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Is the 70/30 Rule Outdated? by Dr. Kevin Baharvand

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Categories: Financial Planning and Investments;
Is the 70/30 Rule Outdated? 

In-house financing advice for startup practices

by Dr. Kevin Baharvand

When I think about the early days of starting my first practice, I vividly remember how tight cash flow was. It felt like every dollar had a job, and there was never quite enough to go around. Payroll, supplies, marketing—there was always something urgent that required cash. At the time, I offered in-house financing for all my patients. It seemed like the obvious choice: I wanted to make treatment accessible and avoid paying fees to a third-party company. But as the months went on, I realized I had made a mistake.

I wasn’t just running an orthodontic practice—I was running a bank.


The industry standard: 70% in-house financing
For years, many large firms and consultants touted a 70/30 rule for orthodontic financing: 70% of your practice’s cases should use in-house financing, with the remaining 30% handled by third-party financing. The logic was simple: in-house financing maximized revenue by avoiding fees while making treatment accessible to patients.

When I started my practice, I followed that advice. It seemed like a good way to maintain control and cater to patients’ needs. But as my practice grew—and as I added a second and third location—I began to see the cracks in this model.


Why 70% in-house financing falls short
While the 70/30 model might work for well-established practices with steady cash flow, it’s a dangerous approach for startups. Here’s why:
  • Cash-flow bottlenecks: In-house financing ties up your revenue in accounts receivable, leaving you cash-poor even as your patient base grows. For startups with high expenses and limited reserves, this creates constant financial pressure.
  • Delinquency risk: While most patients pay on time, a percentage will inevitably miss payments or default altogether. Each delinquent account not only reduces your revenue but also creates administrative headaches.
  • Slow growth: Without upfront cash, it’s hard to reinvest in marketing, hire additional staff or upgrade your equipment—all of which are essential for scaling your practice.

Flipping the script: 70% third-party financing
Over time, I realized the 70-30 rule needed to be reversed. For startups, the healthiest approach is the exact opposite: 70% of your cases should use third-party financing, and only 30% should remain in-house. Here’s why this approach works:
  • Immediate liquidity: Third-party financing provides upfront cash for most of your cases, minus a small fee. That liquidity is a game-changer for startups, allowing you to cover operating expenses and invest in growth.
  • Reduced risk: By outsourcing the financing of most cases, you eliminate the risk of delinquency for 70% of your patients. This gives you peace of mind and simplifies your operations.
  • Focus on patients: With third-party financing handling payment collection for most of your cases, you can focus on delivering excellent care instead of chasing overdue accounts.

My experience with third-party financing
When I shifted my financing model to 70% third-party and 30% in-house, the impact was immediate. I no longer worried about making payroll or delaying supply orders. I had the cash flow I needed to market my practice aggressively and hire the team required to handle growth.

Even the 30% of patients who remained on in-house financing became more manageable. With most of my revenue coming in up front, I could afford to take a more patient-centered approach with in-house cases, offering flexible terms to families who truly needed it.


Lessons from other practices
I’ve worked with many doctors who were hesitant to embrace third-party financing. They feared the fees would eat into their revenue. But the truth is, cash flow is far more important than avoiding fees—especially for startups. The practices I’ve seen thrive are the ones that prioritize liquidity and stability, even if it means giving up a small percentage of their revenue.


The takeaway
The old standard of 70% in-house and 30% third-party financing doesn’t work for today’s startups. It creates unnecessary financial strain and limits your ability to grow. By flipping the script to 70% third-party and 30% in-house, you gain the liquidity and flexibility needed to thrive in the early years of your practice.

Cash flow is king. As a startup, your focus should be on securing the resources you need to grow, not on managing a mountain of accounts receivable. By shifting to a 70/30 model in favor of third-party financing, you can free up cash, reduce risk, and build a strong foundation for your practice.

Orthodontists aren’t bankers—we’re doctors. Let the experts handle financing so you can focus on what you do best: delivering exceptional care and building a practice that thrives.

Author Bio
Dr. Kevin Baharvand Dr. Kevin Baharvand is the founder of White Glove Orthodontist (WGO) and the owner and orthodontist at Elate Orthodontics in Dallas–Fort Worth. In collaboration with other dental groups, Baharvand has successfully initiated multiple orthodontic startups, overseeing every detail. His diverse background—including clinical acumen, a master’s degree in organizational leadership and an active Texas real estate license—serves as the foundation of WGO. Baharvand’s mission is to make startup consulting more comprehensive, fostering the independence of orthodontic practices while ensuring affordability.



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