The Professional Advisory April/2008

The

34 Professional

Advisory For Dental Professionals

IN THIS ISSUE YOU, YOUR EX AND THE TAXMAN David Chong Yen CFP, CA

HOW DO I PREPARE MY PRACTICE FOR SALE? PT. III Graham Tuck H.B.A C.A

ISSUES TO CONSIDER IN THE SALE OF A PRACTICE David Rosenthal BA., LL.B.

SOME INTERESTING RETIREMENT QUESTIONS

TRENDS IN INSURANCE PLANNING PT. II Dr. Ian Wexler

THE IMPORTANCE OF A PROFESSIONAL LEASE NEGOTIATION Ian Toms B.Sc. (Hons)

MARKETING OUR DENTAL PRACTICE: PROVEN EFFECTIVE TOOLS Dr. Ron Weintraub

Mark McNulty BA, CFP, CIM

plus CHANGE NOTES FROM THE EDITOR

VOL. 34 : APRIL, 2008

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The Professional Advisory consists of a group of seven independent professionals who provide services to the dental profession, each of who specializes in a different eld. They have gathered to keep each other informed of the latest developments relating to the profession, and to produce this publication which is designed to provide expert information and advice solely for dentists and their advisors.

Change RALPH CRAWFORD BA., DMD As long as I can remember my mother had a small wooden plaque hanging in her bedroom to which we were directed, in her terms, “as the occasion required”. Since the passing of my mother almost 35 years ago the plaque has hung on my wall and to this day I find myself turning to it “as the occasion required”. The plaque is brass embossed with two hands clasped in prayer and below is the inscription: God grant me the serenity to accept the things I cannot change; courage to change the things I can; and wisdom to know the difference.

Years ago I found that these profound words, entitled The Serenity Prayer, were created in the mid 1930s as an introduction to a sermon by the American theologian, Reinhold Niebuhr (1892-1971). And I understand that by the 1940s the prayer had found its way into both the Alcoholics Anonymous and Narcotics Anonymous programs.

The reality of change is certainly not new. Philosophers, poets and politicians have referred to change down through the ages: Nothing is permanent but change (Heraclitus 500 BCE), Nature’s mighty law is change (Robert Burns 1759-1796), The basic fact of today is the tremendous pace of change in human life ( Jawaharlal Nehru 1889-1964). But what I admire so much about what we refer to in our home as “my mother’s prayer” is its practicality. Yes, there is change, but sometimes there’s not much we can do about it. At other times change needs to be looked at straight and steady, and with courage mustered from within, something done about it. And the secret of course is the possession of wisdom to determine when and how to act.

Certainly, the practice of dentistry is nowhere near being exempt from the effects of change. Technology, economics, politics have consummate influence on

change within a practice without even considering the vicissitudes in our personal hopes and desires, health and age.

We just can’t avoid change and that’s why it’s so important to know how and when to effectively deal with it. We’re living in the 21st century and so many things aren’t what they used to be even a few years ago. And it’s noteworthy that our Professional Advisory contributors - each in their own realm of expertise offer sound wisdom on recognizing and dealing with change.

Believe it or not, there was a time when few dental practices were for sale because why would you buy one if all you had to do was open the doors on any corner of your choice. But change is reality: Graham Tuck continues his four-part series on How Do I Prepare My Practice For Sale and David Rosenthal in his Issues to Consider in the Sale of a Practice deals with 11 very important points to consider when change determines it’s time for that big sale. Leases can form an integral part when practices change owners and to avoid difficulties Ian Toms offers excellent advice on the Importance of a Professional Lease Negotiation.

Ron Weintraub is very positive that changes in the internal and external strategies to Marketing Our Dental Practice can pay huge dividends and “is helpful to maintain our practice over the long term.” And speaking of long term; when that long term of dental practice is over and the change to retirement is imminent, Mark McNulty deals with Some Interesting Retirement Questions so frequently asked as the dentist’s practice days come to and end. The very title of Ian Wexler’s Trends in Insurance Planning is about change and is brought to the forefront in his introduction as he examines “three areas of insurance planning that are currently undergoing a significant amount of change.” David Chong Yen’s opening sentence informs us that “It is both an emotional and a financial strain to go through a separation/divorce.”

If that “strain” isn’t change, what is - particularly when the Taxman is involved? It is interesting that our contributors in a series of diverse topics each deal with some aspect of change. And it is even more interesting to note that each in his own way encourages us to change the things we can and each provides wisdom on how it can be accomplished.

Oh yes, one last word: “Thanks Mom!” PA crawford@dccnet.com

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You, Your Ex and the Taxman DAVID CHONG YEN CFP, CA It is both an emotional and a financial strain to go through a separation/divorce settlement. It is definitely not simply a matter between you and your ex. The taxman might get more than his fair share if you don’t navigate the situation carefully.

To help you understand the issues, consider the following checklist: • Locate a copy of your signed marriage contract or cohabitation agreement - this may reduce your financial exposure. But if you do not have one signed, it is too late!

• Options available in connection with a separation/ divorce - lawyer/court, mediation, arbitration and collaborative family law. The professional fees and time involved might be considerations in deciding on the chosen approach. Speak with your lawyer to get the pros/cons of each option.

• List of assets - compile a list of assets (home, cottage, investment/bank accounts, dental practice, life insurance policy and any other valuables) you and your spouse own and the associated debts outstanding.

• Notify your financial advisor/banker - this avoids one party stashing cash away although some bankers may get nervous.

• Dental practice - your most valuable asset. Valuation often becomes the number one issue in the settlement.

Consider a professional valuator to valuate your practice.

• Matrimonial home/cottage - who is to stay? If this property becomes part of the equalization, there should be no immediate tax implication as the gain may be sheltered by the principal residence exemption. If exemption is not available, one could choose to transfer the property - at whatever it cost - without any immediate tax consequence. Taxes will be payable in the future if the property is sold at a gain by the recipient.

• Registered Retirement Savings Plan - How to split? Should have no immediate tax implication if the transfer is properly documented in the separation agreement and a certain tax election form is filed. It is important that your accountant is aware of your separation/divorce settlement so the election is properly prepared and filed. Make sure you update the name of the beneficiary for those RRSP’s that stay under your own portfolio.

• Spousal support payment - In general, such payment, if made on a periodic basis (e.g., monthly) pursuant to a court order or written separation agreement, is tax deductible by the payer and taxable in the hands of the recipient only. That means if you pay a lump sum payment up front, you might not be able to claim a deduction. The separation agreement must be clear that the payments are for spousal support; otherwise they might be treated as child support.

• Child support payment - How much is required?

There are guidelines available to determine the monthly amount required. It is non-deductible by you (the payer) for tax purposes, nor is it taxable in the recipient’s hands.

• Equivalent to spouse credit - who is to claim? If you have joint or shared custody of your minor child/ children, you have to decide who is eligible to claim the credit. It is best to state this in the settlement agreement to avoid any future argument. It is important to note that if you are paying child support payments, you are not eligible to make such a claim.

• Child care expense - if you share custody, each party could claim the amount incurred subject to the limit stipulated by the Canada Revenue Agency.

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• Tuition and education credits - the student could transfer up to $5,000 to either parent regardless of who actually paid for the tuition.

• Legal fees - relating to obtaining a divorce or division of property are not tax deductible. Legal fees paid to obtain an order for child support or to enforce an existing right to spousal support should be tax deductible. However, legal fees relating to an increase in spousal or child support would likely not be tax deductible.

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• Wills/power of attorney - it is a perfect time to have them updated.

• Life is full of ups and downs; have your advisors with you along the way to smooth out any wrinkles. PA David Chong Yen, CFP, CA with an international firm background and more than twenty-seven years of experience, advises healthcare professionals and owner-managers. Additional information can be obtained by phone (416) 510-8888, fax (416) 510-2699, or e-mail david@dcy.ca.

This article is intended to present tax saving and tax planning ideas and is not intended to replace professional advice.

How Do I Prepare My Practice For Sale?

GRAHAM TUCK H.B.A., C.A. Part III – One to Three Years Before Planned Sale With only one to three years before a planned sale we are coming down to the wire. There is limited time to maneuver. You have definitely come to the point when a valuation is prepared - assuming you have not done so in the past few years. Where are the weaknesses in the practice? Can they be corrected to reflect the changes in the financial statements that will be used to prepare the final valuation to sell the practice? Remember, three years of financial statements are generally the norm unless in very special circumstances it’s one or two years. This means you are in control of how your practice is presented in the valuation.

One should make every attempt to keep the practice production stable or growing - a feature definitely preferred by purchasers. Cost control is also needed as the value is based not on billings but on net normalized profit and patient count. In many situations, where there are low billings per patient, the use of a staff bonus system targeting certain results may be very beneficial to encourage your administrative staff to be more diligent in having patients book and keep their appointments. Increasing their hourly rate carries no guarantee other than increasing costs - thus reducing

your net normalized profit. Money may not be the limiting factor for your staff. Your front desk people may not be capable of doing better. They may need coaching or replacing. Every situation is unique.

Cosmetic changes are available and may be needed in order to present your practice in a favourable light. You should treat these as the final changes before it is time to sell. Choose your colours wisely. Major changes to your leaseholds may not have enough additional value in the final valuation to cover the costs involved.

Try putting on a purchaser’s hat and look at your practice. Too often vendors look at all the old “dead” files and think there is opportunity in them because the staff is always going into them to reactivate files from the past. Ideally, if your staff can proactively revive some of the old files, do it now. But if the staff is only reacting to returning patients to pull the file forward, the purchaser would see little value in those charts.

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Most purchasers like to see a good dental hygiene management program in place. A motivated hygienist will not only reward the patient but also your bottom line and thus the value of your practice. If you do not have the time or inclination to better train your hygienists there are excellent practice management courses available.

Even if you haven’t used an accountant in the past, now is the time to set up a system of annual financial statements for your practice. The last three years financial statements is all you need for the valuation.

What happened before that is not important.

Purchaser’s accountants like to see another

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accountant’s prepared financial statements. It strengthens the reliability of your accounting numbers.

OVERVIEW: The one to three year mark is getting too late to put much money into capital items. Focus on increasing billings and cost control for those three years prior to the sale of the practice. This is especially important if your overhead is high. Remember, both patients and profit drive the value of the practice. PA Graham Tuck, H.B.A., C.A., is the broker/owner of Professional Practice Sales (Ontario) Ltd., which specializes in the valuation and sale of dental practices. He can be reached at (905) 472-6000 or 1 (888) 777-8825 or by e-mail at: grtuck@rogers.com.

Issues to Consider in the Sale of a Practice DAVID ROSENTHAL BA., LL.B. When selling your dental practice, there are many issues to consider: 1. Price Determination - How is your sale price determined? For an asset sale the purchase price is allocated to various assets. A proper valuation of your practice by a reputable appraiser is important and will assist in determining asset values. Review the allocations carefully with your accountant to help finalize the sale price.

2. Professional Corporation - If your practice is owned by your dentistry professional corporation (PC), you need to ensure the PC legal documentation and minute book are up-to-date and in compliance with the laws relating to the PC, especially the rules of the Royal College of Dental Surgeons of Ontario.

3. Assets or Shares: What are you selling? - If you own your practice personally as a sole proprietor, before closing you might be able to transfer the practice to your PC and then sell the PC shares. There are many tax and legal considerations and differences between a

share sale versus an asset sale. Hire an accountant and lawyer who understand the issues when selling dental practices. Get the proper advice to save taxes and get the most money for your practice.

4. Cost Sharing or Partnership - If you are currently in a cost sharing arrangement or partnership, review these agreements with your lawyer to see how these impact on the sale. Consider if you need your partners or cost-sharers consent to sell your practice. Are you required to offer your practice for sale to your partners or cost-sharers first before you can sell your practice to a third party?

5. Sale Agreements - This is the definitive legal document so make sure you understand all your obligations, including your representations and warranties, covenants, conditions and indemnities.

6. Your Current Associates - Consider what happens to associates on a sale. Review your associate agreements to determine what non-competition clauses bind the associate.

7. Premises Lease - A purchaser (and purchaser’s bank financing the transaction) wants a long term lease in place with renewal options. Review your existing lease to see what is required to transfer the tenant’s obligations to the purchaser. Warning: your lease may require you to remain liable for the remaining lease term even on a sale of your practice!

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8. Leased Equipment - Review all existing leases to determine prepayment privileges and penalties.

Often the penalties are severe so consider requiring the purchaser assume those leases with a possible reduction in the sale price. This may be cheaper than paying the penalty to terminate and payout the lease.

9. Sta - possibly the most important and misunderstood area when selling your practice. There are potentially large liabilities regarding your employees upon terminations. Ideally the purchaser will keep all employees and assume all liabilities for sta.

10. Non-competition or Non-Solicitation Covenants The Purchaser will want you to agree not to compete

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within a certain area for a certain time after closing.

What are your objectives after closing? Will you retire or open a new practice across the street?

11. Vendor associating for transition after closing Purchasers typically want you to remain at the practice to assist in the transition or for a longer term association. Think about what your expectations are after closing. How long are you willing to stay after the sale and on what basis? PA David Rosenthal is a senior lawyer with Spiegel Rosenthal Professional Corporation whose practice is devoted to corporate, commercial and business law, with special emphasis on advising and consulting for the dental profession. He can be reached at (416) 865-0736; or fax to (416) 3638451; or e-mail to david@drlaw.ca

Some Interesting Retirement Questions and retire comfortably?

2) What happens after the practice is sold?

3) I am tired of losing money in the stock market.

Is it possible just to invest in GICs or something with no risk of loss?

MARK McNULTY Before addressing these questions, let me provide you BA, CFP, CIM with a little more background. Jack is 57 years old and Last month we met with a new client (let’s call him Dr. has a well-established practice in an urban Ontario Jack Smith) who asked some questions which have, in our experience, a somewhat universal application. community. A valuation done two years ago estimated the practice value at $700,000.

They are: 1) Do I have enough to allow me to sell my practice Jack has been married to Susanne for 35 years and

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and they have three grown children. In addition to the practice they have approximately $800,000 in RRSPs, a hygiene corporation with investment assets of about $650,000, and bank deposits and GICs worth about $230,000. They own their own home (worth around $900,000) and they have no debt. When asked about their personal spending needs, Jack and Susanne did not have any idea what it costs to maintain their lifestyle. They also didn’t know how much of their living expenses were being run through the practice (for example; travel, auto, entertainment, points, etc).

With this brief background in mind, let me address the questions Jack raised. First, do they have enough of a “nest egg” to sell their practice and transition into retirement? This is a critical question. And it’s not one where you want to make a mistake. Why? Well, the problem is you likely won’t find out it’s a mistake until there is little you can do about it except reduce lifestyle. In our experience, Jack and Susanne are not ready to address this question. In order to answer the first question properly, we must know what it will likely cost to maintain their lifestyle in retirement.

One of our first orders of business is to work out what cash flow Jack and Susanne will be happy with in retirement.

The next question was, “What happens after the practice is sold?” The short answer to that question is “a lot.” Many of the factors that stood the Smiths in good stead during their working life will no longer apply in retirement. They no longer will have any earned income but rather will have to live off the cash flow from their portfolio. Their investment strategies will therefore have to change from accumulation and growth to sustainable cash flow generation and safety of principal. If you try to maximize returns like one would do during the accumulation stage of life then you could be assuming an amount of risk that is inappropriate during retirement.

There are all kinds of investment rules of thumb about how your portfolio should be organized in retirement.

A common one is to use your age as the percentage of your portfolio that is invested in low risk assets. Rules of thumb are too general in our view. The structure of a sound retirement portfolio is driven by each individual family’s needs. Properly done, you must first start with tax planning, and an assessment of your indexed, sustainable, after-tax cash flow requirement.

We use a 10/1 retirement investment strategy. That’s where your portfolio is organized to meet your needs, given the appropriate tax strategies, over the next 10

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years, with the plan being updated each year. Any sound retirement plan must be long term in nature to encompass the next stage of your life which could be 30 or 40 years, or even longer. However, it must also be monitored closely and updated annually at a minimum.

Lastly, let me address the question about investing 100 per cent of the portfolio in a supposedly risk free investment like a GIC. There are many risks one faces in the investment world and some are accentuated in retirement. Few investments have no risk. GICs, for example, are subject to interest rate risk. The only reason you don’t see them go up and down in value is there is no current published market for them.

Nonetheless, if you are holding a GIC with a fixed rate and interest rates go up then the fair market value of your investment will decline. For example, in an open market who could you sell a GIC paying six per cent to if an investor could get a new one paying eight per cent? Another risk you will face in retirement is inflation. At an annual average of only three per cent inflation, in 30 years $242,726 after-tax will buy you the same goods and services as $100,000 today.

Unfortunately, in most situations the real income from a GIC portfolio will erode too quickly after taxes and inflation. One of the benefits of an equity component in an investment portfolio is that it is intended to address these risks. Many of the dentists who ask this question have suffered losses in the past when speculating on the stock market. There

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is a big difference between speculating and investing going to take some work, but from our analysis in a broadly diversified, professionally structured, they are well on their way to a successful transition and modern portfolio. Let me draw an analogy between retirement. PA your profession and investing. Should a patient who has had a painful experience at a dental office never again seek the care of a dental professional? Just like Mark McNulty is co-author of The Canadian Small Business Owner’s to Financial Independence. Mark is an Associate Portfolio Manager oral health, your retirement and transition plan is a Guide with Raymond James Ltd. Independent Financial Services - Member complex and ongoing process where generally the CIPF. The opinions expressed by the author are not necessarily those input of a professional will bring enhancement. of Raymond James Ltd. Mark may be contacted at 1.866.261.4768 or Addressing these questions for the Smiths is certainly mark.mcnulty@raymondjames.ca.

Trends in Insurance Planning Pt. II DR. IAN WEXLER Several years ago, I was appointed to The Agents Advisory Council for one of Canada’s largest insurance companies. This appointment, of which I was one of only nine advisors from across Canada, gave me an opportunity to view both short and long term insurance planning initiatives “from an insider’s perspective.” As well, it provided me with a unique insight into the future of insurance planning that most insurance advisors are not privy to. In this article I will examine three areas of insurance planning that are currently undergoing a significant amount of change: living benefits, underwriting and annuities.

Living Benefits Living Benefits is now the current term encompassing all forms of what used to be known as disability benefits. This includes everything from long term disability, to critical illness, to long term care, as well as others. Here are some of the top trends that I envision for the future: 1. For the time being, it is reasonable to assume that the number of companies offering living benefit plans that include long term disability and business overhead expense plans, will not increase or decrease. On the other hand, it is this author’s opinion that the

total number of companies now offering critical illness plans will begin to shrink in the near future. This will be primarily due to profitability and the cost of remaining competitive.

With the aging of baby boomers, who are now turning 65, as well as existing plan holders, companies who have sold these plans will soon be paying huge sums of benefit dollars due to the increased incidence of critical illnesses such as heart attacks, stroke, and cancer.

This financial impact will therefore affect the bottom line of many of these companies, and their ability to compete in the critical illness market.

2. Although the sale of critical illness plans has represented the largest growth area in living benefits in recent years, this trend will start to slow and level off.

3. The cost of critical illness plans will continue to increase over time due to reasons indicated above. In light of this, it may not be unreasonable to see companies offering plans that are “guaranteed renewable” - simply meaning that the premium can increase over time. Canada currently is the only country in the world where critical illness premiums can be “locked in” for a set period, e.g., 10 years or permanently.

4. Long term care is already starting to become the new “hot area” of living benefits, as the baby boomers and the following “baby busters” as defined by David Foot, the author of Boom, Bust, and Echo, begin to realize the dramatic potential cost of health care in retirement. This coverage which is essentially “long term disability coverage in retirement” pays a benefit if you require home or institutionalized care and meet

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specific health criteria as outlined in the contract.

5. As many dentists are working or plan to work beyond age 65, we may see long term disability plans that routinely offer benefits that extend beyond this age, e.g., to 70 or 75.

6. Conversion of long term disability plans into critical illness or long term care plans after a specified age, as well as the conversion of critical illness plans to a long term care plan at a certain age.

Underwriting Underwriting, which is the process of determining insurability, will continue to become more stringent.

This, I believe, will be due to a number of reasons which include more reliable medical testing (I would not be shocked to even see genetic testing at some point in the future.), and terrorism, which has already been the cause for rather strict travel limitations on many current disability and life insurance plans. Does this mean that I recommend everyone avoid seeing their physician and run out to buy insurance now?

No! I have always recommended to my insurance clients and readers who require coverage, that they obtain the best, private, guaranteed insurance coverage when young and healthy. This has not changed.

A risk for anyone considering applying for insurance coverage is waiting or procrastinating.

Annuities One of the most significant growth areas in the insurance industry involves annuities. In general, for those

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who invest an initial lump sum in the annuity, these products provide a guaranteed monthly payout for either a certain period of time or for life. This growth has been due to a few reasons.

1. Canadians are living longer and therefore, there is the potential to outlive their anticipated retirement income.

2. The continued volatility of the stock market, the rest of the economy, and your retirement portfolio in general.

With the annuity market, a new submarket has also developed where an individual can purchase a guaranteed minimum withdrawal benefit. These are annuities which are tied to segregated funds or “seg funds” that offer guaranteed protection of the principal investment over a fixed period of time. For example, if an investor initially invested $200,000 with a five per cent guarantee, he or she would be guaranteed $10,000 a year for 20 years, regardless of the market performance of the underlying investment.

For many dentists heading into a long term transition or retirement, annuities may represent an important and risk free component of their overall financial plan. PA Dr. Ian Wexler is Canada’s leading authority on insurance issues for dentists. He is the President of Protect-a-dent and Protect Insurance Agencies Inc. in Toronto which provides life, disability, critical illness, and healthcare insurance products and services to professionals, executives, and business owners across Ontario. He can be reached for questions or other enquiries at (416) 391-3764 or drwex@protect-ins.com

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The Importance of a Professional Lease Negotiation IAN D. TOMS B.Sc. (Hons) Most tenant leases I review were not reviewed or negotiated by a professional prior to execution - often because at the time the tenant entered into the lease, the tenant did not believe that the fees associated with the service were justified. In fact, a significant number of tenants actually represent themselves in lease negotiation. These tenants are now in deep trouble, which is why they are contacting my office.

Even if your lease has been professionally reviewed, it is very likely that it contains inherent flaws which do not become apparent until it is too late. This article presents only three of the very common lease flaws which could and should have been corrected at the time the lease was negotiated, with an example of the associated financial cost. In short, investing a few thousand dollars before signing your lease can save you hundreds of thousands down the road.

1. Short term plus option period - “I have a buyer for my practice but the sale cannot proceed because the purchaser’s bank will not advance the funds because the term plus option period is shorter than the loan term. At this point, landlord refuses to give additional options to extend the term. I am now faced with either relocating my practice at a cost of $300,000, or loosing the prospective purchaser. Both options are unacceptable as they prohibit my retirement. What do I do now?”

In order to finance a purchase and sale, your lease must have a term plus option time period equal to or greater than the term of the loan, which is often seven years. “Term plus option period” is the total number of years in your current term plus the total number of years in all of your renewal options following this current term. You must appreciate that term plus option period length is critical and must be planned during the initial lease negotiation, and then ex-

tended during each term renewal negotiation.

2. Flawed assignment provision - “I have a buyer for my practice but the sale cannot proceed because the landlord can and will terminate my lease as an alternative to assignment. The landlord has however offered to agree to a new lease on significantly more landlord friendly terms, but he wants to double the rent. The purchaser has agreed to these new terms but as a result has reduced the purchase price offered to me by $200,000. What do I do now?”

Even if your lease has been professionally reviewed, it is very likely that it contains inherent flaws which do not become apparent until it is too late.

This is a very common lease problem. You must have a clear path to assign your lease to your successor.

Why would you ever agree to a lease which provides a landlord with a leverage position at the exactly the wrong time for you? This clause needs to be corrected at the time the initial lease is negotiated.

3. No death & disability provision - “My husband was a dentist and was the tenant named in his premises lease. He passed away unexpectedly just a few months ago. I miss him terribly and now I find that according to his lease, I am required to meet ongoing liabilities, including rental payments. The practice broker says that likely another eight months will pass before the practice is sold. We were counting on the proceeds from the sale of the practice to finance our retirement, and I can’t afford to loose the estimated $200,000 the rent and locum will cost me. I may have to return to work now. What do I do now?”

If you are personally the tenant or have guaranteed your lease, you should have limited or relieved your liability in case of death or disability. Again, the time to deal with this issue was when the original lease negotiation was conducted. A remedial alternative

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includes purchasing life insurance as well as business overhead expense insurance which will reimburse the insured for lease payments made in the event of a disability or death.

To be clear, my advice is to have your lease professionally reviewed at the time you are entering into the new lease. If you are operating under an existing lease, have your lease reviewed to identify flaws and plan a strategy to correct them.

Finally, if you are inclined to represent yourself during

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any form of lease negotiation, I invite you to first visit my web site at www.iantoms.com , Go to the Resource Section, and complete the short multiple choice skill testing quiz which will enable you to assess your own lease negotiating ability. PA Based on more than 20 years business experience Mr.Toms, B.Sc. (Hons) acts as a tenant advocate on behalf of select retail and professional tenant clients primarily in the Greater Toronto Area. Mr. Toms is licensed as a Real Estate Broker and can be reached at (705) 743-1220, by e-mail at iantoms@pipcom.com, or through his web site at: www.iantoms.com

Marketing Our Dental Practice: Proven Effective Tools DR. RON WEINTRAUB Keeping our practices viable in a mobile, aging society is challenging. We need to consider available options carefully to ensure growth of our patient base. Effective marketing reflects our oral health values and helps introduce new people to our dental services. A source of new patients can dramatically increase our patient flow. Being mindful that dental professionals adhere to a dental code of advertising ethics, to maintain a healthy influx of new patients, marketing and communications should be high on our priority list.

What Does Marketing Involve?

To achieve the objective of maintaining a healthy influx of new patients, marketing helps our practices reach the next level of success through image-conscious, but cost-effective marketing strategies. Deciding on a strategy requires initial planning and budgeting. Basic marketing plans include two types: external and internal. The first step in the planning process includes assigning a budget to both types of outreach with the understanding that external marketing is significantly more expensive than internal marketing.

External Marketing Absorbs Most of the Budget External marketing for new practices and those located

in recently developed areas that have the potential of bringing in an influx of patients benefit greatly from external marketing of professional services. Among reported results-oriented external marketing strategies include the following: 1. yellow pages advertisements 2. bus stop billboards 3. refrigerator magnets containing important medical and local information distributed to geographically targeted areas 4. local newspaper articles and ads 5. T.V. and radio spots to send a public health message 6. Community Open House to inaugurate new practices 7. flyers designed to appeal to cosmetically oriented patients offering whitening procedures at an attractive cost. (We need to be prepared, however, to offer current patients the same opportunity.)

Targeting the type of patients who present the greatest chance of long-range retention is the key to tailoring a marketing strategy. Following the Royal College of Dental Surgeons (RCDS) guidelines on advertising, we can distinguish our practice as offering benefits that discriminating patients expect today to enhance the possibility of attracting them.

Since this type of advertising gobbles up the allotted budget quickly, tracking the source of new patient inquiries and eliminating ineffective ones are prudent and cost effective.

Internal Marketing Is Economical With internal marketing, we use our staff and patient

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base as vehicles to refer their family and friends to promote our practice by word-of-mouth. It is successful only with conscious effort and planning. Staff could include the subject of acquiring new patients on the agenda of a routine meeting. Staff members act as ambassadors for our practices. They represent the communities we serve, and in their networking, they meet people who might be interested in our services.

Extending personal invitations and giving us high recommendations, staff publicly promotes friendliness and competence. To reward and motivate the team for their diligence, an incentive such as a spa visit instead of a simple “thank you” shows appreciation.

Our plans should also include marketing to existing patients. The goal of this strategy is to encourage them to refer their friends, family, and associates. The more valued the patients, the more we should encourage them to refer others to our practice. They will probably refer similarly motivated people who value high quality oral healthcare. Wisely, we reassure them that we can accommodate new patients without diluting the experience current patients presently receive.

Most important to internal marketing is effective communication. Proactive administrative staffs ask patients how their appointment went. They also compliment patients on their cooperation. This is an opportune moment to ask if they might have family or friends looking for a dentist and convey sincerity

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when we say we would be happy to welcome them as patients.

The treatment coordinator can also play a significant role in growing the patient flow. New patients who have just enjoyed a WOW experience via a new patient protocol are likely to tell family and friends that they have had a positive experience when they visited the new dentist and were impressed with the high quality of care they received.

Other likely networking candidates include physicians, chiropractors, hair stylists, estheticians, pharmacists, podiatrists, optometrists, mall personnel, emergency care clinics. We need to give them our office contact information.

Wisdom prevails when we also use a tracking method of staff and others who generate referrals in addition to the external marketing sources so we can acknowledge them. No less important to the success of our being recommended is recognition of the efforts made on our behalf. A personalized note or phone call from the doctor or hygienist is not only polite, but also shows appreciation. Moreover, appropriately thanking those who suggest our services assures the possibility of future recommendations.

Our ongoing effort to develop and implement a marketing plan pays huge dividends. Attracting new and established local residents leads to a steady inflow of high-quality new patients. We can develop our own marketing strategy or seek outside assistance to formulate or oversee it. But developing a plan is helpful to maintain our practice over the long term. PA Ron Weintraub is a founding partner with the Bayview Village & Downtown Dental Associates and brings over thirty-five years of knowledge and experience in the practice of general dentistry to the Professional Advisory. Large companies such as Patterson Dental, Ash Temple Ltd, Henry Schein Arcona, & the former Canadian Dental Co. have benefited from his insight. As a consultant to Innovative Practice Solutions, Ron advises dentists on practice enhancement, practice purchases, sales, location evaluations, associate buy-ins, and business mergers. Dr.Weintraub can be contacted at (905) 470-6222 Ext. 221 or drronips@rogers.com.

The views expressed in any article are those of the author alone. They should not be acted upon without the advice of your “professional advisors”.