Dental Practice Transition: A Practical Guide to Management
Table of Contents
Contributor List
Preface
About the Companion Website
Part 1: An Introduction to Practice Transition, Dental Practice Financial Statements and Practice Financial Analysis
Chapter 1: Introduction and Overview
Career Choices
The Current Market and Its Implications for You
The Platinum Age: Now Tarnished
The Best of Times, the Worst of Times?
The Bermuda Triangle´´ of Practice Transition
Inside the Triangle
Outside the Triangle
Some Common Pitfalls Causing the Triangle to Sink
Some Suggestions to Avoid Tipping the Deal
Selecting Key Advisors
Selecting an Accountant
Selecting an Attorney
Selecting a Banker
Selecting an Insurance Broker
Selecting an Investment Counsel
Selecting a Practice Broker
References and Additional Resources
Chapter 2: Financial Statements
Types of Financial Statements
Using Financial Statements
Borrowing
Compliance
Financial Analysis
Planning
References and Additional Resources
Books
Websites
Chapter 3: Practice Financial Analysis
Dental Office Financial Analysis
Dental Practice Revenues
Dental Practice Costs
Financial Analysis: Quantitative Measures of Quality Management for a General Dental Practice
Office Production
Generate Patients for the Practice
Maintain Collections
Control Managed Care
Control Costs
Practice Analysis
Office Production
Generate Patients for the Practice
Maintain Collections
Control Managed Care
Control Costs
Application to Associateships and Practice Purchase
References and Additional Resources
Books
Websites
Part 2: Ownership: Business Planning, Practice Valuation, Dental Equipment, Buying/Buying into a Practice, Starting a Practice, Financing a Practice, and Business Entities
Chapter 4: Business Planning: From the Perspective of the Dentist and the Banker
The Management Process as a Foundation for Planning
Why Is Planning Important?
Why Don't All Business Managers Create and Utilize a Plan?
What Is a Business Plan?
Why Write One?
How Long Should the Plan Be?
Business Plan Format
Elements of the Plan
Cover Page
Table of Contents
Executive Summary
Mission
Marketing Plan
Management Plan
Financial Plan
Appendices
Your Business Plan from the Banker's Perspective
Resources for Business Plans
Business Consultants
Federal Government (SBA)
State and Local Agencies
Academic Institutions
Books
Key Points
References and Additional Resources
A Sample Business Plan (Figure 4.3)
Chapter 5: Understanding Practice Valuation
Introduction
Overview of the Process
Step One
Step Two
Step Three
Step Four
Appraisal Methods
Summation of Assets
Comparable Sales
Capitalization of Earnings
Excess Earnings to Retire Debt
Other Methods
Rule of Thumb
Factors Affecting Practice Value
Historical Performance versus Future Earnings
Other Issues in Practice Appraisals and Sales
Valuation Exercise
Conclusion
References and Additional Resources
Chapter 6: Dental Equipment
Tips on Buying New Equipment
Seating
Dental Units
Patient Lights
Sterilizers
Intra-Oral X-Ray Units
Panoramic X-Ray Units
X-Ray Film Processors
Digital X-Ray
Dental Software
Air Compressors
Vacuum Systems
What to Look for in Used Equipment
Your Needs
Age of Equipment
Condition of Equipment
Red Flags
Valuation of Used Dental Equipment/Determining Fair Market Value
Maintaining Equipment
How to Maximize the Life of Your Equipment
Manufacturer's Maintenance Schedules
Upholstery Care and Maintenance
Final Helpful Hints
References and Additional Resources
Some Manufacturerβs Websites
Some Supplier Websites
Other Sources
Chapter 7: Buying/Buying into a Practice
Choosing the Right Location
Quality of Life
Professional Environment
Business Environment
Alignment with Goals
Deciding to Buy out or Buy into a Practice
Opportunity Cost
Solo Practitioner or Partner
Transition Considerations
Other Doctors Who Will Remain in the Practice
Due Diligence
Cash Flow Considerations
Financial Statements and Tax Returns
Accounts Receivable
Existing Equipment Leases
Financial Forecasting
Operational Systems
Facilities and Equipment
Selling Doctor or Partners
Common Transactions
Buying into a Practice
Buying a Practice
Contracts
Buying into a Practice
Buying a Practice
Key Points
References and Additional Resources
Chapter 8: Starting a Dental PracticeI Want to Be My Own Boss´´
Are You an Entrepreneur?
Your Sense of Efficacy: Do You Believe?
What Special Competitive Advantage Can You Leverage?
Other Considerations
Special Marketing Ideas
Special Real Estate Issues
Equipment Issues
Business Plans and Financing
Step-by-Step Process for Starting a Practice
Dr. Jacobs's Steps for Opening a Practice
Dr. Brad Alderman's Additional Steps
Insights from Dr. Tyler Smith about Starting a Practice
A Summary of the Practice Start-up Checklist from Wells Fargo Practice Finance
References and Additional Resources
Chapter 9: Financing a Practice
Introduction
Financing Dental Transitions: The State of the Industry
Historical Perspective
Preparing for a Practice Acquisition Loan
Commercial Loan versus Consumer Loan
Assessing the Borrower's Personal Credit
Assessing Your Income Requirements
Preparing Your File for a Commercial Lender
Understanding the Commercial Lender
Two Credit Philosophies
Types of Lenders
Seller Financing
Local Bank
SBA Loans
Specialty Lenders
Loan Brokers
Questions to Ask Potential Lenders
Analysis of the Buyer
Analysis of the Practice
During Transition
Loan Terms, Rates, and Typical Conditions
The Proposal Letter
The Commitment Letter
Comparison of Lenders through Proposal and Commitment Letters
Due Diligence and Closing
How to Maintain an Excellent Relationship with a Lender
From the Borrower's Perspective
From the Lender's Perspective
Assessing Your Future
Practice Acquisition
Location and Accessibility
Office Layout and Design
Business Systems
Marketing
Staff
Practice Start-Up
Financial and Business Planning
Location and Accessibility
Technology and Equipment
Marketing
References and Additional Resources
Chapter 10: Business Entities
Sole Proprietorship
Description
Necessary Documentation
Operational and Management Aspects
Income Tax Issues
Liability Issues
Advantages
Disadvantages
Corporations
An Overview
Description and Necessary Documentation
Operation and Management
Liability Issues
Tax Issues
Advantages of C Corporations and S Corporations
Disadvantages of C Corporations and S Corporations
Partnerships and Limited Liability Companies: An Overview
General Partnerships
Description and Ownership
Necessary Documentation
Operational and Management Aspects
Tax Issues
Liability Issues
Limited Liability Company
Advantages and Disadvantages of Partnerships and LLCs
What Is Right for You?
References and Additional Resources
Part 3: Business Systems and Related Issues: Incorporating Technology, Dental Fees and Financial Policies, Dental Benefits, Appointment Scheduling, Compliance, and Embezzlement
Chapter 11: Incorporating Technology
Introduction
Choosing a Technology Partner
Going Alone
Family or Friend
General IT Vendors
Dental Product Vendors
Dental-Focused IT Vendors
Evaluate Current Technology
Budget for Technology
A Proactive Approach
A Reactive Approach
Business Continuity
Local Backups
Off-Site Backups
Disaster Recovery Systems
Computer and Networking Equipment
Servers
Workstations
Displays/Monitors
Networking
Digital Dentistry
Digital Radiography
3D Imaging
Digital Photography
Practice Management Software
Cloud-based Software
Communication Options
VOIP Phone Systems
Patient Communication Tools
Compliance and Security
Staff Processes
Technology Provisions
Patient Entertainment and Education
Marketing Your Practice
Making Wise Investments
Conclusion
References and Additional Resources
Websites
Compliance
VOIP Providers
Patient Communication Tools
Chapter 12: Dental Fees, Fee Setting, and Financial Policies for Patients
Introduction
Fee Schedules and Definitions
Why Do Dental Practices Need to Increase Fees?
Disturbing Trends
Factors that Influence Pricing
When to Raise Fees
How to Raise Fees
How Much to Raise Fees
Economic Indexes that Influence Fee Setting
Practice Purchase and Fee Schedule
Discounting Practice Fees
Discounting of Fees and Dental Benefits
Impact of Fee Increases
What Is UCR?
What Are Percentiles?
A Benefit Provider Says My Fees Are Too High: Are They Right?
Relative Value Unit Pricing
The REV Model
Definitions
Why Financial Arrangements Are Necessary
The Best Financial Arrangement: Cash at the Time of Service
Prefinancial Arrangement Considerations
Financial Policy Worksheet
Financial Arrangements for Insurance Patients
Formula for Successful Financial Consultations
Discounted Treatment Rules
Alternative Financial Arrangements
Additional Considerations
Account Registration Form
Account Registration Form Components
Disclaimer
Importance of Cash Flow
How Much Can You Afford to Finance?
Credit Cards
Utilizing Collection Agents
Summary
Book Companion Website
References and Additional Resources
Appendix A: Payment Policy Acknowledgement Sample
Appendix B: Financial Policy Worksheet (with recommended policies)
Chapter 13: Dental Benefits
Dental Benefits Overview
Publicly Funded Dental Benefits
Commercial Dental Benefits
Commercial Dental Plan Models
Commercial Dental Benefit Plan Types
Structure of Commercial Dental Benefit Plans
Participating Provider Organization (PPO) Obligations
Submitting Claims
An Overview of Dental Benefits
A Glossary of Dental Benefit Terms
References and Additional Resources
Chapter 14: Appointment Scheduling Strategies
Appointment Scheduling Policy and Philosophy
Types of Appointments
Units of Time
Operatory Availability
Disinfection and Preparation Time
Time Units by Procedure
Scheduling by Provider
Type of Procedure
Sequence of Procedures
Variability of Provider's Work Habits
Patient Preferences by Provider
Integrating Appointment Scheduling with Other Business Systems
Well-Balanced Patient Load
First-Time/New Patient Appointments
Children
Cash and Emergencies
Filler Appointments
Over-the-Counter Follow-Up Appointments
Getting It on the Books
Understanding Patient Behaviors
Telephone, E-mail, and Internet Appointment Scheduling
Confirmations
Recalls
Patient Account Balances
Laboratory and Preparatory Results
Who Is Responsible for Scheduling?
Computerized and Paper Appointment Schedules
Computer Interactive Scheduling/Web-Based
Completing an Appointment Unit
Chair-Side Scheduling
Accessing and Monitoring Schedules
Appointment Scheduling Maintenance
Recall System
No-Shows, Last-Minute Cancellations, and Reschedules
Replacing Rocks with Pebbles
Late Providers and Late Patients
Keys to Productive Scheduling
References and Additional Resources
Chapter 15: Compliance with Government Regulations
What Is OSHA?
Subparts
Walking and Working Surfaces
Means of Egress
Noise Exposure
Ventilation
Nonionizing Radiation
Hazardous Materials
Personal Protective Equipment (PPE)
Put On
Take Off
Medical and First Aid
Fire Safety
Electrical Safety
Employee Medical Records
Ionizing Radiation
Blood-Borne Pathogens
Hazard Communications
Workplace Violence
OSHA Compliance and Inspections
Sexual Harassment
What Is HIPAA?
HIPAA Privacy Rule
HIPAA Security Rule
CDC Guidelines
Government Agencies Unraveled
References and Additional Resources
Chapter 16: Understanding Embezzlement
Introduction
What Is Embezzlement?
So Who Are These People and Why Do They Steal?
Motive
Rationalization
Opportunity
The Relevance When Purchasing a Practice
Controls Are Ineffective
A Crime of Navigation
Daily Balancing Is Impotent
Is Embezzlement Therefore Inevitable?
Avoid Hiring Mistakes
What About Existing Employees?
Expense Fraud
Theft of Revenue: The Biggest Problem
How Embezzlers Act
Can My CPA Find Embezzlement?
What to Do (and What Not to Do) If Embezzlement Is Suspected
And What If I Catch a Thief Red-Handed?
Investigators
Maximizing ``Net Recovery´´
Sources of Financial Recovery
The Justice System
Civil Court: Lawsuits
Criminal Justice
Conclusion
References and Additional Resources
Part 4: Marketing and Patient Communication
Chapter 17: External Marketing
The New Economy
Has Dentistry Slowly Evolved into a Commodity?
SmilePalooza Is Born!
Differentiate or Die
The Battle for Your Mind
Build Your Brand
Key Online Brand-Building Strategy
Top Offline Brand-Building Strategies
Newsletters
Card Campaigns
Public Relations Enhanced Through Press Releases
Radio Show Host
Speak at Seminars
Write a Book
References and Additional Resources
Chapter 18: Internal Marketing and Customer Service
Marketing and Customer Service: How Do They Relate?
Internal Marketing
The Three Levels of Patient-Friendly Customer Service
Excellence in Communication Skills
Asking for Referrals
First Impressions Count
The Welcome Packet
Morning Huddle
Portraying a Professional Image
Guidelines for Dental Dress for Success
The Significance of the Team to the Patient
Definitions of Patient Service
References and Additional Resources
Chapter 19: Chairside Communication with Patients
Goals of Communication
Communication Strategies
Word Choice
Suggested Scripts
Management of Anxious, Fearful, and Phobic Patients
FEAR
Pain Management
Management Tools
Special Needs Patients
Book Companion Website
References and Additional Resources
Part 5: Associateships and Dental Support Organizations
Chapter 20: About Associateships
Types of Associateships
Purpose for Associateship
Owner-Dentist
Advantages/Disadvantages
Associate
Disadvantages
Making the Connection
Recruiting the Right Associate (Owner)
Finding the Right Practice (Associate)
Define Success
Win-Win
Evaluation of a Practice
Compensation Package
Failure
Lack of Written Agreement
Unclear Expectations
Unfair Expectations
Inability of the Practice to Support the Associate
Unwillingness to Adapt
Inadequate Compensation, Inadequate Effort on Part of Associate, and Lack of Mentoring
Unfair Patient Assignment
Not Part of Decision-Making Process
Unfair Compensation
Associateship Contracts
Owner/Associate Responsibilities
Patient Assignment
Preferred Provider Organizations/Capitation/Medicaid
Work Hours
Noncompete/Nonsolicitation
Compensation
Hygiene
Insurance
Noncompliance
Termination
Death or Disability
Provide an Out
Conclusion
Acknowledgments
References and Additional Resources
Chapter 21: Dental Support Organizations
An Evolving Industry
DSO Models and Processes
Misunderstandings Regarding Ownership
A Clear Division of Clinical and Nonclinical Support
DSO Success Stories
Supporting New Office Openings
Recruiting Dentists
Supporting Existing Dental Offices
DSO Models versus Group Practice Models
The Present and Future of DSOs
References and Additional Resources
Part 6: Managing Staff: Human Resources/Compliance, Managing Dental Teams, and Staff Meetings
Chapter 22: Human Resources and Employment Compliance
An Introduction to Employment Law
An Introduction to Human Resources
Foundational Elements
Foundational Element: A Policy Manual
Foundational Element: Job Descriptions
Foundational Element: Personnel Files
Recruiting
Performance Management
Preventing Sexual Harassment
Tips on Dismissing Staff Members
Final Note/Conclusion
References and Additional Resources
Chapter 23: Managing Dental Teams
Before You Hire Anyone, What You Must Know
How to Locate and Recruit the Best Staff for Your Practice
Sample Employment Ads
Telephone Screening
First Interview
Questions About His or Her Most Recent Position
Questions About His or Her Other Work Environments
Questions About His or Her Personal Effectiveness
Second Interview/Skills Assessment and Lunch with Staff
Questions About Philosophies
Tests
Role-Play Scenarios
Welcoming Your New Employee to Your Practice
Job Descriptions
Buying a Practice with Existing Staff
Training Employees
Employee Evaluations
Raises
Motivating and Appreciating Employees
Sample Bonus Incentive
How to Handle Challenging Staff Members: Focus on the Behavior, Not the Person
Disciplinary Process Leading to Staff Dismissal
References and Additional Resources
Chapter 24: Staff Meetings
Staff Meetings = Empowered Team = Delighted Patients
Order WITHOUT Control
Morning Huddle: 15 Minutes Before the Start of Each Day
Monthly Team Meeting
Rewarding Experiences
Action List
Reports: Hygiene, Dentist, Supplies, Gift Account
Housekeeping List
Education Topic
Evaluation of Monthly Meeting
Length and Frequency of Team Meetings
Moderator for the Staff Meeting
Getting Started: What to Do If You Do Not Already Have Monthly Staff Meetings
Other Ideas for Staff Education Topics
Book Companion Website
References and Additional Resources
Part 7: Money Management: Insuring a Practice; and Personal Finance, Investments and Retirement Options
Chapter 25: Insuring a Dental Practice
Insuring a Dental Practice
Health Insurance
High Deductible HSA Qualified Health Plans
Deductible Plans with Coinsurance
Deductible Plans with Co-Pays and Co-Insurance
Dental and Vision Insurance
Disability Insurance
Business Overhead Expense
Life Insurance
Protecting What Belongs to You
Insuring your Building
Insuring your Business Personal Property
Business Interruption
Policy Deductibles and Co-Insurance
Ancillary Policy Coverages
Flood and Earthquake
Protecting You the Dentist from Others
Workers Compensation
Employers Liability
Workers Compensation Policy Audits
General Liability Insurance
Umbrella Policies
Professional Liability Insurance
Claims Made and Reported Policy Forms
Occurrence Policy Forms
Employment Practices Liability Insurance
Cyber Liability Insurance
Identity Theft Plans
Summary
References and Additional Resources
Chapter 26: Personal Finance, Investments, and Retirement Options
Finance
Developing a Philosophy About Money
Being Committed to Your Financial Goals
Saving Money versus Saving Buying Power
Building Wealth
Making Decisions from the Revenue Side, Not the Expense Side
Investment Choices
Understanding the Basics of Financial Planning
Retirement Plan Choices
College Funding Investment Programs
The Need for a Budget
Goal Setting
Budgeting Process
Step 1: Setting Up Categories and Calculating Expenditures
Step 2: Matching Income to Expenses
Step 3: Refining Your Budget
Step 4: Setting Up an Emergency Fund
Step 5: Passing on What You Have Learned
Exit Strategies
For Your Business
For Yourself
Long-Term Care Planning
Summary
References and Additional Resources
Books
Websites
Index
End User License Agreement