There’s More to Selling Your Dental Practice Than the Price

Here is a post from Tim Lott, CPA, CVA and Ellen Dorner of NL Transitions, a Dental Brokerage firm.

Far too many times when dentists are preparing to sell their dental practice, they are focused mainly on the price and may wind up overlooking many other issues surrounding the practice sale that are just as important, some even more important than the price. That is not to say the price is NOT important, because it is; however, there are so many other aspects of the transaction.  Sometimes you need to know when to give on one issue so you can profit or benefit from another issue.

The following are some examples of different components of the dental practice sale where the seller can benefit.

• How are you handling the assets that you are including in the sale? How is the price going to be allocated among those assets?

o As a seller, do you know how the allocation is going to impact the income tax picture in the year of the sale?  It is important to have an income tax projection done to determine how one allocation may differ from another in terms of the income taxes you will pay.  If there’s an allocation that works better for you, compromising on the price may be necessary for you to benefit from that allocation.

• If you plan to stay and work for the buyer as an associate, how will you be compensated?

o Would you prefer to be treated as an employee or an independent contractor? What professional expenses do you want the new owner to cover?  These are all negotiable points and if you’re planning on staying on for at least a year, the compensation you receive might actually be more valuable to you then standing firm on a higher price.

• Will you be selling the accounts receivables to the buyer in addition to other dental practice assets?

o If so, how will they be valued?  If you’ve compromised on the price of the other assets, you might be in a better position to use that as your negotiating chip for a more favorable price on the accounts receivables.

• Do you currently own the real estate where your dental practice is located and if so, will you be selling it or renting to the new owner?

o Again, if you’ve compromised in other areas of the transaction, you’ll want to remind the buyer of the compromises you’ve made in those areas so the price of the real estate or monthly rent works more in your favor. The annual increases and/or expenses can be passed through to the buyer within the lease agreement.

So as you can see, there so many other areas that get negotiated during a practice sale.  If you are solely focused on the price of the practice, you may wind up losing a good buyer when, in actuality, the difference in the price may be made up in other areas of the transaction.  It is important to look at the ENTIRE picture and plan accordingly.

Have a range in mind for the price you’ll accept for the practice.  Also have a range that you’ll accept as compensation, a range for the value of the receivables and if you own the real estate, a range for the sales price or annual rent.  When you approach the transaction with a global view instead of just concentrating on the price, you’ll have a much better chance of success in not only selling the practice, but getting what you want from the ENTIRE package.

For more information about your situation, email Ellen Dorner or call her at (800) 772-1065. Visit our website at www.NLTransitions.com .

The Conversation a Dentist Can Have with Fearful Patients

Here is another post, the last in a series, from our friend Jen Butler of Jen Butler Coaching.

It doesn’t matter if patients react from flight or fight mode.  Both types can be easy to work with and does not need to make for a stressful day at the office.

These steps will help you connect, defuse, and gain case acceptance.

1. Empathy- “Mr. X, you seem uneasy/unnerved. In my experience those patients are often the ones that are the most uncomfortable coming to the dentist.  How are you doing with this?” Here’s where you are going to hear, “I don’t like the dentist.”  Hard to hear as a dental professional and also NOT TRUE. Realize when a patient says, “I hate the dentist,” they aren’t talking about you.  This isn’t personal so why are you having a personal reaction? They don’t know you so how can they not like you?!  They are reflecting back on past experiences with other dentists.  This is fantastic information for you to connect with and turn this patient into a real patient for life.
2. Validation- “Mr. X, many patients like yourself share with me they don’t like going to the dentist.  I’ve learned over the years that it’s not the dentist they don’t like but the fear of having cavities, needing work, or experiencing pain that they are looking to avoid.  Would that be true for you?”  If yes, “I see.  That’s totally normal and we are here to work with you through this process.”  If no, “Then what about going to the dentist has you so uneasy/unnerved?”  Validation is the most powerful means of connecting with your patients.  It says you get them and you know how to meet their needs.  FYI- that’s priceless, tangible value for a consumer and they are willing to pay for that.
3. Clarify-  Find out what the patient knows about their previous treatment and diagnoses.  Sometimes you’ll find the patient has thoughts that are not accurate which is feeding into their irrational fear.  You can help them understand and calm their nerves by using Empowering Questions.  Examples:  “What do you know about this treatment?” “What do you remember about the diagnoses?”  “When you recall the conversation, what words pop out most for you?”
4. Fill in the gaps- When a patient recalls something with misinformation or not as you remember, don’t have an emotional reaction about it.  Chalk it up to basic functions of the brain.  It takes at least 3 times for anyone to retain new information accurately.  You are going to fill in the gaps for patients about treatment, payments, insurance, procedures, processes and systems.  It’s not them.  It’s not you.  It’s ALL OF US.  You can either have those three times be at three different appointments or all three times built into one appointment.  That choice is yours.
5. Offer solutions minus the fear-  Patients want treatment, even the fearful.  No one innately wants to have bad oral health.  Help them accept treatment by asking this important question, “If we can do something that will [blank] AND it will be pain free, will you do it?”   The power in this question is the AND.  Don’t forget the AND.
6. Offer a way out- Here is where you talk about the difference between pain and discomfort.  Not much in dentistry really hurts.  There is a lot in dentistry that is uncomfortable.  Laying with your mouth open, people poking at your gums, the notion of someone drilling into your teeth..don’t tell me that doesn’t sound uncomfortable.  It doesn’t cause pain.  Give your patients different words to think about as you proceed, questions to ask themselves during procedures, and a definite way out.  Consider saying, “As we move forward I want you to ask yourself, ‘Is this causing me pain or am I in discomfort?  If it hurts, we will stop and figure out why.  Nothing we are doing today should hurt.  If you are in discomfort we have lots of ways to make you feel more comfortable.  I just need to know the difference.  Regardless, there is always a way out.  You are in control of how fast we go and what we accomplish today.”

For more specific advice on your particular situation, email Jen or call her at (623) 776-6715

What Should a Dentist Do When a Patient Wants to Flee?

Here is another post, the second in a series, from our friend Jen Butler of Jen Butler Coaching.

Patients that come from a place of fight are easier to pinpoint, not easier to work with.  The body has a defense mechanism that when put in dangerous, threatening, or fearful situations gets louder, bigger, and more aggressive to ward off what we perceive as a dangerous predator- yes, meaning you.  I know what you’re thinking, “Patients chose to come in.  I don’t force anyone.”  Doesn’t change the reaction they have.  Remember, this is biology and physiology that is so automatic to our systems we don’t even recognize when we are in these modes.  Patients are not choosing their reaction and they are not making a conscious decision to make your life and the team’s lives miserable.

Patients that have the fight response look and sound like this:

• Move loudly throughout the office, making sure everyone knows they are there.
• Direct responses, often being borderline rude or curt (they are on the offensive).
• Appear grumpy and negative.  I refer to them as prickly- like a porcupine with it’s quills out.
• Easily jump into conflict and disagreements with anyone in the office. “Mr. X, isn’t this weather wonderful?”  “What’s so wonderful about it.  It’s so sunny out it’s blinding me!”
• Use sentence enhancers (swearing), exclamations (Darn it, ‘You’ve got to be kidding me’, etc) and name calling to deflect anyone from noticing their real feelings.

Patients with the fight response are more challenging to navigate through than their counterparts.  Patients in fight mode can be scary, uncomfortable, and mean.  It’s normal to walk away from an experience with a fight patient and need to decompress and regain your composure.  You might want to go as far as dismissing them from the practice altogether.  These are the kind of patients that take you to the brink of, “This isn’t worth it,” and walk away from everything you’ve created.

There is a way for you to: 1) not be affected by these types of patients; 2) assure them they are in a safe place; 3) have a mutually positive experience.  Start with these steps:

1. Accept the patient’s reaction.  You won’t be able to change their automatic response.  You can change their experience.  Control what you can and influence the rest.
2. Don’t come from ego.  This isn’t about you or your team.  The patient didn’t wake up in the morning and purposefully set out to ruin your day.  They are afraid.  If this were a child afraid what reaction would you have?  Why is it different because it’s an adult?Fears are irrational no matter the age.
3. Slow down and give space.  Being in fight mode comes with intense emotions and high energy.  Don’t fuel the experience further by talking fast, rushing the appointment to get through it, and matching high energy.  Slow the experience down by talking just a bit slower, move with more intention, sit lower than your patient with rounded shoulders and your hands in your lap (just until the fear has dissipated), and hang back just a few extra inches when you can to give some space.  Balance your patients energy, don’t fuel it.
4. Ask empowering questions to get the patient talking.  The more you know about them and connect, the greater the chance they will be able to share with you what’s really happening.  If they already knew how to tell you they were afraid they would have.  Help them along by asking the right questions.
5. Be honest, upfront and just ask.  If you find the patient’s fear is really getting the best of them and it is derailing the experience, be honest and just ask, “Mr. X, I’m wondering if you are nervous about being here?”  Wait and listen.

For more specific advice on your particular situation, email Jen or call her at (623) 776-6715

What a Dentist Should Do When a Patient is Fearful

Here is a guest blog post from our friend Jen Butler, M.Ed., CPC, BCC from Jen Butler Coaching.

Fear and dentistry seem to go hand in hand.  Whether the fear comes from childhood experiences or is solely psychological, fear is a real thing that patients often bring with them to their appointments.

Here’s what most dentists and their teams fail to remember: people have two biological, automatic reactions when dealing with fear, FLIGHT or FIGHT.

Those patients that are in flight mode often look and sound like this:

• Sound, they don’t make sounds, not even when asked questions. They are struggling internally to keep it together.  They also know the more conversation had during their experience, the longer they will be there.  Their goal is to get out!
• Often show a nervous twitch by moving their feet, bouncing their leg, moving their hands, etc.
• Ask, “How much longer?” or “What’s next?” or even “Are you almost done?”  They can’t wait to get to the door and RUN.
• Avoid talking about same day treatment, say they want to schedule another appointment and then don’t schedule.

Flight patients are harder to notice because they are stealthy.  Meaning, they don’t let on that they are afraid.  These patients leave you wondering ‘what’s wrong with them’ or ‘with you’ because their appointment was like pulling teeth, and not the literal kind.  You can’t help but reflect on how awkward their appointment was for you and the team.

To effectively work with people in flight mode:

1. Know the signs.  You and your team need to be able to recognize patients in flight mode.
2. Offer calming methods to reduce fear and stress (music, laughter, warm blankets, dim lighting, stress balls, show comedies, etc) if you think they are a flight patient.
3. Be assertive and ask, “I’m curious Mr. X.  How nervous are you about being here today?” The problem addressed is the problem solved.  Until the fear is addressed, the patient can’t truly listen and take in what you are saying about their oral care.
4. Demonstrate confidence in your clinical skills. So often when a patient isn’t giving off the right vibe dental teams back away, feeling awkward and it throws them off their game.  They start second guessing their movements and begin to put further psychological stress on themselves which makes everything even more uncomfortable.  Know that your training and experience has uniquely prepared you for this moment with this patient.  You know how to connect, offer painless procedures, and provide a comfortable, caring environment.  Trust in that and move on.
5. Don’t reinforce stress by talking badly about the patient, ever.  It’s normal to want to vent or release the stress of working with a fearful patient to your team.  DON’T!  The more you talk about how awkward it is to work with that patient, or how much they squirm and jump while you blow air on their teeth, or even when they don’t say two words to you the more you reinforce to you and others that it was a negative experience.  Find another way to release your stress like breathing, positive self-talk, or take a 5 minute break.  What you tell yourself you believe so be careful of what you think.

Flight patients are experiencing something very real.  As a dental professional, you want to learn how to navigate through working with this type of patient because it will make  your job and that of your team much easier.  Plus you will have less stress!

Contact Jen Butler, M.Ed., CPC, BCC at (623) 776-6715 and visit her website at Jen Butler Coaching

The Value of a Second Opinion to a Dentist

Here is another thoughtful blog from our esteemed client Dr. Don Lurie.

It seems to me that every health care professional sometimes needs to take the same advice that he gives to his patients.  "I suggest that we get a second opinion on this…"

I have written many articles regarding the beginning of our practices and continuing to retirement.  As I have said, (The Profession of Retirement, May, 2013) the new career of retirement requires planning and thought including the obvious financial requirements  and also the emotional preparation (Emotional Preparation for Retirement, March 21, 2014).  I strongly believe that preparing for retirement should start with the onset of our practices and that careful management by the proper team of advisors is essential to accomplish this.  Like with most things, we get into a routine and things just continue to function and run - timely donations to retirement funds, investments, insurance, etc... 

However, I made the mistake and took it all for granted.  Things and circumstances do change.  Health can be a factor in your planning (or lack of same), personal goals, motivations, insurance needs and many other components that combine to make our new career of retirement frightening and foreboding.  It is my hope that you can learn from my mistakes and make this transition so more calming and smooth.  I think the key word here is "transition". 

About 10 years before I retired (after 50 years), my "CEO" who really was my accountant (and the head of the Team of Retirement, August, 2013), suggested that we examine several areas of my life and practice.  He also suggested that we get a second opinion on various subjects that incorporate the business of dentistry and oral surgery.  Did we have an accurate appraisal of the worth of the practice or were we hiding our head in the sand? Do we still need to continue large amounts of life insurance or can we scale back as the age increases and other investments take over? Do we have a team in place to advise us on how to Transition the practice, think about buyers, target the buyers, bring in an associate/buyer etc? Are the investments good for the short term (while in practice) or do we need to start looking for a different quality of investment or moderate style of investment for those retirement years so that there can be some inner peace without the volatility of "the gamble"? I thought that my accountant was really so wise to suggest second opinions and it proved to me that he was the correct person for the job of CEO by being unafraid to show and share our information to an unbiased group of advisors.  It is with this vision that I was able to make even better decisions, long before retirement, to make this retirement career seamless as the time approached.  Of course, the first 6 months were an adjustment but I was ready for them.  And after that period, my life has taken on a new purpose and joy that I could only hope would be the case for everyone.   Another big area that needed a second opinion was the role of the corporate attorney.  Were our documents in order? So a review of the articles of incorporation was carried out at that time.  This also helped me in finding the attorney that I thought would be the right person at the time of transition.  This was invaluable and helped to keep that stomach-ache at a minimum.  It was just one worry that was eliminated knowing that there was the right person to turn to at the given time. Another area in transition to be considered is insurance.  Do you have the right kind of life insurance, enough or too much, malpractice insurance (enough or too much), real estate insurance if it applies and are there other insurances that your situation requires? What about HIPPA? Do you have the right IT person to help you to transition? Does he need to install systems at home to help in the transition? The list of questions goes on. 

I always made it a rule when I was in active practice, that I would not be the treating surgeon after I gave a second opinion.  I made this clear to the patient initially and reinforced it.  This gave me clearance to be more objective and to sincerely want to help both the treating doctor and the patient in solving the problem or conflict.  I followed this rule when I receive my second opinion from the outside group of advisors.  They were helpful and, more importantly, reinforced my admiration for my lead accountant.  Both groups agreed that I needed a specialist in practice transition to get to where I needed to go. 

The detail of this team was amazing including instructions to staff on what to say to the patients, how to explain what was going on, where charts would be available, etc.  Actually scripts were written so that there would be consistency among the staff when answering questions.  I cannot emphasize enough the value of scripts.  They should be used throughout your entire career. 

So I would urge you to reevaluate your situation, get that second opinion and move on, either with your original team or perhaps with the new advisors.  It may be an amazing discovery.  The goal is to make this as smooth a process as possible but you too must have an open mind and be clear about your goals.  They should be written down. Keeping a journal is a valuable tool.  Remember, "You cannot live a positive life with a negative mind."

The Team of Retirement for me was key.  Outside advisors and specialists were brought in at various stages of my career and for their efforts, I am eternally grateful.

These are just some thoughts that were on my mind regarding practice transitions and the possibility of a need for second opinion.  We are all here to help one another.  Please do not hesitate to send me you thoughts and questions.  It would be an honor to help.

More Mistakes Made and Lessons Learned next time.

Dr. Donald B. Lurie

email:  donald.lurie@att.net

Phone:     717-235-0764

Cell:         410-218-2228

Emotional Preparation for Retirement from Dentistry

This is another guest post from our dear friend and client, Dr. Don Lurie.

It seems to me that many of the doctors that I talk to as they prepare for retirement, are terrified.  Their anxiety is obvious after just a few minutes of conversation.  I am asked (being recently retired for 2 years): what do you do with yourself, are you happy, does your wife like having you around, and many similar questions.  I have talked before in my articles about the obvious financial preparation for retirement and associated subjects in my blog titled "The Profession of Retirement."   I think that attention needs to be placed on the emotional aspect of retirement.  This was difficult for me and, while I thought I was prepared and "longed" for retirement, it took the better part of 2 years to be emotionally comfortable with this new life. 

Now I would like to share with you some of my fears, visions, and thoughts that have occurred and I am, excited to say, how wonderful this new life - this new career - has become.  In the early stages, the financial aspect was certainly a fear.  After all, I never had to live on a budget where there was a "fixed income."  Thanks to my "Team of Retirement." which I outlined in another earlier article, this was easily overcome and after about 6 months, it was obvious that our preparation was accurate and that life could be sustained.  I don't want to minimize this but I would like to concentrate on the emotional aspects of retirement for this article.  For some folks, no amount of money is enough.  But just as important, is the fear of being unprepared for retirement.  After all, there is no clock that says you must be at the office at 8:30 and leave at 5.  Or that you must be at this meeting or seminar at the given time and so on.  It is a challenge to be able to make your schedule properly; but that is exactly what must be done.  I knew that I wanted to be in a situation that allowed me to be a mentor and a helper.  I wanted to give of myself and this was a major factor in planning my time and for concentration on this new career.  I would urge everyone to look at retirement as the beginning of a new and wonderful career.  You have the tools and the experience.  You have been the CEO of your practice, and with help, the CFO also.  You have learned to communicate, delegate, and to take part in community service.  You have learned to keep informed and to take continuing education, and more importantly, you have learned to bring healing, happiness, and joy to others.  So, soul searching need to be done as to where this new career is headed and what ends do you desire.  There is no limit. 

I prepared for retirement with my team, with my wife, with my pastor, and with my heart.  I knew that I wanted to be an instrument to give back to people and community.  Thus, I was able to list the areas that I could do a little good with the tools that I possessed.  I was then able to see that the areas I was interested in were both professional, secular, and religious.  And then, the list got larger and the openings became clearer.  This introspection takes time and effort.  The schedule is now so filled, that I wonder how I had time to practice Oral Surgery. 

I give council to students, I work at a new profession (photography) which was a hobby of long term, and I still teach at local area study clubs.  I try to write articles that come from the "school of hard knocks" and to share the experience that comes with 50 years of practice.  But this was not enough.  I am proud to be part of a large out-reach program that takes a great deal of time plus volunteering.  And now a new idea has come to me!

Since I wrote an article on "The Specialist and theStudy Club", it occurs to me to start a Study Club for Retiring Dentists.  This would be a group who can share their story with those who are near, not so near, or just beginning to think about the "new career after dentistry."  As I have said before, Planning for Retirement should start when you first begin practice.  Now you see why my group of articles start out with mistakes made! My thoughts on this club would be simply a chance to exchange ideas, to help rid ourselves of the fears, to hear a colleagues' story, or just knowing that you are not alone.  As the time goes on and the group continues, many other avenues can be addressed.  Psychologists, out-reach experts. hobby enthusiasts, financial planners, wives and spouses and their interaction and so on.  I think it can work and it is something that we will start in our area.  There is no age limit and should encourage the 30 year-old on up to the senior group.  Each age has a different prospective and could be a big help to both senior and junior including the transition of a practice. 

These are just some thoughts that have been on my mind and I think you understand where I am coming from.  We are all here to help one another.  Please do not hesitate to send me your thoughts and questions.  It would be an honor to help.

More Mistakes Made and Lessons Learned next time.

If you are interested in participating in a study club for dentists thinking about transitioning out of dentistry, contact Dr. Lurie or Ellen Dorner.

Dr. Donald B. Lurie, DDS

email:  donald.lurie@att.net

Phone:     717-235-0764

Cell:         410-218-2228

Dental Associate Agreements

Here is a guest blog post from our friend Carl Guthrie from ETS Dental.

Associate Agreements (contracts) can suffocate us at a time we should be reveling in a new opportunity.  However, many dentists don’t understand what is in their contracts, in turn complicating the process and turning this joy of new opportunity into a whirlwind of anxiety and trepidation.

This article is not intended to be legal advice.  

ALWAYS consult an attorney or legal expert in your jurisdiction.

Here are a few points to pay attention to when reviewing your Associate Agreement:

1. Employee or Independent Contractor:  Regardless of the debate on what is technically legal or acceptable by the IRS, make sure you know which status you are agreeing to.  If taxes on income are not paid correctly, it could come back to bite both the associate and the practice.   Consult a CPA or Attorney on what is correct for your situation.

2. Compensation: Are you going to be paid on collections or on production?  These two do vary, but don’t get stuck in the mindset that production-based income is the only way you will accept to be paid.  Keep in mind that even if you are paid on production, many practices will adjust your future paycheck if there are any unpaid patient balances or write-offs.  In essence, you are being paid on collections anyway.

3. Notice Period: The length of termination periods are widely becoming 30 or more days long.  We’re seeing more and more asking for 60 to 90 days notice.  Understand what is required of you to terminate your employment with a practice.  

4. Restrictive Covenants and Non-Compete Clauses: Dental practices will protect their interest by requiring you to agree to some sort of restrictions upon the termination of your employment.  They will restrict you from practicing dentistry in any capacity within a certain distance for a specified length of time.  There will be other language that restricts you from soliciting patients or staff for a specified time period.   Distance varies upon geography.  For example, rural areas can have 20 miles or more of a restricted zone, while a metro area will be 2 to 5 miles.

5. Lab Expenses:  Most practices are paying these costs; however, make sure to ask if you will be paying for any lab expenses.  There is no real standard on this in the industry.  Practices will have associates pay for half or an amount equal to the Associate’s percentage of pay.  Also, make sure you understand the formula for calculating your pay with lab expenses.  You want the lab expense to be deducted from the total production prior to calculating your percent of pay.  {Pay = % of production * (Production – Lab expense)}

These are just a few of the “biggies” that develop in contract negotiations.  Again, refer to your attorney for precise legal advice.

Posted by Carl Guthrie, Senior Dentist Recruitment Consultant with ETS Dental. To find out more, call Carl at (540) 491-9104 or email at cguthrie@etsdental.com.

The Specialist and Dental Study Clubs

This is another guest post from our client Dr. Lurie.

It seems to me that the need and demand for continuing education is extremely important to our profession.  Obviously, so do the State Boards and licensing folks.  I would like to discuss study clubs and how to gain the most value for the time and effort it takes to begin a study club.  How to begin and maintain the viability of the entity is important but many other factors need to be considered.  I was fortunate enough to start a study club that was in place for about 18 years and was most successful and helpful to me personally as a specialist in Oral and Maxillofacial Surgery.  It was a venture that was close to my heart as are many endeavors that one creates from scratch.  This is a companion article which started from my recent post on the Specialist and Referrals. 

Continuing education has many virtues but comes at a price.  The large and major professional organizations have tons of meetings around the country and internationally.  The advantages are obvious but some disadvantages are also obvious.  One must leave the office for an extended period of time.  Some meetings are better than others and have greater draw; thus the partners in a group practice may bicker as to who gets to go and who stays and watches the store.  In addition to the time involved, there is a large expense for the meeting - food, hotel, transportation, tuition and time lost in production at the office.  There is no doubt that these large meetings with their fantastic instructors have a lot to offer.  In addition, the large attending group gives ample opportunity for exchange of ideas and experience.  Lunch time becomes an additional course of study as folks discuss what they just heard and how it is or is not applicable to them in their own particular situation.  Even so, I feel there is a great opportunity for the "Study Club" to also be part of this ongoing quest for information, knowledge, practice growth and expansion of referral base.  For the beginning specialist, it is a great supplement to the contacts and personal exchanges with the referral base.

I would suggest starting a study club that is narrow in its field.  This allows for expansion of topics as the club develops but keeps the group focused on a particular subject that can be creatively and exhaustively researched and expanded upon.  In my case, we created a club that was restricted to dental implants.  You must remember that this club was started at about the time that the first words of implantology were first spoken.  I was one of the fortunate ones chosen to take post- graduate training in this new field.  Now it is taught in dental school.  This peaked my interest and desire to share this with colleagues and referring doctors.  We had to learn a new field as best we could and take the courses that were out there - both good and bad.  The study club enabled our group to discern the good from the bad - what worked, was feasible, patient friendly and within our ability to achieve good results.  This process was ongoing throughout my career until retirement.  As the ability improved and the knowledge was enhanced, the complex cases became more routine and the results were more predictable.  Thus, the study club became an arena that open discussions, exchange of ideas, and special speakers embellished the information obtained from the formal courses given around the country.  So I would suggest that a beginning study club be a special interest within a specialty connotation.   

Invite prospective members who are within a 5 year (approximately) time of graduation with you so that you can grow together both educationally and socially.  I must comment on the wonderful relationships that the closeness of the club created.

I would also try to establish a membership that had other specialists in fields besides my own area.  After all, I am trying to create a referral base.  Input from ortho, perio, prosthetics, occlusion, TMJ, etc.  will add to the discussion and I found this to be true.  Everyone benefitted when we discussed implants from an occlusal standpoint for example.  I might invite another oral surgeon to present at a meeting but I certainly did not need one as a competing member. 

There are many ways to conduct a study club meeting.  You can have a classic lecture followed by question and answer.  It can be an actual hands-on class sponsored by one of the companies (with all their resources), a round-table discussion where everyone will present on the subject (as notified in advance) for 15 minutes per person, or even a field trip.  The possibilities are only limited by your imagination.  I would suggest allowing several minutes at every meeting for "good and welfare" so that logistics can be worked out and a consensus agreed upon. 

We actually had an evening where a patient was brought in (all consents signed), records, x-rays, treatment plans etc. presented, and the ability to examine the patient, ask questions---including fees and so on.  It was a fun night. So much so, that it was repeated once a year with a different doctor getting a patient for us to examine.  It was also invaluable when one of the patients was a problem from a treatment-plan standpoint and this gave the entire group the opportunity to help the doctor with the optimum treatment for his patient.  His patient was impressed with the help he was getting on his behalf and I think it was a mutual stimulating evening for everyone.

Always send out an agenda prior to the meeting.  Try to keep the meetings to an agreed upon time format (we used 2 hours).  Try to meet at the same, convenient location when possible with the exception being patient exams, field trips etc. 

Keep the format inexpensive and simple.  We started promptly at 7 PM.  This gave everyone time to get home, grab a bite, kiss the kids and get to the meeting.  We only met 6 times/year.  There were light refreshments in the back of the room at a convenient hotel in the area which included fruit, cheese, coffee, soda and cookies.  Thus, folks could go back and forth while presentations were occurring and not interfere with the presentation.  Our dues structure covered most of the cost of these arrangements.  I footed the bill for mailings and any other special needs. This was done to keep expenses in check.  We started with 12 members and ended with a mailing of 80 active folks.  As new members joined, we tried to get them to get their age-group peers to join with them and this was successful.

So, I think I have given you an idea on how to begin and your own imagination can do the rest.  It was a fun ride and I truly enjoyed every minute of it.  Needless to say, the learning process received was invaluable.  A great way to have "continuing education." with friends, and fellowship.

These are just a few ideas about "starting a study club" and I hope they are of help.  Please do not hesitate to send me your thoughts and questions.  It would be an honor to be of help. 

More Mistakes Made and Lessons Learned next time.

Dr. Donald B. Lurie, DDS

email:  donald.lurie@att.net

Phone:     717-235-0764

Cell:         410-218-2228

The Top Twelve Mistakes Dentists Make Filing Their Taxes

Lance Jacob of the Dental CPAs has compiled a list of the top twelve most common tax filing mistakes that he sees his dental clients making. If you don't have a dental CPA, contact Lance.    

Filling out tax forms with an incorrect Social Security number. The IRS computers will automatically reject your deductions and credits if your Social Security number is wrong.[i] This mistake seems careless and trivial, but it is paramount to have the right Social Security number when filing your taxes.  Your social security number is your tax ID number, which is linked to numerous transactions such as income statements, savings account interest, and retirement plan contributions. It is also vital to claiming tax credits. Since the majority of returns are now being filed electronically, a correct social security number is paramount. An incorrect social security number will result in the reject of an e-filed return.   

Double dipping on dependents for divorced taxpayers. Ill repercussions could result such as additional taxes, penalties, and interest charged.[ii]  A child can ultimately meet the rules to be a qualifying child of only one person.[iii] Once divorced, your children do not duplicate out of thin air; therefore they cannot be claimed twice in taxes.  The IRS does not allow both divorced taxpayers to claim a child as a dependent. 

Not reporting non-deductible IRA contributions.  Any contribution to an IRA, whether it is deductible or non-deductible, should be reported on Form 8606, so when you withdraw it you are not taxed on it.  Plain and simple, all contributions to an IRA must be reported.

Incorrectly reported estimated tax payments.  If your accountant instructed you to make quarterly estimated tax payments, be sure to let him or her know the details of the payment for each installment.  Provide the check numbers, dates of payment, and the amount of each payment.  What often happens is people claim they made the payments as their accountant told them, but did not keep any records and inadvertently forgot a payment or two.  If the accountant includes all of the estimated payments on the return when they all were not really made, the IRS or state government will send a notice of tax due with penalties and interest.

Incorrect Federal ID number used on 1099 MISC.  Although your accountant can easily fix this, the less the IRS has to contact you, the better it is. The IRS matches 1099MISC and the Social Security number or Federal Identification number used. If you provide services, and the client you did the work for issues a 1099MISC, be sure they know to use the federal identification number of your business and not your social security number.  If they use the wrong number the IRS will send you a notice that you did not report income on your personal return, when in fact it was reported correctly on your business return.

Exceeding the mortgage interest deduction limit on Mortgage and home equity debt in excess of $1.1million.  This error commonly falls as the fault of both the taxpayer and accountant.  They only deduct the amount reported of the mortgage interest statement, Form 1098, and do not bother to check the amount of mortgage the taxpayer has.  The tax laws limit the amount of deductible interest to the interest on the first $1,000,000 of home mortgage debt and $100,000 of home equity debt[iv].  So if you have a mortgage of $2 million, you can only deduct mortgage interest related to the first $1.1 million in total debt.   

Standard mileage vs. actual expenses.  Mistakes in this area come from inconsistent use of methods.  If your car is for business purposes only, then the entire cost of its operation can be deducted.  However, if the car is used for both business and personal use, only the cost of its business use can be deducted. The amount of your deductible car expense can be found using either the standard mileage rate method or the actual expense method. [v]  Some people will qualify for both methods but you must choose only one method when you start using the vehicle and continue with that method until you replace the vehicle.  Be sure to figure your deduction with both methods initially to see which gives you the larger of the deductions.

First-Time Homebuyer Credit recipients unaware of the fine print.  Those who received a First-Time Homebuyers’ Credit towards their purchase of a home settled on prior to 12/31/08 must begin repaying that money on 2010 tax returns. Now is the time to take a good hard look at the details of this credit. Many who accepted the $7,500 credit may not realize that it was in fact a loan, and the government will begin not-so-politely asking for the money back over the course of the next 15 years starting with 2010 individual tax returns. As with any federal money however, there is a lot of fine print to read into on this one. Use form 5405. [vi]

Forgetting to tell your tax preparer you took an early distribution on an IRA; therefore, failing to calculate the early distribution penalty of 10%.  If you are under the age of 59.5, a distribution on an IRA (including employer matching and profit sharing) is considered early, and subject to a 10% additional tax.  This tax is in addition of other taxes that apply to the distribution.[vii]

Forgetting your signature on your return! If you were an artist, you wouldn’t forget to sign your masterpiece upon its completion, would you? You must sign your taxes for the IRS to process your taxes.  Filing your taxes electronically is a foolproof way to ensure your taxes will not go unsigned.  These software packages do not allow documents to be sent unless every step is completed. 

Incorrect bank account information for refund. If you are having your accountant file your returns electronically and want your refunds directly deposited (or payments automatically) withdrawn from your checking or savings account, provide the correct account information including name of bank, bank routing number, and account number. This will avoid delays in processing your refunds and/or payments

Forgetting to file a Form 1099 for rental property or a business as a sole proprietor.

 The IRS now requires you to answer the following questions

1.     “Did you make payments during the tax year that would require you to file Form(s) 1099? (these are forms used for rents, non-employee compensation, interest, and other income).

2.     “If yes have you or will you file all required Form(s) 1099?

It is important for your accountant to ask this question of the client and also important for the taxpayer to be aware when a 1099 is needed. You can see the problem you might have if you answer yes to the first question and no to the second.

---

[i] http://www.walletpop.com/taxes/most-common-taxpayer-mistakes/

[ii] http://taxes.about.com/od/dependents/a/Dependents.htm

[iii] http://www.irs.gov/individuals/article/0,,id=218767,00.html

[iv] http://www.irs.gov/publications/p936/ar02.html

[v] http://www.irs.gov/taxtopics/tc510.html

[vi]http://money.cnn.com/2009/09/24/pf/expert/home_buyer_credit.moneymag/index.htm

[vii] http://www.irs.gov/faqs/faq/0,,id=199762,00.html

Dental Mentoring Equals Dental Outreach

Here is another guest post from our client, Dr. Donald Lurie.

It seems to me that part of the continuing attempt to refresh and recharge our enjoyment of practice is the chance to be a mentor.  In these times, there is an obvious decrease in the ability to sit back and enjoy the practice of dentistry and medicine.  Interference from many sources,  stress of compliance, making the numbers work are so problematic that the doctor can lose focus on one of the things that brought him into private practice in the first place.  These are indeed difficult times.  The solo practitioner is almost extinct and the mega practices have their own set of problems from a morale standpoint.  

One of the areas that I found to be energizing and helpful was mentoring.  It started with teaching of residents in the early years of practice.  This was a great way to relate and to also keep current.  As all teachers know, you learn more from teaching than as a student.  Not only is it challenging, but it is a great reward to bring the missing link to the "new doc" - experience.  To be in a group and acknowledge an "ah ha" moment is so rewarding.  For those who are fortunate enough to be in a university city with medical and dental students, there is ample opportunity to give (and to relate).  You will find that the student is greatly appreciative that you took the time to help and point the way.  You will also find that you return to the office or to your home with an exhilarating feeling yourself - remember, "it is better to give that receive."  From another view, these contacts become friends, referral sources, and associates that may lead to other projects and outreach possibilities. This is just another example of a means to refresh and recharge.

Knowing how good the feeling is to give a gift to someone, I also had a grand time in mentoring patients of mine.  Actually, my staff also enjoyed it and related to the mission.  There were numerous opportunities where a young patient, entering college, had no idea of his major or area of interest.  This was an opportunity to chat and just become a friend and counselor. We would actually make an appointment in a off time (lunch etc.) to meet and advise.  Did it happen every day?  No, but often enough that we were invited to many graduations (and even some weddings).  I am convinced that we know more than just how to be a good doctor and this ability can be a wonderful way to have that "feel good" day or moment.  So you want to talk about marketing.  This, if done from the heart, is number one in my mind. 

So, it seems to me that you can make some fun out of you practice and have it actually become a source of an outreach program.

I would love to hear from you and share your ideas and experiences.  

More Mistakes Made and Lessons Learned next time.

Dr. Donald B. Lurie

donald.lurie@att.net 

Phone:  717-235-0764

Cell:      410-218-2228

Dentists Who Represent Themselves When Leasing Office Space Have Fools For Clients

 This is a guest post from our friends at the Dental Attorneys. 

Putting the final touches on a lease agreement you just negotiated, with what you believe are very favorable terms, is a time to celebrate. Dream office. Great location. Generous tenant improvement allowances. In fact, you’re feeling great and you want to shout with glee about it. There’s just one minor issue you don’t know about: the landlord feels the same way. There’s no wondering why the landlord feels the way he does either, since there weren’t any lawyers to deal with and the dentist thinks he essentially got everything he was after. That dentist just doesn’t know it yet, but by representing himself without a lawyer representing him, problems will likely be inevitable and costly.

Dentists should remember they treat patients. Lawyers negotiate contracts.

Once the lease is signed, you and the landlord often have opposite goals. The landlord wants the lease in effect as soon as possible so he can begin collecting rent from you, even if it’s going to take three, four or even five months to “build out” the office space to your specific conditions. You just want to get into a nice, attractive new space and start running your practice. But how would you know that if a contractor lags on building out your space, he should be the one paying the rent for that extra time, not you. And neither the landlord, nor the contractor, is likely to tell you this, either.

When leasing space for that dream office, you should try to gain every concession possible from the landlord so that when it comes time to pay that first month’s rent, it isn’t overwhelming.

If your landlord is building out the space, he will try to economize on every item, reducing his costs and increasing his net profit on top of the cash already paid to him, a lot of cash for the initial and standard five- or 10-year lease agreement. Your ultimate goals may be the same – long-term financial efficiency, but again, you are at opposite ends of the spectrum when it comes to your dream office.

If you and your attorney agree that the landlord will build out the space and act as a general contractor, you should be prepared to tell him what type of cabinetry you want, whether you want Berber carpeting or tile flooring and where you do and do not want your restrooms located. You should have every detail spelled out: sinks, staff break rooms, patient waiting areas, built-in desks, areas for administrative duties, and the like. But, again, you treat dental patients. Lawyers advise clients on leases. It is sort of like asking an MD to fill a cavity, or you to perform breast enhancement surgery. Competent lawyers are the ones you should turn to when negotiating a lease because the handful who specialize in dental practice law, know all the nondental items you don’t.

With lawyer in tow, and you deciding to take an active role in the building out of your office, there are many issues and items that must be addressed.

In the paragraphs that follow, the authors examine common lease issues that most dentists don’t know about when negotiating their leases.

Office Build-Out Issues

Most leases provide the dentist with a limited time to complete the build out of their space, and the landlord will even try to start the build out period before the lease is even signed. Therefore, you should require that the landlord have a limited time to review your plans, and you should put penalties in your construction contract so that your contractor has to pay your rent if he doesn’t finish on time.

Another common build-out issue is the tenant improvement allowance the landlord gives you. When you negotiate the rent, the landlord will rent the space based upon the leasable square footage, typically measured from the exterior walls of the entire unit. However, the landlord will routinely give the dentist a tenant improvement allowance based upon the usable square footage, causing the tenant improvement allowance to be 10-20% less than had it been based on the leasable square footage. Always insist that the tenant improvement allowance be based upon what you are leasing, i.e., leasable square footage.

Rent Increases

Nearly all leases have rent escalation clauses, which are either contractual in nature or that are tied to one of any number of commonly used economic indexes, such as the consumer price index, cost of funds, and others you know from watching Lou Dobbs on CNN. This is what you and your landlord will be negotiating and, with any luck, your lawyer can talk him into tying such increases to one of the less volatile indexes. There should always be a ceiling on such increases, just as the landlord will insist on a floor for the same indexes.

Damage to Office

Earthquakes, fires, floods, even riots are part of the landscape in California. The authors have noticed all too often in their practice that one of the victims of these calamities is the dental practice owner. The typical lease provides that if the dental lease office is damaged, the lease remains in effect if the landlord elects to rebuild, but imposes no time limit on when it is to be rebuilt. Some leases even require the tenant, or the tenant’s insurance company, to continue paying the rent while the office is unusable. While most of the time rent is abated, even the highly motivated landlord can have difficulty rebuilding, usually because of building permit delays (in the case of widespread destruction) or because insurance companies won’t pay enough to cover the cost to rebuild. The authors have seen numerous situations where a dentist, tired of waiting for the landlord to rebuild, built out a new office at a significant cost only to have the landlord call back two or even three years later and tell the dentist he must return and start paying rent because the dentist’s lease was still in effect.

The solution? Insist on having the landlord start repairs within a certain time period (e.g., 90 days) and complete the repairs by a certain date (e.g.,, 180 days). If the landlord fails to meet these goals, you should have the option to terminate the lease so you can move onto a new location.

Subordination Clauses

The subordination clause is an almost invisible clause in most leases because of the intricacies of the mortgage foreclosure clauses. These clauses typically require that your lease will become subordinate to any new financing the landlord places on his or her building. If our real estate bubble ever bursts, many landlords will lose their buildings as rents decrease and they can’t pay the mortgage. If a lender forecloses and there is a new owner, the new landlord does not have to honor your subordinated lease, and you may lose your dental office space. However, most landlords will allow modification to these clauses during lease negotiations because they know they won’t own the building if this ever becomes an issue. Therefore, always ask the landlord for a waiver of such clauses.

Assignment Clauses

A typical landlord wants to control who occupies his or her space and will insert clauses that virtually destroy a dentist’s ability to sell his or her dental practice.

For instance, it is common to have recapture clauses in the lease, allowing the landlord to cancel the lease if asked to assign it to the dentist buying your practice. They almost always have a clause making the lease renewal options personal in nature, so that when you try to sell your dental practice, you only can assign the lease through the current expiration date. If this is the case, the buyer’s lender won’t finance the sale because they want the lease to last as long as the lender’s loan will be in effect (i.e., 7-10 years). Many landlords may insert clauses that give the landlord a right to claim a portion of the profits you receive from the sale of your dental practice.

Virtually all standard form leases contain provisions which keep the original tenant on the hook for the rent through the expiration of the term, including all option periods. This occurs whether the lease specifically states this, or if the lease is silent as to when the tenant is released from liability, by operation of law. You want to ask the landlord to release you from liability, either at the time you sell your dental practice or at the end of the current lease term, so that you don’t remain liable throughout the entire lease term. Even if the landlord won’t release a tenant at the time of assignment, they usually will allow a release at the end of the then-lease term, based on the argument that if the buyer is a bad tenant, the landlord has lease remedies which allow the landlord to deny the buyer the right to renew the lease term.

Recapture clauses should be negotiated out of leases, as should all options - personal language. Leases should not give the landlord any right to make a claim upon the purchase price you received for your practice. You should try to obtain a release of liability to avoid the nightmare of a default occurring well after you have retired and are unable to take over the office.

These assignment clauses can destroy the nest egg you are building in a successful dental practice. This is why it is so important, whether you are buying a dental practice or building one from scratch, to have an attorney with experience in the dental field assist you with your lease negotiations.

The list of legal “dos” and “don’ts” for dentists astounds most of them when we sit down for an initial conference on selling, buying, relocating, leasing, or otherwise affecting the ownership of a dental practice.

It is often said that he who represents himself has a fool for a client. As the reader can tell from the points raised above, a dentist representing himself rather than utilizing an experienced dental attorney can miss issues which could make their dental practice relatively worthless. With such a valuable investment as a dental practice, it obviously is in the dentist’s best interest to retain the services of an expert in the leasing area.

Jason P. Wood, B.A., J.D. and Patrick J. Wood, B.A., J.D.

jason@dentalattorneys.com or pat@dentalattorneys.com | (800) 499-1474 | www.dentalattorneys.com

Jason is an associate attorney in the law firm of Wood & Delgado, and Patrick is the founder and senior partner of Wood & Delgado, a law firm which specializes in representing dentists for their business transaction needs. Wood & Delgado represents dentists in California, Nevada and Colorado.