Making the Most Out Of Financial Planning

Did you resolve to make better financial decisions for your dental practice this year?

Financial improvements are the third most popular resolution people make on January 1. It’s not too late to make progress for 2017. Use this guide as a starting point to set up your office for success.

Tips for Financial Success from the ADA

According to the American Dental Association (ADA), smart financial planning for dentists begins with a profitable practice. A profitable practice begins with raising fees. A good rule of thumb is to implement a small increase every ten months; that way, you’re netting one extra increase over a five-year period.

Next, on the ADA’s list of recommendations is collecting 100 percent net. Make sure you see all the gains from your work. Setting your expectations lower can impact your profitability and your staff’s collection procedures. So if your monthly gross is $50,000 and after insurance adjustments and other write-offs, the net is $45,000, make $45,000 your collection goal. Don’t settle for less.

The third tip for financial success is having a plan for consistent growth. Involve your staff in this discussion, and benchmark at least the following figures:

• Gross Production
• Net Production
• Collections
• Net Collections
• New Patients

In 2015, the median gross billing for dentist owners in private practice, including specialists, was $640,000. The top source of gross billings in 2015 was private insurance, followed by direct patient payments, managed care, and government programs.

Other Recommendations

Other recommendations include viewing overhead expenses in terms of revenue, doing everything possible to ensure quality patient care, and properly managing debt.

Don’t be so quick to cut expenses if doing so would negatively impact practice growth. For example, investing in a new patient billing system requires up-front expenses, staff training, and perhaps ongoing maintenance expenses. If the new billing system allows you to serve patients better and more efficiently, it’s a win in the long run.

When it comes to debt, debt that will increase your practice’s profitability and efficiency is good. Think mortgage, software, and better equipment. But any debt you struggle to pay off is problematic.

Practice growth planning is time-consuming and sometimes difficult. But it’s time well spent. Don’t put off your financial planning goals. Put a plan in place now and see the benefits throughout 2017 and beyond.

Contact us today to make the most of the financial planning at your dental practice.

Why You Need Certain Information for Your Due Diligence – Part II

I decided to write this blog series mainly because of the pushback we get from sellers’ advisors on some of the information we request when representing the buyer. The second items I’ll discuss are the practice management reports for production by provider by ADA code and production by payor.

What’s interesting about the pushback we get on these reports is that we want these reports when we’re representing the seller and assisting them in coming up with an asking price or a value for their practice. We believe we can do a more thorough job for the buyer if we have this information.

Of course, we’ll get the standard response of “it’s in the information we already sent to you. Unfortunately, that’s not correct. Many times what they’ve provided is a summary of the production by category like diagnostic, preventive, restorative, etc. and it’s usually for the entire practice, not by provider. While this might be good information for practice management consultants to get an overview of the practice for their consulting engagements, it’s never enough information for a buyer who needs to understand how the collections are being generated and who’s generating them. We may also get a fee schedule and/or a practice production by ADA code. Again, good information, we just need more.

You see, the buyer is in a different position than the seller. The seller knows what they do; they know what their hygienists do, but guess what, the buyer has no idea. The seller could be performing procedures that the buyer doesn’t perform which could mean the buyer can’t replicate the seller’s collections. Or, maybe the buyer does procedures that the seller doesn’t so there may be some upside potential for the buyer. You can’t determine that without seeing the procedures, ADA code no matter what the practice questionnaire might state.

The other problem we often see is that many practices put the doctors’ exams under hygiene production. So we’re told the hygiene production makes up 40% of the total revenue of the practice when it’s more like 25%, which is closer to normal. Without seeing the detail and taking the seller’s word, the buyer might draw an incorrect conclusion that there’s a lot more dentistry to be done.

The two other aspects of knowing the true production by provider is A) we can evaluate the hygiene production to their wages to see if it falls within industry norms and B) we can better assess “reasonable” compensation for a dentist when performing our price assessment. We see valuation reports that have used incorrect assumptions based on bad PM reporting where practice prices have been overstated because “reasonable” doctor’s compensation has been understated based on dentistry of only 60% of total practice revenue instead of 75%.

The other PM report we ask for, production by payor, shows the total number of PPOs in the patient base. This also becomes important when trying to assess the collections generated by PPOs in which the seller is IN network with and the percentage of patients in PPOs where the seller is OUT of network.

Many of you already know about the Delta Premier issue, where buyers may not be able to retain the Delta Premier fee schedule w/o also participating with the regular PPO and therefore, a buyer won’t be able to replicate the seller’s collections in many cases. However, what many buyers of FFS practices fail to understand is the percentage of patients in a FFS practice that belong to PPOs. The buyer runs the risk of having those patients leave the practice to look for an IN network provider when the seller leaves the practice. The attrition rate is generally known to be higher in a FFS practice for a buyer anyway; if the buyer also knows that 40% of the patients have a PPO, then they need to appreciate that the risk of attrition could be worse.

This report will also be helpful to a buyer who is buying a FFS practice with the intent of potentially joining PPOs in the future, or a buyer of a PPO/FFS mix practice who has the intent of potentially dropping out of some PPOs in the future. It’s very useful information for the buyer and, unfortunately, we get pushback from sellers and their advisors when asking for these reports.

So here are some real life examples of why these reports can be very enlightening for a buyer:

1. I’m in the middle of an assessment right now on an FFS practice where the top ten PPO payors represent about 35% of the practices total production. For the buyer, if they remain FFS, they run the risk of higher than normal attrition as patients may take the opportunity to go to an IN network provider. The buyer is also contemplating joining some PPOs as the practice revenue isn’t very high so they now know what the potential impact could be to the existing patient base and revenue by getting into certain PPOs.
2. As mentioned above, we’ve seen valuation reports calculating reasonable doctor’s compensation for dentistry using a lower doctor collection figure because the doctor’s exams were under the hygiene production column. This has the effect of creating a higher value than would otherwise have created with proper information.
3. We’ve seen other dentistry codes thrown under the hygiene column like crowns, extractions, etc., almost always by mistake. However, with production by provider by ADA code reports we can make the proper adjustments and provide a more accurate picture of practice price and performance for the buyer.
4. We’ve seen situations where practices were labeled FFS when in fact they were a mix FFS/PPO practice and the PPO portion was significant enough that the buyer chose to walk away. We determined this when comparing collections to gross productions were less than 85% of gross production. In FFS practices, collections are generally greater than 90% of gross production.
5. Lastly, we’ve seen production by provider reports that show other doctor providers in the past, like specialists where their revenue wasn’t removed from prior year collections even though their compensation was removed. Needless to say, prior year collections were overstated so that the asking price was way overstated. We would have NEVER known this if we only relied on a tax return and/or P&L collections.

The fact is most practices have the PM software that can generate these reports easily, even if the office has to contact the software company to find out how to generate these reports. There isn’t any reason why sellers and their advisors can’t provide these reports and in our opinion, there isn’t any reason every buyer shouldn’t be asking for these reports.

Written by Tim Lott, CPA, CVA. For more information on our services, please feel free to contact one of the members of the Dental CPA team by calling 844-DENT CPA or emailing info@dentalcpas.com.

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

Is a Traditional Practice or a Group Practice Right for a Dentist?

Here is another guest post from our friend Carl Guthrie at ETS Dental.

Twenty years ago, the vast majority of dentists were solo practitioners who called their own shots and ran their own businesses. Today, group practices represent a significant percentage of the market and now provide an alternative to traditional solo practice. At this point in your career, which setting is right for you?

We have placed hundreds of dentists in both group and traditional settings. While walking a job seeker through the decision process, we consistently hear the same set of "pros and cons" offered for both settings. Here is an overview that we hope will prove helpful to any dentist considering a new position.

There are many types of group practices. For the purposes of this blog I will define traditional practices as those that have a sole practitioner or two partner doctors. Group practices include corporate groups, offices run by practice management companies, and private practices with three or more doctors.

Traditional Practice:

Pros:


• More income potential as a practice owner or partner
• Freedom to run the office as you see fit
• Freedom to pursue your own clinical interests
• Equity position is more likely

Cons:


• Complete responsibility for the practice
• Many hours of administrative work outside of clinical hours
• Balancing clinical CE with business development training
• Practice growth is your responsibility

Group Practice:

Pros:


• Limited or no administrative responsibilities
• Limited or no time required outside of office hours
• Reduced overhead could improve compensation
• Collegial setting
• Larger marketing budget
• Ability to specialize within practice
• Mentors available – clinical and business
• CE program in place
• Ability to negotiate higher fees from insurance companies
• More funds for equipment and technological upgrades
• More common to find benefits packages include group health insurance, 401K, and more

Cons:


• Less clinical autonomy
• Less or no control on business of the practice
• More colleagues to disagree with
• Quality of colleagues work reflects on you
• Less freedom to pursue niche
• Equity position less likely
• Higher staff turnover

This is certainly not a complete list of all the varying aspects of these two settings.

Contact Carl Guthrie with any questions you may have.

Dental Practice Purchase Checklist

We've been getting inquires asking if there is a checklist a dentist can refer to when buying a dental practice.

And when asked, we deliver.

Dental Practice Purchase Checklist

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

In This Season of Thanks, This is How One Dentist Gives Back to His Community

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

It seems to me that in this season of the year, our thoughts should turn to the ideals and morals of our history, of our parents and grandparents and even of the faith that has united and nourished us.  We all hear the expression ""I want to give back" but it is something that has to be nurtured, reflected upon, and then acted upon.  It must be sincere.  I guess that the sentimentality of this season of the year has given me the desire to share thoughts about this so-called "giving back." 

Last month, I discussed mentoring to both our younger practitioners and even to our patients.  This should be extended to anyone who might think that our experience, knowledge, and professional bearing might give them insight into their future and to help shape their career attitude to enable the practitioner to love his practice, his patients and staff, and to guard against the cynicism of just practicing for the dollar.  It is most difficult in this current climate to have these "noble" feelings and it is quite difficult to find the words to just address them.  I almost want to quote scripture to help me find the words and to share what I feel in my heart.  In my blog titled Mentoring Equals Outreach, I have started to share the ideal of gift giving and of thanks giving.  I have also suggested that this is, if sincere, a great function for marketing of your practice.  But do you know what? It just makes you feel good and that good feeling should be expanded.  As it was handed down to us by someone or at some place, the good that we have done, are doing, and should continue to do (even in retirement)  expresses who we really are and what is dear to our hearts.

A local group of friends and myself have started an outreach to patients who have difficulty getting around.  Their caretakers must spend time taking them to doctor visits, going to the pharmacy or many other mundane daily activities.  The caretakers, who are saints, are usually other elderly family, friends or neighbors who can only do so much and who, in turn, need to have a break.  Some of the doctor visits are just to have a BP, pulse, and other vital signs on an interim basis until their thorough check-up is due with their primary care physician.  These are easy visits for us since it is something that we do on a daily basis in our practice.  These folks welcome us, enjoy our visit, and feel like it is a social hour.  And you are right - it is a social hour of love and togetherness.  After taking vital signs, the doctor is called and, in 99 % of the time, that is all he wanted to know.  The patient is told to keep his normal appointment and the caretaker is told of the request also.  Actually, the caretaker has an hour off (haircut, personal errands) etc…  The group that I am in consists of active practitioners, nurses, retired docs, other health professionals including one EMT person (who gives one full day/week to this endeavor).  We call it a ministry or an outreach program but it so simple, so necessary, and has just been a joy to be part of it. And guess what? We learn from our visits, gain life experience in our conversations, and get more out of the visit than the shut-ins.  We now have increased our group to include non-professional types for things like drug store errands, haircuts, shopping, lunch, or just a plan visit so that the folks can change the scenery.  Our visitation includes seniors, recovering adults, folks home from the hospital, etc...  "There but for the grace of God, go I."

Next week is Thanksgiving.  Let it be a joy to share your love with family, extended family, and all your loved ones.  And when you are saying Grace at this festive meal, start thinking about how you are giving or going to give back.  I seems to me that this is what Thanksgiving is all about.

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

Several IRS Tax Court Rulings Dentists Should be Aware of... (if for no other reason than to dispel the myth that the IRS is humorless).

A Bike Sharing Program Isn't Mass Transit

Employee Benefits—Bike Sharing: Expenses an employee incurs by participating in a "bike share program" do not qualify for the favorable tax treatment provided for qualified transportation fringe benefits. According to IRC Sec. 132(a)(5), employers that provide their employees with transportation benefits can exclude those benefits from employees' gross incomes if the benefits are qualified transportation fringes as defined in IRC Sec. 132(f)(1) . A qualified transportation fringe includes any transit pass that entitles a person to transportation on mass transit facilities. A bike share program is not a mass transit facility. Information Letter 2013-0032. 

You Would Imagine They Could Have Thought of a Better Business Purpose...

Travel Expenses for Good Night's Rest: A self-employed tax return preparer that operated out of her home was denied a deduction for travel expenses that were necessary "just to get rest" from the stress of her neighborhood and harassment by clients that called her home at any hour. The Tax Court said that a taxpayer's choice of where to live is personal and her travel to get a good night's rest was a personal, not a business, expense. Meals and entertainment expenses claimed for meals with clients and a catered client party were denied as a business purpose was not established. Joyce Linzy , TC Memo 2013-219 (Tax Ct.).

Bad News for an Independent Contractor Deemed by IRS to be an Employee

Income Tax—SEP Contribution Disallowed: The taxpayer signed a letter of appointment with the British Consulate General (BCG) to serve a three-year term as a trade officer. He was referred to as "self-employed for tax purposes" in the letter and so filed a Schedule C reporting his income and related expenses and took a deduction for a SEP contribution based on his BCG earnings. After finding that the taxpayer was a common law employee of BCG and not self-employed, the Tax Court disallowed his SEP contribution and imposed a 6% excise tax on the excess contribution. On review of that decision, the 9th Circuit agreed that taxpayer was a common law employee. As such, he was not an employer under IRC Sec. 401(c)(4) with respect to his BCG earnings and could not contribute to a SEP and deduct his contributions based on those earnings. Rosenfeld v. Comm. , 112 AFTR 2d 2013-5638 (9th Cir.).

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

Making a Dental Associate A 50/50 Equity Partner

Lately we have been hearing from dentists and associates about the feasibility of creating a 50/50 partnership. Before this is contemplated there are some questions to be answered and considerations to be weighed.

Here are a few that we feel are important:

•   Is your practice large enough patient base wise for two full-time doctors?
•  Is the physical space larger enough for two doctors to work at the same time or will you be doing a split schedule?
• Is your business house (the practice systems, processes, etc.) in order?
• Is your personal house (any legal issues with either party such as pending divorce) in order?
• How long has the associate worked with you and are you comfortable with his/her practice style?
• Why did you hire the associate in the first place? Was it simply for coverage so you could cut back, or was it to have an in-house buyer when you are ready to retire?
• How does the associate’s patient base compare to yours? In other words has the associate been given insurance based patients and smaller/routine cases compared to your fee for service bigger ticket cases.
• Is the associate going to be a 50% owner immediately or over a period of years?
• As the original owner allowing a 50/50 partnership, are you willing to give up or share control of the practice you built?
• Is the associate capable or willing to take over any administrative duties you currently perform?
• Does the associate get along well with your staff and patients?
• Has the associate added to the growth of your practice?
• How will you share the new patients?
• Does the new doctor perform any procedures that the seller doesn’t and vice-versa?

For further information, please contact our friendly and wise Dental CPAs at (800) 772-1065 or info@dentalcpas.com

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.

How a Dentist Can Balance the Chaos - Ten Tips to Create a Better Work Life Balance

Here is another guest post from our friends at ETS Dental by Tiffany Worstell. 

I feel like I should start a support group with this introduction, but…

Hi, my name is Tiffany and I suffer from horrible work/life balance.  I work full time, am taking classes online, and I am raising two kids.  Throw into the mix household chores, two dogs, Girl Scouts, viola lessons, marching band, and a plethora of other projects going on at any given time, and you have a snapshot of my life.   Just writing this down is making me nervous.  What am I forgetting that needs to be taken care of or done tonight?!

Crazy thing about my little chaotic snapshot above is I know I am not alone. Life is crazy anymore.  Looking around my office, each one of us has a handful or two of other activities and responsibilities.  Chances are your office is the same way.  Life happens regardless of your title or position.

So, how do you balance it all?  Initially, I started looking for sites with tips, but I decided it was better to get real life answers so I took my question to my colleagues and Facebook followers.  Some answers were almost universal; some were a little more unique.  Here are some highlights….

Ten things you can do to create a better work life balance

1. Limit the amounts of time that you do work stuff at home or vice versa.
2. Use a calendar!  Scheduling events makes it easier to know what is coming up and plan accordingly.  Google Calendar is a favorite for many of those that responded.
3.  Create lists.  Do what must be done first.  Do what you do not want to do and get it out of the way.  Once something is completed, check it off and move on to the next.
4. Turn off your alerts; do not be a slave to your phone.  Check your emails on your own terms; not with every beep, buzz, or blinking light.
5. Take some time for what makes you happy: read a book, watch a movie, go for a run, exercise, or go out for a drink with a friend.
6. Find some peace.  Pray.  Meditate.  Get a massage. 
7. Get help!  This was a tough one for me, but there is no reason that my kids couldn’t straighten up the house while they are waiting for me to get home or wash the dishes from breakfast.  They even like starting dinner once in a while. 
8. Don’t be afraid to let go.  One of my Facebook friends said it best, “When I was working full time, was a full time graduate student and a single mom I achieved balance by letting go of things that do NOT last-dishes, dust and laundry.  Instead, I chose football practice, school activities and a kid flick.”
9. Say no.  I struggle with this one, but it is okay to not do everything all of the time.  If something is not important to you, let it go and focus on what needs your attention.
10. Find what works for you.  Take advantage of the time you have; I study on my lunch breaks and can knock out a good bit of my reading without interruptions which helps me immensely.  A colleague wrote, “Having the opportunity to work remotely is a huge thing for me.  It helps me not to feel guilty about going to my kids’ activities (games, etc.) and I make up my time in the evenings when they are engrossed with homework.  Sometimes they will come and hang out in my office as they do their homework and we’ll all be ‘working’ together.” 

I guess I have some pretty smart colleagues and friends!  Of course this is only a small sampling of the ideas out there; what do you to do to make your own chaos work?  I would love to hear what works for you.    

"Life is too short to wake up in the morning with regrets, so love the people who treat you right, forget about the ones who don't, and believe that everything happens for a reason. If you get a chance, take it. If it changes your life, let it. Nobody said life would be easy, they just promised it would be worth it. 
-Harvey Mackay 

Tiffany Worstell is a nationwide Recruiter for Dental Staff at ETS Dental. She can be reached at tworstell@etsdental.com or 540-491-9112. ETS Dental is a Dental Recruiting firm specializing in finding and placing General Dentists, Dental Specialists, and Dental Staff throughout the United States. www.etsdental.com

What Can a Dentist Do When a Patient Complains That Their Fees Are Too High?

Here is a guest blog from our friend Sandy Pardue who can be reached at info@classicpractice.com or by phone at (800) 928-9289.


When a patient says, your fees are too high show surprise and say, Our fees are too high? and wait for their response to see what they have on their mind. Sometimes people do not say what they mean. They might think it should cost less, or they may think they cannot pay the whole fee now. This is what you must find out.

Ask:

• What do you think was too high?
• What would have been a fair fee in your mind?
• I suppose it is possible a mistake could have been made, etc.

They may be asking to reduce the fee. If they are a senior citizen over the age of 65, you can tell them they are entitled to a five percent discount. For anyone else however, tell them, {{Mr(s). _, I know it may seem that way but our fees are really in line and we are proud of our fees.}}

I'm glad you are concerned about the cost because that is one of our advantages for the quality work we do. People remember poor quality more than they remember a fair fee and Dr. really does quality work.
Dr. is an excellent dentist and he has such a good reputation. He really tries to go the extra mile to take care of his patients. He is always available to you. Dr. Tooth is here on Saturdays, Sundays and holidays when necessary. He takes such good care of his patients.
Back to the fees, Dr. Tooth keeps the fees in line in the acceptable (or average) range. He stands behind everything he does.

Or:
We charge very fair fees for the highest quality of service and treatment and we always go that extra mile to take good care of you. We will make sure you get the best of treatment.
If they insist your fees are higher than others, show them our fee comparison schedules (which by the way, shows nothing about the high quality we deliver). __ Mr(s)., I am glad you brought that up and I appreciate how you feel. Our fees are very fair fees especially compared to others in this area and nationally. Here, I'll show you a comparison of our fees with others if you like. (Show them a list of fees compared with other offices in the area and around the nation for the services they are getting.) Also, Dr. Tooth is well recognized for his excellent work. Our fees are not higher than others across the nation. Use the fee comparison schedules.

If your fee is higher (which is very rare) say, Our fee is only two or three percent more than the average and less than the U.C.R. (Usual and Customarily Reported). We definitely do make the extra effort to give you excellent service and quality. Our extra service is worth more, but we don't charge for it.

Or,
Are you concerned about a small extra fee, or the high quality of service? If you pay too little and don't get what you need or want, you waste your time and money. You know, you get what you pay for.
It is very important to get why they are upset and handle it with good communication skills.

If They Want to Change Dentists Because of Fees

If you fail with the above say, Let me have Dr. Tooth call you. I know he will care how you feel. If they refuse, have the doctor call them anyway.

If they are really solid and will not budge say, I will tell Dr. Tooth and I know he will miss you. We'll still have your records on file, so if you ever have an emergency or any problems at all, just give us a call.

Join Sandy in New Orleans for one of her Spice Up Your Practice seminars for many more practice building ideas, team training and organizational systems to grow your practice. Call her at 800-928-9289 or visit her website at www.classicpractice.com. She is looking forward to speaking with you!

Dentists - Charge the Batteries and Change the Scene

Here is another guest post from our client Dr. Lurie on his "Mistakes Made and Lessons Learned".

It seems to me that in the course of practice, there comes a time to charge the batteries and change the scene. This can be both physical as well as mental (emotional). Allow me to ramble on this one for a few minutes. You leave the house at the same hour every day for a routine drive to the office, usually over the same route, and arrive at a destination that you have seen every day, with the same people, decor, aroma, and basic schedule. This goes on for days, weeks, months and years. It is, of course, the office and we accept this as our workplace and how it fits into our daily routine of work. Now, think about the few days that were different. Perhaps there was a traffic jam, an early morning meeting, a half day of continuing education, a birthday celebration that the entire staff is helping to celebrate. Was not this a day that was different and "charged the batteries"?

This leads me to think about ways and efforts that can be incorporated into our work lives that can do this on an occasion and have long lasting effects and advantages.  I remember a time when I could not stand my private office.  It was the same four walls that I worked in for many years.  I wasn't even aware that it was dragging me down until my wife popped in one day and suggested that we must do something about this.  And then, we turned it into an office project with the staff and a decorator, with input from everyone.  Of course, this would come back to haunt me later on.  Anyway, it was fun and it really did give me a tremendous emotional lift and it became a place where I could recharge the batteries, work, and interact with the patients in a non-dental setting.  So this is an example of a physical change.  Gradually, these changes took place in the waiting room, the business office, and, most importantly, the staff lounge.  This was a tremendous boost for all of us and we had again, found a sanctuary that we all could share.  Incidentally, this became the room for the "dreaded staff meetings" that I discussed in a previous blog.  But you get my point - a fun way to change the monotony of the place where so many hours are spent.   The added benefit of "team" input was great and this, of course, adds the emotional benefit of the revision.  The energy in the office was off the wall and lasted for years as we all became closer, knowing that this was our project and our stamp.  Obviously, our staff turn-over was minimal and staff was on-board for many years.  So the uplift in decor helped in many directions. 

With this in mind, I tried to think of things that would keep us energized and focused.  These would fall into the mental (emotional) category.  An example would include all special occasions that the staff wanted to share----birthdays, anniversaries, and other celebrations were welcomed and planned.  The planning of the event was the key and time was set aside in the work day for this.  I think that this is part of the whole recharging of the battery that I mentioned earlier.  The routine was changed, the day was different, and the effect lasted for quite some time.  These are just examples but I think you get the picture.  One could add: trips, meetings (both professional and social - i.e.museum of art trip with spouses), or joining with another office for a continuing education evening, or a fashion show at a department store, etc...  The possibilities are endless but I urge you to consider them for your own peace of mind and to add the activity of "fun" into the practice. 

Another area that I found had a profound effect on managing stress was an activity that we called "Mentoring of the Patients" and I will tease you with this and discuss it in my next article.

More Mistakes Mad and Lessons Learned next time.  As always, I would love to hear from you and share your ideas and experiences.

Dr. Donald B. Lurie

donald.lurie@att.net

Phone:  717-235-0764

Cell:      410-218-2228