How Much Does It Cost To Build A New Dental Office?
By Dr. David Ahearn, DDS, Founder and President of Design Ergonomics
So, the first, and perhaps obvious answer to this question is that the dollar amount that your new dental office will cost is likely more than you want to hear! And worse than that, more expensive tomorrow than it was yesterday! But … the good news starts now, with a change in how you think about the investment you are making in a new dental office.
Instead of focusing on the dollar amount for building a new dental office, you need to focus first on two things:
1. What will my PERCENTAGE of production cost be once I am up and running – 6 to 12 months from the start? You shouldn’t have your amortized monthly cost be more than 10% of production. So a good starting point is to work backwards from there.
Focusing on what your production number will be needs to be the starting point
At Design Ergonomics, we have a large number of client offices where this percentage is actually 5%. So, at that point, the cost of the building is just noise. In fact, in our one year post-completion surveys, far too many offices report that they should’ve listened to us and actually built bigger dental offices! To learn more about how to right size your office, refer to our Math of Growth article.
Make the right investments in your dental office
But now let me get to directly to the second, and most important, question to focus on:
2. There is a concept referred to as competitive strategy. People that understand real business understand this. Dentists don’t. In the mindset of competitive strategy your understanding would be that you CAN’T control the average construction cost in your area. What you CAN control are the performance results that your new office will have.
And so, the far more important question instead of “What is the cost?” would be:
“What can I get of income producing VALUE for every dollar that I spend?”
When you focus on THAT question, you become laser focused on your design! Your focus changes from dollar cost to:
– Efficiency of construction
– The effectiveness of space planning
– The productive results of the equipment you plan to use
All of this is with the end goal of being more productive – by design – than anyone else in your region! The rest of the cost; of leaseholds, the cost of land in your area, construction costs, permitting delays, you largely can’t control! And no past, present, or future competitor can either.
Bad planning is therefore your biggest expense!
So, if your area is one of those places where the cost to build is $450 a square foot (OMG) then that is what every competitor has to spend too!
So, here is what we would suggest. Figure out how you can create that great practice design, but with a need for one-third less space to get the same amount of treatment rooms.
Do that with a layout plan that is twice as productive.
Do that with dental equipment that costs less but gets much better results.
What results from this – as understood by the rest of the business world, but apparently not to us dentists – is referred to as Sustainable Competitive Advantage. Every other dentist that has NOT done what YOU do to create this advantage will have a very difficult barrier to compete. Forever! They can buy new technology or spend more on marketing, and do anything to train people … but they will always have higher costs! Which, for example, means that you’ll always be able to pay higher wages for better people.
If you’ve done this correctly, you’ll have clear and simple systems – by design – so your staff will be able to get up to speed faster. Training will take less time. Room turnaround will be faster and cost you less. In each and every aspect of what you do YOU simply pull further and further ahead.
Build a dental office with a “forever advantage”
So how much does it cost to build a dental office in 2022? I discuss a range of numbers for both a tenant improvement and a ground-up build in my YouTube video at 3:42. I’ve also put the numbers in the images below.
But it’s important that you understand that these numbers are just estimates from April, 2022 and they would need to be updated constantly as market conditions change. And there’s your challenge. There’s a wide variation in cost – sometimes over double – in range. And this range is not just because of material costs. Labor is also a huge factor. So, while this may not precisely answer your question about how much it costs to build a new dental office, I hope it also illustrates the point that you shouldn’t focus on the cost to build your dental office. What you should focus on is what you can control – spending your money in a very deliberate way that creates a sustainable competitive advantage that will also keep you ahead of the competition … forever.
So here we are. You probably have more questions at this point than you have answers. I suspect that I just have told you some things that may stretch your understanding of what is possible. But, simply stated, in over twenty years we have NEVER had a dentist take our advice and fail. EVER! We design dental offices that create a forever advantage.
If you have more questions, feel free to contact my Design Ergonomics team. We probably know great builders in your area and more importantly, we know how to get you what you really need – that forever advantage – and the knowledge that with it nobody can catch you!
To learn a little more about my journey in dentistry, and other principles you can apply to make your practice a fun, easy, and productive place to work, take a look at our This Can All Be Easier playlist on YouTube at:
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