Dental Entrepreneur - Fall 2012

entrepreneur

class of 2013 | FALL issue

dental

Business Beyond the Classroom

Hurdles of a First Year Dentist

How To Obtain A Loan In Order To Buy A Practice The Future Of Dentitry: How Will The Level Of Competition Change?

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entrepreneur Fall 2012 Volume 15, issue 1 Editor & Publisher Anne M. Duffy RDH Assistant Editor Michael Duffy Production Ruthie Gordon Publishers Press Inc.

Welcome to Dental Entrepreneur

class of 2013 FALL issue

G

reetings, soon to be dental school graduates!

As we all monitor the political proceedings that this November will bring, a couple of thoughts come to mind, most notably surrounding our current economic situation. While there might be some optimism on the horizon, certainly it is a concern for those new dentists about to hit the Real World.

That goes for whatever path you are planning to take upon graduation.

Director of Advertising A.Marie Linesch Editorial Board Dr. Gene Heller Dr. Harold Sturner Dr. Craig Murray Dr. Earl Douglas Rachel Teel Wall, RDH,BS. Dr. Tom Snyder Layout and Design John O’Connor

Class of 2013 Contributors Derek Champagne Dr. Ryan Dulde Fred Heppner Joeseph D. Jordan Dr. Roger Levin John McGill and Dr. Charles Blair

Dr. Gary Palsis Jr. Kathleen M. Roman Dr. Tom Snyder Dr. Josh Turnbull and Matthew Lingerbrink Mary Lynn Wheaton and Amy Morgan

Charter Sponsors Oral‑B Laboratories Ultradent Products Inc. Procter & Gamble Wm. Wrigley Jr. Corp.

Glidewell Laboratories Benco Dental Co. Tess Corp.

Dental Care Alliance

The Pride Institute The Snyder Group McKenzie Management Caesy Education Systems, Inc. Warner‑Lambert Co. Phillips Health Care Oxyfresh Worldwide

Each scenario has similar potential pitfalls, but we at Dental Entrepreneur: Business Beyond the Classroom are here to spread out a safety net.

Sure, you’ve done the clinical work and studied enough to be experts in the field of dentistry, but how much education regarding the economic side of things have you been able to absorb?

That’s why twice a year, we curate several experts in finance and risk management, in addition to people who can offer tips on how to build a middling practice into a great one.

For the first time we are featuring young dentists that were in your shoes a year or two ago. Gary Palsis, Ryan Dulde and Josh Turnbull are emerging leaders in your profession. Please take special notice of their message. I am proud of them for contributing!

We love Tom Snyder’s article, Can I Afford a $700,000 Practice? While he acknowledges that school debt as of 2011 averages $178,000 at public institutions and $245,000 at private institutions, he notes that many dental lenders understand that and are ready to lend money to purchase a practice.

Is it the right idea? Snyder’s piece has an answer.

As for the nuts and bolts of lending, check out Fred Heppner’s hopeful perspective.

Kathleen Roman is risk management education leader for Medical Protective, and she contributes The Role of the Senior Dentist: Ethical and Risk Management Consideration. She gives us an excellent example from the anonymous Dr. A and Dr. B and the pitfalls of a lack of insurance.

Find out what the “secret sauce” is that can make practices elite with Good to Great from Harvard Business School alums Turnbull and Matthew Lingenbrink. Those guys pull out points like a Vision/ Mission Statement and Great Leadership, which might sound simple, but there is definitely more to it.

Editorial Office 12233 Pine Valley Club Drive Charlotte, NC 28277 704/953-0261 Fax 704/847-3315 ADuff2@aol.com

And, in today’s climate of social media reliance, something that both presidential candidates use quite well, you need to know how to utilize the Interwebs to your advantage.

Send materials to: Dental Entrepreneur Magazine 8334 Pineville Matthews Road Ste. 103-201 Charlotte, NC 28226

As the election for the leader of the free world nears, we encourage you to vote for the candidate you believe in, for it is your future.

When you have finished enjoying this magazine pass it along to a friend and PLEASE RECYCLE Copyright 2013 Dental Entrepreneur, Charlotte, NC Material herein may not be reproduced, copied or reprinted without prior written consent of the publisher. Acceptance of advertising does not imply endorsement by the publisher.

Derek Champagne’s Building Your Personal/Professional Brand through Social Media provides all the guidelines you’ll need to do so.

Just know that Dental Entrepreneur: Business Beyond the Classroom is casting a big vote towards your success!

All the best,

Anne M. Duffy Publisher 2 Fall 2012 Dental Entrepreneur

www.dentalentrepreneur.com

class of 2013 FALL issue Volume i

dental

entrepreneur’s

Contents Prologue

4 Hurdles of a First Year Dentist Gary Palsis Jr., DMDP

Business Beyond the Classroom Practice Builders 24 Creating Growth In the New Economy Roger Levin, DDS

26 Building Your Personal/Professional Brand

Getting Started 6 Dental Practice Financing: How Do I Obtain a Loan in Order to Buy a Practice?

Fred Heppner

8 So You Want a Win/Win? The Must Knows (Whether Becoming an Associate or Purchasing a Practice) Mary Lynn Wheaton, Director of Consulting & Amy Morgan CEO Pride Institute

Through Social Media Derek Champagne

The Power To Succeed 28 Begin With the Patient in Mind Ryan C. Dulde, DDS

32 Good to Great: What Elite Practices Do Differently Josh Turnbull, DMD, MBA 2013 candidate and Matthew Lingerbrink, MBA

Business Fundamentals 12 Can I Afford a $700,000 Practice?

Tom Snyder DMD, MBA

14 The future of Dentistry: How Will The Level of Competition Change?

John McGill, CPA, MBA, JD and Dr. Charles Blair

22 The role of the Senior Dentist: Ethical and Risk Management considerations Kathleen M. Roman, MS

www.dentalentrepreneur.com

Fall Entrepreneur Fall 2012 3

Prologue Gary Palsis Jr., DMDP

Hurdles of a First-Year Dentist

W

ith the end of senior year coming to a close, I remember listening to most of my classmates talking about where they “matched” for different residencies. They were excited to begin a new chapter in their life-long commitment to academia. What about the students who wanted to be done with school and go out and finally make a living for themselves? I didn’t hear them talking as excitedly about starting a new job in the “Real World.”

The truth was that most of these students had no idea what to expect in their first year of working. I know I didn’t. All I knew was that in a few short months, I would be working as a general dentist. Maybe it’s not as glamorous as becoming an oral surgeon or an Gary Palsis Jr., DMDP orthodontist, but I liked general dentistry, and I was anxious to get started.

My father has been a general dentist in Melbourne, Fla., for over 30 years, and I had always thought that I would be practicing with him when I graduated. I knew working with my father would be a great, comfortable transition into private practice. However, I also knew that turning a single-dentist practice into a practice big enough for the both of us would take a lot of time and money. Furthermore, my father’s patient flow would have to double if I wanted to have any patients of my own. Reality sank in when I saw my loan total. Going into practice with my father quickly became a less enticing option for

4 Fall 2012 Dental Entrepreneur

my first years out of school. If I wanted to get out of debt quickly, I was going to have to look for opportunities elsewhere.

As a very involved dental student, I had the opportunity to serve as a national leader with the American Student Dental Association, which is headquartered in Chicago. I started thinking to myself that living in a big city and working on my own for a few years might not be a bad option. When else in my life would I have the freedom to do something like that?

I could work on my dental skills, make money, pay off some loans and have some fun before I decided to settle on a place to practice more permanently. Thus began a whirlwind of events that had to occur to make practicing in Chicago a reality.

After taking the proper board exams, finding the right job would be more difficult than anticipated. Chicago is the heart of organized dentistry, and consequently, there are so many practices in the Windy City that the market is saturated with dentists. Luckily, I found a job working for a small clinic on the south side of Chicago that caters mostly to underserved children. It’s not the most glamorous of jobs, but it has provided me with a consistent salary to help pay for my school loans.

Looking back at my first year of practice, I can certainly say that I have learned speed and have noticed improvement in my clinical skills. However, working has also shown me quickly the areas that I need to work on if I want to become a better general dentist.

Almost every day, there are questions I have that I need to look up or ask another dentist about. I call my father all the time to discuss cases where I am unsure of what to do next.

If I felt like I knew all the answers after only one year of practice, then I know something must be wrong. Striving to be a conscientious dentist, I want to be sure I am doing the best that I can for my patients.

Deciding what to do after dental school can be a difficult task, and the answer can be different depending on your goals. For most, the dream of starting a dental practice fresh out of school is an impossibility. So where does that leave most graduates? Either they apply to a residency, or get out there and become an associate dentist somewhere that is willing to take a chance on a new graduate with minimal experience. My situation is obviously different from those dental students who already have a family to support, those who are going into residency, or those who will be serving in the armed forces after graduation. In the past year, I was able to pay off at least one-fourth of my student loan debt and hope to be done in the next three years. My ultimate goal of opening my own practice may just be closer than I had originally hoped. Then again, I haven’t completely ruled out moving back to Florida to work with my dad. For now, I think I’ll stay where I’m at because I’m happy in Chicago. ■

Gary Palsis is from Indialantic, Florida. He received his undergraduate degree from University of Florida in 2007, majoring in Microbiology and Cell Science. He graduated from University of Florida College of Dentistry in 2011.

Gary is licensed in Florida and Illinois, and is currently practicing general dentistry as an associate in a group practice called Studio Dental in Chicago, Illinois. His hobbies are football, basketball, soccer, photography and piano.

www.dentalentrepreneur.com

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Getting Started fred heppner

Dental Practice Financing:

How do I obtain a loan in order to buy a practice?

L

et’s put to bed the ugly rumor that banks aren’t financing practice purchases. Contrary to what some have heard, dental industry financing is alive and well. In my personal experience as a dental practice transitions consultant since 2004, banks have come through even during tough economic times by providing money for dentists to accomplish the goal of purchasing a practice, buying in to a partnership, purchasing equipment, or re-financing an existing practice or equipment Fred Heppner loan. I have good knowledge at my disposal that tells me that in 2011, nearly one billion dollars was loaned to the dental profession for purchases, start-ups, equipment and re-finances. One need not worry that banks aren’t loaning money to dentists; they are. Most lenders for dental practice acquisition loans will finance 100 percent of the purchase price and working capital – the total usually not to exceed 85 percent of the practice’s previous year’s collections.

So, let’s talk about what’s involved in putting together financing. First things first; find out your personal credit score.

To do this, you may go online and use one of the highly advertised credit score companies, or you may contact one of the niche lenders in dentistry and make an application with them. The number a person would look for is the payment score, or FICO score. FICO score is reflective of how well one makes payments on borrowed money. Lenders are looking for a credit score of 680, at least over 650.

Next, one should begin to gather financial information so that a personal financial 6 Fall 2012 Dental Entrepreneur

statement can be created. This is, in the simplest terms, a statement of a person’s assets and liabilities; what one owns and what one owes (try that three times real fast!). This would include savings accounts, brokerage accounts, real estate, auto, home, investment property, retirement assets, student loans, any other loans, credit card debt, any other income and any other payments made on a regular basis. Hopefully, the personal financial statement will show more money coming in than going out.

And, it is encouraging to a lender to know that the borrower is living within his or her means.

A note about credit cards – Abnormally high credit card debt is worrisome to lenders in that once a person arrives at a certain

level, in the neighborhood of $30,000 to $40,000 for example, banks will most likely begin to lose interest in providing a loan.

Along these lines, something must be said about student loan debt. The norm seems to be moving towards $300,000.

Lenders understand this type of and amount of debt because it’s how the dentist has acquired the knowledge and skill necessary to provide valuable dental services in the future for which he/she will be wellcompensated. In an extreme example, it’s not out of the realm of possibility to have a husband and wife carrying $750,000 in student loans while seeking to borrow money to buy a practice.

Before recent years, business plans were required when applying for a loan. Today, www.dentalentrepreneur.com

lenders move more towards a Credit Interview whereby the buyer and the representative from the lending institution discuss the buyer’s history, the plans for the practice, their knowledge of the practice, the location and community where the practice operates, and the financial health of the practice.

Lenders are very interested in knowing the buyer has experience and can match the current doctor’s productivity.

The dentist buyer will need to present documents, usually practice management reports, showing his/her productivity over the past year or two.

From the buyer’s side, generally, this is what is needed for a lender to consider approval for financing. Some other items and/or issues may come up depending on the circumstances, but these few steps will get the buyer into a good position to know if and when he/she can qualify.

However, this is only one side of the equation. The lender must now examine what the loan will purchase. Let’s use the example of a practice purchase, with some discussion about other possible purchases.

The lender will examine the practice which the buyer is looking to either purchase or with which to establish a partnership.

The lender will want, at the very least, three years of business federal tax returns, interim financial statements (profit and loss statement and balance sheet) various practice management reports, and possibly a summary of the lease for the office space wherein the practice operates. Depending on the size of the acquisition and complexity of the deal, more information may be requested.

At this point, the lender will examine how much profit the dental practice generates. To do this, lenders typically separate owner compensation, practice profit, interest, depreciation and amortization and see how well the business generates cash to service debt. If cash flow is not sufficient to meet debt service using these standard expense categories, it may be necessary to look a little deeper and find other expenses that the owner has, which are discretionary owner benefits to boost the cash flow number. These may include automobile expenses, owner life insurance policy premiums, owner health insurance premiums, www.dentalentrepreneur.com

family members as employees who will not work in the office after the acquisition, etc.

The lender will examine the information on the practice and set alongside the information from the buyer in order to determine if the buyer can service debt and live comfortably. If the answer is yes, then the parties move forward. If the answer is no, it may be that the buyer’s living expenses may be too high, or the practice doesn’t provide enough cash to make the deal happen.

When a practice doesn’t provide the necessary cash flow, the buyer may need to bring some money to the table in the form of a down payment. The amount is somewhat dependent on the intent of the buyer to purchase the practice, and the position the seller may have regarding the sales price. Alternatively, the lender may ask the seller to finance part of the purchase price.

This is usually called a “carry back” in the form of a promissory note.

Once the loan is approved, the bank will require the borrower to put up collateral in case the borrower defaults. Typical collateral for a dental practice purchase is to lien all of the assets contained in the practice.

Assets include furniture, some fixtures, dental equipment, supplies, instruments and patient records. Similar to buying a home or a car, that asset becomes the collateral put up against the payments over time. Once all the payments are made, the practice assets are owned by the borrower.

Additional collateral often required is a corporate guarantee on the part of the buyer’s corporation, or the seller’s corporation when the buyer is seeking to buy in to a partnership.

What this means is the bank will require the buyer’s corporation as well as the buyer to be accountable for payment on the loan. When a partnership is being considered, the bank will additionally require the seller’s corporation to be accountable for payment in the event the buyer defaults on the loan.

Unfortunately, the economic conditions our country went through in the past several years created an environment whereby people fell into bankruptcy. In some cases, dentists found themselves in a position where bankruptcy was the only option. Personal bankruptcy will take 10 years to re-build. After filing bankruptcy, one must begin to establish credit right

away and stay current on all payments in order to prove their credit-worthiness down the road. Again, this will take some time. In other words, bankruptcies are not a favorable aspect of a borrower’s credit worthiness.

If a borrower has defaulted on a practice loan, it’s not likely banks will provide funding to purchase another practice. Yes, there are extreme examples of when a bank would forgive this aspect of the borrower’s credit history, but again, it’s not likely.

Finally, no practice purchase, partnership undertaking, or merger and acquisition are the same. Understanding the quirks in any deal is important because some risks may be hiding in the shadows that could cause problems after the fact. For example, a seller wishes to stay on board with the practice as an employee dentist, working part-time, two days a week, but the practice is only busy enough to provide four full days a week of dental services. The buyer may wish to acquire the practice in order to work full time and earn enough money to pay personal expenses and service debt. How can this happen with the seller requiring two days per week?

To sum up, if a dentist is seeking financing, be confident that there are financial institutions that are very familiar with the dental industry and, given the right circumstances, can work quickly to approve loans for sensible practice purchases, partnership buy-ins, equipment purchases, and re-financing. Again, one must make sure his/her credit score is around 680, that there is more money coming in than going out, that in the example of a practice purchase, his/her productivity matches the practice being considered, and that the practice provides enough cash to service debt and allow for a good living. ■

Since 1983, Fred Heppner has shared his knowledge and experience as a Business Management Advisor through his business management firm, PROACTIVE PRACTICE MANAGEMENT, and has helped dentists experience “Win-Win” results as a Practice Transitions Consultant through ARIZONA TRANSITIONS. Contact Fred by phone at (480) 513-0462, or e-mail at FredHeppner@ cox.net or FredH@ADSTransitions.com.

Dental Entrepreneur Fall 2012 7

Getting Started Mary Lynn Wheaton, Director of Consulting & Amy Morgan, CEO Pride Institute

So You Want a Win/Win? The Must Knows

(Whether Becoming an Associate or Purchasing a Practice)

T

he decision on where to associate or purchase your first practice is right up there with your initial career choice, marriage and kids! This is by far the most serious economic commitment dentists have to make at the start of their professional career. Finding the right practice with which to associate can provide many positive outcomes including: hands on mentorship, further enhancement and confidence building in clinical and management skills, good compensation and sweat equity/goodwill towards a potential future purchase. It can also generate many negatives, which can put a young dentist on a path of mediocrity, ongoing debt and poor or no future choices for next steps in professional growth.

Whether associating, buying in or directly purchasing a practice, it is essential Mary Lynn Wheaton for the young dentist to perform his/ her own due diligence and examine numerous factors and systems to feel in control and insure win/win agreements.

In this article, we Amy Morgan will provide specific guidelines for this vital decision making process, so that each new dentist has the ability to create a future so bright… you’ve got to wear shades!

Due diligence seems like a no-brainer when it comes to making important life decisions. However, horror stories abound on both sides of the equation,

8 Fall 2012 Dental Entrepreneur

whether buyer or seller.

We often hear at Pride Institute from new dentists who thought they were buying or associating in a practice with a “huge patient pool” only to find out that the active patient base (those patients who have been seen in the practice in the past 18 months) was hugely overestimated or that a major percentage of patients: • Were part of a reduced fee insurance plan • Had little or no treatment needs • Were the wrong age, social or economic demographic • Or were trained in bad habits and were in fact “bad patients” “Rose colored glasses” overvaluations can occur for many reasons, from the senior dentist not knowing their own practice statistics or from a perceived need to push the value in order to procure as much as possible for the sale of the practice and supplement retirement.

Another scenario we deal with all the time is when the senior dentist (mother or father, brother, sister, husband, wife) wants their new graduate family member to join the practice, whether the patient base can support more than one dentist or not. This is a difficult situation, as ultimately both the senior and junior dentist wind up with diminished potential for present and future income. Bottom line, the worst cases occur when, for numer-

ous reasons, both parties feel they got the short end of the stick, a lose/lose feeling by both.

The objective of proper due diligence and open communication about a practice is for both parties, in the end, to negotiate a win/win, best-case scenario, agreement. To achieve this, a great deal of information needs to be gathered by examining documents, interviewing the doctor and team, and observing the practice and systems. The major areas of evaluation include: • Operational Systems: scheduling, financial arrangements, insurance, new patient examination, continuing care, marketing, sterilization and inventory • Patient Records: chart or digital record • Patient Demographics • Facility: including technology • Staffing: job descriptions, compensation plan, morale, and staff meetings • Communication: patient and team • Statistical Evaluation: operational expenses, production, collections, new patient flow and case acceptance www.dentalentrepreneur.com

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• Goal Setting: for growth and continuous improvement When we work with graduating students or transitioning dentists in our Smart Start consulting/training programs, we utilize due diligence and onsite assessment checklists to make sure that no stone is left unturned. When you get ready to follow these checklists, it is important to remember that when talking with the doctor and team, note the tone, body language and any colorful aside comments in the answers. Your interviewing skills and interpretation of the non-verbal clues give you valuable insight into the practice. Let’s get you armed and dangerous with some questions you might not have thought to ask! Here are a few examples of what we look for in evaluating the above.

Scheduling 1. Ask the appointment coordinator, “When is the next opening for a crown appointment or significant treatment block?” “When can I first see the dentist as a new patient?” “Do the new patients enter the practice with a visit to the hygienist or see the doctor first?”

“Do you have a template for scheduling to a goal?” “Do you get out on time and/or have lunch on time?” “Does the doctor run on time, or is he/she usually running late?”

Answers to these questions provide clues to the busyness of the practice. If it takes over a month to get either a crown or a new patient appointment, this is an initial indicator of a practice that is overflowing and could need an associate. If you are a buyer, it indicates you’re going to be busy, as well, and will potentially need less marketing. Of course, also inspect the appointment schedule for balanced days, procedures performed, emergency times and coordination of hygiene periodic exams – all these leading to a productive, yet non-stressful, schedule.

Financial 1. The financial coordinator should be questioned about collections percentage and how he/she accomplishes that level of success or what the obstacles may be.

10 Fall 2012 Dental Entrepreneur

2. Are there written financial guidelines to follow? If so, review these looking for a systematic approach with enough flexibility to allow patients to receive their care yet keep financial stability within the practice.

3. Review the accounts receivable, noticing the health of the aging of the accounts and what portion is due to insurance.

4. Are they fully utilizing online communication strategies for insurance and billing activities?

Continuing Care 5. In the Continuing Care system: are patients pre-appointed? How many are in the system and are they in compliance? How many are overdue, and what are the follow-up procedures to contact overdue patients?

6. What is the Case Acceptance of Patient of Record out of the dental hygiene department?

7. Does this department provide minimally between 40-60 percent of the restorative diagnosis in the practice?

Insurance 1. What insurances are accepted in the practice?

2. What percentage of patients participate in these plans?

3. How much is the write-off to insurance compared to the practice’s Usual Customary Reasonable (UCR) fees?

4. How is treatment presented that is outside of the insurance maximums?

5. How efficient is the e-claims system?

6. Knowledge of the practice’s insurance mentality provides great insight into the team and doctor and their existing communication skills in influencing patients to accept appropriate care not covered by insurance. And of course, this can be an indicator of practice demographics and thus practice profitability.

Marketing 1. How many new patients are being appointed on a monthly basis? And where are they coming from?

2. How is the practice marketed? Ask to see any marketing materials including brochures, stationery and ads.

3. Visit the website and evaluate for interest, ease of use, information, Google placement and a host of other criteria for website effectiveness. What is your initial first impression?

4. Is there evidence of the team marketing internally – asking existing patient for referrals?

5. What is the relationship with specialists in the area?

6. Is there evidence of a social media/ online reputation management strategy?

New Patient Process 1. Observe a new patient telephone call.

Does it build relationships based on value? Is there a huge gap between inquiry and committed first appointment?

2. Observe a new patient experience to see if it is compatible with your philosophy of care, noting the questions asked, the establishment of relationship with the patient and, of course, the clinical data derived.

3. What type of treatment conference occurs after the clinical examination?

4. Is the practice measuring Case Acceptance and, if so, what is the percentage of case acceptance and what is the average cost of new patient treatment plans?

Patient Records 1. Review 10-25 patient records looking for evidence of quality of the record with such things as: a. Medical and dental history with updates b. Initial examination charting and treatment plans c. Evidence of high quality radiographs (digital?) d. Patient photos taken e. Periodontal examinations with evidence of periodontal treatment planning f. Record of treatment complete and thorough g. Uncompleted treatment easily found h. Currently in compliance with recare interval 2. Evidence of follow-up on delayed www.dentalentrepreneur.com

treatment. How many of the patient records you examined show evidence of uncompleted treatment? What is the dollar amount? Knowing this and extrapolating from this sample allows you determine an approximate amount of potential treatment sitting in patient records.

Patient Demographics 1. While reviewing the records, also note the age, demographic profile (if available) and whether an insurance patient.

2. And just simply observe patients in the practice. What do the patients look like? Do they seem happy and engaged? Or is the reception area filled with people tapping their feet and looking at their watches?!

3. What is the percentage of pediatrics in the practice?

Facility and Environment 1. First impressions count – trust your gut!

2. How many operatories and are they each fully equipped? Is technology up to date?

3. If you were an “inspector” (and you are!) what notes would you be writing on your clipboard to make your report?

Staffing 1. What is the ratio of staff to the number of patients and to the production level of the practice? Is there proper staffing or over/under staffing?

2. Note staff personality styles and the interaction they have with the patients and the doctor (and with you… does the staff seem excited to meet you?!).

3. Do the team members seem happy, motivated and busy?

4. Is there an employee policy handbook, job descriptions, formal and informal coaching opportunities?

5. Have to add this important one: Ask about compensation! You might get an earful!

Communication 1. Telephone skills of the front office when communicating with patients.

2. Influencing skills of the doctor and www.dentalentrepreneur.com

team with patients.

3. Evidence of effective and regular team meetings.

4. Is there a morning huddle as a playbook for the day?

This is a huge topic entailing many lines of communication in the practice with both internal as well as external strategies.

Statistics and Goals 1. The obvious of course: a. What is the gross production per month and per year (doctor and hygiene)? b. What is the collection percentage? c. How many working days for the doctor per week and hygiene days per week? d. What is the new patient flow per month?

2. Are production and collection goals set relative to the expenses for the practice?

3. Is the team aware of these goals, and do they participate in how to reach the practice goals?

4. If purchasing, have you seen the most recent cash flow and expense documents (P&L), and do they correspond to regional range norms as well as support the cash flow of the practice?

5.

These are just a few of the questions we insist are asked, and as you can see, there is a lot of information to gather in order to make an informed decision regarding your future affiliation with or purchase of a practice. Your approach should be one of curiosity - finding out as much as possible and evaluating the results of your investigation. Many young dentists feel that they do not have the right to deeply explore opportunities! Bottom line – as a professional, you have to. It would be negligent of us not to suggest the use of expert counsel in the evaluation of your future practice. Excellent transitions specialists, accountants, lawyers and consultants exist across the country to help you in establishing the appropriate value of a practice.

But the ultimate due diligence must be done by you. Accepting only the advice given by others is like ordering your wedding dress or tuxedo online from a description. You must try it on to see that it not

only fits, but is the right choice for the all-important day. The selling or senior doctor and team should welcome these questions and have many of their own for you (which is the subject of another article on your preparedness for the questions they will have of you). Only when everyone is fully informed and feeling right about the compatibility will it turn out to be the win/win relationship that everyone so desires. For more extensive advice and support in your transition, please refer to the link at the end of this article which will direct you to the “Ask Pride” section of our website.

These are challenging times for everyone.

You deserve to be given the best tools to secure the best future. ■ Mary Lynn Wheaton Director of Consulting & Amy Morgan CEO Pride Institute

Mary Lynn Wheaton, RDH, MA has twentyfive years of experience in all aspects of dental practice management and serves as consultant team leader at Pride Institute. She specializes in practice development, team building, group interaction and customer service and is known for providing interactive in-office training and dynamic workshops.

Amy Morgan, CEO of Pride Institute is a renowned dental consultant whose practice management curriculum has been adopted by a number of dental schools. Amy has been published in nearly every major dental publication. Since joining Pride Institute as a consultant in 1993, she has greatly enhanced its time-proven management systems to revitalize thousands of dental practices (both general and specialty) so they can become more secure, efficient and profitable.

For more information about our “Smart Start” consulting/training programs or our due diligence/onsite assessment checklists, please call (800) 925-2600 or email info@prideinstitute.com. For more information about Pride Institute visit www.prideinstitute.com.

Dental Entrepreneur Fall 2012 11

Business Fundamentals Tom Snyder DMD, MBA

Can I Afford a $700,000 Practice?

A

s dental education debts continue to rise, more graduates are feeling that it is an impossible goal to purchase a dental practice. With the average dental school debt as of 2011 at public institutions averaging $178,000 and those at private institutions averaging $245,000, it is no small wonder why today’s graduates feel that way!

However, the good news is that all of the major dental lenders understand your plight and Tom Snyder DMD, MBA are ready to loan money for a practice acquisition as soon as two years after your graduation. These lenders are in the business of providing funds for dental practice acquisitions because you are their market. The ability for recent grads to obtain sizable loans is a reality. Bank underwriters consider several factors; your credit, your amount of debt, your clinical production history and, most importantly, the financial condition of the practice you are purchasing.

Every entrepreneur has heard the adage, “You’ve got to spend money to make money.” The enormous benefits of acquiring a successful, profitable dental practice certainly can place you on track to retire your student debt comfortably as well as meet your financial obligations of purchasing a practice. Furthermore, if you have the clinical experience to produce in excess of $35,000 to $40,000 a month, start thinking out of the box and consider purchasing a $600,000 or $700,000 practice. In fact, you can purchase an even higher grossing 12 Fall 2012 Dental Entrepreneur

practice, especially if the seller remains after the sale.

When you purchase a successful practice, you are purchasing a dentist’s historical earnings. As long as you continue to maintain the practice revenue and eventually grow the practice, your financial success can be easily achieved.

Before the Great Recession, many banks were funding start-ups at a very high rate.

Recently, practice start-ups have declined, particularly in economically hard hit areas of the country. However, a start-up is still a viable career option in the right market. Yet, for many graduates, purchasing an existing income stream via a highly profitable practice is always a winning proposition.

When comparing whether a start-up option is preferable to purchasing an existing practice, you must consider the long term cumulative potential for wealth accumulation. To illustrate this point, assume that you purchase a $700,000 practice, which has a profit margin of 40 percent.

That equals $280,000 of income per year (before debt service). Over a 20-year period, without even considering any growth in your annual income, the total income you can generate over that 20-year time frame translates into $5.6 million. Let’s assume that you paid $500,000 for this practice (including working capital). The loan term is for 10 years at an interest rate of 6.0 percent. That translates into annual payments of $66,280 over the course of the loan. So is borrowing $500,000 for a practice that can produce potentially over $5.6 million in career earnings a worthwhile investment? The answer, of course, is yes. In fact, several banks now offer loan terms for 15 years, so affordability can be enhanced. For example, that practice

acquisition loan for $500,000 at a slightly higher interest rate of 6.2 percent over 15 years, would equal $51,018 per year over the loan term. So, you would reduce your annual loan payments by 23 percent annually.

Since many practice start-ups range from $250,000 to $400,000 (based on area of the country), the borrowing cost and perceived risk of a smaller loan may seem more attractive. However, if there are no patients at the onset, there is no income!

It will also take a considerable number of years for you to catch up to the earnings stream that you will be receiving from the first day of ownership, when purchasing a practice. In fact, you may never catch up as far as your lifetime earnings potential is concerned. Chances are, purchasing a profitable practice may still offer the best alternative for many graduates.

With interest rates still in single digits for the foreseeable future, the time is right for taking advantage of these market conditions that allow investing in a highgrossing practice a real possibility. Lower interest rates translate into more purchasing power for you! ■

Dr. Tom Snyder is managing partner of The Snyder Group LLC. A transition services consulting firm that specializes in practice valuations, practice sales as well as designing associate and partner relationships. He can be reached at (800) 988-5674 or email: tsnyder@snydergroup.net. The firms’ website is www.snydergroup.net

www.dentalentrepreneur.com

Wells Fargo Practice Finance

We’re here to help you take the next step

When you’re ready to purchase or start a practice, count on Wells Fargo Practice Finance to help you achieve your practice goals. · · · ·

Customized financing to help you acquire an existing practice or start one from scratch Competitive fixed rates with preferred pricing for ADA® members Expert project support by experienced practice financing specialists Complimentary business planning tools, educational resources and practice management consulting to help you successfully manage your transition to ownership

To get started, contact us at 1-888-937-2321 or visit wellsfargo.com/welcomedentists to request your free New Dentist planner.

Wells Fargo Practice Finance is the only practice lender endorsed by ADA Business ResourcesSM

ADA® is a registered trademark of the American Dental Association. ADA Business ResourcesSM is a service mark of the American Dental Association. ADA Business Resources is a program brought to you by ADA Business Enterprises, Inc., a wholly owned subsidiary of the American Dental Association.

All practice financing is subject to credit approval © 2012 Wells Fargo Bank, N.A. All rights reserved.Wells Fargo Practice Finance is a division of Wells Fargo Bank, N.A.

Business Fundamentals John McGill, CPA, MBA, JD and Dr. Charles Blair

The Future Of Dentistry (Part 1): How Will The Level Of Competition Change?

H

istorically, the goal of most dentists was to form a solo practice.

In recent years, this trend has shifted with more partnerships being formed than in years’ past. Coupled with the fact that many recent graduates prefer not to practice alone, the opportunities for partnerships as a career choice are definitely on the rise.

What does the future of dentistry hold? In our first installment, we examine how the John McGill, CPA, level of competition MBA, JD will be affected by the growing number of dental school graduates, longer dental careers, increased dental productivity, changing scope of dental services, introduction of Dr. Charles Blair paraprofessionals and changes in workforce laws and demand for dental services.

According to the ADA, the mean real (adjusted for inflation) net income of dentists has risen dramatically over the past 30 years. The average practice net income increased almost 68 percent from $140,000 in 1981 to $235,000 at its peak in 2007, before dropping to approximately $220,000 in 2009, the last year reported by the ADA, due to the economic recession.

Number of Dental School Graduates Increasing The dramatic increase in dental net profits and the poor economic outlook in 14 Fall 2012 Dental Entrepreneur

medicine were the biggest factors behind the significant increase in the number of dental school applicants. From 19902009, the number of individual applicants rose by 138 percent, or approximately 6 percent a year. Of the12,210 individuals who applied to dental school in 2009, the

last year reported by the ADA, 4,871 were enrolled for a 2.5:1 ratio. Applications may be peaking now, due to the high cost of dental education. Costs for some dental school programs (including living expenses) now exceed $450,000, which could require over $60,000 annually in student www.dentalentrepreneur.com

loan repayments.

The number of dental school graduates had previously declined from a peak of 5,756 in 1982 to a low of 3,778 in 1993, for a 34 percent drop. Since 1993, the number of dental school graduates has rebounded to 4,171 in 2000, 4,443 in 2003, and 4,873 in 2010, the last year reported by the 61 dental schools operating in the U.S. and Puerto Rico. With five new dental schools opening since 2000 and 12 more on the drawing board, it’s highly likely that the number of dental school graduates will once again top 5,000 within the next few years.

Number of Dentists Practicing Increasing Meanwhile, doctors are practicing longer, delaying retirement due to economic and lifestyle factors. Seventy is the new 65 in dentistry, as the number of doctors retiring at age 65 dropped dramatically following the 2008 stock market and real estate decline.

With more dental students graduating each year and doctors working longer, the number of professionally active dentists (actively licensed) has soared from 166,383 in 2000 to 184,578 in 2010, for an increase of 18,195, or 10.94 percent, over this decade. In comparison, the U.S. population has been expanding at a slightly slower pace than the number of dentists.

Accordingly, the U.S. population per dentist has declined from 2,254 in 1996 to 2,246 in 2009.

According to the 2010 ADA Workforce Model, the number of professionally active dentists is projected to increase to 195,267 in 2020 and 202,330 in 2030. However, since this growth is projected to be slightly lower than the overall population growth, the ratio of dentists per 1,000 U.S. residents is projected to decline from .59 in 2010 to .54 in 2030.

Another factor affecting the level of competition is the number of female dentists in the profession. According to the ADA, female dentists made up 21.56 percent of total dentists in 2009, up from 14.4 percent in 1999. Moreover, 47 percent of first year dental school classes are female now, up from 35.3 percent in 1999 and 15.6 percent in 1982. As a result, the percentage of female dentists is projected increase significantly to 29.2 percent of the dental www.dentalentrepreneur.com

The quality of dental school graduates and their productivity is substantially higher than in the 1970s and 80s. workforce by 2020.

A much higher percentage (30 percent) of female dentists were working on a parttime basis (less than 30 hours per week) in 1999, compared to only 14.7 percent of male dentists. This trend has changed somewhat in recent years due to economic conditions. We’ve seen an increasing number of female dentists now electing to convert from part-time to full-time to increase their family’s income. Yet, we remain convinced that a higher percentage of women will elect to work only parttime in the future, which will reduce the competition level.

Dental Productivity Increasing Aided by new technology, improved systems and treatment techniques, and a higher caliber of dental school graduates, dental productivity per doctor is increasing, adding to the effective level of competition. A decade or so ago, a dental practice grossing $1,000,000 or more was an elite status, achieved by only a handful of practices. Now, it is not uncommon to find solo general dental practices producing $1,000,000 - $1,500,000 per year or more.

Even after adjusting for inflation, the increased productivity is very impressive.

Certainly, new technologies have boosted the level of dental productivity. However, another little-noticed trend has yet to be recognized. The quality of dental school graduates and their productivity is substantially higher than in the 1970s and 80s. Back then, many dental school graduates were happy to produce $200,000 - $300,000 in their first year. Now, it is not uncommon for newly graduated dentists to be producing $500,000 - $1,000,000 annually within three years following graduation.

Changing Scope of Dental Services The future competition level will also be affected by the nature and scope of services provided and who provides them.

Historically, all dental services have been provided in the dental office either by or under the direct supervision of a licensed dentist. That’s changed recently, and even greater changes are expected in the future.

Tooth whitening services have been “peeled off” from the scope of services provided exclusively by a licensed dentist, or under his supervision. Efforts by state dental boards to prohibit tooth whitening (bleaching) centers operated by nondentists were struck down by the Federal Trade Commission (FTC) in December of 2011, on antitrust grounds.

Introduction of Dental Paraprofessionals The Surgeon General’s 2000 Report on Oral Health cited a pressing need for access to dental care for 17 million lowincome children. In response, two charitable organizations, the Pew Charitable Trust and the W.K. Kellogg Foundation, have funded projects recommending three new mid-level dental providers (dental therapists, community dental health coordinators, and advanced dental hygiene practitioners), similar to Physician Assistants (P.A.s) and Nurse Practitioners (N.P.s) in medicine, to attempt to address the unmet dental needs.

Alaska was the first state to allow licensed dental therapists. Alaska’s Native Dental Health Aide Therapists (DHATs) are providing dental services – including restorations, extractions and other surgical dental procedures – in remote tribal villages following two years of technical training and work under the direct supervision of dentists. Minnesota next approved the licensing of dental therapists in 2009 and at least six other states (New Mexico, Kansas, Vermont, Ohio, Washington, and California) are either considering such legislation or studying the issue.

While the ADA and state dental boards have universally opposed licensing dental therapists, it’s too early to determine how far and how fast this trend will spread.

Dental Entrepreneur Fall 2012 15

Changing Workforce Laws A change in workforce laws affecting dental hygienists and dental assistants will also affect the future competition level for dentists. Professional dental hygienist organizations are lobbying state legislators to expand their allowable duties to include administering nitrous oxide, local anesthesia, and providing laser therapy, as well as to practice without direct supervision of a dentist, or even independently, as Colorado now allows.

Likewise, expanding duties for dental assistants and expanded function assistants promise to increase the number of procedures which can be delegated to these staff members who perform them under the doctor’s direct supervision. That will allow doctors to increase production using the same staff and facility. This increased efficiency is essential to maintain acceptable profitability in the face of increasing managed care penetration.

Unfortunately, the introduction of dental paraprofessionals and expanded delegation of procedures to other dental staff will decrease the need for licensed dentists.

Accordingly, these factors will increase the effective level of competition in the future.

Demand for Dental Services The decline in profits for the average dentist in recent years shows that dentistry is no longer “recession-proof.” In evaluating the causes of the decline, the ADA found that while the gross billings (production) per patient visit had risen from $131.75 in 1996 to $176.72 in 2009, patients were delaying visits and treatment.

The percentage of the U.S. population visiting the dentist during the past 12 months had dropped from 41.2 percent in 2003 to 38.6 percent in 2009. Meanwhile, the average visits per patient per year had dropped from 2.05 in 1996 to 1.91 in 2009.

Also, dental services purchased during those visits also changed with fewer biggerticket, restorative procedures and more lowercost, preventative and diagnostic procedures.

As a result, dental spending declined for the first time ever in 2009, before increasing by 2.3 percent to $104.8 billion in 2010.

While the current economic recovery is benefiting practices nationwide, the declining role of dental insurance represents a 16 Fall 2012 Dental Entrepreneur

While the current economic recovery is benefiting practices nationwide, the declining role of dental insurance represents a huge negative effect. huge negative effect. Fewer patients have dental insurance coverage than in the past, and the coverage they have is paying for a small portion of the dental bills these days.

As a result, the average out-of-pocket payment for dental costs rose from $264 a year in 1996 to $325 in 2008. Higher out-ofpocket costs and declining real income levels for middle class patients have resulted in a dramatic increase in the percentage of patients with unmet dental needs due to affordability problems, from 8 percent in 1997 to 13 percent in 2010.

In the future, dentistry will benefit from the increased demand from a growing, aging population. The 65-and-older age demographic will grow from 12 percent of the total population currently to a peak of 20 percent in 2035. As patients age, they tend to spend more on dentistry. Seniors were forecasted to purchase 23 percent of total dental expenditures in 2006, rising to 28 percent in 2018, and 32 percent by 2030.

Unfortunately, most dental insurance coverage is employer-based, and basic Medicare does not cover dental benefits.

Since most seniors do not have employerbased coverage, they pay a much higher percentage of dental costs out-of-pocket (68 percent), compared to only 45 percent for patients 41-50 years old.

Political factors will also affect dental demand. Pediatric dental demand will increase once pediatric coverage is required in 2014 under health care reform.

Unfortunately, demand for big-ticket procedures will decline in 2013, once health care reform slices the maximum flexible spending account (FSA) limit from $5,000 to $2,500 annually.

The economic recovery and the growing senior population will increase demand for dental services in the future. However, affordability will be the key issue limiting growth, since real income increases will be nominal, out-of-pocket costs will increase, interest rates will rise as the economy improves, and taxes are slated to increase.

The significant increase in the percentage of female dentists, who are more apt to work only part-time, will help the competition level. However, increased dental productivity, more limited scope of dental services, introduction of paraprofessionals, more expansive workforce laws, growth of managed care plans and corporate practices, and restricted demand for dental services, leads us to believe competition in dentistry will increase slightly over the next five years.

“The above article was reprinted with permission from The McGill Advisory, a monthly newsletter devoted to tax, financial planning, investment, and practice management matters exclusively for the dental profession, available for $227 a year from John K. McGill & Company, Inc. Visit www.mcgillhillgroup.com or call 888.249.7537 for further information.” ■

John K. McGill is a tax attorney, CPA and MBA. He serves as CEO of The McGill & Hill Group, LLC in Charlotte, NC, and a partner with the law firm of McGill & Hassan, P.A. He is also President of John K. McGill & Company. Mr. McGill has been providing customized tax and business planning services exclusively for the dental profession for over 30 years.

Dr. Charles Blair offers strategic planning, coaching to new dentists regarding training on proper fee alignment, correct insurance coding, and analyzing practices, existing or recently purchased. His newly updated insurance coding handbook, “Coding with Confidence: The Go-To Guide for CDT 2009/2010” is available on his website at www.drcharlesblair.com. For more details, email him at charles@drcharlesblair.com or call 866.858.7596.

www.dentalentrepreneur.com

PRACTICE ExPERIEnCE . . .

WITH PATTERSOn DEnTAL

Revolutionize how youR team and patients expeRience dentistRy.

and o. 1 priority ts is your n en ti pa b done. g n jo e ti ea get th and that tr ur tools to yo re a we underst y g lo no ent and tech that equipm most of u need to make the vice and support yo ser e th ide ov antee. pr ar gu we this is why satisfaction ll as a 100-percent we as s, nt me est inv your practice

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le whether you are a small office or a large office with multip ists locations, our skilled sales representatives and special can assist you in providing expert dental care.

» The Patterson Advantage® member loyalty program » Patterson Technology Center training and support » Localized service from thousands of dedicated representatives across the U.S. PRACTICE ExPERIEnCESM WITH PATTERSOn DEnTAL. Call 800-873-7683 or visit www.pattersondental.com to start living your dental dreams.

Business Beyond the Classroom

Resource Guide

ADA Insurance Plans 888-463-4545 www.insurance.ada.org

Aspen Dental 877-330-1349 www.AspenDentalJobs.com

For loan collateral, debt protection, and financial security, dentists rely on the ADA Insurance Plans for best-in-class life and disability insurance, including free coverage for ASDA members during dental school. ADA members benefit from group rates that keep premiums low and hard to beat. GreatWest Life & Annuity Insurance Company insures the ADA Insurance Plans, and protects more than 130,000 dentists, dental students, and their families every year.

At Aspen Dental we recognize that our success is a direct result of empowering and supporting ambitious dental professionals. We provide a professional, fast-paced, entrepreneurial work environment based on a mutual respect that keeps our interests aligned together, we build and develop successful, patient focused dental practices. Please see our ad on page 5.

ADS Transition Specialists (888) ADS-4237 www.ADStransitions.com ADS is the nationwide leader in dental practice sales, associateships, buy-in/buy-outs, partnerships and appraisals. ADS is comprised of the industry’s most experienced professionals, including dentists, attorneys, and CPAs. We can help you with each step of your next transition. To view a complete list of practice opportunities available in your desired area, visit us at ADStransitions.com. Please see our ad on page 29.

ADS Transition Specialists South 770-664-1982 www.adssouth.com ADS South is the premier dental transition organization in the Southeast. We provide associateship placement, dental practice sales, appraisals, and expert testimony services.

Our company was founded over 26 years ago by Earl M. Douglas, DDS, MBA, BVAL, and we continue to control the cutting edge of transition technology. Please see our ad on page 23.

The Artist Evolution LLC Toll Free: 866-610-5334 www.theartistevolution.com The Artist Evolution is a full service, strategic marketing and design firm with a passion for helping practices around the country to communicate effectively with their target patients, to develop an identifiable brand, and to meet their objectives in a cost-effective way. Please see our ad on page 25.

18 Fall 2012 Dental Entrepreneur

Henry Schein Nationwide Dental Opportunities 866-409-3001 www.dentalopportunities.com Henry Schein Nationwide Dental Opportunities is the perfect solution for your Dental Associate recruitment needs. Call 1-866-409-3001 today to learn more about improving your opportunities for success. See our ad on page the back cover.

Henry Schein Professional Practice Transitions (PPT) 1-800-730-8883 ppt@henryschein.com www.henryschein.com/ppt Henry Schein Professional Practice Transitions (PPT) is the practice sales division of Henry Schein, Inc. Our affiliation with the largest dental supply company in the country—intent on servicing the practice buyer’s future supply, equipment and service needs―makes PPT the only company with a vested interest in the buyer and a career long trusted relationship with the seller. (Please see our ad on the inside back cover.)

MacPractice, Inc (402) 420-2430 MacPractice.com MacPractice DDS is the leading practice management and clinical application for dentists who prefer to use a Mac, featuring electronic insurance submission, Mac native digital radiography and photos, charting, Electronic Dental Records, Kiosk, Web Interface, iPhone Interface, speech dictation, and Mac stability and ease of use. Please see our ad on page 21.

www.dentalentrepreneur.com

AirForceReserve

@AirForceReserve

USAirForceReserve

Scan this QR code for AFR news, events and information

DEDICATION. COMMITMENT. SERVICE.

Serving part-time in the Air Force Reserve gives me experiences unavailable in my daily practice. It also provides additional benefits like paid CMEs and hands-ontraining. I learned dentists come in as officers and that the Air Force Reserve is offering generous signing bonuses. Best of all, I’m able to serve my country from where I live.

Text CHAT to 71212 to reach an advisor* 800-257-1212 • AFReserve.com/HealthPro Scan the QR Code with your smart phone for AFR news, events and information * M e s s a g e a n d d a t a r a t e s m a y a p p l y. Te x t C H A T t o 7 1 2 1 2 t o i n i t i a t e a n S M S c o n v e r s a t i o n w i t h a n A i r F o r c e R e s e r v e a d v i s o r. Te x t S T O P t o 7 1 2 1 2 t o o p t o u t . Te x t H E L P t o 7 1 2 1 2 f o r m o r e i n f o r m a t i o n . T h i s p r o g r a m e m p l o y s o p e r a t o r s w h o a r e p a i d t o p a r t i c i p a t e i n c h a t . H o u r s o f o p e r a t i o n : M o n d a y t h r o u g h F r i d a y, 8 : 0 0 a m t o 1 0 : 0 0 p m E S T. S e e p r o g r a m t e r m s a n d c o n d i t i o n s a n d p r i v a c y p o l i c y a t h t t p : / / s m s . a f r e s e r v e . c o m .

Business Beyond the Classroom Orascoptic 3225 Deming Way, Suite 190 Middleton, WI 53562 800-369-3698 www.orascoptic.com info@orascoptic.com Orascoptic has been designing and manufacturing awardwinning dental loupes and light systems for over 30 years.

Our purpose at Orascoptic is to assist students and clinicians in delivering better procedural outcomes through superior visualization. Renowned for quality craftsmanship, Orascoptic loupes deliver remarkable resolution over a deep and wide viewing field. Please see our ad on page 9.

Oxyfresh Worldwide Inc. 800-333-7374 ref# R23037601 aduff2@aol.com Since 1984 thousands of dental professionals have discovered Oxyfresh’s safe and effective oral health products for use in long-term care and maintenance of their patients. Retail sales, wholesale rebates and “free product” programs allow you to get paid appropriately for providing professional guidance and instruction to your patients. Ad on page 31.

PARAGON Dental Practice Transitions www.paragon.us.com 866-898-1867 Offices located Nationwide. PARAGON offers professional consultation and related services to healthcare professions with primary emphasis on the dental profession: comprehensive dental practice valuations (including a written valuation and analysis report); practice sales; pre-retirement sales; practice acquisitions; practice mergers; associateships; partnerships; practice consolidations and practice management.

References available by request. Please see our ad on page 33.

Patterson Dental Supply Inc. 800 873-7683 www.pattersondental.com Patterson Dental Supply Inc. is a full-service distributor of a complete range of dental products and services to dentists, dental laboratories, institutions and other healthcare providers throughout North America. As one of the nation’s largest dental distributors, Patterson Dental sells consumable dental supplies, digital and other dental equipment and practice management software. Please see our advertisement on the inside of the front cover and page 1.

20 Fall 2012 Dental Entrepreneur

Resource Guide

Patterson Advantage (800) 328-5536 www.pattersondental.com Patterson Dental, a leading distributor of dental products, equipment and technology in North America, is the largest business in the progressive, global Patterson Companies family of businesses. Dental professionals who partner with Patterson enjoy the convenience and assurance of relying on one trusted source for everything they need. Please see our ad on page 17.

Sirona Dental Systems, LLC 800-659-5977 http://www.cereconline.com CEREC AC from Sirona is the most advanced dental CAD/ CAM system available. With its Bluecam, capturing fast, precise digital impressions and then creating high quality esthetic restorations is a reality. CEREC AC delivers access to efficient, precise, scalable and affordable solutions, including CEREC Connect. Call 1-800-659-5977 or visit www.cereconline.com. Please see our ad on page 35.

United States Air Force Reserve 800-289-6695 AFReserve.com/HQ The Air Force Reserve offers dentists challenging part-time opportunities with lifelong rewards. Receive world-class specialized training with continuing education that will enhance your civilian opportunities. Gain valuable experience while caring for our nation’s finest. Special financial incentives available for some specialties. Discover where the rewards of service and healing take flight. Please see our ad on page 19.

Wells Fargo Practice Finance 1-888-937-2321 wellsfargo.com/dentists practicefinance@wellsfargo.com Wells Fargo Practice Finance provides customized financing supported by experienced specialists and practical planning resources to help dentists acquire, start and expand their practices. The only practice lender selected especially for ADA® members and endorsed by ADA Business ResourcesSM, we understand the business of growing successful practices and are here to help you achieve your goals.

Please see our ad on page 13.

www.dentalentrepreneur.com

Schedule DR (Digital Radiography)

Chart

N availoaw on thbele App S tore

MacPractice Interface for iPad/iPhone

MacPractice DDS Clipboard

MacPractice DDS

EDR (Electronic Dental Record) Orthodontic / Endodontic Charts

Notes

Attachments

MacPractice EHR Certification - MacPractice DDS 4.1 is 2011/2012 compliant and has been certified by CCHIT速, an ONC-ATCB, in accordance with the applicable certification criteria for Eligible Providers adopted by the Secretary of HHS. This certification does not represent an endorsement by HHS or guarantee the receipt of incentive payments.

CCHIT速 is a registered mark of the Certification Commission for Health Information Technology.

MacPractice 4.1 CC-1112-769760-1

Visit MacPractice.com or call (402) 420-2430 for product information, trade shows, presentations, screenshots and a demo.

Business Fundamentals kathleen M. Roman, MS

The Role of the Senior Dentist: Ethical and Risk Management Considerations

T

he case: Shortly after graduation from dental school, Dr. A was offered a job in the office of general dentist Dr. B. During the interview process, Dr. A had been candid about the fact that her husband was completing a medical residency and that her family would likely be leaving the state within the next 18 months. Dr. B was willing to accept a short-term employee, and both parties agreed to the arrangement.

While confirming the job offer, Dr. B had stated that he would pay for Dr. A’s professional liability insurance. He assured her that he would purchase a policy from the same insurance carrier that he used.

Subsequently, Dr. A inquired about the status of the insurance policy and was told that it had been taken care of.

At the end of her husband’s residency, Dr. A resigned from Dr. B’s practice, and she and her family moved to another state. Six months later, Dr. B was Kathleen M. Roman, sued by an angry MS patient. Dr. A was also named as a defendant. Dr. A contacted her previous employer’s office and requested a copy of her insurance policy, but no one responded to her requests.

During this same time period, Dr. A was in negotiations for an associateship. Her potential employer asked her for a copy of her proof of insurance from her previous employer.

In order to deal with both issues, Dr. A was forced to hire an attorney who contacted Dr. B’s office on her behalf and 22 Fall 2012 Dental Entrepreneur

demanded information about her malpractice insurance policy. At this point, Dr. B admitted that he had never purchased any insurance for Dr. A. Relative to the lawsuit, this meant that she had no insurance coverage. This lack of insurance also made her a less attractive job candidate since professional practices may be unwilling to hire individuals who have gaps in their professional liability coverage.

The attorney representing Dr. A demanded a copy of the patient’s records and was able to determine that Dr. A had never seen or treated the patient. As a result, he succeeded in having her dismissed from the case.

At one point, Dr. B stated that he had never promised to purchase insurance on behalf of Dr. A. However, he was unable to verify this statement because no formal employment agreement had been signed by the two parties. Fortunately, Dr. A had retained a copy of an email from Dr. B’s office manager, in which the office manager responded to a question about the policy purchase, assuring Dr. A that Dr. B had “taken care of it.” On the basis of that document, Dr. A’s attorney threatened to sue Dr. B for reimbursement of Dr. A’s legal fees and inconvenience. Eventually, Dr. B did reimburse Dr. A for her expenses.

Dr. A was lucky that she had never seen or treated the patient involved in the lawsuit against Dr. B. Had she been involved with the patient’s care, and depending on the severity of the case, Dr. A might have faced significant out-of-pocket expenses for legal fees and patient compensation.

Prevention: It was Benjamin Franklin who said, “Only play cards with gentle-

men – but always cut the deck.” A variety of topics may be discussed during the pre-employment interview process – but unless the results are formalized, at some point down the road neither party may be able to remember “who said what.” As such, the employment agreement should be documented in writing and signed by both parties.

Inexperienced job seekers may think it rude to ask questions about the inner workings of a potential employer’s practice.

But just as it would be foolish to buy a car without having any knowledge about its engine, mileage, or warranties, it is also foolish to blindly accept casual comments as contractual commitments. Over time, one or both parties may forget the details of the agreements or be unable or unwilling to comply with them.

In Dr. A’s case, she should have requested a written employment offer. Among other things, it should have specified her clinical duties; coverage schedules; production requirements, compensation and bonus plan. In addition, it should cover her supervisory role with respect to support staff and her participation in the development of practice policies and procedures.

Offers to purchase professional liability insurance for clinical employees are fairly standard in the dental profession. Potential employees need to know what kind of coverage will be purchased, generally either occurrence or claims-made. There are significant cost, coverage and termination differences between the two types of coverage, and job candidates need to understand that the price differences between the two are often dictated by the terms associated with each. www.dentalentrepreneur.com

For example, an employer may offer to buy a claims-made policy for a job candidate – and that may be acceptable to the candidate. However, looking into the differences between the two policy types, some dentists might prefer to have occurrence coverage. Even though it is almost always more expensive, an occurrence policy generally provides broader coverage protection and eliminates the need for the future purchase of tail coverage. In this case, the candidate might want to pay the difference between the claims-made coverage the employer would have purchased and the occurrence coverage. But, the information, including copies of any insurcandidate who knows nothing about the ance policies. Doctors should keep these different policy types won’t understand the policies in a safe place and should not disvariances and may lose the opportunity to pose of them if they change employers. In negotiate a more satisfactory arrangement. fact, insurance policies should be retained In addition to a written employment for the lifetime of the dentist. agreement, associate dentists/employees The hiring/senior dentist has an ethiADS.south209 2/25/09 1:42 PM Page 1 should always have access to their insurance cal duty to his or her younger colleagues,

Inexperienced job seekers may think it rude to ask questions about the inner workings of a potential employer’s practice.

including the duty to educate them regarding business processes, in addition to the clinical elements of dental practice.

Poor business skills and disorganization more often are the cause of professional dispute than intentional dishonesty, but the amount of grief generated is generally indistinguishable, regardless of the type of poor leadership that caused it.

Open communication, honesty and good documentation are essential to the beginnings and maintenance of a positive and respectful working relationship. ■ © The Medical Protective Company. 2012.

All rights reserved.

Kathleen M. Roman, MS, is risk management education leader for Medical Protective, the nation’s oldest professional liability healthcare insurer, founded in 1899. Kathleen can be reached at: kathleen.roman@medpro.com

Practice Makes Perfect “Dr. Earl Douglas and the staff at ADS South have been real helpful in steering me in the right direction in the purchase of my first practice. Dr. Douglas’s experience, organization and detail-orientation, pointed out to me where improvement is needed and how to go about achieving it.”

Elizabeth H. Guerrero, DDS Get off to the perfect start. Call your ADS transition specialist for AL, GA, LA, MS, NC, SC, TN and VA today.

ADS South (770) 664-1982 ADSsouth.com www.dentalentrepreneur.com

Dental Entrepreneur Fall 2012 23

Practice Builders Roger P. Levin, DDS

Creating Growth In The New Economy

I

n the course of presenting 100 seminars throughout North America each year, I encounter greater and greater numbers of young dentists concerned about the future of dentistry and their dental careers. This is hardly surprising. These doctors are graduating with record levels of debt and experiencing increasing difficulty becoming associates. They are also encountering something virtually unheard of in the past – banks

By Roger P. Levin, less willing to lend DDS money to dentists.

All practices in today’s economy also face a new consumer purchasing mentality.

Consumers now ask the following questions prior to making a purchase: • Do I really want it?

• Do I want it now?

• Do I want to buy it here?

This shift in consumer behavior has proved challenging for dentists when presenting cases. The number of rejected cases is increasing, and more patients are settling for less-than-optimal treatment.

I remind new doctors that, despite these daunting challenges, many in their field are not only surviving, but also thriving in the new economy. To young dentists concerned about the future of their careers, I make the following three recommendations: 1. Utilize The 3-Step Method For Accelerated Production Growth 2. Use Internal Marketing The Right Way 3. Outsource Everything Possible Utilize the Three-Step Method for Accelerated Production Growth After extensive study of other businesses to determine how top CEOs were addressing changing economic times, Levin Group created a new concept for dentists called The 3-Step Method For Accelerated Production Growth. This process allows

24 Fall 2012 Dental Entrepreneur

young dentists to quickly master the most important aspects of running a business and ensure that the practice will increase production on a continuing basis. It consists of: • Setting clear targets Creating defined targets gives practices clear indications of achievement. Targets allow all key areas of practice performance to be gauged accurately. For example, targets can include collecting 99 percent of all money owed to the practice, having 98 percent of all patients scheduled at all times, establishing a no-show/last-minute cancellation rate of less than 1 percent, etc. Once key targets have been identified, communicate them to all team members so that everyone in the practice can work together to make them happen.

• Designing systems to achieve the targets It is no longer enough for systems to simply get the dentist and team through the day. Systems today should be based on reaching established targets, or the practice may plateau or decline. When stepby-step systems are in place, production increases and stress – especially financial stress – disappears.

Every top CEO knows that if targets are not achieved, they have not done their job properly and, in some cases, may no longer have their job. Most young dentists will eventually own their practice and therefore enjoy absolute job security. However, the value of owning the practice depends entirely on how well the practices achieves its targets.

• Implementing excellent scripting to make systems work better Systems don’t run themselves. Smart teams have to administer them. And they must know what to say. Levin Group painstakingly reinvented how scripting works by going far beyond merely conveying accurate information. This new type of scripting is about the ability to influence people. Systems for scheduling, case presentation, customer service and collections are more effective when teams create value

for the office. Practices that implement value-creation scripting are enriching their systems to achieve desired targets.

Use Internal Marketing the Right Way Successful internal marketing enables practices to retain existing patients and gain new ones. Unfortunately, few practices know how to effectively implement internal marketing strategies. Often, one or two strategies are attempted periodically when the practice slows down. Such endeavors are never effective for long and require a great deal of effort with very little payoff.

Research from The Levin Group Data Center has demonstrated that most practices have less than 20 percent of their patients refer even one other patient each year. This is of concern for all dentists, given that the number of new patients entering dental practices has dropped by 30 percent over the last three years. In this new reality, internal marketing cannot be approached haphazardly. Practices are now dependent on the ability of internal marketing to bring new patients to the practice.

Young dentists should view internal marketing as a science – not a series of sporadic gimmicks used by practices to hopefully gain referrals. Correctly implemented, internal marketing represents by far the most powerful form of marketing dental practices can employ. External marketing, such as TV, radio and newspaper advertising, typically works just a fraction of the time – and at an enormous expense. Levin Group finds that 80 percent of the investment made in external marketing results in a monetary loss for dental practices.

On the other hand, effective internal marketing works most of the time – and with very little expense to the doctor.

Achieving the three crucial targets listed below determines the success of an internal marketing program: • 40–60 percent of patients refer at least one other new patient each year www.dentalentrepreneur.com

• 80 percent of family members of new patients also join the practice • A minimum of 15 strategies functioning together at all times No one particular strategy is critical to a successful internal marketing program.

Instead, a combination of 15 strategies leads to a “critical mass” of internal marketing activity that motivates patients to refer others to the practice.

Outsource Everything Possible Outsourcing means allowing expert advisors to handle work- or life-related issues.

For example, areas such as taxes, financial planning and real estate acquisition can be handled by outside experts such as accountants and attorneys. This immediately decreases the burden on young dentists and will help them avoid costly mistakes.

Making decisions without expert guidance can result in bad associateships, con-

Practice Image Builders does exactly what our name says: We build the image of your practice by providing you with a practice brand and identity, building your website, and providing you with all the marketing materials necessary to connect with your patient and referral community – at an affordable cost.

Comprehensive Branding and Identity Package

$7,900

Logo • Business Cards* Letterhead/Envelopes* Referral Brochure* Appointment Cards* Practice Overview Brochure* Website Design/Development Exterior Signage Graphics Your Comprehensive Branding and Identity Package includes all graphic design, brand consulting, copy writing, web design and hosting, and printing and shipping of 1,000 quantity* of each of all marketing materials.

For more information, contact The Artist Evolution, LLC at 866-610-5334 or visit www.practiceimagebuilders.com

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tract and legal problems due to misunderstanding legal ramifications, overpaying for a practice, staff issues, etc. Many young dentists attempt to personally handle these activities to save money, but they end up costing themselves a great deal more in money, time and trouble.

Being properly advised will eliminate most serious problems that will arise in dental practices. I strongly recommend paying for expert advice early. It is far more cost effective for dentists than dealing with problems when they occur at a later time.

Just as patients rely on your expertise for dental care, you should do the same in areas outside of dentistry.

Conclusion Young dentists have greater debt and more competition than their colleagues in the past. Despite these challenges, they have no reason to be discouraged. Highly successful practices are being built at this very moment. Consequently, there is no reason why young dentists should accept diminished success as the new “normal.”

Top practices use proven business principles to operate not only as excellent practices but also as excellent businesses. This distinction must be understood. Young dentists who enter practice today with great clinical skills and wait for the practice to simply grow on its own will find themselves greatly disappointed.

Dentistry will continue to behave more like traditional businesses and those doctors who routinely implement new systems and innovation can avoid persistent and longlasting plateaus or declines. Remember that the recession changed the rules and created stress for every type of business.

Young dentists who are prepared for the new economy with tools such as The 3-Step Method For Accelerated Production Growth will be able to experience success throughout their careers. ■ To learn how to run a more profitable, efficient and satisfying practice, visit the Levin Group Resource Center at www.levingroup. com. You can also connect with Levin Group on Facebook and Twitter (@Levin_Group) to learn strategies and share ideas.

Dental Entrepreneur Fall 2012 25

Practice Builders By derek champagne

Building Your Personal/Professional Brand through Social Media

Start Building Your Own Brand Now that Will Benefit Your Dental Practice Later

W

e all understand that building your practice brand is important, but have you considered that building your personal brand may be valuable as well?

And have you considered that you should begin building your personal brand now?

Your personal brand is what people (specifically your target employers, colleagues, business partners, community leaders, and Derek Champagne future patients) will learn about you when they search for your name online.

Now more than ever, personal branding is important to most dental/medical and nonmedical professionals. Perhaps you will be considering an associate position in a private practice or even partnering with a colleague to purchase a practice. Aside from traditional protocol, including verifying credentials and letters of recommendation, you can be certain that your future employer, bank loan officer, partners, and patients are going to Google you! So be proactive now to shape perception by building your personal brand.

What is a brand? Your brand is simply what people (most importantly your target) know about you. Here are 3 brand building questions: What does your target know about you? What is your personal brand “equity” (value)? Is your brand identity a proper reflection of what you want to represent? What will show up if someone searches for you? Your value in Google search engines is referred to as your “Google quotient”. A good way to check your quotient is to refresh your browser and then type your name in quotes into Google. Can you find you? If 26 Fall 2012 Dental Entrepreneur

not, I recommend that you begin building your brand intentionally.

If your name does appear, take a good look at what comes up and ask yourself – Is your brand identity a proper reflection of what you want to present about yourself? You don’t want inappropriate pictures on social media or any kind of negative content associated with your name. I highly recommend that dental students begin their own brand building with social media immediately. The goal of brand building in social media is to be recognized, to shape perception, and to

increase networking and communication.

Here are some ways to start building your brand with social media: • Create a personal website or blog. One of the best tools you can utilize is a blog – so start blogging. Blog about what’s happening in your community, any special awards you have received, success stories, and new innovations in the field you are pursuing – basically anything that helps build your personal brand.

• Utilize video and image sites to post www.dentalentrepreneur.com

online presentations and videos – Slideshare, Scribd, YouTube, Vimeo, etc.

• Utilize multiple social media networking: Join Facebook, LinkedIn, Twitter, and Google +.

• Purchase a few domain names associated with your name. I recently heard a story during a new dentist committee workshop where a fellow student had purchased the domain names of all his fellow students without their permission. You should reserve your name if possible (myname.com, myname.net, other) and a practice name that reflects your own name and specialty (mylastnamefamilydentistry.com).

Consider the following to help shape your personal brand: First of all, be intentional. You should have a goal in mind and know where you are going. Each action you take should be intentional. Focus on your personal vision and present yourself towards that direction.

Social media sites are a great place to network, join dental networks, and share achievements. Some examples of what to share with your brand on social media are your involvement in community service, mission trips, and other fun and interesting things about yourself. Don’t share overly personal information, but be personable.

Next, make sure you stand out. You want your social media circle to read and respond positively to your activity. In order to successfully do this, your following must perceive your personal brand in a distinct way. One way your brand will stand out from the competition is by your unique messaging strategy. All of your personal communication efforts should be aligned with your brand and your specific goals. When crafting your personal message strategy, present yourself clearly and dynamically, and in an honest way.

Finally, social media is ever changing as new technologies and platforms continue to emerge. Keep yourself informed on how to stay relevant. Be aware of new social media networking sites, apps, and tools that are relevant to your industry niche (i.e. Pinterest, Path, etc.). Staying up-to-date on the latest innovations on the web and implementing a strong message strategy can help maximize your online presence.

Facebook is certainly the most utilized www.dentalentrepreneur.com

social media site. Your presence on Facebook can be key ininteracting with future employers and patients. Take care in how you present yourself on Facebook. First of all, start a professional page or group. Create a vanity URL with your unique name. Post on your page regularly with interesting content, images, videos, and links that encourage interaction from your Facebook following.

Utilize feeds to populate content. Consider promoting your professional page to reach more of your friend base. Overall, make sure you are participating in your niche community – both on and offline.

Twitter is another valuable tool for brand building through social media. In order to use this tool effectively, you should under-

Now that you have created social media accounts that are showcasing your personal brand, it is important to manage your online reputation. stand how it works and know what you want to do with it. Why are you Tweeting? For social reasons, business reasons – or both?

You are limited to 140 characters in a Tweet, so make sure you are sharing the most compelling content. Be genuinely interested in others and ask questions about their hobbies, career, etc. Tweet unusual, groundbreaking information and/or links, videos, and images that stand out from the mundane posts.

Facebook and Twitter are not the only social media sites out there. There are multiple other sites you can use to build your brand. Some of these include: YouTube, LinkedIn, Google +, VisualCV, your personal website and Google profile, and blogs.

Actively contribute to social media communities within your industry showing that you are up-to-date with relevant trends and news.

Now that you have created social media accounts that are showcasing your personal brand, it is important to manage your online reputation. You should be careful to main-

tain some level of personal privacy and be careful not to blur the line between contacts and friends. Control the content that appears on your social media pages – un-tag or remove material that does not reflect the image you want to portray professionally.

Always think before you post, anytime, anywhere. Be proactive in managing your own reputation before something negative occurs. Delete the negatives if possible.

If you are not able to delete, address the negatives: acknowledge what has been said, restate your personal brand values, and have a friend or colleague restate positives about you. Monitor your reputation regularly.

Check out Google’s “Me on the Web” or Google Alerts to be notified when your personal data appears on the web and take action to remove unwanted content.

Here are some tips on how to maximize your presence online: • Keep your profiles consistent throughout each social media platform: brand messaging, images, etc. A useful website for finding available usernames across all of your social media platforms is www.namechk.com.

• Include social media links on your email signatures, printed materials, etc.

• Include a QR code on the back of your business card that links to your key social media site.

• Utilize management dashboard tools such as Hootsuite or Tweetdeck to simplify posting to multiple social media accounts at one time.

• Remember the major goals in brand building on social media – being recognized, shaping perception about your personal brand, networking, and communicating effectively with your targets. ■

Derek Champagne is a strategic marketing consultant who specializes in developing, executing, and managing marketing campaigns. He is also the managing partner of Practice Image Builders, a company that specializes in developing medical brands, as well as building websites and social media platforms for practices nationwide.

Derek holds a BS in Business Marketing, as well as a Masters in Business Administration. He can be reached at (866) 610-5334 or email:Derek@ practiceimagebuilders.com.

Dental Entrepreneur Fall 2012 27

Power To Succeed Ryan C. Dulde, DDS

Begin With The Patient In Mind

I

n a recent issue of the Proceedings of the National Academies, Nathan Mlot, a Mechanical Engineer at the Georgia Institute of Technology, published an article about fire ants. While a single fire ant struggles when exposed to water, a group of the same fire ants when working closely together can float effortlessly for days. The ants accomplish this by literally linking their bodies together. The fire ants actually create “waterproof rafts,” and as a whole the rafts are significantRyan C. Dulde, DDS ly more buoyant than an individual fire ant floating alone – much like a happy, productive dental team can outperform an unhappy dental team any day of the week.

The life of a dental student is rather selfish, isn’t it?

Seriously, think about it... After countless hours of your day spent in classrooms and clinics, the remainder of your time is usually allocated to studying and lab work. With so much of your schedule and energy monopolized, the most important people in your life get the short end of the stick – a version of you that’s devoid of energy and propped-up just long enough to make an appearance.

Home life suffers during an exam-heavy week as dirty laundry and dishes pile up.

Plants and pets are lucky to survive a finals week! Though you may not realize it, your decision to pursue a dental degree obligated those around you to years of sacrifice and compromise toward your cause.

Now, please don’t take this the wrong way. The nature of the “dental school” beast demands a level of selfishness. It’s a reality

28 Fall 2012 Dental Entrepreneur

all dental students share, and my story was no exception. Like you, my success as a dental student was defined by my ability to improve and advance my skills. It was a system that legitimized self-mindedness, and even rewarded it. For a long time, the primary mission was simply to work on me.

Then I entered the private practice world, and all the rules changed.

As associateship interviews approached, I began nailing down a few priority items I was looking for in a prospective practice.

The list included a great staff, a boss interested in mentorship, a thriving business with ownership opportunity and an overall compatibility with the practice philosophy

and style. The criterion that rose to the top of my list, however, was “the patient experience.” Thinking about my own experiences as a patient, I wanted to work for an office that, without question, kept its patients as the primary focus.

During the course of interviews, I encountered practices that ran the gamut – a few were more staff-centered or money-centered, and some were, well, “My most recent vacation”-centered. I did find, however, a few offices that seemed to concentrate on the patient experience, first and foremost.

Fortunately, the opportunity to join one such office arose. In the whirlwind of my transition from residency to private practice,

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I almost overlooked the true significance of what I had discovered.

I was beginning a new game, with new rules. In order to succeed in this new system, I would need a whole new mindset. Unlike the student experience, success would no longer be a function of things I did for me. Success, from this point forward, would depend on my ability to be patient-centered. A patient-centric practice philosophy positions the patient as a singular center, and then derives all aspects of the practice from that center. In other words, consideration for the wants and needs of the patient permeate every aspect of practice behavior.

A patient-centric philosophy is a simple concept, but “simple” and “easy” are two completely different things. The challenge to “think like the patient” can be formidable for an emerging practitioner. The new dentist’s mind is already quite busy just trying to “think like a dentist”! Making that critical shift from a self-focused to a patient-focused mindset is not easy. However, I believe it is

the most impactful way to squarely position yourself on a path to successful practice, and to get moving down that path. The sooner you overcome this mental hurdle, the better!

The Patient-Centric Business While good customer service is standard, few practitioners conceptualize it to the extent that the value of customer service actually shapes and defines the practice.

Generally, the dentist starts by establishing the practice as he/she sees fit. Then, he/ she begins tweaking his/her administration and management of the practice as a result of trial-and-error, good advice from colleagues, and something she learned from a continuing education course. Eventually, through experience enough positive changes have been implemented so that patients are satisfied. This is an ego-centric approach, in which the practice is created by the doctor for himself/herself and retrofitted to the patients’ needs. The patient-centric mindset takes the polar opposite approach, creating the practice for the patient from the very

beginning. While the two philosophies could yield similar end results, the conceptualization of the patient-centric practice is entirely different.

In his instant classic, The E-Myth Revisited, Michael Gerber contrasts the entrepreneur and technician mindsets. He describes the “Fatal Assumption” as the belief that one understands a business that does technical work because one understands the technical work itself. Dentists seem exceptionally susceptible to this line of thinking.

The technician applies an ego-centric mindset, responding primarily to the needs of himself/herself; the entrepreneur applies a patient-centric mindset, responding primarily to the needs of the customer.

The challenge for new dentists entering business is two-fold: 1) Obtain the knowledge needed to function effectively as an entrepreneur and manager, and 2) Resist the urge to abdicate away your business in order to play the comfortable role of technician.

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Dental Entrepreneur Fall 2012 29

The Chair-Side Mindset As a fresh face in an established practice, building my patient base relies on the relationships I establish at new patient exams.

Thinking that I was winning patients over, I was actually making a mistake that many students and new grads make: my new patient exam was a miniature version of a dental school lecture. At some point in the conversation about the pros and cons of various dental materials, the eye contact from the patient fades. The patient isn’t asking questions. We’ve run out of time. I walk away thinking, “Wow, I think I really nailed it.” I totally did not nail it. I can’t thank my business manager enough for calling me out on this early Who knows how long I could have gone on like that?

My new patient exams were ego-centric.

I was doing that exam for me. I was more concerned with demonstrating my knowledge of dentistry than how to tailor the message to perfectly suit the patient’s wants and needs. I was processing treatment plan options out loud, probably leaving my patient feeling confused and overwhelmed.

With some coaching and the adoption of a patient-centric mindset, my new patient exams now revolve around the short- and long-term benefits of treatment, rather than the properties of various ceramics.

Patient-Centric Conflict?

In more than one interview, I was questioned about conflict. Do you see any value in it? How do you handle it with a staff member? How do you handle it with your boss? The best answer I have is that which derives from the principle of patient-minded practice: “If we’re truly 100-percent patientfocused and patient-centered, I just don’t see how there can be any room for staff conflict that isn’t constructive or beneficial for the patient experience”.

This response was met with overwhelming signs of approval from the entire team.

If everyone commits to making patients the central focus, internal conflict is more than just a squabble. It’s a damaging violation of the practice’s core value. A credible and consistent leader, rooted in patient-centric philosophy, has the power to swiftly diffuse conflict.

In summary, gone are the days when patients were referred to as “my denture30 Fall 2012 Dental Entrepreneur

“The Entrepreneurial Model has less to do with what’s done in a business and more to do with how it’s done...

[It] does not start with a picture of the business to be created but of the customer for whom the business is to be created. It understands that without a clear picture of that customer, no business can succeed.”

Michael Gerber, The E-Myth Revisited over-partial” rather than by name. The new challenges ahead will require a new patient-centric mindset. Make the patient experience your first concern, and your long and happy career will be off to a successful start. ■ Dr. Ryan Dulde is a general dentist in Milwaukee, WI. He earned his D.D.S. in 2011 from Marquette University School of Dentistry.

Following dental school, Ryan completed an AEGD residency program, providing dental care to the Navajo Nation in northern Arizona. He is a former Speaker of the House and board member for the American Student Dental Association (ASDA). Dr. Dulde is also a former delegate to the ADA House of Delegates and Wisconsin Dental Association House of Delegates. Ryan is passionate about leadership development for emerging dentists, frequently speaks on leadership topics, and is co-chairman for ASDA’s upcoming 2012 National Leadership Conference. In addition to Dental Entrepreneur, Ryan enjoys writing for DentalCompare (www.dentalcompare.com), his blog Excursives (www.excursives.com), and various dental newsletters and publications.

Contact Ryan at duldedds@gmail.com.

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If you have any questions, comments, or responses to our magazine, please connect with us on Dental Entrepreneur Magazine — our official Facebook page!

Read us online www.dentalentrepreneur.com Send your questions or comments to aduff2@aol.com www.dentalentrepreneur.com

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Power To Succeed Josh Turnbull, DDS and Matthew Lingenbrink

Good to Great: What Elite

Practices Do Differently

J

im Collins’ best-seller, Good to Great, graces almost every top-10 list of best business books of all time. If you haven’t read it, you should (and no, we are not on commission). I remember reading the book years ago when I was working with Dr. Gordon Christensen on publishing our study, The Business Side of Dentistry, and thinking, “I wonder what set of factors separate top practices from the underperformers.” What is their secret sauce?

After enrolling at Harvard Business School, this question was still burning within me, and I decided to team up with a classmate, Matthew Lingenbrink to figure it out.

Matt was a management consultant at Bain and Company for the past four years, where he worked with executives from Fortune 500 companies on operational improvements and strategy. Over the past year, we interviewed practices across the country and are happy to share with you what we have discovered.

What is a Top/ Elite Practice?

We define an elite practice as one that Josh Turnbull, DDS fulfills the following three criteria: (1) it produces more than $1.5 million in revenue per dentist; (2) its employees score at least an average of 9 out of 10 on a Satisfaction/ Matthew Lingenbrink Promoter Score1; and (3) it is highly profitable (with a minimum of $500,000 net income per dentist annually).

32 Fall 2012 Dental Entrepreneur

What is Their “Secret Sauce”?

Although each practice was very different, we identified the following five factors that are clearly noticeable in elite practices and are often missing from underperformers: 1. Vision/Mission Statement A vision statement describes your company’s long-term goal. A mission statement describes what you stand for. All great companies in the world are guided by a vision/mission statement. Top practices understand this and are much more prone to invest the time to develop one and make it an active influence in their practice. They understand that vision/mission statements inspire patients and motivate staff to invest themselves in the practice. They imbue both patients and staff with a greater sense of pride in their association with the practice.

And they set the strategic direction, define the culture and underpin the systems and processes that help the practice stay on course.

Top practices are also much more likely to have a clear set of core values. Research has shown that shared values create increased

employee loyalty to their organization, motivation to do their work, satisfaction with their lives and a sense of unity and esprit de corps. Companies with strong corporate values outperform those without – generating four times the revenues, seven times the job creation, twelve times the stock price and 750 percent improved profit performance2.

Vision statements are typically developed by the founder and owner of a company (i.e., the dentist). Mission statements and core values are often developed together with the members of a team. We have seen practices take a staff trip or dedicate an evening in the practice where they order in food to hash out and share ideas to create their mission statement and core values.

Involving the staff in the creation process is crucial, because they feel like they own it.

We recently witnessed one of these meetings and found it to be a very energizing, teambuilding exercise.

Creating a real, breathing vision/mission statement that has a sustained impact on your practice can be challenging. Followthrough is critical. We have seen the following from top practices: www.dentalentrepreneur.com

• Select a core value to focus on for the week and read it in morning huddles.

Provide an award in the Monday morning meeting to the employee that best demonstrated that value the prior week.

• Post the practice vision/mission statements and core values somewhere visible for staff and patients to see – in the waiting room for patients, in meeting and break rooms for staff, and on the practice website for the general public.

• Read customer reviews in morning huddles and highlight how they reflect core values.

2. Great Leadership Dentists of top practices are not always energetic, gregarious and charismatic, but they are very good at motivating their people. Here are three ways in which we saw them do so: a. Pride and Impact: Top practices have very distinct cultures that flow from their vision/mission statements. They have high standards of excellence and people feel fortunate to be a part of them. There is also a very innovative spirit about these practices and a focus on continuous improvement. People are expected to bring their best ideas and there are systems to encourage and reward the behavior. b. Rewards and Recognition: Com-

Vision statements are typically developed by the founder and owner of a company (i.e., the dentist). pensation is necessary to keep your employees around, but not to keep them motivated. In fact, even wellpaid employees can be unhappy if not properly recognized. Top practices are very good at regularly recognizing their people for achievement and effort. From our interviews, we found that personal recognition was a much more powerful motivator than financial bonuses or rewards. c. Professional and Personal Development: People need to feel stretched, even when they do not realize it. Doctors of top practices set the expectation that their staff continually improves in their profession – encouraging them to read the latest dental literature, share their learnings in team meetings and pursue the latest continuing

education (CE) courses. They also regularly sponsor staff throughout the office to attend CE courses.

3. Constant Focus on Goals and Metrics It has been said, “Goals that are not written down are just wishes.” Although each practice differs in the metrics it tracks, the top practices have a much sharper and consistent focus on measuring and following up on goals and metrics. However, it is very important to point out that the top practices we observed have all been in business for over a decade and have put patients before profits. As such, their goals do not affect the way they treat patients. They simply help push them to work more efficiently, market more effectively, etc. Here are some of the goals/metrics top practices set/track that underperformers often do not: • Production: Yearly/monthly/daily production. Also, production per hour for each provider. This latter metric is one of the most significant because it measures efficiency and helps identify variability by provider.

• Marketing: New patients, source of patient referrals, ROI from each method.

• Utilization: Cancellation/no show rates, percentage of patients with appointments scheduled.

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Dental Entrepreneur Fall 2012 33

• Clinical Treatment Planning: Treatment acceptance rate, SRP treatment percentage.

Top practices are very good at identifying trends, diagnosing holes and dips and working hard to constantly exceed goals and improve.

4. Clear Roles and Responsibilities It’s no secret – dentists are not good at holding their staff accountable. Part of this stems from the fact that they are unsure what people should be accountable for.

Top practices have very clear roles and responsibilities and typically have regular performance reviews (at least semi-annually). Great dentists at top practices strike a good balance of rewarding employees when they exceed expectations and being willing to let them go if they are chronically underperforming.

5. Exceeding Patient Expectations The little things mean a lot to patients.

The after-hours phone call to see how they are doing after a difficult or long visit to the practice. The hand-written thank you

We are convinced that if practices focus on these five principles, they will move the needle from average or good to great. card for referring a friend. The extra time spent on a new patient exam to get to know the patient and address her chief concern.

Greeting the patient by name and with a smile. Remembering things in his personal life. These are the things that patients do not expect – and love. These things convert them from passive patients to evangelists for your practice.

These five principles were common themes apparent in many top practices. We are convinced that if practices focus on these five principles, they will move the needle from average or good to great. These principles are powerful and will bring a greater sense of excitement and purpose to you and your staff. ■

1 A Satisfaction/Promoter Score measures employee motivation and satisfaction. Employees are asked a series of questions, which include: “On a scale from 1 to 10, with 10 being the highest, how likely would you be to recommend a friend or colleague to work here?” and, “On a scale from 1to 10, how likely would you recommend someone to get be a patient and get treatment here?

2 Kouzes, James, Posner, Barry. (2007).

Leadership Challenge (4th Edition).

San Francisco: John Wiley & Sons. (pp. 79-80).

Dr. Josh Turnbull: Graduated from Harvard School of Dental Medicine, cum laude, before attending Harvard Business School.

Has worked with dentistry’s leaders, including Gordon Christensen, with whom he published a featured article, “The Business Side of Dentistry”, in Dentistry Today. Josh is an entrepreneur, having grown a company from scratch to 50 employees before attending Harvard.

Matthew Lingenbrink: Consultant at Bain and Company, the world-renowned consulting firm, where he helped leaders of Fortune 500 companies with strategy and operational improvement before attending Harvard Business School. He also graduated magna cum laude with a masters degree in Accountancy from Brigham Young University.

34 Fall 2012 Dental Entrepreneur

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Today, patients and staff alike expect their dental practice to have the advanced technology that makes procedures faster, healthier and less painful. Will your practice evolve with your patients – or will you be left behind?

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Dental Trade Shows 153rd ADA Annual Session October 18 – 21, 2012 San Francisco, CA Greater New York Dental Meeting November23 -28, 2012 New York, NY Yankee Dental Congress January 30 – February 3, 2013 Boston, MA 148th Chicago Mid Winter Meeting February 21- 23, 2013 Chicago, Il 101st Hinman Dental Meeting March 21 -23, 2013 Atlanta, GA California Dental AssociationSpring Session April 11 – 13, 2013 Anaheim, CA

National Dental Student Lobby Day ASDA members can make a difference by lobbying for dental legislation. Attend National Dental Student Lobby Day in Washington, D.C., April 15-16, 2013. The event is co-hosted by the American Student Dental Association and the American Dental Education Association. Register

by March 13 at www.ASDAnet.org.

ASDA’s National Leadership Conference The American Student Dental Association is hosting its first-ever National Leadership Conference, Nov. 2-4 in Chicago. The event will provide leadership training to dental students across all years. Other benefits of attending: Experience training in people management, public speaking and presenting, personal finance, practice negotiations, mentoring others and more • Build leadership skills that will be beneficial throughout their dental careers • Increase the understanding of key issues in dentistry and dental education • Build relationships with exhibitors to fulfill current and postgraduation needs Dental Entrepreneur: Business Beyond the Classroom will be there to meet the leaders attending. Please look for us!

Index of Advertisers ADS Dental Transitions South........................................................................................................ 23 ADS Dental Transitions…………………………………………………………….................................... 29 Artist Evolution............................................................................................................................ 25 Aspen Dental................................................................................................................................. 5 Henry Schein ............................................................................................Inside back and back cover Lightspeed.................................................................................................................................. 35 MacPractice................................................................................................................................ 21 Medical Protective....................................................................................................................... 13 Orascoptic..................................................................................................................................... 9 Oxyfresh...................................................................................................................................... 31 Paragon...................................................................................................................................... 33 Patterson...............................................................................................Inside front cover and page 1 Patterson Dental Supply............................................................................................................... 17 Sirona........................................................................................................................................ 35 US Air Force Reserve.................................................................................................................... 19 Wells Fargo................................................................................................................................. 13 36 Fall 2012 Dental Entrepreneur

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Are you fully prepared for your professional journey?

Transitioning a career takes planning. Have you taken steps to ensure that you will make the right decision when retirement is at hand? Do you know what it takes to plan an exit strategy?

Sell a practice? Hire an associate? Bring on a partner?

It takes expert guidance from a team of people who have your best interests in mind.

Henry Schein Professional Practice Transitions (HSPPT) provides a full range of nationwide dental practice brokerage, practice valuations and transition planning services to help dentists achieve their professional goals. HSPPT will support you with practical advice and customized strategies that will ensure your success.

• Appraisals • Practice Sales and Purchases • Associateships, Partnerships and Mergers • Retirement Planning • Business Structure Consulting

Speak with a Henry Schein Practice Transitions Consultant today!

1-800-730-8883 Henry Schein Financial Services is not a bank, does not represent itself as such, and does not conduct banking activities. © 2012 Henry Schein, Inc. No copying without permission. Not responsible for typographical errors.

or e-mail: ppt@henryschein.com www.henryschein.com/ppt

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recruitment and placement needs • Providing the skills and facilities to place Associate candidates in private practice, clinics, and dental organizations of every category • For Associate candidates as well as employers • Associate recruitment and placement programs are proactive, efficient and results driven • Experienced professionals give personal attention to all the details of the search and placement process

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