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

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.

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 Case Study: Selling the Real Estate with the Charts

Here is a guest blog from Ellen Dorner, Managing Director of Dental Practice Sales

Dr. A is a 62 year-old GP that is in the process of transitioning out of his practice.  Dr. A owns his own building in a small office park with good parking, good visibility and in a very stable area.

When Dr. A decided he was ready to transition out of practice, he also decided that he would sell the building at the same time.  With all the good things about his building location, the sale has not gone as easily as he thought it would.  He has had several interested buyers for his practice, all of which are young dentists just starting out.  And while they would love to eventually own their own building, the decision to do so now has been a difficult one.  With @ $200,000 in school loans still outstanding, the additional cost of a building purchase along with the practice has become too daunting.

This seems to be the situation with many dentists who own their real estate.  The buildings were purchased with the notion that real estate always goes up and is a great investment.  And while commercial real estate has taken a hit over the last few years, the decision to own was not necessarily a bad one at the time.  The glitch is that in transitioning a practice with the real estate to a young dentist just starting out is proving to be too much for them to handle at this point in their career.

A better idea may be to lease the building with an option to buy the real estate at a later date.  The critical piece to this situation is to be sure that all terms are in the lease – who will value the real estate, the terms of the eventual purchase and the timing of the purchase.

As in any part of the transition, it is critical to have trusted advisors to walk you through this process.  You are the dental expert, don’t hesitate to rely on other experts for this important transition in your life.

To discuss your situation, email Ellen or call her at (800) 772-1065.

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

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

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.).