- Tailored banking solutions, like reducing collateral and accepting equipment or future receivables, can help young dentists thrive
The lack of job opportunities for dentists across the country has become a significant concern in recent years. Many dentists struggle to find stable employment within established practices or healthcare institutions, leaving them with no choice but to start their own clinics. Opening a private dental practice can be a rewarding career move, but it also comes with earth-shattering financial challenges, especially for young dentists.
Unlike medical clinics, setting up a dental practice requires substantial upfront capital for purchasing or renting office space, buying dental equipment including dental units, X-rays, sterilisation autoclaves, furniture, IT systems, office supplies and dental materials. The imposition of higher taxes on dental equipment and materials by the government, along with an extensive decline in the value of the Pakistani rupee, has led to a noteworthy increase in the prices of dental paraphernalia. These expenses create significant financial pressure, on the poor youngster who intends to establish a private practice, before any revenue is generated.
After the initial investment, operational expenses can be bothersome which include staff salaries (dental assistants, hygienists, receptionists), maintenance of dental equipment and software, utilities and rent for office space. These recurring costs can quickly accumulate, and if not properly managed, they can strain the dentist’s finances. Rising inflation rates also increases the cost of dental supplies, equipment, and even rent. Economic downturns can reduce patient spending on elective dental procedures, further impacting revenue.
Most dentists need to take out loans to cover the initial setup costs but securing a loan may be difficult for new graduates or those with limited savings. Banks and other financial institutions require collateral to secure loans. Dentists may not have sufficient assets to offer as collateral, especially if their only significant investments are in the clinic itself. If they cannot provide adequate security, it may be difficult to secure the loan. Loan repayment includes high interest rates, adding to the financial burden.
Banking sector should consider offering tailored solutions to help them overcome these hurdles. The banks can reduce collateral requirements or accept equipment, future receivables, or the practice lease as a form of collateral if they recognize that young dentists may not have significant assets to offer as collateral. Unsecured loans based on the dentist’s professional qualifications can also help.
The banks can offer specialized loan programmes specifically designed for young dentists. These programs can take into account the unique needs of new dental professionals, offering lower interest rates, longer repayment terms, and more flexible lending criteria, recognizing the high earning potential in the dental profession. Offering pre-approval programs specifically for new dentists will allow them to secure financing even before they begin their practice. This pre-approval can help them negotiate better terms with equipment suppliers, contractors, and landlords, giving them an advantage when starting their clinic.
Collaboration with representative bodies like dental associations can help banks design loan products that better serve the needs of dentists. These partnerships could also help young dentists access financial literacy resources and better understand the financing options available to them.
Rural and underprivileged urban areas face a shortage of accessible dental care, leading to untreated oral health issues. These financial incentives would not only support the growth of dental practices in these economically disadvantaged areas but also improve community health outcomes, fostering a more equitable healthcare system while supporting the professional growth of dentists.
The Author is Dean Faculty of Dentistry, Baqai Medical University