Opening a Dental clinic in Singapore (Part 1)

15th September 2022

Opening a dental clinic in Singapore (Part 1): Your guide on prevailing laws and regulations, business planning and financing

Are you thinking of open up your own dental clinic? After several years of practicing dentistry in a group clinic or hospital setting, you might consider branching out on your own to set up your own clinic.

From having greater flexibility and autonomy over working hours, larger decision-making power, to higher earning potential and greater control over patient care, there are clear benefits to starting your clinic. But much like any business, it requires a lot of work and can be a challenge. Dental clinic owners need to juggle patient care with the demands of running a business. As a business owner, you must oversee operations, financials, marketing, and more.

How to get started on opening a dental clinic in Singapore

Building a good foundation is critical for long-term success. Regardless of it being just early research or you have made up your mind, doing extensive research will help you understand what the journey entails and prepare you for the road ahead as a clinic owner. Like a health screening, it is essential to do your due diligence and read up thoroughly, talk to other dentists, professionals, colleagues and friends in the industry, and perhaps even attend a few online business classes.

This article aims to provide information on prevailing laws and regulations, business planning, and financing.

1. Relevant and applicable laws and regulations to the dental clinic

Registering a business

Dentists must register their dental clinic as a business entity with the Accounting and Corporate Regulatory Authority (ACRA). There are four main types of business structure to choose from – sole proprietorship, limited partnership, limited liability partnership and company. Carefully consider which of these business structures best suit your needs. Consider your business needs, financing plan, preferred working style and risk appetite. Read more about the comparisons between the different business structures here.

Applying for approvals and licenses

Dental clinics in Singapore are required to hold a Dental Clinic License. Applicants must be registered members of The Singapore Dental Council (SDC). You will need to pass a MOH inspection to obtain your clinic license and open your new clinic. MOH has advised owners to submit their license application at least two months before the intended commencement date. The license fee is $360 for a standard 2-year license. The documents you will need to apply for a clinic license include your ACRA profile, SCFD fire safety certificate and clinic floor plan. Check out the MOH guide here.

A new Healthcare Services Act (HCSA) took effect from 3 January 2022, and is implemented progressively to replace the current Private Hospitals and Medical Clinics Act (PHMCA). Phase 1 was implemented on 3 January 2022. Phase 2, which Dental Clinics requirements fall under, will be implemented in March 2023. Separately, the Dental Registration Act provides legislation on the registration of dentists and dentistry practice in Singapore. It is recommended to read these legislations in detail.

2. Business planning for the dental clinic

The long-term success of any dental clinic requires a plan. You may know what you want to set out to do but to translate it into a successful endeavour, you would need a road map for your business. A well-considered business plan can be a critical 'north star' that assists with making sound business decisions and guides you to look objectively at your business. In addition, it forces you to sit down and think about the crucial aspect of running your own business that you rarely think about as a dentist in a hospital or a dental group clinic, such as operations, finances, and competitors.

In addition, your business plan can also provide a strategic framework for your clinic's future growth and expansion. At some point, you would probably consider seeking external funding to scale up your business. As a result, your business plan could be an important document that investors and bankers will ask for as part of their evaluation process.

While the business plan should be well-thought, it does not need to be highly comprehensive at the beginning but should include some key sections. Furthermore, the document should be a working document that you update over time as you achieve new milestones, change strategy, or adapt to the market landscape.

Your business plan should include:

A mission statement
Business summary (including services offered) and description
Operational strategy
Financials
Ideal customer profile
Industry analysis

Putting together the plan might be time-consuming, but it is a worthwhile endeavour. After the initial planning is completed, you will have a clearer understanding of the gaps and opportunities in the industry, your customers' needs, and your clinic's unique proposition – which helps you think of your clinic as a business. As a result, you will understand your dental clinic's vision and growth and build a strong foundation for its long-term success.

3. Financial aspects of the dental clinic

Starting a new dental clinic will require significant initial capital costs, and it might not be financially wise for you to pay for everything upfront, depending on your personal circumstances. Therefore, understanding how to finance the initial capital costs of the dental clinic is important when starting out.

You will need to consider your financing options – how will you finance your dental clinic? Assess how much capital you have, how much more capital do you require, what liabilities you are prepared to assume and what risks you are prepared to take.

Some of the financing options available are:

Bank loan (such as a general upfront starter loan to cover set-up costs, property loan, equipment loan)
Joint ventures with other dentists
Raising funds from family and friends

Know the costs and expenses

Starting your own clinic requires substantial capital investment. The big-ticket items include rental (set aside 6 – 12 months’ worth), renovation costs, staff compensation, equipment and medicine purchases. You need to set aside some money for relevant licensing fees, marketing, daily operating expenses and IT infrastructure (eg. server costs, or a subscription for a suitable practice management system). Understanding the costs and expenses of starting and running your clinic will enable you to prepare a break-even analysis. This can help you make informed financial decisions and operate your clinic more efficiently and profitably.

Cashflow management

In addition, you will need to determine how much you need for operating expenses and a float to ensure healthy operating cashflow. Cashflow is important because it enables a business to meet its existing financial obligations and plan ahead for the future. Like many businesses, maintaining a healthy cashflow is the lifeblood of a dental clinic. Payment delays can be as fatal to a business as a stoppage in a person's blood flow. Similarly, unexpected high-value outflow can be deadly for the business. Therefore, it is crucial to properly manage cash flow for your clinic's long-term financial health.

The top three cashflow challenges that dental clinics typically face are:

High overhead and unexpected costs
Infrequent visits and late payments
Slow and delayed insurance payouts

Stay tuned for more information as we share more considerations that a prospective dental clinic owner should be aware of.

Thank you for reading, and let's connect!

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