Monday, September 2, 2013

Dentist and Spouse Roles - Financially Speaking

Here is another guest blog from our client Dr. Lurie.

It seems to me... the role of the wife (spouse) in a dental practice has not been discussed enough.  We take it for granted that the husband and wife are on the same page, but this is not necessarily so and has cropped up in discussions at many study clubs. Since I have written several articles on retirement preparation, I would like to interject that retirement begins with the start-up of practice. The role (or roles) of the doctor and spouse will obviously play a big part in the success and continuation of the practice and for the eventual plan that the team for retirement carry out.

There are several different scenarios to look into.  The doctor (male) with a non-working wife seems to be a common model.  When a good marriage is present, stable and open, financial interests will be discussed and the future planned for, with budgets for essentials and "fun", including shopping, vacation, hobbies etc...  Even with the so-called good marriage, sometimes the mate does not think that the cash flow will ever change or diminish and that status quo just continues.  Unfortunately, this does not always happen.  One of the problems is the lack of communication between the two.  Or worse, in unstable marriages, the lack of caring about the communication.  This can be a prelude for disaster.  Credit card debt is the killer and many doctors and wives are falling into the credit card debt chaos that then makes the practice a place where there is pressure to pay the personal debt along with the overhead of the practice itself (which, in today's times is getting more and more burdensome even for the mega practices.). One can only hope that the two can sit down and get a handle on this. Then, if needed, meet with the financial adviser to face the crisis and the facts.  Sometimes, it is the doctor who is the one who abuses the credit cards, or it may be the wife - or worse, both of them.  This added strain then makes the practice a pressure cooker and the joy of dentistry begins to fade.  We find that the emphasis is on paying the debt (at the sacrifice of quality) rather than reinvesting into the practice and escalating its return.  If the parties are not able to resolve this, then the situation might be doomed (as many of you know.) 

I have been there and was able, early on, to get the adviser to help us (and to reign me in since I was the abuser.)  We actually went a step further.  My wife started working in the office one day per week.  This was a great benefit in several ways.  The most important one was that she saw how hard I worked and what the overhead margin was all about.  It also enabled her to meet with the staff and she was directly under the supervision of the office manager.  This was made quite clear in the beginning.  She then was better qualified to work our personal household budget and to maintain our entertainment budget on a level compatible with the office.  The second benefit that we obtained was social security benefits that now (in retirement) really come in handy.  I was lucky (in that this conference with my team ) was early in my years of practice and marriage. 

Obviously, every practice (and doctor) has differences.  Not all doctors can have their wife in the office with them.  It can cause problems with staff if not addressed properly.  Conversely, it may be a benefit with staff knowing that the spouse is there. The communication and the personalities of the entire staff and doctor are the key. My Dental CPA has told me countless number of cases where credit card spending has caused practices to fail.  I urge you to look at this carefully and adjust wisely.  Remember that the beginning of practice is the beginning of retirement. There are many facets to this discussion and this is but one of them.  I wanted to share with you my personal story.

It seems to me… that we may have many variations on this.  I would love to hear from you and share experiences.

More Mistakes Made and Lessons Learned next time.

Dr. Donald B. Lurie
Phone:  717-235-0764

Cell:      410-218-2228

No comments: