specific CPA is an invaluable tool throughout your career and can be especially helpful as you equip your practice. Always consult your CPA to determine how these tax breaks could benefit you and any caveats you should know. If you are in need of an experienced, trusted CPA, our Build Your Team program can get you connected to one for free!  

Making the decision on what to buy and how to find it 

Now that you have prepared for your purchase, it is time to find the equipment for you. Not sure where to start? Here are some ways to find the right equipment for your needs:  

Ask for recommendations  

There is no greater resource than your peers. Speak with your study groups, dental Facebook groups, and other dentists you know and trust to see what equipment and brands they recommend and what they stay away from.  

Work with an equipment specialist at a trusted supplier/distributor  

Equipment purchases are large investments, and there can be price differences between brands, makes and models. Leveraging a trusted specialist to walk you through the pros, cons, features and abilities of each option will help you save valuable time and self-research. 

See the dental equipment or technology in action 

Buying something in the higher price ranges without seeing it in person can be worrisome. A visit to a trade show, getting a demo, visiting a practice that is already using the technology, or visiting a showroom is a great opportunity to view the equipment and ensure that it will fill your needs and work for your practice.  

Consider used or refurbished equipment  

Used equipment has its pros and cons, and it can be difficult to know where to start. If you are looking for certain equipment at a discounted price, a trusted equipment specialist can guide you through the search for secondhand items. Dental equipment suppliers may have refurbished equipment that fulfills your needs, too.  

Peers, social media networking groups, study clubs, etc may also be good avenues for used equipment, but just like with buying a used car from an untrusted source, there are risks involved. Please use an equipment professional to help assess the item before you buy.  

Know how you will finance your dental equipment purchase  

The best financing option for any practice owner looking to purchase equipment is paying cash, but that’s not always possible. If cash isn’t an option for you, then there may be several other financing options.

Many suppliers have preferred financing options that offer better terms than third-party options. Supplier-preferred financing could offer six to 12 months of 0% interest and may offer a period of no payments. Just like 0% auto financing from the Chevys and Fords of the world, the manufacturers want to move equipment and use extremely low financing options to motivate doctors to buy their products.  

These are great terms, but they are likely only beneficial if you can pay the balance during that promotional period. If you cannot, the interest could skyrocket once that time of no interest is over. Be sure you understand what you can afford and how quickly you can pay it off before you decide how you will finance your equipment purchase.  

Equipment-specific loans from a third party could be a great option. Panacea Financial has an equipment loan with up to $250,000 in financing — and more if needed! — and approval in as little as 1 hour! Learn more here. Whatever financing option you choose, we are here to help!  

Before making your purchase, we recommend consulting with your team. CPAs and equipment specialists from a trusted distributor or manufacturer can help you make well-educated decisions. If you are in need of industry-specific experts to advise you throughout the purchase process and beyond, our Build Your Team program can get you connected for free!  

Panacea Financial, a division of Primis. Member FDIC.

Periodontists face financial challenges from school to practice, but having an understanding of personal finances and ways to improve or invest in yourself can make all the difference. In this article, we share how these financial challenges may affect you as a periodontist, what you can expect in a salary, and what you should know when considering practice ownership. 

Financial Challenges for Periodontists

How does a periodontist’s career path affect their personal finances?

Your training as a periodontist requires a significant commitment, both time and money. The average dental student graduates with $292,169 in student loan debt, according to the Education Data Initiative. 83% of all dental students (both general and specialty) graduate with student loan debt. 

As you probably know that unlike medical residencies, many dental specialty residencies charge tuition. Some charge as much as $70,000-$80,000. Periodontal residents may receive a stipend but usually not enough to offset the tuition and costs of living. 

Between steep student loans and lack of pay during residency, you may face significant financial setbacks early in your career…but all is not lost! 

Budgeting tips for periodontists

In every career stage, financial stress can negatively impact your schooling or patient care. But creating a budget can give you greater control of your spending and greater confidence in your long-term financial goals and help you overcome the challenges faced while in training.

We have a guide to budgeting you can check out here, but here are some simple tips to help you get started:

• Pick a budgeting tool. Tools like Mint, You Need a Budget, Tiller Money, or Money Patrol can make budgeting simpler by syncing to your bank and other accounts. 
• Compare income to expenses. Seeing your monthly income vs. expenses can be extremely beneficial. If you have more expenses than income, you will want to assess what areas you can cut back on.
• Automate your payments and savings. While seeing patients, the last thing you want to worry about is paying your bills. Automating your payments prevents you from forgetting to pay your electricity, rent or other bills. Automating your savings helps you make good habits without significant effort.

Salary

What is the average salary of a periodontist?

As we mentioned, the costs are high to become a periodontist, but once you do, the pay is good! According to ZipRecruiter, the national average salary for a periodontist is $245,809. This is significantly more than the average salary of general dentists, $173,117.

What are the highest paying states for periodontists?

There are 11 states that pay above the national average salary for periodontists. Here are the top five (but realize a lot of the pay difference here is due to the high cost of living in these states): 

• Hawaii $280,031
• Nevada $275,615
• Massachusetts $274,245
• Rhode Island $268,713
• Oregon $266,752

What are the lowest paying states for periodontists?

There are 39 states that pay below the national average salary for periodontists. Here are the bottom five:

• Louisiana $174,361
• Georgia $174,365
• Florida $188,540
• Mississippi $191,732
• North Carolina $193,034

Practice Ownership

Should I become a periodontal practice owner?

Whether early in your career or a tenured periodontist, practice ownership could be a great next step in your career journey, but it all depends on your goals. We created a full article detailing the current benefits of and trends in dental practice ownership, which you can find here, but here are some highlights we think you should know.

Practice ownership can be financially lucrative! According to DentalPost, across all years of experience, owners in dental practices average $100,000 more a year and are more likely to receive pay increases than associate or employed dentists. Additionally, owners have significantly more job stability than associates, with most owners staying at their current practice for more than 15 years.

Especially early in a dentist’s career, it can be intimidating to pursue practice ownership and take on even more debt, but becoming an owner can actually be extremely beneficial financially. Practice ownership can allow an individual to accumulate equity and increased earnings while paying off their loans.

How do I finance becoming a practice owner with significant student loan debt?

Having hundreds of thousands of debt can cause difficulty when pursuing practice ownership. Many lenders do not look favorably on a high debt load, even though student loan debt and the prospective additional debt will likely allow you to make more money and may allow you to pay off your debts sooner.

Working with a lender who understands the unique needs of periodontists and other healthcare professionals means you won’t be met with an automatic “no” based on numbers alone. If you are considering practice ownership and want to speak with a bank that understands your needs, Panacea Financial can help you. Visit our Panacea Practice Solutions page to learn more.

Before you go…

Periodontology is a complex career from the career path to the procedures, and financial challenges and lack of planning can make it even more difficult. Don’t let your finances hold you back from achieving your goals and being financially healthy.

We at Panacea are here to help. If you need to get on the right track, we can connect you with financial advisors to assess your debt, income, investments and more to determine how you can improve. Visit our Build Your Team page to get connected to trusted professionals for free.

To find other article to assist you on your financial journey, visit our Resources page or check out the curated list below: 

• Finding a Practice Lender & Bank: Choosing Wisely Today for Your Practice Tomorrow
• A Doctor’s Guide to Building an Emergency Fund
• Pros and Cons: Starting a Dental Practice vs. Buying an Existing Practice
• Owner vs. Associate: What to Know When Considering Dental Practice Ownership

As a doctor, you will likely encounter many contracts throughout your career. Whether an employment contract or a business deal for your practice, contracts are a common part of professional life that require careful review.

A contract lawyer can be an incredibly useful advisor as you navigate the legal documents you may encounter. Learn how these experts are equipped to help you below.

What is a contract lawyer?

A contract lawyer is a legal professional who drafts, manages and executes contracts between parties. While their main responsibilities include creating and revising legal contracts and documents, other potential responsibilities include: 

• Regulatory and compliance requirements
• Labor and employment issues
• Real estate transactions
• Mergers and acquisitions deals

When do doctors need a contract attorney?

Contract attorneys can be useful advisors throughout a doctor’s career. Let’s walk through some examples of when they can help:

When being hired…

Whether accepting your first job after residency or entering a new job well into your career, considering a new position can be both exciting and daunting. Hospitals and practices are businesses, which means they want to cater to their needs and create contracts that best suit them. 

An experienced contract lawyer — especially if they have experience working with doctors — can ensure your contract works for your needs and advise you on any areas for negotiation. Depending on the circumstances, a contract lawyer can negotiate with your employer on your behalf or coach you through your negotiation.

Aspects of a contract a lawyer will review: 

• Compensation & benefits
• Non-compete clauses
• Malpractice insurance provisions
• Termination processes
• Exit notice rules

Additionally, a tenured attorney with experience in your field may have knowledge of your prospective employer and the local healthcare market. If the attorney has worked with other employees of the company, they may have insight into what terms the employer may be willing to negotiate. Your attorney may also be able to provide input regarding whether the employer would be a good fit for you based on their experience and knowledge of the company’s competence, reputation and culture.

Understanding a non-compete agreement

Non-compete agreements are common in medical, dental and veterinary employment contracts, but doctors should be wary of accepting them without careful review. These clauses can restrict a doctor from working at a competing practice or starting their own practice within a certain geographical distance in a certain period of time. 

According to Medscape, nearly half of primary care physicians surveyed were bound by a non-compete clause. It is important to understand exactly how the terms could affect you before agreeing to them. Additionally, states have varying requirements for these covenants that a lawyer would have knowledge of and share that with you as you consider the offer.

When leaving a job…

Just like when beginning a job, leaving a job can have complications and stipulations. This is especially true if you did not thoroughly review your contract when starting the position. 

Many doctor contracts have a minimum length of time in the position. If you are wanting to leave before this time is up, a contract lawyer can help you understand how this may limit you and/or negotiate an exit.

When becoming a partner…

If you are considering partnership in an existing practice, entering into one without the help of a tenured contract lawyer could have lasting effects on your success and satisfaction at the practice. A contract lawyer will help you create or negotiate the terms of the partnership and follow the necessary legal procedures. 

Terms a contract lawyer will consider include: 

• How revenue will be shared
• How decision making is delegated
• If/When/How more doctors are added to the partnership

Additionally, these lawyers can help you draft legal documents like confidentiality forms, patient paperwork and a letter of intent. 

When owning a practice…

Contract lawyers can be helpful if you are a practice owner entering into agreements with various parties, including when purchasing your practice, hiring employees, entering into agreements with insurance providers, or contracting with suppliers or equipment rentals.

If you are drafting legal contracts or agreements for your business, a contract lawyer can ensure your contracts are free of any loopholes, are legally enforceable, and are admissible in court. 

Laws and regulations are changing regularly. A contract lawyer will keep your contract in line with the law and help you avoid any liabilities or risks. Expertly written contracts protect you from contract litigation and can further help you protect your practice.

Where to find a contract lawyer for doctors

Finding a trusted contract lawyer with experience working with doctors can be a challenge, but it doesn’t have to be. Our Build Your Team program was built for this need. We have trusted, vetted advisors in every field, including law, that can help you reach your goals.

Get connected to a contract lawyer you can trust for free by visiting our Build Your Team page. We are excited to assist you on the next step in your career!

Choosing a practice lender and banking partner for your acquisition, startup or any other practice-related transaction is a very important decision. More than just rate, the relationship you are creating with your lending bank, the support and services they provide, and how their structure allows you to focus on what you do best — patient care — rather than worrying about business operations are incredibly important factors that should be considered.

Finding a lender that has the best program AND will provide you the best support is likely the best course of action as you make this important business decision. Rate is important, but understanding the big picture will help you make the best choice for your needs.

First, understand your practice needs

The most important factor to consider when choosing a practice lender and bank is your personal, professional and practice needs. Before diving into the search for your lender, we recommend considering these questions:

• What is important to you in a financial partner?
• What future plans do you have with your practice?
• How do you envision running — or how do you run — your practice operationally?

The answers to these questions will guide you throughout this decision.

More than just rate: What other factors affect a practice loan?

Many individuals in search of a loan will focus solely on rate, but knowing other aspects of the loan and lender is incredibly important.

The five primary components of a loan we recommend considering include: term, amount borrowed, monthly payment, structure (balloon versus fully amortized/variable versus fixed rates, etc.), and rate.

Another important factor is the impact of the prepayment plan, which essentially marries you to your lender or bank with a penalty should you choose to want to move banks. Many practice lenders lock you into their program for up to five years with a prepayment penalty to recoup the interest they need to earn on their initial low-rate loan. 

The last thing you want to do is choose a loan today based on rate, when that lender may not be equipped to fulfill your next need, causing you to get hit with a prepayment penalty because you are forced to change lenders to handle your new need.

This series of events could negate your rate-based decision and may cost you even more money than what you saved in the first place with the lower rate.

Why is this important?

Picture buying a house and wanting to get the lowest rate on your home loan. Then, that home loan lender also requires you to sign up for all your utilities (electrical, gas, garbage, etc.) with them, as well. 

Would you just worry about the rate on the loan without understanding the other costs, fees and servicing of the rest of your household first? Chances are, the lower rate of the loan is being balanced out with potentially more expensive utilities, negating your initial savings all together. 

What to consider when choosing your practice lender

Practice lenders and banks don’t just support you with a loan. They are also partners that assist you thereafter with successful practice operation and future growth through additional banking products and services. 

Here are some areas of the loan or lender you should consider before obtaining a loan for your practice:

Terms and Rates 

Choosing a loan term can have a significant impact on your rate. Most practice lenders offer 10-year terms, but it is common to also see 12- and 15-year terms as needed, depending on the situation. 

How does loan term affect your practice loan rate? 

When considering home ownership, 30-year mortgages are largely impacted by rate because you take longer to pay that loan back, meaning the total interest paid is significant. But the shorter the term of the loan, the less rate becomes a factor, because you are amortizing the principal balance much more quickly. This is the same principle for practice loans.

For example, every .25% on a $500,000 loan on a 10-year term means an extra ~$62 per month in your payment if you keep it for the full 10 years. This is even less if you pay the loan off early. For many, this extra ~$62 per month is inconsequential. 

Taking a slightly higher monthly rate, but getting yourself into a better overall program could be a smarter financial decision in the long run.

Structure and servicing 

A practice loan is about more than just rate because there are many other factors that will affect you financially and even operationally. 

Here are some aspects you should consider: 

• Does the lender charge for or limit deposits or items? 
• Does the lender charge for additional equipment needed to bank with them or allow remote deposits?
• What additional services will you get or be charged for if you need them?  
  • ACHs (automated clearing house network) – Think of this like Venmo for your business. You will use this product weekly, but there are fees for these transactions with some banks. 
  • Wire transfers – How freely and efficiently will you move money if you need to pay vendors or yourself? Some banks attach fees or limits to these transactions which can hinder your workflow.

Keep in mind that a lender and bank’s structure and servicing can help you save time and improve efficiency. What is that worth to you and your practice?

How you are serviced, how unexpected needs are dealt with, and ease of contact are important. Time is money — you will have an issue at some point, but knowing your lending partner is ready to help you with those issues is extremely valuable. 

Merchant services 

An essential part of owning a practice is accepting any form of payment from your patients, including credit cards. This is known as credit card processing or merchant services.  

These services are often accompanied by fees that are not always transparent. Some lenders draw customers in with low rates on loans but require the use of their merchant services. Through high fees, these lenders can easily make up for the lower rate, preventing you from reaping the benefits of that low rate. 

Future support 

Consider how a practice lender will support you with future loans. Look ahead before you make a decision to ensure you don’t pick a lender that can’t support your practice with future needs.

Support you may want to consider:

Does the lender have real estate programs to help you buy your practice building? 

Learn whether your lender is a SBA or conventional lender, as this can affect your term and rates when or if you buy a building. 

Another component to understand is a lender’s loan-to-value (LTV) guidelines. These determine how much you would need to put down or finance further in your practice. This assessment of risk can also affect your interest rate, but more importantly, the future cost of this transaction when it’s time for you to purchase a building.

Keep in mind that you will more than likely have to use your practice lender that you chose originally, if you want to finance your down payment because of the prepayment penalties associated with that original loan.   

Does the lender offer construction or expansion loans?

If or when your practice grows, you will want a lender who is able to help you expand your existing practice, build a new building, or buy or start an additional location. Some lenders have loan limits or lack the programs or policies needed to allow growth, restricting your ability to own multiple practices or finance an expansion.

Ask your lender if they can explain what your financials need to look like to open office number one, two, three, four or more. A great practice lender should be easily able to walk you through numbers, goals and what they would want to see and when, in order for an expansion/new office loan approval.

Are equipment loans available if needed?

Both expected and unexpected equipment needs may arise, and having a lender ready to address these needs can be incredibly helpful. Understanding the options and terms for these loans can help you know what to expect when the time comes for new equipment and help you choose the best long-term lending partner.

Choosing your practice lender

Ultimately, we recommend you don’t just choose a practice lender and bank solely on rate.  There are so many other components and factors to review, and every practice owner has a different set of needs.

When deciding on a loan, it is important to work with a true lending and banking partner that can support you today and be able to better support you tomorrow. In borrowing the large sums of money necessary for practice needs, you deserve to leverage that commitment and have a true partner throughout the rest of your time as a practice owner.