Coastglen Financial, a small-business funding service in Pensacola, FL, explains how to finance a dental or medical practice: equipment financing for clinical gear, term loans for build-outs and purchases, and working capital while claims are paid. Escambia County, FL had 294 physician offices and 106 dental offices as employers in 2023.
Three money moments in a practice
Think of practice funding as three separate decisions rather than one big loan. The equipment decision is about assets with a working life. The space decision is about walls, plumbing and wiring that stay with the building. The cash decision is about the weeks between treating a patient and being paid for it.
Mixing them, for example paying for a chair from the operating account or covering payroll with an equipment loan, can cause problems later.
How to finance medical equipment
Clinical equipment can be financed against itself. Equipment financing spreads the cost over the equipment's useful life, and the equipment secures the deal. Get the vendor quote with model numbers, ask about refurbished options, and check whether service contracts are included or separate.
Leases can make sense for technology that dates quickly, such as imaging software; loans suit long-life items such as dental chairs and sterilization equipment.
How to finance a dental practice expansion plan
Adding an operatory or moving to a larger suite is a build-out. A term loan can cover construction, cabinetry and plumbing, with the equipment financed separately. Partners may want the contractor's estimate, the lease, and a simple projection of added production per month.
How much does it cost to build a dental office, and who can say? It varies too much by size, location and specification for any honest single figure; the contractor's itemized estimate is the number a partner can work from. Ask for one that separates construction from equipment.
The receivables gap
Insurers pay after a claim is processed. A growing practice adds staff and supplies before the extra claims pay, so the gap widens with growth. Working capital sized to claims outstanding, using an aging report split by payer, closes it.
Do banks offer medical loans?
Banks, specialty healthcare lenders and other funding sources can lend to practices, each with its own view of new practices, acquisitions and equipment. Coastglen routes a request to partners that provide the kind of funding the practice needs; partners decide and set terms.
Mistakes to avoid in a practice request
- Financing equipment and build-out on one loan with one term, so long-life walls and short-life technology share a schedule
- Sending collections totals without an aging report
- Leaving out the lease, or a lease shorter than the loan
- Not separating the vendor's service contract from the equipment price
Each one can send a partner back with questions. Fixing them before the request goes in answers those questions earlier.
The local picture
In Escambia County, FL, offices of physicians numbered 294 employer establishments in 2023, with 4,534 employees, and dentists 106 with 861 employees (U.S. Census Bureau, County Business Patterns 2023). Across all ambulatory health care there were 768 employer establishments. Dental offices average about 8.1 employees each (our arithmetic), and only 29.2% had fewer than five.
Chiropractic, therapy and optometry practices follow the same three-moment pattern on a smaller scale; see that page. The fuller industry view is on medical and dental practices, and county counts on the Pensacola, FL page.
By Coastglen Financial · Updated