Dental office project glossary: 64 terms in plain English

A

Amortization

Amortization is paying off a loan through equal scheduled payments that cover interest and principal over a set term. Early payments are mostly interest. The Alithos estimator assumes 15 years at 8.25%, which puts a $784,800 four-operatory lease startup at about $7,614 a month. A longer term lowers the payment and raises the total interest. More in the financing guide.

Amortized TI

Amortized TI is extra tenant improvement money a landlord advances beyond the base allowance, which you repay through higher rent over the lease term. It carries an interest rate even when the lease doesn't call it one. Compare that rate with your bank's before you accept it, and check what you still owe if you leave early. See negotiating TI allowances.

B

Base rent

Base rent is the fixed rent in a lease before operating expenses, taxes, insurance and CAM are added, usually quoted per rentable square foot per year. JLL reports average national medical office rents in the mid-$20s per square foot per year, with new developments leasing above $40 [11]. Always ask what sits on top of the base. More in the real estate guide.

Bonus depreciation

Bonus depreciation is a federal rule that lets a business deduct all or part of qualifying property's cost in the year it is placed in service. The One Big Beautiful Bill Act made 100% bonus depreciation permanent for qualified property acquired and placed in service after January 19, 2025 [3]. California does not conform [5]. Education only; confirm with your CPA. Try the Section 179 calculator.

Build-out

A build-out is the construction that turns raw or existing space into a working dental office: walls, plumbing, electrical, HVAC, vacuum and air lines, shielding, ceilings and finishes. The Alithos estimator assumes $170 per square foot for a standard leased build-out and $220 for premium. A 2026 dental-lawyer guide gives $150 to $350 per square foot for leasehold work [13]. See the build-out cost guide.

C

CAM (common area maintenance)

CAM charges are a tenant's share of the cost to run a building's shared areas: parking, landscaping, lobbies, hallways, security and often a management fee. They are billed on top of base rent, usually estimated monthly and reconciled once a year. Ask for two or three years of CAM history and whether increases are capped. More in the real estate guide.

CBCT (cone beam CT)

CBCT is a 3D x-ray system that images teeth, bone and airway in one scan, used for implant, endodontic and surgical planning. Vendor-published prices for a new unit run roughly $40,000 to $150,000 [14]. The Alithos estimator's premium imaging package is $130,000, including sensors and a pano. Installation, shielding, software and service are usually extra. See CBCT or not.

Certificate of occupancy

A certificate of occupancy is the local building department's sign-off that a space was built to code and can legally be used for its approved purpose. You generally cannot see patients until the inspections behind it pass. Build its timing into your opening date and your rent abatement, because a late inspection pushes both. See how to open a dental practice.

Change of use

A change of use happens when a space moves from one occupancy category to another, such as retail to medical office. Many jurisdictions treat it as a trigger for code upgrades: accessibility, restrooms, fire separation, parking or utility fees. Ask the city what a change of use will require before you sign a lease on non-medical space, not after. More in the real estate guide.

Change order

A change order is a written amendment to a construction contract that changes the scope, price or schedule after signing. Each one should state the reason, the cost and the time impact before the work proceeds. Change orders are where budgets drift, which is why independent change-order review is part of owner-side advisory. See Project Navigator (availability depends on your project's state).

Collections

Collections are the money a practice actually receives from patients and insurers, as opposed to what it bills. Lenders test coverage on cash flow, so collections matter more than production. The ADA Health Policy Institute reports average gross billings of $965,660 per private-practice general dentist in 2025 [16]; billings are not collections. See what lenders want.

Construction contingency

A construction contingency is money held in the budget for costs nobody can price yet: hidden conditions, code comments, late design changes. It should belong to the owner, not the contractor, and sit as a visible line rather than buried inside other numbers. Decide in advance who can spend it and how each use gets approved. See the hidden costs of a dental build.

Cost segregation

Cost segregation is an engineering-based tax study that splits a building's cost into shorter-lived components, such as certain electrical, finishes and site work, so they can be depreciated faster than the building itself. It mostly matters to owners of real estate: ground-up builds and condo buyers. It is a question for your CPA and a qualified engineer. See building a dental office.

Credentialing

Credentialing is the process of applying to insurance networks so they will pay you as an in-network provider. Each plan reviews your license, NPI, practice address and other details. It ties directly to opening cash flow, because claims can't be paid in-network until approvals arrive. Start early, and budget working capital for the gap. See the startup checklist.

D

De novo practice

A de novo practice is a dental practice opened from scratch, with no existing patients, staff or revenue, as opposed to buying one. It means a full build-out, new equipment and a ramp-up period. The Alithos model puts a four- to five-operatory leased de novo at standard finish at about $746,000 to $980,000 all-in, including working capital. See startup costs.

DEA registration

DEA registration is the federal registration a dentist needs to prescribe, administer or dispense controlled substances. It is tied to a state license and a practice address. When you move, DEA says not to submit the address change until you have an approved state license for the new address [9]. Put it on the relocation checklist. See relocating a practice.

Debt service

Debt service is the total of scheduled principal and interest payments on your loans over a period, usually a year. For a startup that includes the practice loan, equipment financing and any other debt the lender counts. In the Alithos model, a $784,800 project at 15 years and 8.25% carries about $7,614 a month, or roughly $91,400 a year. Try the loan payment calculator.

Delivery system

A delivery system is the unit that holds the handpieces, air-water syringe and controls at the dental chair. The three common layouts are over-the-patient, side delivery and rear delivery. The choice affects cabinetry, chair position and where plumbing and power land in each room, so settle it before the floor plan is final. See the equipment cost guide.

Depreciation recapture

Depreciation recapture is the tax that can come due when you sell or dispose of property you depreciated: some or all of the gain, up to what you already deducted, can be taxed at higher rates than a long-term capital gain. It is why fast write-offs like Section 179 are mostly a timing benefit, not a permanent saving. Confirm with your CPA. See the Section 179 calculator.

Design-bid-build

Design-bid-build is a project delivery method where an architect completes the drawings first, contractors bid on those drawings, and you sign with a general contractor. Price comparison is clean because every bidder prices the same documents. The tradeoffs are time and the fact that design changes after bidding become change orders. Compare it with design-build.

Design-build

Design-build is a project delivery method where one company handles both design and construction under a single contract. It can be faster and gives you one point of responsibility. The tradeoff is fewer independent checks on price, because the party that designs the work also prices it. An independent quote review helps close that gap. See design-build vs. design-bid-build.

Draw schedule

A draw schedule sets when a construction or project lender releases loan money, usually against completed work verified by an inspection or a pay application. You typically pay interest only on what has been drawn so far. Check that the schedule matches the contractor's billing and that lien waivers come with each payment. More in the financing guide.

DSCR (debt-service coverage ratio)

DSCR is the cash flow available for debt payments divided by those debt payments. A ratio of 1.25x means $1.25 of cash flow for every $1.00 owed. Dental lenders commonly look for at least 1.25x, as a guideline rather than a strict minimum [1]. The Alithos estimator uses 1.25x to show the collections a project needs. Try the DSCR calculator.

E

Equipment financing

Equipment financing is a loan or lease secured by the equipment it pays for: chairs, delivery units, sterilization and imaging. SBA 7(a) loans for equipment generally run up to 10 years, longer if the equipment's useful life exceeds 10 years [7]. The term should not outlast the equipment. Compare dealer financing with your practice lender's offer. See the equipment cost guide.

Escalation clause

An escalation clause sets how rent increases over a lease term: a fixed percentage each year, a fixed dollar step, or a link to an index such as CPI. Small percentages compound over a ten-year term. Model the full term's rent, not just year one, before you compare two spaces. Your attorney reviews the final language. More in the real estate guide.

Exclusive use clause

An exclusive use clause is a lease provision where the landlord agrees not to lease other space in the property to a competing use, such as another general dentist. Its value depends on how the use is defined: general dentistry, all dentistry, or named specialties. Ask for it in the letter of intent, before leverage shifts. Your attorney reviews the wording. See lease negotiation basics.

F

Feasibility study

A feasibility study is a go or no-go financial screen done before you commit to a location or project. It asks whether the space fits, what the project will roughly cost and whether projected cash flow can cover the debt. The Alithos Feasibility Check is a $2,500 flat-fee version that credits toward the Budget Plan. See the Feasibility Check.

FF&E (furniture, fixtures and equipment)

FF&E is the movable items a project buys separately from construction: reception and office furniture, breakroom appliances, décor and often technology. Dental equipment is usually its own budget line. The Alithos estimator groups IT and furniture at $45,000 plus $3,000 per operatory, so a five-operatory office plans about $60,000. See startup costs.

G

General contractor

A general contractor (GC) is the company that holds the construction contract, hires and coordinates the subcontractors, and is responsible for delivering the work shown on the drawings. Dental experience matters because of vacuum, air, plumbing and shielding details. Compare GC quotes line by line for what each one excludes, not just the total. See construction cost per square foot.

Gross lease

A gross lease, or full-service lease, is a lease where the rent includes the building's operating costs, such as property taxes, insurance and common area maintenance. The landlord carries the risk of those costs rising, so the quoted rent is usually higher than base rent on a net lease. Ask which costs, if any, can still be passed through. More in the real estate guide.

I

Interest-only period

An interest-only period is a stretch at the start of a loan when you pay only interest, not principal. Some practice startup loans include one to ease the months before collections build. Payments step up when it ends, so plan your cash flow around the full payment, not the introductory one, and ask how long the period lasts. More in the financing guide.

Intraoral scanner

An intraoral scanner is a handheld wand that captures a digital 3D impression of teeth and gums, replacing many traditional impressions. Budget it with its software, any subscription and the computer it runs on. Decide whether every operatory or only some get one, since that changes the equipment line and how rooms are scheduled. See the equipment cost guide.

L

Letter of intent (LOI)

A letter of intent is a short, usually non-binding document that sets out the main terms of a lease or purchase before the full contract is drafted: rent, term, TI allowance, free rent, exclusive use and contingencies. It is where most of your leverage lives. Know your number before you sign one, and have your attorney review it. See negotiating TI allowances.

Load factor

Load factor is the ratio of rentable to usable square feet, showing how much shared building area is billed to each tenant. For example, a 1.15 load factor on 2,000 usable square feet means you pay rent on 2,300 rentable square feet. Measurement follows BOMA standards [10]. Compare spaces on usable area and total cost. More in the real estate guide.

M

Mechanical room

A mechanical room houses the dental compressor and vacuum pump, and often the water treatment, amalgam separator and IT rack. It needs ventilation, power and sound control, and its location drives the piping runs to every operatory. It is easy to forget in an early layout and hard to fit later, so place it early. See how much space you need.

Medical office condominium

A medical office condominium is a suite you buy within a larger building, owning your unit while sharing common areas through an owners' association. It builds equity without buying land, but adds association dues and shared decisions about the building's future. Owner-occupied real estate loans, including SBA 504, can apply [7]. Compare all three paths in dental office real estate.

MEP (mechanical, electrical, plumbing)

MEP is the group of building systems that covers HVAC, power and lighting, water, waste and gas. In a dental office it also ties into vacuum, compressed air and sometimes medical gas. MEP is one of the largest and least visible parts of a build-out, and a main reason a cheap-looking space can be expensive to finish. See the build-out cost guide.

Modified gross lease

A modified gross lease is a middle ground between gross and NNN: the rent covers some operating costs and the tenant pays others, often utilities, janitorial or increases above a base year. No two are written the same way, so read exactly which costs are yours and how they can grow. Your attorney reviews the final language. More in the real estate guide.

N

NNN (triple net) lease

An NNN lease, or triple net lease, is a lease where the tenant pays base rent plus its share of property taxes, building insurance and common area maintenance. The base rent looks lower than a gross lease, but total occupancy cost can be similar or higher, and it can rise. Ask for the current NNN charge per square foot and its history. More in the real estate guide.

NPI (National Provider Identifier)

An NPI is a 10-digit number that identifies a covered health care provider in HIPAA transactions, and it carries no other information about the provider [8]. Dentists get an individual (Type 1) NPI, and a practice billing as an organization gets its own (Type 2). You need it before credentialing with insurance plans. See the startup checklist.

O

Operatory

An operatory is a dental treatment room: the chair, delivery system, light and cabinetry, plus the plumbing, vacuum and air that serve them. Operatory count drives almost every other budget line. The Alithos estimator assumes 500 square feet of total office per operatory for 3 to 5 operatories, 450 for 6 to 7, and 425 for 8 or more. Try the square footage calculator.

Overhead

Overhead is a practice's operating costs as a share of collections: staff, rent, supplies, lab, marketing and everything else before the owner's pay. One dental lender writing in ADA News puts overhead in a well-run general practice at 58% to 68% of collections [1]. A new practice can run above that range while collections ramp. See working capital.

P

Panoramic x-ray (pano)

A panoramic x-ray, or pano, is an extraoral image that shows both jaws, all the teeth and the surrounding structures in one picture. Some units combine pano and CBCT in one machine. The Alithos estimator's standard imaging package is $60,000 for digital sensors plus a pano. The room needs a shielding review before construction. See CBCT or not.

Personal guarantee

A personal guarantee is a promise that you, personally, will repay a loan or cover a lease if the practice can't. It puts your personal assets behind the business. Many lenders and landlords ask for one, especially from a startup with no operating history. Ask whether it can be capped or reduced over time, and have your attorney review it. See what lenders want.

Placed in service

Placed in service is the tax-law point when property is ready and available for its specific use, even if you have not started using it [4]. That date, not the purchase date, generally decides which tax year a Section 179 or bonus depreciation deduction falls in. Late-December installs need care. Confirm with your CPA. Try the Section 179 calculator.

Plumb-not-equip

Plumb-not-equip means an operatory is built with its plumbing, electrical, vacuum and air lines in place, but no chair or delivery unit installed yet. It lets you open with fewer equipped rooms and add equipment as the schedule grows, without reopening walls later. Budget construction for every room and equipment for the rooms you will use on day one. See how much space you need.

Production

Production is the dollar value of dentistry performed at your fee schedule, before insurance write-offs and uncollected balances. It is always higher than collections. Planning starts with it: the production you expect sets the operatory count, and the collections that follow set how much project the practice can carry. See how many operatories you need.

Q

QIP (qualified improvement property)

QIP is an improvement to the interior of a nonresidential building, placed in service after 2017, excluding enlargements, elevators and escalators, and the internal structural framework [4]. It is 15-year property and can be elected as Section 179 property. Whether the tenant or the landlord owns the improvements matters. Education only; confirm with your CPA. Try the Section 179 calculator.

R

Ramp-up

Ramp-up is the stretch after opening when a new practice's patient base and collections grow toward a full schedule, while fixed costs start on day one. Its length is the biggest unknown in a startup budget, and working capital exists to carry the practice through it. Plan for a conservative ramp and treat a faster one as upside. See working capital.

Rent abatement

Rent abatement, or free rent, is a period when the landlord waives base rent, and sometimes operating costs, usually at the start of a lease. For a dental tenant it is most valuable when it covers the build-out months before you can see patients. Check whether it starts at lease signing or at opening. Your attorney reviews the final language. See negotiating the lease.

Rentable square feet

Rentable square feet is the area you pay rent on: your usable space plus your share of the building's common areas, such as lobbies, corridors and shared restrooms. It is equal to or larger than usable area. BOMA publishes widely used measurement standards [10]. Rent and TI quotes are often per rentable square foot, so confirm which one a quote uses. More in the real estate guide.

Restoration clause

A restoration clause requires a tenant to remove its improvements and return the space to a set condition when the lease ends. For a dental office that can mean pulling plumbing, vacuum lines, cabinetry and shielding. Negotiate it out or cap it before signing, or it becomes a cost that arrives at the end of the lease. Your attorney reviews it. See hidden costs.

S

SBA 504 loan

An SBA 504 loan finances owner-occupied real estate and major fixed assets by combining a bank loan, a Certified Development Company loan and a borrower contribution. A typical split is up to 50% bank, up to 40% CDC and at least 10% from the borrower [7]. Loans run $25,000 to $5.5 million. It is not for working capital. More in the financing guide.

SBA 7(a) loan

An SBA 7(a) loan is the SBA's main small business loan, made by a private lender and partly guaranteed by the SBA. The maximum is $5 million [6]. Terms run up to 25 years for real estate and generally up to 10 years for equipment and working capital, and the SBA caps the variable rate at a base rate plus a spread [7]. More in the financing guide.

Second-generation space

Second-generation space is a suite previously built out for a medical or dental tenant, often with walls, plumbing, vacuum and air lines and cabinetry still in place. On the right suite it can save six figures, but only if the layout fits your plan and the systems meet current code. Have it inspected before you count on reusing anything. See the build-out cost guide.

Section 179

Section 179 is a federal tax provision that lets a business elect to deduct the cost of qualifying equipment and certain improvements in the year placed in service. For tax years beginning in 2026, the limit is $2,560,000, reduced dollar for dollar once qualifying purchases exceed $4,090,000 [2]. California caps it at $25,000, phasing out above $200,000 [5]. Education only; confirm with your CPA. Try the Section 179 calculator.

Shell space

Shell space, also called cold or gray shell, is a building or suite with structure, roof, exterior walls, a slab and utilities stubbed in, but little or no interior work. You build nearly everything, including HVAC distribution, restrooms and ceilings. The rent can look low; the build-out cost and the TI allowance decide whether it is a good deal. See the build-out cost guide.

Soft costs

Soft costs are the project costs that are not physical construction: architecture and engineering, permits and fees, legal, loan fees, insurance during construction and project advisory. They are easy to underestimate because they arrive as separate invoices from different people. The Alithos estimator assumes soft costs equal to 12% of construction, with cabinetry another 10%. See the hidden costs of a dental build.

Sterilization center

A sterilization center is the room or alcove where instruments are cleaned, packaged, sterilized and stored, set up so they move one way from dirty to clean. It needs sinks, counter length, power and ventilation for sterilizers and washers. Its position relative to the operatories shapes daily flow, so fix it early in the floor plan. See how much space you need.

T

Tenant improvement (TI) allowance

A tenant improvement allowance is money a landlord contributes toward building out a tenant's space, usually quoted per square foot; you pay any cost above it. Published ranges for medical and dental tenants run roughly $40 to $100 or more per square foot and vary widely by market, term and building [15]. For example, on 2,400 square feet, $25 versus $70 per square foot is a $108,000 gap. Try the TI allowance calculator.

U

Usable square feet

Usable square feet is the area inside your suite that you actually occupy and can build in, excluding shared building areas. It is the number that matters for your floor plan and operatory count. Rentable square feet is usable area plus your share of the common areas, so ask for both figures whenever you compare spaces. See how much space you need.

V

Vanilla shell

A vanilla shell, also called warm shell or white box, is a suite delivered with basic HVAC, restrooms, perimeter drywall, lighting and a ceiling grid, often to a landlord's standard. It costs less to finish than a cold shell, but dental plumbing, vacuum, air, shielding and most interior walls are still yours. JLL's 2026 fit-out benchmark starts from warm white box [12]. See the build-out cost guide.

W

Work letter

A work letter is the lease exhibit that spells out who builds what, who pays for it, how the TI allowance is disbursed and what condition the landlord delivers before your work starts. It is where TI promises become either enforceable or vague. Read it as closely as the rent terms, and have your attorney review it before signing. See negotiating TI allowances.

Working capital

Working capital is cash set aside to run the practice, covering payroll, rent, supplies and loan payments, until collections catch up with expenses. In a startup it funds the ramp-up. The Alithos estimator assumes $85,000 as a default, but the right amount depends on your overhead, your ramp and your lender's requirements. See how much working capital you need.