You purchased the practice for $1 million. That most likely means the office was collecting $1.25 million. The reason you bought an existing practice rather than hang up a sign and hope for patients to walk in the door is because you bought goodwill. Goodwill from patients returning for treatment, dentists and others referring patients to you, and the general knowledge that your office is there. The difference between that and a new office is that with a new office you would have to do the footwork of meeting referring sources, advertising, etc to get to the collections or production you are looking for. When buying an existing practice, you start making money the next day. And that reason is goodwill. Not true with a brand new one.

I asked about operatories you have. A chair could cost you $15k, X-ray $6k, sensors $8k, etc. Basically an operatory will cost you $30-$40k each. If you’re solo, I doubt you have more than 3. If you’re in a group practice, I’m guessing 10 chairs. So your equipment cost is somewhere between $100-$300k. That leaves $600k for tenant improvements which is not true. Therefore, you do have goodwill in that purchase cost which is easily transferable to a new location.