Dental Entrepreneur - Spring 2011 Issue

entrepreneur

10 Tips for Young Dentists When to Start Looking for a Practice to Purchase The “Secret� to Increasing Profits in the Growing Practice!

class of 2011 | spring issue

dental

Business Beyond the Classroom

PArtnerShiP. integrity. INNOVATION. At Patterson Dental, we are proud to connect you with innovative tools and resources so that you can focus on providing expert dental care.

Patterson Dental is the company you can call on for everything from operatory equipment, digital X-ray products, dental practice financing and innovative CAD/CAM impressioning solutions as well as the service and support to seamlessly integrate these technologies into your practice.

As the dental industry has evolved and practice needs have expanded, we’ve grown to meet your needs, with 88 branch offices nationwide and more than 1,500 sales representatives and equipment specialists in the U.S. and Canada.

Let us be your partner in providing everything you need to excel at dentistry.

Contact your Patterson representative, local branch or call 1-800-873-7683

dental

entrepreneur Spring 2011 Volume 13, Issue 2 Editor & Publisher Anne M. Duffy RDH Assistant Editor Michael Duffy Brad Beauchamp Production/Accounting Kitty Beauchamp Director of Advertising Linda Hart Editorial Board Dr. Gene Heller Scott Mahnken Allen Schiff, CPA Dr. Tom Snyder Dr. Harold B. Sturner Dr. Joe Rubino Layout and Design John O’Connor

Class of 2011 Contributors Dr. Ann Bynum Dr. Chris Bowman Dr. Rosemarie Cruz Dr. Earl Douglas Leslie Franklin Dr. Gene Heller Cathy Jameson, CEO Dr. John H. Jameson Wes Jankowski Brad Kucharo Dr. Roger Levin

Gretchen Lovelace Preston Lovelace, JD Scott Mahnken Dr. Neal Patel Dr. Jane Puskas Kathleen M. Roman Dr. Tom Snyder Dr. Anthony Stephanou Nancy Stuhulak Rachel Wall

Charter Sponsors Oral‑B Laboratories Ultradent Products Inc. Proctor & 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

Editorial Office 12233 Pine Valley Club Drive Charlotte, NC 28277 704/953-0261 Fax 704/847-3315 ADuff2@aol.com Send materials to: Dental Entrepreneur 7422 Carmel Executive Park #107 Charlotte, NC 28226 704/846-7089 Fax 704/846-7304 Linkbeau@aol.com When you have finished enjoying this magazine pass it along to a friend and PLEASE RECYCLE Copyright 2011 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.

2 Spring 2011 Dental Entrepreneur

Welcome to Dental Entrepreneur

class of 2011 spring issue

I

n the past few months, I might have set a world record for the amount of miles I’ve spent in the car, traveling with my husband to parts both known and unknown while my youngest son completed his senior season on the University of Vanderbilt varsity basketball team.

Of course, there were the home games in Nashville, where we had established a list of our favorite haunts around town over Joe’s four-year tenure.

But some of the most-exciting times were going down to the lesser-known Columbia, S.C., Athens, Ga., and even Gainesville, Fla., to watch the Commodores shoot hoops and enjoy a new city.

Not one trip would be placed in the FAIL box, and that was mainly because we relied on tips from friends, concierges, guidebooks, even my Blackberry.

You see, nothing has to be too difficult if you’re on an unfamiliar path, just like the one that you might be embarking on at the moment. Using the right resources can help navigate the foreign path on which you embarked once you donned your cap and gown.

I mean, let’s face it, dental school graduate is not another name for business professional.

At least not yet.

We here at Dental Entrepreneur: Business Beyond the Classroom have culled together many trusted voices in the realms of dentistry and business, speaking on subjects you may not have covered in the classroom.

For starters, do you know if you want to purchase your own practice immediately upon entering the Real World?

Dr. Thomas Snyder, Director of Practice Transitions for the Snyder Group/Henry Schein PPT, seeks to answer the important question of “When to Start Looking For a Practice.” In his piece, Snyder outlines two hypothetical situations: “Dr. A,” who bought a practice three years after graduating, and “Dr. B,” who waited seven. The breakdown of the numbers might shock you.

Once you make that decision, you must read founding president of ADS, Earl Douglas’ offering, “I Paid Too Much For My Dental Practice.” I wasn’t a math or finance major, so I’ll leave the percentages to him.

Regardless, Douglas reveals that “a practice with efficient cash flow will earn more net income and do it with less effort… than could be achieved by getting a FREE practice with inefficient cash flow.”

Now, as you become a practicing dentist, you might want to consider disability insurance. Is it a want, or a need?

Leslie Franklin, Director of New Dentist Markets at Great-West Life & Annuity Insurance Company, answers just that with “Disability Insurance: Selecting from the Menu.” Learn how to protect yourself, your family and your business with some guidance from Franklin.

Also in this issue, Kathleen M. Roman, Risk Management Education Leader at Medical Protective, tackles proper staffing in “Credentialing: An Important component of Patient Safety and Practice Quality,” and [insert title here] Neal Patel shares his experience selecting the right equipment when starting a practice in “Your Journey Begins with the Right Tools.”

Remember, “You Are the Expert,” as marketing guru, Patti Iuni writes when urging all practicing dentists to use their knowledge of products and procedures to keep their businesses solvent.

But just because you’re an expert in the chair doesn’t mean it is easy to get there.

One of the most-important roadtrips of your life is beginning, and we hope to serve as a business road map along the way.

In fact, can Dental Entrepreneur sit shotgun?

All the best,

Anne M. Duffy Publisher www.dentalentrepreneur.com

class of 2011 spring issue Volume ii

dental

entrepreneur’s

Contents Prologue

4 My Story Ann Bynum, DDS

Getting Started

Business Beyond the Classroom

28 The “Secret” to Increasing Profits in the Growing Practice!

Creating Passive Income in the Dental Office Anthony Stefanou, DMD

6 When to Start Looking for a Practice to Purchase Tom Snyder, DMD, MBA

8 I Paid Too Much for My Dental Practice Earl Douglas, DDS, MBA, BVAL

The Power To Succeed 34 10 Tips for Young Dentists Roger Levin, DDS

12 Your Journey Begins with the Right Tools Neal Patel, DDS

Business Fundamentals 14 Credentialing: An Important Component of Patient Safety and Practice Quality Kathleen M. Roman, MS

18 Disability Insurance: Selecting from the Menu Leslie Franklin

Practice Builders 22 Empowered Performance Rachel Wall, RDH, BS

26 You are the Expert! Your Patients Want your Recommendation Pat Iuni www.dentalentrepreneur.com

Dental Entrepreneur Spring 2011 3

Prologue Ann Bynum, DDS

My Story “

Why a dentist?” I remember my closest high school and college friends asking me. I had always been interested and fascinated with science from the good old days of dissecting a cat in high school to taking upper-level biology classes in college. My concerns with entering the medical field as a physician were the stories of long nights on call, working for hospitals and insurance companies and dealing with morbidity on a daily basis – none of those my cups of tea.

What enticed me about dentistry were the concepts of having my OWN practice, making my OWN decisions (hiring employees, setting office hours, etc.) and hopefully, if done right, never discussing or dealing with the mortality of my patients. And, it was an artistic science. I was able to use my brain and my hands to accomplish a satisfactory outcome for my patients, while leading and teaching my patients and my team members.

As I was on my dental school journey, I found a great affinity for pediatric dentistry. I loved joking around and acting like a kid myself, so it just seemed natural that I should pursue this specialty. What a great decision I made! Looking back, I can’t imagine doing anything else with my gifts or my life. After finishing my residency, my husband (also a dentist) and I decided to move to Greenville, S.C., to hang our shingles and start our practices. My parents retired there, and I wanted to start our family close to family. I always believed – and still do – that you should live WHERE you want to live and the rest will work itself out. That’s

4 Spring 2011 Dental Entrepreneur

instead of going somewhere to live because of a practice opportunity and end up not being happy there because you aren’t near family, don’t like the weather, etc. etc.. Let living where you want trump living where you think you HAVE to live.

I’ve been in the trenches practicing pediatric dentistry for almost 14 years now, and it’s still just as fun as the first day! I also enjoy speaking and consulting and plans for the future include bringing in a partner that I can teach leadership, team and customer-ser vice principles to along the way. Eventually, this will allow me more time to speak and help other practices achieve success.

Upon moving to Greenville, I quickly realized there were only a few female dentists here, but the numbers seemed to be grow-

www.dentalentrepreneur.com

ing rapidly as in all parts of the country.

However, we had no “group” to call our own. I quickly became friends with other female dentists and specialists and have continued those business and personal friendships to date. More recently though, I realized I had become so ingrained in my own practice that I had lost touch with new female colleagues coming to the area.

When I lecture, many women approach me with questions and challenges specific to being a female doctor, boss and leader.

One day, a light went on and I decided the best way to help was locally by culminating all female dentists together on a regular basis for social gatherings. More importantly, it was to get to know each other and how we could help each other in our business and personal lives. I am happy to report that after organizing a network of female dentists in the Upstate of South Carolina, the Dental Divas, that more friendships have been made, more networking has occurred and an internal referral framework has begun based on all of us getting to know each other oneon-one versus our office manager talking to their office manager mentality. I often will get e-mails or Facebook strings with questions about what the going rate of a hygienist is, how do you handle maternity leave, how do you handle paying employees during Continuing Education events… the list goes on and on. We have also taken on a philanthropic effort by supporting the Children’s Hospital of the Greenville Hospital System’s Virtual Toy Drive. We raise money to buy toys for kids in the hospital. We also did a dragon boat race and raised over $5,000 for cancer research.

I have made some of my dearest friends here in Greenville by personally reaching out to my female counterparts, and I know that has continued for others who have been involved with Dental Divas.

On a personal note, I was recently diagnosed with cancer less than a year ago, and many of the friendships and business relationships I made through Dental Divas were so wonderful. Not only were these female dentists encouraging and uplifting, but many of them were willing and filled in at my office as to not disrupt my team and patients in my absence.

www.dentalentrepreneur.com

I can’t imagine doing anything else with my gifts or my life.

Many patients join my practice because of the fact that I am a female, so it was wonderful to have so many female associates willing to pitch in while I was healing - a gift difficult to ever repay.

So as I kick off 2011, I am hopeful in the growth of the Dental Divas, and more importantly the good they do for our community and for each other. I look forward to great things within my own dental practice and with my own team. And I hope to continue motivating and inspiring other dentists and practices to deliver exceptional care to their own patients and skills for leading their own teams forward into 2011. ■ Dr. Ann Bynum is originally from Ocala, Florida. She did her undergraduate training at Florida State University. She then attended dental school at the University of Iowa, where she met her husband, Dr. Matt Bynum. She did two further years of training in Pediatric Dentistry @ the University of Texas Health Science Center in San Antonio, Texas.

Dr. Ann Bynum moved to Greenville, South Carolina in 1997 and opened her practice in Simpsonville. She has three children of her own and understands and appreciates the art of pediatric dentistry and parenting!

Dr. Bynum is a Diplomat of the ABPD, a member of the SSPD, the AAPD, and the ADA. She has lectured and written numerous articles on customer service, marketing, and teamwork over the years. She enjoys spending time with her husband and their three boys, Matthew, Luke, and John. She enjoys working ON her practice, triathlons, and travelling. She recently can add to her list that she is a cancer survivor and an Ironman!

She can be reached at www.hollytreepediatricdentistry.com or dr.ann@hollytreepediatricdentistry.com

Please reach out to our advertisers. They care about you and keep us in print.

dental

Business Beyond the Classroom

entrepreneur If you have any questions,

comments, or responses to our magazine, please write us at: Dental Entrepreneur Magazine, 7422 Carmel Executive Park #107, Charlotte, NC 28266 or e-mail us at: ADuff2@aol.com or Linkbeau@aol.com

www.dentalentrepreneur.com

Dental Entrepreneur Spring 2011 5

Getting Started Thomas Snyder, DMD, MBA

When To Start Looking For A Practice To Purchase

T

he main reason why the majority of you have entered the dental profession is to become a business (practice) owner. The road to your purchasing an existing practice has become a bit bumpier as the cost of your dental education keeps rising. As many of you will be in debt in excess of $200,000 after graduation, you may begin to wonder when the appropriate time will be to buy a practice. We have found, however, that the cost of delay can be significant, especially when purchasing an existing practice with a proven income stream.

So, the sooner you are ready to purchase a practice, the better financial outcome it may be for you.

The majority of dental graduates will enter a residency program for one to two years, with most grads electThomas Snyder, DMD, ing to work as an MBA associate for several more years before making a purchase/ decision. For those in specialty training, the timeline may even be longer.

Making the decision to purchase a practice is not only based on your feeling of financial ability, but also your confidence in becoming a business owner and entrepreneur. Often times this deferral of ownership is driven by a need to earn money and get established financially before considering owning a practice. Careful introspection is also critical to ensure that you’re able to handle the clinical production of a potential Seller who has a successful thriving practice.

Notwithstanding these considerations, 6 Spring 2011 Dental Entrepreneur

let’s look at the economics of two classmates who eventually bought a dental practice but did so at different points in time after graduating.

Dr. A has decided to buy a dental practice three years after graduating from dental school. Let’s assume that the practice that Dr. A will purchase has revenue of $700,000 with a 60-percent overhead. Let’s assume the practice sells for $440,000 and Dr. A will also need $90,000 in working capital, so he or she will need a loan of $530,000. Dr. A’s loan terms are ten years at 7-percent interest, with annual principal and interest payments of $73,845. Let’s also assume the practice will grow 5 percent a year. In this example, the projected net income for Dr. A before

taxes in his/her first year of ownership will be approximately $206,000. In Year 2 of ownership, the projected income will be $220,000 before taxes.

Dr. A (Owner Year 1)

Dr. B. (Owner Year 5)

Year 1

$ 166,000

$ 120,000

Year 2

$ 206,000

$ 130,000

"

Year 3

$ 220,000

$ 140,000

"

Year 4

$ 235,000

$ 150,000

"

Year 5

$ 250,000

$ 200,000

Ownership

Year 6

$ 266,000

$ 213,000

"

Year 7

$ 284,000

$ 228,000

"

Year 8

$ 301,000

$ 244,000

"

Year 9

$ 340,000

$ 260,000

"

Year 10

$ 360,000

$ 277,000

"

Total

$2,628,000

$1,962,000

Associate Income

www.dentalentrepreneur.com

Dr. B, a classmate of Dr. A, is not sure whether or not he/she can comfortably make a practice acquisition as soon as Dr. A. So Dr. B decides to work four more years from the time Dr. A purchased his/ her practice. Let’s assume Dr. B earns an income of $120,000 a year over that four-year period from the time Dr. A purchased the practice with small annual increments in associate compensation.

We’ll also assume Dr. B then decides to buy an identical $700,000 practice with the same overhead of 60 percent and sales price of $440,000 – now seven years after graduation! Let’s also assume that interest rates have increased to 9 percent. The annual debt service will now be $80,560.

So, in his/her first year of ownership, Dr. B will earn about $200,000 before taxes and in year two will earn about $213,000 before taxes. In comparing the total income earned by Dr. A over a 10-year period from the time Dr. A purchased his/her practice, and comparing it to Dr. B’s earnings over the comparable period, the difference amounts to over $660,000.

(See Chart on left) In considering a purchase opportunity both from a timing and readiness perspective, make sure that you maxi-

Making the decision to purchase a practice is not only based on your feeling of financial ability, but also your confidence in becoming a business owner and entrepreneur. mize the opportunity you have in your residency program to learn as much clinical dentistry as possible, thus enhancing your clinical skills. Take Continuing Education courses along the way in practice management so that you can get a basic foundation in running a small business. Most importantly, remember that banks specializing in dental lending are eager to loan you money for practice acquisitions. In fact, most banks only require a two-year experience window from graduation to quality for a loan to

purchase a practice. These banks realize that you all have large educational debt, but as long as you keep your credit in good standing, meaning FICO scores between 650 and 680, and the practice you will eventually purchase is one with a good cash flow history, you will get funded for your practice acquisition.

Imagine if Dr. B would have purchased a practice at the same time as Dr. A, that additional $660,000 dollars could have been used as pre-payment for dental school debt putting them in a much stronger financial position. The old adage “timing is everything” is quite applicable to purchasing a dental practice as well. ■

Dr. Tom Snyder is Director of Practice Transitions for The Snyder Group/Henry Schein Professional Practice Transitions.

A transition services consulting firm that specializes in practice valuation, practice sales as well as designing associate and partner relationships. He can be reached at (800) 9885674 or email: tsnyder@snydergroup.net The firms’ website is www.snydergroup.net

Get more patients.

And look good doing it.

Customized Graphic Design, Marketing and Website Development for Dentists and Dental Practices www.jumptolightspeed.com

www.dentalentrepreneur.com

Dental Entrepreneur Spring 2011 7

Getting Started Earl Douglas, dds, mba, bval

I Paid Too Much For My Dental Practice

W

hen you finally do graduate and you’re off into the real world of practicing your art, you will probably do a lot of conferring with colleagues who have entered practice ahead of you. You will doubtless hear many opinions on what they did and the outcome of their decisions. You are going to hear a lot of contradictory views in the process. Dentists who started from scratch will tell you it was the best possible move they could have made, and others Earl Douglas, DDS, will tell you that MBA, BVAL they wish they had bought a practice instead. Some of your colleagues who bought practices will tell you they got the best deal in the world, while others will tell you they paid too much for their practice.

When dentists buy a practice and things don’t work out financially as they had hoped, many times their first conclusion is that they paid too much. That’s why they didn’t make the income they expected. But in analyzing nearly 1,000 practices over the years, I discovered a few reasons some practices are more profitable than others.

If we are to understand why one practice is more successful than another, cash flow analysis will give us the answer. Cash flow is the measure of financial performance of a practice. This term simply describes all of the financial elements of a venture – the collections, the expenses, the debt service (payments to the bank) 8 Spring 2011 Dental Entrepreneur

and the net income left over for the owner.

At this point, we’re about to enter the world of numbers, but bear with me until the end when we will discover what makes a practice profitable and the part price plays in it. Don’t worry if you get bogged

down in the next section, but hang on to the end for some amazing discoveries. You can revisit the numbers later if you wish to prove those astounding conclusions.

We will start by examining an actual practice with the following annual statistics:

www.dentalentrepreneur.com

Practice Gross Income............... $628,000 Practice Overhead..................... $332,000 Debt Service.............................$ 79,000 Practice Net Income.................. $217,000 Practice Price............................ $399,000 The debt service is for a loan of $429,000 - $399,000 for the practice, plus $30,000 for working capital that the buyer will use to pay expenses until the collections catch up with the production.

The terms of the loan are a seven year payback at 7.5 percent interest. The average monthly practice income is $52,000 and the monthly loan payment is $6,600, which is 13 percent of the practice income.

Now let’s look at the effect of price on the cash flow of this practice. If the buyer got a really “good deal” and paid $50,000 less for the practice, the difference in the payment from a full price sale would be only $9,000 per year, or just 1.4 percent of the practice gross income. This small amount cannot financially make or break any practice. The difference in daily production is $3,185 per day versus $3,140, less than one buccal pit restoration per day.

To discover what actually financially makes or breaks a practice, we need to look past the small difference that price savings can make and find out where the real source of practice financial success lies. The following major expenses and percentages of revenues for an actual practice are as follows: (The remaining other overhead expenses were less than 1 percent.)

Staff Expense.......................22% Lab......................................7% Dental Supplies....................7% Office Supplies......................1% Rent.....................................5% Utilities/Phone......................2% Advertising...........................3% Bank Charges.......................2% Other...................................1% The major overhead expenses for this actual practice are very low and the purchaser of this practice would earn a 49 percent net of their personal production after all expenses and debt service. Using the percentage of personal production versus www.dentalentrepreneur.com

using the percentage net of gross production is a much more accurate indicator of the efficiency of a practice. My benchmark percentage net of personal production for a buyer’s first year is 30 percent, so at 49 percent net, this practice is far more profitable than the standard practice.

Now let’s compare this practice to another actual practice with the following statistics: Practice Gross Income..........$657,000 Practice Overhead................$475,000 Debt Service....................... $ 84,000 Practice Net Income............ $ 98,000 Practice Price.......................$415,000 The following major expenses and percentages of revenues for this actual practice are as follows. (The remaining other overhead expenses were less than 1 percent.)

Staff Expense........................... 46% Lab.......................................... 5% Dental Supplies........................ 5% Office Supplies.......................... 1% Rent.........................................6% Utilities/Phone..........................2% Other.......................................2% Advertising............................... 1% Bank Charges........................... 1% Legal/Accounting...................... 1% Insurance................................. 1%

In this second practice, the purchaser nets only 23 percent of their personal production. We can test the theory that the purchaser of this practice paid too much for it, and we’ll see if we can lower the price to a value that will allow the purchaser to earn a successful income from it.

Let’s start by taking one-third off of the price. That should surely provide a much better income – a full 33 percent slash. At the new price of $278,000, the purchaser will now have a net income of $123,000, which is 29 percent of their personal production. This is still not close to the net income of the first practice of $217,000, which is a 47 percent net of their personal production.

Let’s take a full 50 percent off of the price of this second practice and see what happens. Lowering the price to $208,000 will yield a net income of $136,000, which is 32 percent of the purchaser’s personal production.

The second practice still does not compare with the first practice’s net income of $217,000 and 47 percent personal net.

Now let’s do the ultimate price reduction – FREE! That’s right, the price is $0! How good can it get! At a price of $0, the second practice will provide a net income of $182,000, which is 43 percent net of the buyer’s personal production,

Business Beyond the Classroom

Resource Guide

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

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. Great-West Life & Annuity Insurance Company insures the ADA Insurance Plans, and protects more than 130,000 dentists, dental students, and their families every year.

Please see our ad on the back cover, then compare for yourself!

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 27.

ADS 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 17.

Dental Entrepreneur Spring 2011 9

still less in dollars and net percent as buying the first practice at its full price.

This vivid, but actual comparison of cash flow in two actual practices drives home the point that practice price is not a prime factor in the success of a practice purchase.

Yet practically every buyer concentrates on this relatively minor issue rather than focusing on the primary factor in their financial success, which is the intrinsic practice cash flow.

Notwithstanding, you still do not want to overpay for a practice. But at least we know that there is a better financial outcome even if we overpay for an efficient practice than there would be by getting a “good deal” on an inefficient practice.

Where are the overhead items that can make or break the cash flow of a practice? The main items and an efficient target percentage for them are as follows: Staff Expense............................28% Lab.......................................... 10% Dental Supplies.........................7% Office Supplie............................1% Rent ......................................... 5% Utilities/Phone .........................2% Staff expense is one of the easiest items to lose control of. I see practices that give its employees a raise every year, even as the

practice revenues decrease. Then I see practices that reduce the number of employees only to see their revenues increase. I have spoken to many dentists who admit they are overstaffed, but keep unneeded staff on as a charitable gesture. Sellers are in a better position to overpay staff than a buyer, who has more expenses than most sellers due to debt service for the practice, student loans, a home mortgage, etc.

Laboratory expense is an unusual expense – many times the higher the lab percentage, the better the practice, as it is an indicator of the amount of crown and bridge and cosmetics being done.

The cost per unit may also drive up this percentage while the practice may not be generating more lab cases. Each dentist needs to assess the balance between the cost and quality requirements that goes into their laboratory expenses.

Supplies are another area that can easily get out of balance. Buyer’s must be careful, though, in looking at supply costs on a tax return or Profit and Loss statement, as many times the supply expenses may include equipment purchased and called supplies in order to expense it, rather than depreciate it. Many times items of a personal nature that are not actual practice expenses are deducted in this item.

Office supplies are similar to dental

Business Beyond the Classroom

Resource Guide

ADCPA (503) 485-9252 www.ADCPA.org

The Academy of Dental CPA’s (ADCPA) is a national association of accounting firms that specialize in delivering creative solutions that meet the unique needs of the dental profession. The ADCPA is comprised of 24 firms, representing in excess of 7,000 Dental Practices, that provide progressive consulting, accounting and tax services.

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 31.

Lightspeed Multimedia, Inc. john@jumptolightspeed.com www.jumptolightspeed.com

Don’t settle for the same generic look as every other dental professional in the area! Stand out with a professionally designed image created for you and your practice. Please see our ad on page 7.

10 Spring 2011 Dental Entrepreneur

supplies in that personal items or equipment may be buried in this line item and not be an actual representation of the real expense.

A new owner can adjust the above expenses by controlling the actual expenses they pay and how they approach their accounting methods. But there are other expenses which are very difficult, if not impossible, to control. Rent is such an expense. In practices with high occupancy expense (rent, utilities, telephone), the only way of changing that expense is to move the practice, which is prohibitively expensive considering the cost of leasehold expenses and build outs.

In examining two actual practices, we have discovered that a practice with efficient cash flow will earn more net income and do it with less effort, even when paying full price, than could be achieved by getting a FREE practice with inefficient cash flow.

So when a dentist tells you that they paid too much for their practice, you’ll know that their financial outcome had very little to do with the price they paid, but with the intrinsic cash flow of the practice.

Hopefully you will know what to concentrate on in your search for a successful practice. ■ Earl Douglas, DDS, MBA, BVAL, is the founding president of ADS, a company with independent practice brokers, appraisers, and consultants nationwide. His company, ADS South serves the Southeast and South Central US. He can be reached at 770-664-1982 or at douglas@adssouth.com. Visit the website at www.adssouth.com.

www.dentalentrepreneur.com

The easiest Dental Exam you’ll ever take

DENTAL MALPRACTICE EXAM When selecting dental malpractice insurance, you should choose: The company with the strongest claims defense The most experienced company The dental malpractice company with the highest financial ratings Medical Protective is “All of the Above”

Before you see your first patient, you’re going to have to choose dental malpractice insurance coverage.

Some new dentists give it little thought and automatically settle for the first insurer they hear about or use their employer’s company. But it’s your career on the line, and there are significant differences in the quality and value of companies and coverage available. Choose the company that more dentists have trusted since 1899 to protect their reputations, practices and assets. Choose the strongest malpractice insurer — Medical Protective.

Ask about our malpractice protection specifically designed for new graduates. dental@medpro.com www.medpro.com 800-4MEDPRO ©2011 The Medical Protective Company®.

Trust the dental malpractice experts.

Getting Started Neal Patel, DDS

Your Journey Begins with the

Right Tools

As a recent college graduate, I can appreciate both the level of excitement and anxiety for those beginning their start-up journey in private practice.

Allow me to share my experience.

In 2006, I remember being told that the startup “recipe” was to be frugal, do your own hygiene and start with bare essentials until you can justify the expense of having the equipment and tools of your dreams. Although this concept has proven to be successful for many clinicians, it quite honestly did not appeal to me. I knew I wanted to hit Neal Patel, DDS the ground running.

Those that continue to read this article must share a common philosophy: service before self and excellence in all you do.

Let me encourage you to think outside the box and build the practice of your dream with the technology recipe. I like to think of myself as someone who does not accept a simple approach or the easy way out. Like the majority of you, I spent a significant time in dental school daydreaming about my venture.

I ran multiple scenarios through my head about the risks and the rewards. I knew what my goals were, but quite honestly needed help figuring out how to get started and what tools I would need along the journey. With the help of my Patterson Dental representatives, I opened my practice three years ago in February of 2008, Infinite Smiles. It makes sense to keep your risk low and follow the traditional path for a start-up practice, but 12 Spring 2011 Dental Entrepreneur

the risk was to great not having the right equipment for excellent service and great dentistry. I have come to value great technology and equipment, necessary tools so I can compete with seasoned practitioners.

Realize that the risk of not having good equipment is far greater than the risk to acquire it.

Most recent graduates are overwhelmed with the abundance of options when it

comes to technology and equipment as seen in the exhibit floors of our national meetings. Do not make the mistake of investing in equipment that does not have a DIRECT impact on your ability to deliver exquisite care. Lets start with the backbone to this technology recipe. I chose to go digital from the onset. With advancements in technology and equipment, realize that digital dentistry has www.dentalentrepreneur.com

made a significant impact in the dental market. Consider technology and equipment that is future friendly.

I teamed up with Patterson Dental to understand the fundamentals of a digital practice for management of patient data, diagnostic records, patient education and delivery of clinical therapy at the highest level. I was more afraid of having a potential patient evaluating my ability to do dentistry based on my equipment even before I had the chance to do the dentistry. Did I really want my clients to feel my pressures of starting a new dental practice? I honestly think that patients who are provided dentistry with bare minimum leave a practice feeling that way. Often, as dentist in private practice, we are “sized up” by our patients by their first impression. The question you must ask yourself is, “Do I want to be the young dentist thought of as having little to no experience and half the tools that most patients are now accustomed to, or do I want to be the young dentist practicing with cutting edge technology and latest techniques?” Trust me when I say this, my growth and success over the short three years has been by providing the best technology and tools that dentistry has to offer. Patients leave my practice ranting and raving about their experience.

In the modern age of computers, patients come to expect certain amenities from their dentist. Having the ability to collect and store patient records digitally is viewed as being progressive. Patterson Eaglesoft, among multiple other practice management systems, was the most powerful and intuitive software that still lets me focus on patient care. It successfully combines administrative and clinical features. Most of all, it has excellent support. In addition to digital patient records, I knew I wanted to go digital with diagnostic imaging. I chose Schick CDR digital sensors for it seamless integration with Eaglesoft. Patients are impressed with the clarity of digital Xrays on computer screens instead of films on a light box. I placed a significant emphasis on my ability to diagnose for comprehensive dentistry. I felt well-educated and pre-

www.dentalentrepreneur.com

In the modern age of computers, patients come to expect certain amenities from their dentist. pared for private practice, but diagnostic acumen comes with experience. My lack of clinical experience required a “magic bullet.” My magic bullet was the Sirona Galileos CBCT. With the Galileos as my primary diagnostic tool, I was able to distinguish my practice from the rest simply because of my ability to diagnose using a 3D image. With one scan, I am able to diagnose for all facets of dentistry: Endo, Perio, Ortho, Oral Surgery, Implantology and General Dentistry. My ability to show and educate patients on their needs with 3D CBCT images has a direct impact on my case acceptance rate. In addition to being able to comprehensively diagnose and treatment plan, I needed a flexible platform to allow my practice to deliver restorative clinical treatment.

I chose Sirona’s CEREC Cad/Cam as the platform for restorative care. With CEREC, my practice is able to provide prosthetics from crowns, inlays, onlays, and veneers. The CEREC platform is flexible and functions as a digital impression system for digital lab communication and lab fabrication of prosthetics, to chairside milling for same appointment restorative care. The beauty of having CEREC is that I have full control over my results.

Along with these essential tools, I supplemented several smaller items to help me streamline workflow and add additional procedures. With significant literature and research showing the long term success of endosseous dental implants and an increased public awareness if implants, I knew it was critical for me to be able to provide dental implants to patients as an

alternative to fixed bridges. I acquired Acteon’s Implant Center 2. The Implant Center 2 is a self-contained unit with both a surgical piezotome and an implant motor for complete instrumentation necessary for hard tissue augmentation and implant dentistry. And last, but not least, I chose to eliminate traditional tissue retraction using cord in my practice by introducing a diode laser. I chose Sirona’s SIROLaser Advanced, a powerful soft tissue laser that offers customized settings for all soft tissue procedures.

Although it might seem overwhelming, I will tell you that with these tools you will be more than prepared to pave your path to success. The combination of this equipment is my technology recipe for great dentistry. I am thrilled to and fortunate to practice such great technology and feel equipped to provide all levels of clinical therapy. My selection from CBCT to Cad/Cam allowed me to establish my start-up as the cutting edge facility for dental care in my area.

Although my patients see me as being young, they think of me as the young and enthusiastic dentist who provides the highest level of dentistry with amazing technology (the same kind of dentistry that most dentists expect for their own mouths). I encourage all of you as recent graduates to evaluate the list of equipment I have mentioned in my technology recipe for your own practices. I promise you that the decision will be one the hardest you will have to make, but the journey moving forward is incredibly rewarding in knowing the kind of dentistry you will be able to provide your patients as well as practice success. ■ Dr. Neal Patel is a graduate of The Ohio State University where he earned degrees in Molecular Genetics, General Dentistry, and fellowship in Implant Prosthodontics. Dr. Patel is currently on an international lecture circuit speaking on Advanced Digitization in Dentistry and CBCT. He is a consultant for a number of dental manufacturers and works closely with the R & D Sector for product development and enhancement. He can be reached at drpatel@infinitemiles.com.

Dental Entrepreneur Spring 2011 13

Business Fundamentals

Credentialing:

Kathleen M. Roman, MS

An Important Component of Patient Safety and Practice Quality

I

n the fall, Dr. Tom Sparks* hired a new dental hygienist. He was sorry to have lost Melissa, the previous RDH, whose family has moved to another state. But he was thrilled when Suzanne applied for the job. Her resume revealed a highly-qualified and experienced professional. Recently divorced, Suzanne had relocated from another state to be closer to relatives.

In reviewing her resume, Dr. Sparks noted that Suzanne Kathleen M. Roman, had a bachelor’s MS degree in education as well as an MBA. He was excited about the possibility of having a staff member with the potential to support patient education as well as business processes.

Afraid that another dental practice might make her an offer, Dr. Sparks promptly hired Suzanne.

He began to plan improvements that would benefit from Suzanne’s training. First, he’d ask her to assume some administrative duties, possibly developing educational programs for patients and ordering office supplies. If things worked out, he would promote her to office manager, thus relieving himself of some of the reports and business-related tasks that cut into his time with patients. “Who knows,” he thought, “I may eventually hire another hygienist to free up more of Suzanne’s time for administrative responsibilities.”

Dr. Sparks assumed that Suzanne would be an asset to the practice. The *All names have been changed.

14 Spring 2011 Dental Entrepreneur

patients seemed to make a comfortable transition from Melissa’s care to Suzanne’s.

Lindsay, the receptionist and Della, his assistant, also welcomed Suzanne and made an effort to make her feel at home.

However, as Dr. Sparks began to assign additional tasks to Suzanne, both Lindsay and Della voiced concerns about some of the changes. “Maybe they’re a bit jealous,” Dr. Sparks told himself when Lindsay reported that Suzanne had brought in a drug rep to discuss the possibility of dispensing pain medications in the office.

Suzanne had explained to Lindsay that patients could go directly home following a procedure without having to first stop at a pharmacy to full a prescription. Neither of his senior employees was in favor of this new plan. “Well, let’s just give it a try and see if it works,” he told Lindsay.

Consequently, Lindsay and Della no longer expressed their concerns to Dr. Sparks.

The following April, on a day when the waiting room was full of patients, uniformed marshals appeared without notice.

They flashed badges at Lindsay and demanded to see Suzanne. Dr. Sparks, who was with a patient at the time, was forced to abandon the patient’s treatment to see to the disturbance. Marshalls arrested and handcuffed Suzanne in front of the doctor and his staff and led her out through the waiting room past the astonished patients.

According to the arrest report, Suzanne had been trafficking in drugs, selling small quantities of unlogged drug samples, mostly painkillers. She had also been selling prescriptions that she’d filched from Dr. Sparks’ prescription pads. An alert pharmacist had noticed a discrepancy in the dentist’s signature and reported his concerns.

Dr. Sparks’ practice was closed for nearly a week as federal investigators went through his books and checked his records. For a time, suspicion also centered on the dentist and his other staff members. Ultimately, they were cleared of any wrongdoing, but the stress and hassle factor took a toll on the team’s morale.

It was true that Suzanne was a dental hygienist and held a master’s degree, but her job application skipped several other important facts. Having lost her license in another state, Suzanne had gone back to school to complete the master’s degree.

During that time she had also sought drug counseling, ultimately receiving a lenient judgment from the court because of her apparent commitment to rehabilitation. Her relocation was motivated, www.dentalentrepreneur.com

Scheduling DR (Digital Radiography)

Chart

iPhone Interface

iPad Interface

MacPractice DDS 4.1

EDR (Electronic Dental Record) Orthodontic / Endodontic Charting

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 for product information, trade shows, presentations, screenshots and a demo.

at least in part, by a desire to elude her tarnished record.

Because Dr. Sparks was forced to participate in lengthy interviews as part of the ongoing investigation, he lost many hours that he could have spent treating patients. The arrest and resultant press attention to Suzanne’s drug scam garnered unfavorable press for the Sparks clinic. Several patients transferred to other doctors’ practices and Lindsay soon resigned—partly because she resented being involved in a criminal investigation, but also because she was upset that Dr. Sparks hadn’t listened to her when she’d tried to voice her concerns about Suzanne’s actions.

For Dr. Sparks, the hiring of Suzanne Breeze was a painful experience. The state dental board summoned him to appear before a peer review panel and ultimately issued a disciplinary statement which was reported to the National Practitioner Data Bank. Dr. Sparks’ practice received negative attention in the local press. He’d lost several patients, some of them of long standing. And a valuable employee had resigned.

In fact, Dr. Sparks was lucky. Other healthcare professionals have not been so leniently treated by federal investiga-

tors. In addition, it is fairly common for negative media attention to generate professional liability claims or complaints to regulatory agencies, i.e., departments of health, OSHA, state licensing bureaus, etc.

Dr. Sparks learned his lesson, he says.

Following are suggestions he’s used to ensure that the next “good egg” he hires, really isn’t a “bad apple.”

1. Whenever possible, interview more than one person. Even if you end up hiring the first person you interviewed, wait until you’ve interviewed all the candidates before making up your mind. In that way, you’ll be more inclined to give each candidate a chance to reveal his or her skills and talents. No two candidates will be the same; the flashy, charming candidate should not be allowed to override the quiet, and perhaps more substantive candidate.

2. Hire the individual to fit the job description; don’t stretch the job description to fit the individual.

Making special accommodations, especially when they don’t make sense from a job design perspective, may create an undue burden for other employees. It gives the impression of favoritism and could expose the prac-

Business Beyond the Classroom

Resource Guide

Henry Schein Professional Practice Transitions (PPT) 1-800-730-8883 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 careerlong 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 15.

Medical Protective 800-4MEDPRO www.medpro.com

Since 1899 Medical Protective has been the nation’s leader in dental professional liability. As a member of the Berkshire Hathaway group of businesses, Medical Protective provides dentists and oral surgeons with four levels of unmatched protection - strength, defense, solutions, since 1899. For more information, visit www.medpro.com or call 800-4MEDPRO.” Please see our ad on page 11.

16 Spring 2011 Dental Entrepreneur

tice to employment-related liability.

Don’t hire a “warm body.” If you can’t find an acceptable candidate among the first round of resumes and interviews, reopen your search.

It’s better to wait until the right person comes along than to make a mistake it may be very difficult to correct.

3. Always use a job application and always require a resume. Using two documents may identify discrepancies in the candidate’s history. A job application will also ask for information that may be unlikely to be included in the resume: a) have you ever been arrested; b) may we contact your previous employer, etc.

Be sure that the application doesn’t request information that is precluded by law. An attorney who specializes in employment law can be helpful in developing hiring policies and procedures. For example, an attorney will advise how best to include in the application process a statement that will require each potential employee to assert that he or she is telling the truth by completing the application — and acknowledging that the practice has the right to terminate the candidacy/ employment of any individual who lies in the application process.

4. Always check references. In general, it’s best to ask for work-related or school-related references. The assessments of friends or relatives are unlikely to be as revelatory as those provided by fellow workers. Ask questions like, “If you owned a small business, would you hire X?” “Why/why not?”

When a potential employee holds a license, be sure to inquire about that person’s status from the state licensing board. Is the candidate’s license current? Are there any disciplinary actions? In Dr. Spark’s case, he should have contacted the state from which Suzanne obtained her RDH license and where she had ostensibly practiced before her move. Ensure that all employees’ licenses/certificates are

www.dentalentrepreneur.com

updated annually — and retain copies of those documents in employees’ confidential human resources files.

Potential employees who hold licenses should also be asked to provide proof that their Continuing Education obligations have been met.

5. Contact previous employers. Some organizations may invoke a policy in which they will specify whether or not an individual was employed but are unwilling to discuss the details of the employment and/or termination/resignation. If you can’t get them to give you much else, see if you can get them to answer this one question, “Would you rehire this person?”

6. Document all actions taken to address questions that may have been raised during the course of an interview. Ask to see copies of previous employee evaluations.

Candidates who are proud of their previous work records are often able

to produce copies of these evaluations.

7. Once you’ve successfully negotiated the hiring process for a new candidate, always send a follow-up letter to the other candidates. Thank them for their interest, wish them well with their careers, and tell them that, although their qualifications were impressive, you have selected the candidate who you think most closely matches the practice’s current needs.

8. Retain copies of all documentation related to employment issues. Just a few of these items are: licenses, degrees, certificates, resumes, applications, references, and any other correspondence related to the hiring, training, discipline, promotion, or discharge of an employee. Ensure that the new employee is given a copy of his or her job description and that a copy of the document is also retained

in the individual’s confidential personnel file. The American Dental Association offers some excellent materials to help dentists ensure that their human resources processes are organized, complete, and legal.

The tips listed above are more closely related to employment law than they are to professional liability. However, poor hiring choices are often related to improper credentialing of potential employees. The unscreened employee may have a negative effect on a practice’s efficiency, morale, or the legality of its operations. By recruiting and retaining ethical and motivated employees, doctors can reduce the risk of patient injury and/or dissatisfaction — both of which are key components in healthcare malpractice litigation. ■ Kathleen M. Roman is Risk Management Education Leader, Medical Protective. She welcomes readers’ comments and can be reached at: kathleen.roman@medpro.com

ADSSO_009 ADS South Half REV3_Layout 1 1/19/11 7:11 PM Page 1

“ I only have one regret about selling my practice. I should have called Dr. Earl Douglas sooner.”

Sound Advice.

Trust us for all your dental transition needs.

• Appraisals • Brokering • Practice Financing

ADSSouth.com

• Associate Placement • Equity Associateships

Practice Transitions Made Perfect™ PPC is now ADS South.

GEORGIA, LOUISIANA & TENNESSEE

Earl Douglas, DDS, MBA, BVAL ( 770) 664 -1982 earl@adssouth.com

www.dentalentrepreneur.com

N. CAROLINA, S. CAROLINA & VIRGINIA

James J. Howard, DMD (910) 523 -1430 jim@adssouth.com

ALABAMA, MISSISSIPPI & W. TENNESSEE

Rebecca Kyatt ( 205) 253 - 9094 rebecca@adssouth.com

Dental Entrepreneur Spring 2011 17

Business Fundamentals Leslie Franklin

Disability Insurance: Selecting from the Menu

A

s a healthcare professional, you know the importance of a balanced diet. When eating out, you make choices based on what you see on the menu, what your body needs, and what you can afford. Meat or pasta, fruits or vegetables, dairy or legumes…the goal is to have the right balance for both sustenance and satisfaction.

When it comes to disability insurance, you also have Leslie Franklin a menu of choices, and here your decisions can affect your financial health.

This article will help you get up to speed on the two basic categories of disability insurance and their many components so you can become savvy about selecting from the menu to build the right disability protection for your needs.

Yes, You Need It! Let’s first examine the classic “want” vs. “need.” Dessert, for example, is a “want,” but disability insurance is more of a “need,” especially for dentists. Why? Dentists face a one in three chance of experiencing a disabling injury or illness at some point in their careers.1 And when disability prevents you from working, the lost income can financially threaten your lifestyle, your practice, and your family’s security.

And don’t assume that a disability won’t 1 Data derived from ADA Income Protection

Plan claims data, 2004-2009.

18 Spring 2011 Dental Entrepreneur

happen to you because you’re young and healthy now. Of dentists currently receiving benefits through a group disability insurance plan sponsored by the American Dental Association, approximately 15 percent were under 45 when they became disabled.

A Way to Protect Your Income If you are disabled and can’t practice for a prolonged period, disability income insurance (also referred to as personal disability insurance) will help replace your lost income. It’s therefore vital—but not all disability income policies are created equal. They can differ in quality, price, and components, so shop carefully. Here are five questions to ask: 1. How does the policy define disability? Each policy has its own standard for determining if a dentist is disabled. The definition of disability instructs how and when that policy will pay a claim, so it is one of the most important elements to investigate. Some policies only pay if your disability prevents you from working in “any occupation.” Those policies won’t pay benefits as long as you can teach, consult, or perform any reasonable job, no matter how little that job pays. In contrast, a policy with a richer “own occupation” definition of disability will pay a benefit when you’re unable to work as a dentist, even if you choose to do something else.

Not all “own occ” policies are the same, either. Some will reduce your benefits when you earn other

income, or only pay benefits on an “own occ” basis for a few years then switch to a lesser “any occ” basis. In contrast, the most generous coverage—called “true own occ”—will provide full disability benefits, long term, if you can’t practice dentistry, regardless of how much you earn elsewhere.

2. How much coverage can I get?

Assuming your goal is to maintain your standard of living if you become disabled, experts recommend a monthly benefit that approximates 60% of your net taxable earnings from dentistry (roughly equal to your after-tax income). For example, if you net $10,000 a month before taxes, a recommended benefit amount would be $6,000/month. That puts the onus on you to adjust your coverage periodically so your protection keeps pace with your income and resulting lifestyle.

Based on the maximum amount of coverage offered by a company, you may ultimately obtain multiple policies to adequately protect your income level.

3. How long must I wait to receive benefits? All policies will require you to wait a certain number of days (known as the waiting period or elimination period) from the date your disability begins until you are eligible for your first check.

You may have a choice of waiting periods, and the longer the waiting period, the lower your cost of insurance. Factor in how long www.dentalentrepreneur.com

CEREC ® 3D Software powered by Biogeneric: Predicts perfect proposals with a single click.

Natural form and function is now as easy as scan, click, mill.

CEREC Biogeneric Software effectively reads the morphology of the patient’s own dentition to predict the right form and function for all restorations. Based on comprehensive morphological analysis of thousands of actual teeth instead of arbitrary “tooth libraries,” CEREC Biogeneric Software allows you to create inlays, onlays, crowns, veneers and temporary bridges with just a single click. Ideal form, function and occlusion— CEREC 3D Software powered by Biogeneric does it with ease. Simply scan, click, mill and admire.

• Clinically and functionally valid proposals every time • Automatic process: a single click produces the natural restoration • Unrivaled ease-of-use lets you focus on your practice and not complex software manipulation

To experience the power and simplicity firsthand, contact your Patterson representative:

CAD/CAM FOR EVERYONE

800-873-7683 www.CEREConline.com

you could manage without any income from your practice—30, 90, 180 days, etc.—and choose accordingly. Some policies will even let you mix multiple waiting periods to balance your need for cash with your need to budget.

4. Can I customize my coverage?

Some companies sell “one-sizefits-all” policies. You buy the policy with all its bells and whistles whether or not you want them all. Other companies offer an a la carte menu of coverage features. You decide if you want these “options” or “riders” and pay accordingly. Note: Some coverage options only exist for a limited time, so check eligibility and expiration dates carefully as you consider customization.

5. Is it difficult to get disability insurance? That depends. A past injury or sickness, or a family history of certain illnesses, could make it tougher to get coverage. That’s why experts recommend

applying for disability insurance while young and relatively healthy.

You also may have to provide a tax return or other income information to substantiate the amount of coverage you request.

On rare occasions, you can get insurance without pre-qualifying via a medical or financial review— when it’s offered on a “guaranteed issue” or “open enrollment” basis.

The ADA’s student offer for ASDA members operates this way—no questions asked—so future dentists can get important insurance in place before entering the workforce.

And a Way to Protect Your Business As a dentist, you need to protect more than your personal income: You have a thriving business, too. That’s why you should consider a second type of disability coverage called business overhead expense insurance. It’s designed specifically to reimburse you for certain practice and professional expenses if you

Business Beyond the Classroom

Since 1984 thousands of dental professionals have discovered Oxyfresh’s safe and effective oral health products for use in longterm 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 33.

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 29.

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 Spring 2011 Dental Entrepreneur

The need for disability insurance: “When I graduated from dental school, I had a wife, a baby on the way, and more than $100,000 in student loans. I knew I was just one car wreck away from not being able to practice dentistry, so I felt compelled to insure my income even though I hoped I would never need it.”

Name withheld at request of dentist, disabled at age 44

Own occupation: “If I could offer any advice to young dentists, it would be this: When you get disability insurance, look for a policy that has an ‘own occupation’ definition of disability. That way, if you are disabled from dentistry, you won’t be forced to work in another occupation unless you want to.”

Bruce Jensen, D.D.S. Kaysville, Utah

Resource Guide

Oxyfresh Worldwide Inc. 800-333-7374 ref# R23037601 aduff2@aol.com

Patterson Dental Supply Inc. 800 873-7683 www.pattersondental.com

What Your Peers Say About…

Business overhead expense insurance: “It was great to have disability income insurance for my personal expenses, but it was especially important for me to know that my business expense plan was there to help pay my staff’s salaries and benefits, and cover other bills like utilities and rent.”

Neil Dicker, D.D.S. Orefield, Pennsylvania

Choosing a company: “Buy from an insurance company that will work for you—not against you—if you ever have to file a claim.”

Jac Pedersen, D.D.S. San Luis Obispo, California

www.dentalentrepreneur.com

Don’t Own a Practice?

Why You Need Business Overhead Expense Insurance, Too Even if you don’t own a practice yet, business overhead insurance could still be right for you. Any of these professional expenses might qualify for reimbursement benefits if you became disabled: • Student loan payments • Professional association membership dues • Malpractice insurance premiums • Licensure fees • Continuing education tuition and fees • Laundry services • Operatory rental and/or contractor overhead • Hygienist/assistant salary A note to dental students: If you have free ADA Student Disability insurance through your ASDA membership, your coverage will automatically convert after graduation to include $2,000/month in business overhead expense insurance (in addition to $2,000/ month in disability income insurance). Call 888463-4545 or visit www.

WellPreparedGrad.com for details about conversion and renewal premiums.

www.dentalentrepreneur.com

are disabled—and you don’t have to own a practice to take advantage of this coverage. (See boxed sidebar.)

The reason you need both types of disability insurance is simple: If you only have one, you could end up robbing Peter to pay Paul. For example, you might dip into your personal disability benefit to cover your payroll and then come up short for your home mortgage. But with both types of insurance in place, both your personal and professional “halves” can move forward with minimal financial impact.

Here are four key questions to ask when shopping for business overhead expense insurance: 1. What’s covered? Business overhead policies typically reimburse the business owner for office rent/ mortgage, employees’ salaries and benefits, utilities, professional membership dues, accounting fees, advertising costs, and so on. Some companies also cover payments for practice loans and student loans, which is highly recommended for new dentists. In addition, a top-quality plan might include “locum tenens” coverage, a special benefit that covers the cost to hire a replacement dentist during a period of disability.

2. How much can I get? Companies vary in the maximum amount of coverage they offer, and the amount you request must correlate with your actual practice or professional expenses. You may be asked to verify your monthly expenses with a tax return or other information, especially when applying for larger amounts.

3. How will I be paid? Benefits are based on actual expenses for the prior month. You are reimbursed for these costs after they occur, so you’ll need to provide monthly documentation of your expenses while disabled.

Some plans pay benefits even if you’re only partially disabled.

4.

How long will I receive benefits? If you become disabled, you typically will know fairly quickly if you will eventually recover or must sell your practice (thereby eliminating your business expenses). As a result, monthly benefits are paid for a shorter time, like 1 or 2 years, than for personal disability income insurance. As long as you have purchased the right amount of monthly coverage, you should have ample benefits to pay monthly expenses while you plan your next move.

Choosing the right company With all these variations, make sure the company offering disability insurance is reputable and strong. Independent rating services such as A.M. Best, Standard & Poor’s, and Moody’s Investors Service can help you check out a company’s financial strength. Your peers, mentors, and professional advisors also may have recommendations about a company’s pricing, service, and promptness in paying claims.

The bottom line: Just like a healthy diet includes the right variety and quantity of food, you need the right kinds and right amounts of disability insurance for whatever your future might hold. If you’re ever sidelined by disability, you’ll be glad you insisted on quality coverage. ■

Editor’s Note: This article does not constitute legal, financial, or medical advice.

Please seek professional input as appropriate to your situation.

Leslie Franklin is Director of New Dentist Markets at Great-West Life & Annuity Insurance Company. She helps new dentists and dental students use insurance to attain their personal and professional goals. The ADA Insurance Plans are insured by GreatWest Life and provide group life and disability insurance to ADA members. For more information, call 888-463-4545 or visit www.insurance.ada.org.

Dental Entrepreneur Spring 2011 21

Practice Builders Rachel Wall, RDH, BS

Empowered Performance

A

s you start your dental career, you may be expecting thousands of dollars of restorative treatment on your schedule every day, having every patient say yes to treatment plans and immediately scheduling exactly what you’ve recommended.

Sounds good, right?

The reality is that with high level communication skills you can get pretty close to this. But Rachel Wall, RDH, there will always BS be patients that say, “No,” or, “Not now”. So in order to produce $80,000 per month in restorative, you must present two, even three times that much treatment each and every month. The good news is that you don’t have to do it alone. Empowering your team, specifically your hygiene team, to help you enroll treatment will be one of the biggest keys to your success. Here, I’ll share with you some of the inside secrets I learned from years as a clinical hygienist in high-performance practices and years as a hygiene consultant helping practices grow.

This brings up the first of a series of steps in creating a powerful hygiene department that keeps your schedule full with comprehensive care, creating an empowering environment.

Step 1 - Empower your hygienist by clearly stating that you are confident in their dental knowledge and skill

22 Spring 2011 Dental Entrepreneur

Unfortunately, we hygienists are sometimes stifled by what we can’t do versus being inspired by what we can do. So, when you say to your hygienist that you would love to see more restorative treatment coming out of hygiene, your hygienist might look at you and say “What part of ‘hygienists can’t diagnose’ do you not understand?.”

If she doesn’t say it, there is a good chance she’s thinking it. What I have discovered is that when hygienists say “I can’t diagnose,” what they are really saying is “Show me a way through this barrier.”

Empowering your hygienists to maximize what they can do is powerful. When this shift occurs, hygienists are in a position to begin a whole new phase of their career: one filled with satisfaction and challenge. That new energy might be just what you need to turn hygiene from a loss-leader into a thriving source of growth for your practice.

Then, set out your expectations regarding co-diagnosis. It may sound something like this: “I respect you as a highly skilled dental professional. To effectively support our patients in staying healthy, I need your help. Patients trust you and your opinions. To work as a team, we must all have the same beliefs in what is best for our patients. I would like to spend time with you reviewing my personal treatment philosophy and why I make certain treatment recommendations. This will allow us to discuss areas in which we may have different opinions on treatment and resolve them. Although it is my job to make a final diagnosis and treatment plan for our patients, I do expect you to contribute to that diagnosis with thorough observation and education of our patients. I will give you all the tools you need to feel comfortable doing this including specific training

www.dentalentrepreneur.com

Don’t just deflate.

Virtually eliminate gingivitis.*

With powerful mechanical and antibacterial actions, the NEW Clinical PRO-HEALTHTM SySTEM for Gingivitis helps break the cycle of gingival inflammation and gingival bleeding for improved oral health in patients with mild to moderate, persistent gingivitis.

Specialized images show the average area and magnitude of improvement in gingivitis over time*

Before using the system: Significant gingivitis

2 weeks of use: Initial improvement of gingivitis

NEW SYSTEM!

6 weeks of use: Further improvement in gingival health

To learn more, visit dentalcare.com/clinical *Six-week clinical results with NEW Crest® PRO-HEALTH® Clinical Gum Protection Toothpaste, NEW Oral-B® Glide® PRO-HEALTH® Clinical Protection for Professionals Floss, and Oral-B® Professional Care SmartSeries 5000 Electric Toothbrush with SmartGuide™.

© 2010 P&G

PGC-3060

OPAD10984

Continuing the Care That Starts in Your Chair

on how I diagnose and treatment plan a variety of dental conditions.”

Step 2 - Give your hygienists permission to observe restorative needs and to begin educating patients on those conditions This includes permission to participate in diagnosis, not only for perio disease but for restorative needs as well. Give permission to think in a broader sense when reviewing X-rays, intra-oral photos, etc.; to think beyond calculus and gingival health and begin to think about what might have caused that abfraction on No. 11; to think about what you might recommend to strengthen that broken second molar; to look at X-rays and analyze the root tips as well as the bone level.

I want to be very clear here. The doctor makes the final diagnosis and creates the final treatment plan. That being said, it is well within the parameters of the hygiene position description to offer information to patients about what conditions he or she has observed in the patient’s mouth.

This prepares your patients for your recommendations.

Every practice has a gold mine waiting in the charts in the form of treatment that has been planned but not scheduled.

In the case that all treatment planning is completed at the new patient visit, there is a perfect opportunity for hygiene to view the next phase of treatment and bring this to the patient’s attention without the specifics of “diagnosis” being an issue. Taking photos of the quadrant reminds the patient of their problem and opens the lines of communication before the doctor even enters the room.

Step 3 - Clearly communicate your treatment philosophy Often, dentists assume that since their team works with them each day, they are familiar with their treatment philosophy.

This may be true, but there may be some specific aspects of treatment where staff may need more information. Confusion about your treatment philosophy creates inaction. When your hygienist is not totally confident with your treatment philosophy, he or she may be reluctant 24 Spring 2011 Dental Entrepreneur

to reinforce recommend care to patients.

Being unsure about how you would plan a restorative case is another key challenge that must be overcome before there is consistent enrollment taking place in hygiene.

Empowering your hygienists to maximize what they can do is powerful.

Step 4 - Case review This may be the most important tool in increasing co-diagnosis in hygiene. First and foremost, all the dentists in your practice must on the same page. If you go through the case review process together before including the staff, it will create a “united front” for the team. I’ve had the opportunity to coach some very large practices through this process. While each dentist has or her own preferences and beliefs, in a large practice consistency is critical.

Below is a guide to walk you through a case review session. During this time, you will review several patient charts, discussing the treatment plan and what brought you to create that plan. You may discuss what cues you to recommend a crown versus an onlay versus a composite filling.

Are there certain criteria that you use to determine the best treatment? Share those with your team and be specific. Utilize intra-oral photos and take photos during your restorative procedures to show your team how decay invades the inner part of the tooth when it’s allowed to grow. Use these photos to create a sense of urgency for your team to share this with their patients.

The Case Review session is a time of open learning, a safe environment where there are no dumb questions or wrong answers, only opportunities to learn.

When reviewing the patient charts, have on hand the x-rays, any intra-oral photos, periodontal charting and the current treatment plan. This will support your diagnosis and explanation of the plan.

CASE REVIEW These case review guidelines are designed to facilitate learning between the dentist and team. The objective of case review time is to expand on the technical knowledge of hygienists and improve consistency in treatment recommendations between the dentist and hygienist. Initially, this should consist of two one-hour sessions in which the doctors and hygienists review the recommended treatment of a few chosen cases.

Doctor’s Role: • Give hygienists permission to think more like a dentist when viewing diagnostic information • Instill confidence in the intelligence and technical knowledge of the hygienist • Utilize one or two cases with complete x-rays, perio chart. A complete treatment plan, intra-oral photos and clinical notes are very helpful.

• Explain what you saw during examination and give specific reasons for the treatment planned • Give team guidelines for ideal examination according to doctor’s preference Exam Guidelines from Doctor to Team: • Top three Items to look for when viewing X-rays • Alveolar bone quality, interproximal tooth structure, ratio of tooth vs. amalgam, #mm b/t pulp and restoration, periapical lesions, etc.

• Top three to look for during Intraoral exam • Tissue health, broken teeth, fractures, fistula, suspicious soft tissue lesions, darkness around restorations, quality of restorative margins, etc.

• If X-rays look like ___________, pre-frame patient for treatment • If Intra-oral photos look like ________, pre-frame patient for treatment Hygienist’s Role: • Be open to learning and asking questions www.dentalentrepreneur.com

• Receive the challenge to think more like a dentist as a huge opportunity for growth and to increase level of patient care and education • Ask yourself *If I were an endodontist/periodontist/prosthodontist what would I see? *If there are fractures/cavities/wear patterns, which teeth have them? *If I see a problem on the right side, is it also present on the left?

• Have team develop a treatment plan *Hygienists create a treatment plan with the available information *Doctor reviews their mock treatment plan and gives feedback Going through such an exercise can help you in developing strong team support of your treatment philosophy. Including assistants and administrative staff in this meeting can be valuable. With every team member giving patients the same message, success is a given.

Following and implementing the steps outlined in this article will result in noticeable increase in restorative treatment enrolled in hygiene. Creating an empowering environment is just the beginning; to find out how to create a system for hygiene co-diagnosis that is lasting and dynamic go to www.InspiredHygine.com to get your free audio CD of “The 3 Secrets to Increase Hygiene Diagnosis”. ■

Review each Case: • Review each treatment plan • Ask yourself *Are there any teeth that are questionable as to what type of restoration is best? *Is there more than one treatment route available to this patient? *What is the most conservative treatment possible? *Are there external factors (health, habits) that affect the1 success of the9:22 AM P111386a.qxd:Layout 2/25/11 treatment plan?

As owner of Inspired Hygiene, Rachel helps dentists tap into hygiene’s profit potential. In addition to coaching, Rachel draws from her 18 years of experience as a hygienist and practice administrator to deliver to-the-point articles and speaking programs. She has spoken across the country including the AACD annual session and the popular The Profitable Dentist seminar in Destin, FL. Rachel’s articles have been published in numerous industry journals including The Profitable Dentist, Dental Practice Report, Dentistry Today, RDH, and Modern Hygiene. Inspired Hygiene’s programs include in-office coaching, a free weekly e-zine, the High Performance Hygiene Mastermind group and the new High Performance Perio webinar series. Inspired Hygiene is the preferred hygiene coaching group for the Productive Dentist Academy. To contact Rachel, email her at Rachel@InspiredHygiene.com or call 877-237-7230.

Page 1

Practice Growth... with Patterson Dental

> Practicing dentistry is your responsibility.

Helping your practice grow is ours.

That’s why we created the Patterson Advantage® membership program. Unlike any other membership program in the industry, Patterson Advantage helps you grow your business. Through your everyday purchases, you’ll earn Advantage Dollars that you can use to reinvest in technology and equipment for your practice.

Practice growth with Patterson Dental. Contact your Patterson representative, call 800.873.7683 or visit www.pattersondental.com today to learn more about the Patterson Advantage program.

P111386a (2/11)

www.dentalentrepreneur.com

Dental Entrepreneur Spring 2011 25

Practice Builders Pat Iuni

You Are The Expert!

Your Patients Want your Recommendation

A

fter four years of dedicating yourself to learning and mastering the skills necessary to become a successful practicing dental professional, it’s hard not to start thinking about the fruits of your labor.

At some point in the not-too-distant future, you will move into practice for yourself and will need to learn and master the skills necessary to run a small business. You will be faced with Pat Iuni many different decisions and will need to start to decide how your practice will be run.

Production will be a word that becomes part of your vocabulary. Let’s face it, production is important for any business, and it is no different for dentists. You and your staff will need to start to balance the idea of production against “selling” products and procedures. Many young dental professionals are uncomfortable with selling procedures and/or products.

My advice is to get comfortable with it, recommending/selling procedures and products in the name of good oral health is what your patients expect. They come to you not only for a procedure, but for advice. They want positive reinforcement that what they are doing to maintain their oral health is working, and they also want a professional’s recommendation on things they can do to enhance their current practices.

Fortunately, you are in a position to improve care and production at the same 26 Spring 2011 Dental Entrepreneur

time by becoming comfortable and effective at recommending oral care solutions. Your ability to recommend oral care solutions, procedures, and home care products will positively impact your practice and your patients’ oral health.

As a dental professional, you and your staff have a responsibility to make specific product recommendations to your patients. As part of your practice, you will be asking patients to accept treatment plans that may be costly. If the patient does not have the proper instructions and/or product recommendations, the end result of that treatment could be less than ideal. For example, if a patient has no previous experience with a crown, bridge, or implant, then it is critically important that you and your staff educate the patient on proper home care technique so that the patient’s investment is protected.

Recommending the proper products is like offering an insurance policy on the procedure.

As consumers, we expect to receive information on products we purchase.

Your patient is a consumer, they are buying dental treatment from you. Why would we not provide the patient with the same kind of information we expect as consumers when making purchases? If you are selling a procedure to your patient, shouldn’t you and your staff provide them the “instruction manual” as well?

One of the keys to becoming effective at making product recommendations is understanding the range of options that exist, in addition to having sufficient product knowledge. For example, it is not enough to say to a patient, “Use an electric toothbrush.” They need to understand why they should use an electric toothbrush, especially since it requires a substantial out-of-pocket expense. Be well versed on the features and benefits of the various products/ options.

www.dentalentrepreneur.com

Make sure your staff is educated, as Most companies will provide these matewell. If you expect your staff to recomrials free of charge. mend products and services, it is imporIf you really want to make a difference tant that they understand and believe in in your patients’ oral health, consider the product or service. Personal use or dispensing products that you recommend experience with products is always helpand believe in. A good example might be ful, as many patients will ask their dentist power toothbrushes. If you believe Oral or hygienist what they personally use.

B is the best power brush for a particular One way for you and your staff to patient type, stock the item in your office stay current on the latest product techfor those patients. This is the best way to nology is to leverage the various selling ensure that your specific product recomorganizations. Most manufacturers have mendations are followed. sales forces, either direct or indirect, that We all know that our patients have would love the opportunity to educate good intentions, but the reality is that the you and your staff on the latest prodoral care retail environment can be conucts and technologies that they reprefusing to shop, and patients don’t always sent. Meet with them, give them time, follow through with recommendations take them up on their offer to do “lunch once they leave the office. There are other and learns” in your office. benefits to in office dispensing - it will Depending on the product, keep save your patients time and money, you’ll patient education materials on hand or have the option to give personal instruchave display models in your office so you tion and observe the patient using the can demonstrate how to use the product. product, and last the revenue associated ADSNL_003 Half Page Ad REV2.qxd:Layout 1 2/14/09 6:36 PM Page 1

with that transaction stays in your office.

In closing, everything you and your staff do once you are in practice will be a reflection of you and your practice. Show your patients how committed you are to their oral health by recommending and dispensing the home care products that will help them maximize what you do for them in the office.

Allow them to continue the care that you start in your chair. ■ Pat Iuni is New Business Development manager, NA Oral Health for P&G. He has held many positions with the company since 1987 and is currently responsible for growing Crest & Oral B recommendations and sales in alternative channels, with focus on Managed Care, Employers, and Dental Insurers.

He serves on the AGD Foundation Board and the Leukemia Society Team in Training.

Married with three children, Pat resides in Cincinnati Ohio.

Make the perfect transition

Making that first transition into your career is the most important decision you will ever make. For more than 30 years, ADS and its local transition specialists have helped dental graduates like you make the perfect first transition. As the nationwide leaders in practice purchases, we know the best opportunities wherever it is that you want to be. We are dedicated to your success.

Get off to the perfect start. Visit us online to find your local ADS representative.

ADStransitions.com/localrep www.dentalentrepreneur.com

Dental Entrepreneur Spring 2011 27

Practice Builders Anthony Stefanou, DMD

The “Secret” to Increasing Profits in the Growing Practice!

“

Dentistry is a business!” is the one phrase that you will repeatedly hear in seminars and read about in email groups and articles as you embark on your clinical careers and private practices. It is easy to say, “We know that!” However, many of us still believe that as long as we are great clinicians, our patients will love us, and that means we will be successful financially. Unfortunately, that is not always the case (and certainly not the norm!). Great clinicians often fail to be very profitable in private practice. Conversely, many average or poor clinicians become very successful financially. Why is that? Well, there are many reasons. One is that the overwhelming majority of patients do not know the difference between excellent and acceptable Anthony Stefanou, DMD dental work, and if that’s all we focus on, we can lose the financial game. And, there are many other factors that are important in leading and managing an office, such as:

• How do I powerfully and effectively market my practice?

• How can I improve my communication skills with patients and staff?

• How do I hire, train and motivate the best possible office team?

• How do I stay current with technological advances without overspending?

28 Spring 2011 Dental Entrepreneur

• How do I design an office so that it looks professional and operates efficiently?

• How do I stay in compliance with regulatory issues?

Therefore, it is certainly not just about how you cut a crown prep. The good news is this: if you understand and implement a powerful concept used universally in the business world, you can be both a great clinician and more profitable.

The concept is called PASSIVE INCOME.

Let’s look at some numbers. In the last 15 years, there has been a dramatic, steady increase in the most important statistic when looking at office profitability: overhead, or what it takes to “run” a practice.

Recent surveys now show that the average dental office is operating at a bit under 70 percent overhead (up from 58 percent just 15 years ago!) What does this mean in simple terms? For every $100,000 you collect, you net $30,000.

Now, here’s the challenge. You want, and need, for your practice to grow steadily each year.

Combinations of things are often done to try and accomplish this:

www.dentalentrepreneur.com

• Signing up with more plans (to get more patients) • Hiring more staff (to accommodate the anticipated patient volume) • Staying open more hours (to offer more flexibility) • Buying state-of-the-art technology and equipment (more debt, more payments) • Expanding the types of treatments and services you provide Some of this is fine, and even necessary, to get to the next level. However, if this is all you do, the end result can be that your gross goes up significantly, but so does your overhead! Many $1,000,000 offices operate in the 85 percent overhead range! You don’t need to be an accountant to recognize that your net now is basically the same as if you were grossing half that at the average 70 percent overhead. You now go ahead and spend thousands of dollars on practice management consultants to do what…decrease your overhead? The thinking is that we will automatically create more (net) income if we increase the practice gross. We go about it by doing more dentistry, spending more time chairside or staying open more hours. This is an active approach to try to become more profitable, or as some call it, “trading time for money.”

The problem is that it doesn’t always translate into more profits. Why? Because when we solely go this route, the overhead almost

The idea is to create more income without having to see more patients or spend more time in the office. has to go up percentage-wise.

So what can be done about this? As the practice grows, we need to find a way to utilize a combination of active and passive approaches. Passive income is simply defined as “earnings derived which the individual is not actively involved,” or “isn’t doing more work to earn the income.” This is the key to the power of real estate investing, and why much of the world’s wealth is created in this area.

Can this be applied to the dental office?

Yes! The idea is to create more income without having to see more patients or spend more time in the office. Another business/marketing term that can be used to explain what we are looking to do here is “increasing the point of sale,” or making more dollars per patient visit. Sound impossible? It’s actually not difficult at all.

There are two methods to do this in

your private practice. The first is an “indirect” way to create passive income.

It’s indirect because you are still working for it (chairside), just not spending much more time at it and still seeing the same number of patients.

For example – your patient needs several restorations in one quadrant. In the past, many dentists would have scheduled two or more one hour appointments so as to not “push it” on the patient. Now, with patient comfort being emphasized with various products and technological advances, you offer one slightly longer appointment (maybe 1 ½ hours total) and get three-four composites done in that time frame. This can therefore be considered a “form” of passive income.

Technically, it’s just smarter business without seeing more patients.

The second approach is what I call “true passive income.” Let’s first look at active income again. Your office is operating at 70 percent overhead. To net another $30,000, you must create, find and/or produce an additional $100,000 in dentistry. How much work will that take?

Or, a better question might be, “Can you even do that every year?”

There is a simple method to easily profit the extra $30,000 this year in a passive way, without having to do $100,000 worth of extra dentistry.

We already instruct patients on preventing decay and/

Don’t Worry About Your Future...Own It!

The Paragon Progressive Ownership (POP) Plan provides a proven means for a new dentist to gradually enter into a co-ownership relationship with an experienced dentist.

Call Paragon for a personal consultation to see if POP is right for you.

866.898.1867 Visit PARAGON.US.COM to sign up for our free newsletter. www.dentalentrepreneur.com

Dental Entrepreneur Spring 2011 29

or periodontal disease, and smile maintenance. We recognize we need to do this, and patients expect and want us to do this. The problem is that what we usually do is offer generic advice: brush, floss, rinse, etc. We don’t tell them what to use. The end result of this is that they usually don’t improve their oral health.

They go to the supermarket or pharmacy and get overwhelmed with the choices in the dental aisles.

What they often purchase are not the right products for their dental needs: high abrasion toothpastes, hard bristle brushes, high alcohol content rinses and products that contain colorings or dyes that can stain teeth. On top of that, the drug companies and stores make all the money. Something is wrong with all of this. The good news is that it there is a new trend emerging in dentistry. Recent statistics show that approximately onethird of dental offices now recommend specific home care programs and dispense (yes, sell!) them in their offices. This is no different than what veterinarians, dermatologists, chiropractors and other medical disciplines have been doing for many years. We are the oral health care experts. We should be getting paid to provide oral health care instruction. It’s as simple as that. Patients love the conve-

nience. They get the proper recommendations based on their dental condition and treatment plans. You get to better control what they are using. They improve their oral hygiene and maintain the cosmetic and restorative work they have invested in. And, guess what? You increase your profits significantly!

Now, instead of saying to Mrs. Jones, ”Go home and make sure to brush, floss, rinse, etc.,” you now say, “Mrs. Jones, we’re going to make sure you are using the best home care to take care of the investment you have made in your smile. We recommend the _________ home care system. In fact, we use it ourselves! Mary will get you your personalized hygiene kit up front and review the instructions with you.”

Mrs. Jones does this without hesitation. This doesn’t take up any more chair time. Do this with just four-five patients per day, and you can produce another $30,000 this year in profits. The office staff also benefits because you can now offer a percentage of the retail profits from the program to them as a monthly bonus.

They become motivated and don’t worry about their “$.50-an-hour” raise as much!

This concept works, and everyone wins – patients, staff and your practice! There are several high-quality alcohol-free home

Business Beyond the Classroom

Resource Guide

Patterson Advantage Dental (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 25.

P&G Oral Health 1-877-418-5559 (Option 1) www.dentalcare.com

P&G Oral Health markets a wide range of products to Dental Professionals, including Crest and Oral B brands. With our ProHealth system from Crest & Oral B, Professionals can now recommend a system that virtually eliminates plaque and helps prevent re-growth. Please see our ad on page 23.

To learn more visit www.virtuallyplaquefree.com

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 19.

30 Spring 2011 Dental Entrepreneur

care programs that distribute through dental offices. Research and personally try a few of them before you decide what to recommend. I urge all of you to consider implementing retailing in the dental office and creating substantial passive income in your practice. You will be on your way to “healthier patients” and a “wealthier practice,” with less stress, less time in the office, and a more balanced and productive career and life! ■

Dr. Anthony Stefanou is a 1987 graduate of Tufts University School of Dental Medicine.

He practiced dentistry for almost 20 years, and has been the VP of Sales & Marketing for several dental companies. He is the founder of the Dental Sales Academy, providing workshops and live training programs for dental companies to assist their sales teams on “How to Sell to Dentists”. Dr. Stefanou also lectures internationally on such topics as retailing in the dental office, benefits of alcohol-free home care, risk assessment, and social media.

He has been the featured speaker at many conferences, and his articles have appeared in RDH, The Profitable Dentist, First Impressions, and Proofs magazines. He resides in New York City and can be reached at tonydmd@gmail.com or 646.375.2067.

Please reach out to our advertisers They care about you and keep us in print!!

www.dentalentrepreneur.com

Dental Entrepreneur Survey

We’d love your feedback! Please fill out our survey. Go to dentalentrepreneur.com and it will redirect you to our survey page. Or fill it out here and mail or fax it to: Dental Entrepreneur, 7422 Carmel Exe Park, St 107, Charlotte, NC 28226.

FAX 1-704-846-7304

Name________________________________________________

College_______________________________________________

Email_________________________________________________

Age__________________________________________________

In what single area of a dental practice would you like more information?

Are you interested in being able to download Dental Entrepreneur Magazine from the internet?

____Finances ____Front office - Administration ____Insurance concerns ____Dental equipment ____Other (please specify) _________________________________

____Yes ____No

How would you like to enter the dental field? ____Start your own practice ____Associateship ____Join an existing practice ____Have not decided ____Other (please specify) _________________________________

Where would you like to see yourself in five years? ____In a private practice ____In a group practice ____In an educational environment ____In military service ____Other (please specify) _________________________________

What are your major concerns in your career? ____Money issues ____Getting patients ____Harmony within the practice ____Getting loans ____Other (please specify) _________________________________

Would you consider staying in touch with us for the next two years? ____Yes ____By Email? ____Other? (please specify) _________________________________ ____No

Would you consider writing an article about your first year in practice? ____Yes ____No ____Possibly ____Ask me a year after I graduate ____Other (please specify) _________________________________

What could Dental Entrepreneur Magazine do to make it more valuable to you?

___________________________________________ ___________________________________________ What kind of articles would you like to see in future issues of Dental Entrepreneur Magazine?

___________________________________________ ___________________________________________

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

dental

Business Beyond the Classroom

entrepreneur

Please reach out to our advertisers. They care about you and keep us in print.

If you have any questions, comments, or responses to our magazine, please write us at: Dental Entrepreneur Magazine, 7422 Carmel Executive Park #107, Charlotte, NC 28266 or e-mail us at: ADuff2@aol.com or Linkbeau@aol.com See the entire issue online at:

www.dentalentrepreneur.com

10

Power To Succeed Roger P. Levin, DDS

Tips For Young Dentists

In his book, The Tipping Point, Malcolm Gladwell examines how success happens in business. Most companies go through a cycle of ups and downs. If the up is big enough, then he refers to it as a tipping point. This is where a company goes mainstream and becomes extremely successful.

In popular culture, there are many examples of tipping points—where a product or service goes from obscurity to ubiquity, from the fringes to the forefront. Think of cell phones, personal computers, Facebook, to name Roger P. Levin, DDS just a few. For a product or business to reach a tipping point, many things have to go right. For dental practices, a tipping point is obviously not worldwide success, but a place of continual growth and success where debt is significantly reduced. In dentistry, it usually takes five to seven years for a new practice to reach a tipping point.

With the right management and marketing systems, new dentists can get there sooner.

The State of Dentistry Today Today, the level of debt accrued by new doctors is truly staggering. It is not unusual for a new dentist to start his or her career owing a half-million dollars or more. Perhaps an even more troubling concern is the inability of young dentists, saddled with high debt, to sufficiently invest in the practice to ensure growth in the years ahead.

Some young dentists and dental students may be thinking, “Is it all worth it?” Speaking as a third-generation den34 Spring 2011 Dental Entrepreneur

tist, I can tell you with great confidence, “Absolutely!” The challenges may appear quite daunting, but the rewards are tangible and substantial. Dentistry allows you to have a great career helping people achieve better oral and overall health. This profession provides a comfortable lifestyle where you can run your own business and make your own schedule. Dentists typically are in the top 10 percentile in annual income.

How to Reach the Tipping Point Sooner Dental schools teach dental students how to be excellent dentists. However, due to time constraints, most instructors do not have the opportunity to teach dentists how to be excellent practice owners.

The business side of dentistry is what the vast majority of dentists – both young and experienced – find the most challenging about practicing today. Years ago, a new practice owner could hang out a shingle, and he or she was virtually assured of a successful career. Today, practice success requires more planning, more effort and more expertise.

The world of dentistry is more complex than even from a decade ago. Research and technological breakthroughs are changing the way dentistry is performed.

Cosmetic and implant dentistry continue to grow. Dental insurance grows more complicated. Competition is increasing.

And then there’s the current economy, which has affected the way patients spend money on dental care.

What To Do and What Not To Do The following tips and targets can help new dentists succeed in today’s complex dental landscape and reach a practice tipping point sooner:

1) Don’t — Overspend Fortunately, very few dental practices enter into bankruptcy. But it can happen.

That is why Levin Group advises young dentists not to overspend when opening a practice. In today’s dentistry, one could easily spend a million dollars to open a practice with advanced technologies, the latest equipment and a beautiful office design. Start with the basics, and add more when the patient base is established and the practice begins to grow.

Target: Within six months, create a formula for all technology purchases to show whether each purchase will return on its investment within five years.

2) Do — “WOW” Patients with Superior Customer Service As a new dentist, you will be under the microscope. Patients will automatically compare your practice to their previous dental experiences. Exceed patient expectations every day with every patient. Treat every patient like your favorite celebrity.

Train your team to do the same. Make the experience an extraordinarily positive one—patients will keep coming back and they will tell their friends and families about your practice.

Target: Train all team members to provide superior customer service within six months.

3) Don’t — Wait to Implement Documented Systems Most new practices have excess capacity, so dentists often feel no compelling need to focus on improving efficiency through systems. High-performance systems with defined targets are critical to achieving production goals, reducing stress and setwww.dentalentrepreneur.com

ting the foundation for long-term success.

By implementing systems earlier, you can benefit from them longer.

ally in short supply, so proceed cautiously with social media.

Target: Construct step-by-step, documented systems for every area of the practice within one year.

Target: Establish a practice website that shows up on the first page in Google search results when people in your area search for a local dental practice.

4) Do — Create a Vision Statement Most new dentists have a practice vision, but very few write it down. The vision is the type of practice you want to have in the next three to five years or even longer. By writing it down, the vision becomes real. It is no longer an idea, but something tangible. Committing the vision to paper is the first step to achieving the vision.

7) Don’t — Ignore Telephone Skills Even in the age of the Internet, the telephone is still the practice’s main lifeline for new patients. Train your front desk team to make new and prospective patients welcome when they call. Have your team win over potential patients with powerful verbal skills and turn calls into scheduled appointments through enhanced verbal skills.

Target: Create a new or revised vision statement in the next two months.

Target: Script 100 percent of patient interactions within six to eight months.

5) Don’t — Buy the Largest Yellow Pages Ad Yellow Pages ads are expensive and usually not very effective. A better investment is a strong patient referral program.

Asking every patient for referrals can jumpstart growth. It is not embarrassing to tell patients you are new, young and would appreciate referrals. Most patients will go out of their way to help a young dentist if they like the doctor and staff.

Train your team to ask patients for referrals during checkout and post signs in high-traffic areas saying new patients are welcome.

8) Do — Hire Slowly Too many young doctors hire more staff than they need. Starting with only a few employees who perform multiple jobs is how most entrepreneurial businesses begin. Most entrepreneurs do not hire who they’ll need in three years, but work a little bit harder in the early years doing more with what they can afford.

Keep your staff small and use formulas to know when you should add the next staff member.

Target: Grow your patient referrals by 50% within one year through effective internal marketing.

6) Do — Have a Professional Website The Internet is the new Main Street.

Every practice needs to have a professionally designed website with easy-toaccess information, including treatment philosophy, services, hours of operation, doctor’s bio and email contact. Consider using Facebook, Twitter and other social media to reach current and new patients.

Remember, though, that participating on these sites while beneficial can also be very time-consuming. A doctor’s time is usu-

www.dentalentrepreneur.com

Target: Within two months create a plan for growth that identifies two production goals needed to hire additional staff members.

9) Don’t — Ignore the Team Your team is a key component of your success. Provide staff members the leadership, training and motivation they need, and your office will be well-positioned to grow dramatically in the years to come.

Your team is looking to you, as the leader of the practice, for guidance. Lead your team, and they will respond accordingly.

Target: Take your team to two seminars in the next 12 months.

10) Do — Surround Yourself with Experts Young dentists, due to a lack of funding, often think they should wait to surround themselves with experts and try to do everything on their own. The problem is that young dentists do not have expertise and one mistake can delay reaching the tipping point by years. It is important to have experts help with leasing, office design, management systems and staff hiring.

Target: Within one year, work with two outside experts (accountants, consultants, bookkeepers, etc.) to help you reach practice and/or personal goals.

Benefits of the Tipping Point Moving to the tipping point or beyond should be the dream of every dentist. This means the practice will have excellent production and profitability if all management systems are properly in place.

For a young practice, it means that the dental team can be expanded so that each team member does not have to be a jackof-all-trades and specialization can occur.

It means that the doctor can rely on the team for most day-to-day operations and focus 89% of their time on patient care— one of Levin Group’s most important targets.

Conclusion There are no guarantees of immediate success today. This means that young doctors have to plan ahead to sustain the early years, implement effective systems and targets, and have a realistic view of what it will take to be successful. A young dental practice should provide an outstanding return on investment. Follow the above strategies, and your new practice will soon reach a tipping point. ■ Visit Levin Group’s Resource Center at www. levinegroupgp.com for a wide range of educational materials, including tips, newsletters and white papers. You can also connect with Levin Group on Facebook and Twitter (@ Levin_Group) for tips, news and sharing ideas.

Dental Entrepreneur Spring 2011 35

Dental Trade Shows California Dental Association – Fall Session September 22–24, 2011 San Francisco, CA

Yankee Dental Congress January 27–29, 2011 Boston, MA

American Dental Association October 10–13, 2011 Las Vegas, NV

Chicago Mid Winter Meeting February 24–26, 2011 Chicago, IL

Holiday Dental Conference November 4–5, 2011 Charlotte, NC

Hinman Dental Meeting March 24–26, 2011 Atlanta, GA

Greater NY Dental Meeting November 26–30, 2011 New York, NY

California Dental Association – Spring Session May 13–16, 2011 Anaheim, CA

Index of Advertisers

ADA Insurance Plans.........................................................................................................Back cover ADS South.................................................................................................................................. 17 ADS Transition Specialists............................................................................................................. 27 ADCPA……………………………………....Resource Guide Listing..................................................... 10 The Artist Evolution LLC................................................................................................................ 31 Henry Schein (PPT)..................................................................................................Inside back cover Lightspeed.................................................................................................................................... 7 MacPractice................................................................................................................................ 15 Medical Protective....................................................................................................................... 11 Oxyfresh...................................................................................................................................... 33 Paragon...................................................................................................................................... 29 Patterson...............................................................................................Inside front cover and page 1 Patterson Advantage.................................................................................................................... 25 Proctor & Gamble........................................................................................................................ 23 Sirona ....................................................................................................................................... 19

36 Spring 2011 Dental Entrepreneur

www.dentalentrepreneur.com

It’s the Journey Are you fully prepared for your professional journey?

Do you know what it takes to build professional and personal wealth? Hire an associate?

Bring on a partner? Plan an exit strategy? Sell a practice? It takes expert guidance from a team of people who have your best interests in mind.

Henry Schein Professional Practice Transitions (HSPPT) is the nationwide team you want on your side when you decide to pursue your professional goals. HSPPT provides a full range of transition services and will support you from graduation to retirement with practical advice and customized strategies that will ensure your financial success.

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

Follow Henry Schein Pratice Transitions at facebook.com/henryscheinpracticetransitions

1-800-730-8883 Henry Schein Financial Services is not a bank, does not represent itself as such, and does not conduct banking activities. © 2011 Henry Schein, Inc. No copying without permission. Not responsible for typographical errors.

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

Your patients need you.

Your colleagues need you.

Your family needs you.

Still think you’re in this for yourself?

From dental school through retirement, ADA Insurance Plans protects you and those who count on you. All of our insurance plans feature a set of benefits and options that support the unique needs, challenges, and goals of dentists.

Plus as a member, you’ll find comprehensive coverage at exceptionally low premiums. Our insurance experts work only with dentists and are ready to support you with objective guidance and information.

For more information call 888-463-4545, email ada@gwl.com, or visit www.insurance.ada.org.

This material is an outline only and not a contract. Benefits provided under respective Group Policy Nos. (104TLP Term Life, 1105GDH-IPP Disability Income Protection, 1108GDH-SDP Student Disability, 1106GDH OEP Office Overhead Expense Disability, 104GUL Universal Life, and 1107GH-MCP MedCASHSM) issued to the American Dental Association; insured by Great-West Life & Annuity Insurance Company and filed in accordance with and governed by Illinois law. Coverage available to all eligible ADA members residing in any U.S. state or territory. Term Life, Universal Life and MedCASH premiums increase annually, Income Protection every 5 years and Office Overhead Expense every 10 years. Premium credit discount not guaranteed but reevaluated annually. ©2011 Great-West Life & Annuity Insurance Company. The inverse boomerang logo is a registered trademark of Great-West Life & Annuity Insurance Company.

All Rights Reserved.

NDAD11-DE

Protecting the practice—and the life—you’ve built. Life • Disability • Business Overhead • Hospital & Critical Illness