4 Mistakes That Are Costing You Money

Reprinted by the XLDENT.com Blog

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For many dentists, the dream of practice ownership is often met with the struggle to start and run a small business. Today, we will look at four common mistakes business owners make and how you can overcome these challenges.

1. Not sticking to your budget
For many, the concept of budgeting is easy to understand, but difficult to do. You probably know that creating and following a budget is key to building a profitable practice, but if you’re finding yourself stuck in a bad routine, it may be time to push the reset button. Dentists who run their businesses on a budget are able to keep their goals in perspective and make wiser purchasing decisions. If you’re just getting started, give yourself some grace for the first few months. Remember that no two months are exactly alike and your budget cannot be a template that you copy and paste over and over.

2. Letting your bookkeeping slide
Bookkeeping is a critical component to realizing success in your dental practice. If you’re not reconciling your books monthly, you’re missing an opportunity to correct mistakes sooner when transactions are fresh in your mind. Left unnoticed, even small mistakes will create additional work for your CPA and result in higher fees.

3. Failure to review practice reports
To take your practice’s daily pulse, you have to check reports daily. It will take you less than a minute to glance at your production, collection, debit and credit values each day. Making it a habit to review this information frequently will ensure there are no surprises when you’re reviewing the numbers over longer periods of time, such as monthly or quarterly. After you have a good handle on the basics, start getting familiar with other metrics such as outstanding insurance claims, new patient analysis, accounts receivables, and practice demographics.

Spend a few minutes perusing the Dentaltown forums and it might seem easy to setup and manage your own network. After all, there are many other dentists documenting their trials and successes, right? The average DIY dentist fails when it comes to seeing the big picture, especially as it relates to managing risk, aligning technology with practice goals, and long-term planning. Taking time from production to configure practice hardware is not a wise use of your time. This job is best outsourced to a network service provider who can help you manage the technology needs for your practice.

What Do You Do With Extra Cash in Your Dental Practice?

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No doubt, the title to this article will evoke some groans and rolled eyes. What extra cash, you say? With student loans ranging from $350,000-$400,000, dental practice purchase costs ranging from $600,000-$800,000, home mortgages, supporting a family, and tax obligations, that “extra cash” may never seem to materialize. And before you know it, you’ve reached retirement age with a dental practice that doesn’t command top dollar upon sale and a projected income stream that won’t support a comfortable retirement.

Fund Your Golden Years
Fortunately, your story can have a happy ending. With a bit of planning, you have the means to fund your “golden years” by investing appropriately in your dental practice by using the right saving vehicles for retirement and leveraging the tax code to your advantage.

Invest in Your Practice
When purchasing a dental practice, prospective buyers look for a strong, sustainable client base, a healthy balance sheet, and a skilled team who keeps the practice operating at peak efficiency. They’re also looking for a well-maintained facility with up-to-date dental practice equipment and technology. Recent changes to the tax code can help you keep your building and equipment in tip-top shape and provide payoffs now and in the future.
Accelerate Deductions

If you own the real estate in which you house your practice, you may have an opportunity to accelerate deductions on your income taxes. Instead of applying the standard 39-year depreciation schedule to the entire property, Section 168 of the tax code empowers a building engineer to perform a cost segregation study that breaks the building into Internal Revenue Service (IRS) sanctioned asset classes.
Selected components may be deemed to have shorter useful lives (i.e., 5, 7, or 15 years), thereby opening the door to accelerated depreciation. For “ground up” dental buildings, we have seen 24-65 percent of the total building cost reallocated from 39-year property to much shorter lives.

That adjustment alone can have a significant impact on your current tax liability. If you completed a new building or major lease-hold improvement within the past several years, do not despair. Filing an additional tax form allows you to move the cash flow benefits of a cost segregation study to your current tax year.

Upgrading Your Equipment or Adding an Operatory Can Be Beneficial
If you need to upgrade your dental equipment or add an operatory, but worry that it’s beyond your financial reach, Section 179 of the IRS tax code may tip the decision in a favorable direction. For equipment purchased and placed in service, your business may claim a Section 179 deduction up to $500,000, subject to a phase-out threshold of $2,000,000 on total purchases. You may also claim a 50 percent bonus depreciation on qualified property placed in service this year.

Industry Benchmarks
The table below provides industry benchmarks for staffing, patient load, and annual billing based on the number of operatories in your dental practice. As indicated, modest growth in capacity can translate into an attractive revenue stream.

Average Dental Practices 3-4 Ops 4-6 Ops 6-9 Ops
Dentists 1 1 or 2 2 to 3
Hygienists 1.5 2 2 to 3
Active Patients 1,000-1,800 1,900-2,500 2,800-7,500
Annual Billing $750,000 to $1,00,000 $900,000 to $1,500,000 $1,400,000 to $3,000,000

You may also wish to consider expansions in your service offerings. For example, an investment in chairside CAD/CAM solution, which would enable you to design, produce, and insert ceramic restorations in a single appointment.

Beyond the obvious revenue potential and cost savings, patients benefit by eliminating extra trips to your office to complete their treatments. Convenience may draw people to your doorstep. A quick look at results from four practices attests to the upside potential.

Technology-Minded Doctor Increased Net Income 50 Percent
For the chart below, there is a “story” regarding Practice C, with a four percent decrease in collections. The practice was a partnership. One of the partners was older and wanted to “hibernate” until he retired, versus keeping his practice on the cutting edge of technology and providing world-class treatment for his patients. So the two partners basically divorced, causing the slight drop in collections. However, when the technology-minded doctor went off on his own, his net income increased 50 percent, as evidenced in the table below.

Before & After Purchase of CEREC & 3D Imaging
NET COLLECTIONS
Practice Before Purchase After Purchase % Increase
A $1,295,000 $1,663,000 28%
B $982,000 $1,882,000 92%
C $3,204,000 $3,076,000 -4%
D $1,990,000 $2,593,000 30%
Before & After Purchase of CEREC & 3D Imaging
NET INCOME
Practice Before Purchase After Purchase % Increase
A $476,000 $850,000 79%
B $266,000 $465,000 75%
C $520,000 $780,000 50%
D $598,000 $908,000 52%

American Dental Association (ADA) surveys tell us less than 10 percent of dentists have the ability to retire when they desire and maintain the same standard of living. According to the Wall Street Journal, “70 is the new 65” for dentists. The average age at which dentists retire is 68.7… and rising.”

Maybe we are all living longer, so why not keep working? Maybe dentists really love their jobs. But just maybe, they have too much debt and too little savings as they enter their 60s.

Invest in Your Retirement
IRAs: As soon as practical, make contributions to a tax-qualified retirement plan. Annual investments in Individual Retirement Accounts (IRAs) can grow into a comfortable nest egg by the time you transition into retirement. Contributions to traditional IRAs may reduce your current tax obligations as a function of your adjusted gross income.

Roth IRAs: Taxes apply to future withdrawals when you are likely to have a lower marginal tax rate. Roth IRA contributions are not eligible for tax deductions; however, these assets will not be taxed as they generate earnings or otherwise increase in value. Your tax advisor can help select an investment vehicle suitable for your circumstances.

401 (k) Plans: Contributions to 401(k) plans also provide tax benefits. For example, a 50+-year-old dentist with the right 401(k) Profit Sharing Plan can set aside $59,000 for retirement. If married to a 50+-year-old, another $24,000 can be placed into a 401(k) or Simple IRA. If paying a combined federal and state marginal tax rate of 40 percent, the after-tax cost of these savings amounts to $49,800.

While the eventual withdrawals from these accounts will have tax implications, you may be in a lower tax bracket when they’re realized.

After-Tax Investment Strategy
Retirement accounts are not the only form of recommended savings. As the dental practice matures and the debt load eases, you should develop an after-tax investment strategy funded by resources that are not required to meet current obligations. A skilled wealth advisor can help you craft an investment strategy that is consistent with your age, risk tolerance, and preferences.

Invest in Tax Planning
The good news about going into dentistry is its skilled professionals are highly compensated. The bad news is they often land in the highest tax brackets. Moreover, high income individuals are subject to elevated taxation on their federal returns as a function of:
• A top tax rate of 20% for capital gains and dividends, up from 15%
• A phase-out of the $4,000 personal exemption deduction
• Limits on itemized deductions, such as home mortgage interest, charitable contributions, property taxes, sales tax, state taxes
• Increases in the employee portion of the FICA hospital insurance tax (i.e., 0.9% on wages that exceed $250,000)
• A 3.8% Medicare tax on investment income (e.g., interest, dividends, annuities, royalties, rents)

If you’d like to create some “extra cash,” you’ll want to understand your impending tax liabilities and develop strategies that consistently keep you in the lowest marginal tax brackets year after year. The tax strategies noted earlier may merit your consideration; however, their value depends on how well they fit your specific circumstances. Clearly, it does not make sense to create a windfall of tax savings in one year if your liabilities soar in subsequent years as a result. Likewise, you won’t get much benefit from accelerating deductions should you have a year with relatively light income.

50 Percent of Dentists Don’t Get Max Benefit From Retirement Plans
Your tax advisor should also take a close look at your retirement plans. While 96 percent of dentists have a practice-sponsored plan, half do not get the maximum benefit from them. If you find yourself having to play “catch up” on your retirement planning later in your career, there are special cash balance retirement plans that could allow you to contribute significantly more than traditional plans, including the possibility of contributing some proceeds from the sale of your practice.

Just as fluctuations in your year-to-year business results call for adjustments in tax strategy, your retirement plan may need to change several times during the life of your practice. Key decision points include:
• Cash flow of the practice
• Dentist’s debt load
• Years to retirement
• Retirement funding needs
• Income tax savings
• Future building projects
• Employee demographics
• Team appreciation

A periodic review gives you the means to stash away more funds (or free up cash to spend on something else) when you make investments strategically, not on auto-pilot.

Invest in Your Future
If extra cash threatens to burn a hole in your pocket while significantly increasing your tax obligations, it’s time to create a written plan that charts the course for your future. Capture the goals for your practice as well as your personal life and then devise the strategies and tactics for achieving them. When you write down goals and track them, you are much more likely to achieve them. And when you have extra cash, you’ll know what to do with it.

Control What You Can

Provided by: Pelton & Crane

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When you hear another dentist talk about intense back pain—the “so intense you can’t focus” kind of back pain—you might assume that this person is at the end of his or her career. Some aches and pains at the tail end of years spent in a bustling practice are to be expected—or so you tell yourself.

Pains Started in Dental School
For Dr. Desiree Walker, the pain wasn’t coming 20 years in—or even 10, or 5 for that matter. The pain in her neck and upper back started in dental school. The combination of a backpack weighed down with heavy laptop and books, hunching over that laptop and books to study, then hunching over patients and mannequins in clinic were all talking their toll.

“In school, nothing is custom-fit to your body and ergonomics is the last thing on your mind. The only thing you’re concerned about is passing,” Dr. Walker remembers. “When you’re experiencing pain in that context, you’re not searching for the source of the pain, just a cure.”

“I Knew Something Had to Change”
When the pain grew so intense that Dr. Walker found herself holding back tears during an in-clinic exam, she had a startling realization: “How can I treat patients for the next 30 years when I can’t make it through this exam? I couldn’t focus and it was scary. I knew that something had to change.”

What Healthy Looks Like
Consultations with physical therapists, sports medicine doctors and others led to a back brace, which was enough to get Dr. Walker through dental school, but she knew it was just a Band-Aid, not a permanent solution. Like many others before her, Dr. Walker didn’t waltz straight from graduation into her own custom office, but rather, into a position as an associate. This offered a level of customization not much improved from her days in the clinic.

Equipment Frustration Led to a Breakthrough
“I didn’t have any control over the equipment I was using; I just knew I didn’t like it,” she said. “I chose to focus on my stool and loupes, doing what I could to make sure I had the right angle.” The frustration on the equipment front led to a breakthrough, or as she put it, “what finally helped me over the edge from pain to pain-free.” It wasn’t some miracle drug, but movement that finally made the difference.

Need for a Better Position While Sitting and Treating
“With my physical therapist’s help, I realized I needed a better position while sitting down and treating, but he didn’t talk to me about exercise. That was something I could do, integrate movement and stretches throughout the day, and change the way I moved outside of the dental practice,” Dr. Walker shared.

“I went back to basic exercises with body weights and yoga. I joined the University of North Carolina Gymnastics Club, I was de-stressing and strengthening and I started doing better. I don’t have control over my environment, but I do over me and how I move. I then translated that back into my work day.”

When, two years ago, she was finally in a place to build the practice she wanted, she was in shape to have her equipment complement the total-body health routine she’d established, instead of counting on it to be the cure-all.

A Place of Her Own
It was the weekend that Dr. Walker came to Pelton & Crane’s Charlotte, North Carolina facility that she got the call saying she’d been approved for a construction loan to build her own practice. “The visit to Pelton’s Center of Excellence provided the wonderful framework for creating an amazing patient experience and then we get the call and I was just ready to go, ready to dive in. I had all this energy and passion and was hungry for a direction on how to express it,” she remembers. “And what I realized was that creating this experience wasn’t just for the patients, but for me. I wanted to enjoy it as well! If I wasn’t enjoying it, patients would sense that.

Thinking about all that I’d learned up to that moment, I knew that the body responds to the environment it’s in, and I wanted quality products and the right ergonomic set up for my body. Without energy, without health, your success and the ability to contribute will be limited. I was tired of having those limitations on me. This was my time.”

Now, two years into the practice, business is good and Dr. Walker feels incredible. “The energy I have is like what I had in high school,” she said with a laugh. “I’m able to practice with quality ergonomic equipment—like my patient chair and stool—and I’m able to take breaks. I build my own schedule, which is freeing, and if something isn’t right or doesn’t feel right, I can change it.”

Spreading the Ergonomic Gospel
Having experienced such a transformation in her own approach to clinical practice, as the boss, Dr. Walker is now helping spread the ergonomic gospel to her staff. “I’m always asking them how they’re feeling, because they’re not going to tell you otherwise. They’ll tell each other that their backs hurt, but not you. At the end of our huddle each morning, we stretch, check in with our bodies and talk about things other than the patient schedule. It is important, as a leader, to let staff know you care about their health,” she said. And, when that doesn’t work, she engages in some digital show-and-tell.

“Pelton & Crane’s Narrow Back Advantage™ app has a function to correctly identify improper positioning, so I’ll sneak up and take pictures of my hygienists and staff so that I can show them problem areas and discuss what they need. Being aware of your body’s position is crucial, and using new things like this to help is smart and really fun.”

Learn more about ergonomics and your health at http://www.ergonomics.pelton.net.

That Didn’t Work Out So Well

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By: Rhys Spoor, DDS, FAGD

The original chief complaint of this pleasant patient was that she had been chipping her front teeth and wanted to slow the chipping and get more volume to her teeth as they appeared short to her. At her initial presentation, she had a porcelain fused to metal crown on tooth #3 and a DO composite on tooth #15. The remaining teeth were unrestored.

When she presented for a consultation in our practice, she had recently seated full coverage lithium disilicate crowns and missing provisional restorations for veneers on #7- #10. The missing provisionals had been replaced several times and kept fracturing, usually within hours of being replaced (Figs. 01, 02, 03, 04 and 05).

Patient and Dentist Frustrated
Needless to say, this patient was frustrated, as I’m sure was the dentist. She just wanted to fix a couple of chipped teeth and now she found herself in a position where she felt like she had made a big mistake and had lost not only trust in the first dentist, but trust in dentistry as a whole.

I discussed with her why the provisional restorations kept being pushed off. The functional envelope her teeth were traveling through did not match the shape of the teeth that had been fabricated and were being fabricated. She thanked me for my time and opinion, and I didn’t hear from her for three months.

What Patient Was Told Wasn’t the Case
When the patient returned, she had the final restorations on #7-#10 seated about two weeks prior. The veneer on #7 was missing and #8 was fractured with what appeared to be delaminations between the cement and the restorations (Figs. 06, 07 and 08). The treating dentist had told her he thought once he had placed the final restorations in the final cement the breakage problem would be eliminated. Unfortunately, that was not the case.

Breakage Was Inevitable
We scheduled her to come in for removal of the maxillary restorations and new provisionals about a week later. I also let her know that unless we changed the underlying occlusal cause and decreased the excessive force on the final restorations, further breakage was inevitable. When she returned the following week, tooth #9 had also fractured (Fig 09).

Rationale Was to Build Cuspid Rise Back Into Final Restorations
We removed and reprepped #7-#10 to the original design as there was no advantage to removing any more of the natural tooth structure. We also added very conservative veneer preparations on #6 and #11. The rationale was to build cuspid rise back into the final restorations (Fig. 10).

Risk of Perforation
The mandibular anterior restorations were aggressively reduced facially, just short of perforating the restorative material. The patient was apprised of the risk of perforation and possibly needing to replace some or all of the restorations if that were to occur. Fortunately, there was still enough thickness to maintain the restorations and not replace them (Figs. 11 and 12). The rationale here was to increase the amount of overjet, along with the redesigned cuspid rise, and reduce the lateral forces during parafunction on the incisal edges of the maxillary incisors.

5 Weeks With No Chipping or Breakage
A final impression was taken, along with a centric bite registration and a stick bite, to reference the horizontal plane of occlusion. Shades were selected and photographs sent to the laboratory. A directly made, self-curing bisacryl composite provisional material was shaped and tinted with composite tints (Figs. 13, 14 and 15). This important step was used to determine that forces generated during mastication and parafunction had been altered enough to not fracture the provisional material. The patient was in the provisionals for five weeks with no chipping or breakage.

Renewed Confidence
The final lithium disilicate restorations were seated routinely with a resin cement. Both the patient and I had renewed confidence these would be successful as the provisionals were intact after the five-week trial. The final restorations met the patient’s initial expectations of strengthening the incisal edges of the maxillary anterior teeth and adding a slight amount of length (Figs. 16, 17 and 18). She was also very pleased with the aesthetics.

The key learning issues with this case were:

  • Excessive incisal edge wear is a history of the occlusal forces and unless something is done to change the environment, that same pattern will be recreated.
  • The mandibular incisors are relatively small and preparing unrestored teeth for full coverage crowns leaves greatly compromised teeth. A more conservative veneer would have been a better choice and would have worked well with a resin cement. The final facial contour usually cannot be any fuller than the original facial contour.
  • Use the cuspids to help protect the incisors in parafunction.
  • Clearly explain the benefits and risks of treatment or no treatment. Patients deserve and are required to be informed in terms they can understand.

The Best Service Available

By Dr. Kenneth Van Kirk

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What was it that made you want to work with Burkhart?
The Supply Savings Guarantee and our Account Manager Mike Anderson! The guarantee savings were below our competitor’s overall prices.

How does your Burkhart account manager help you reach your goals as a dentist and business owner?
Our goal is to keep our overhead low and provide the best dentistry we can. It is a win-win situation for our practice to be able to save money—guaranteed.

How has the SSG helped your staff be more efficient?
Our overall cost is below 5%. We were 6.6% with Darby, and our costs have been lowering since then, too.

In what way does your Burkhart Account manager help you and your team?
Mike is very aware of all his products; what is on sale and the savings we get. He always passes this information on to us.

What would you say to a doctor considering the SSG program?
I would say they have nothing to lose, only to save money for the practice—and who doesn’t want to save money?

Any final thoughts?
When Burkhart first came to our practice, we were guaranteed a savings [being on the SSG program]. The first year we paid $17,000 less than what we were spending with Darby, and the second year we spent $20,900 less. We are becoming more efficient the longer we are with the program. I would highly recommend Burkhart to anyone that would like to save money and know you are getting the best service available.

Top 4 Things to Consider When Choosing a Dental Chair

Provided by A-dec.

There are many reasons a dentist may choose one chair over another, from the ability to integrate a full range of options, to comfort and ergonomics for patients and staff—and countless personal preferences in between. What matters most is finding a chair that’s the right fit for you and your team. Before you begin diving into the details, think about these four high-level considerations, which apply to all types of practices across the board.

1. Performance and Efficiency
Does every feature have a specific purpose geared toward helping you and your team gain access and perform at your best? Is each piece ergonomically designed for both patient comfort and yours? Look for a thin backrest, swivel on both sides of center, soft cushioning, programmable positions, dual-articulating headrest, movable, multi-position armrests, synchronized chair movement and a footswitch or touchpad.

2. Durability and Reliability
Is the chair made to last and built to withstand the rigors and harsh environment of the operatory? Is it sturdy and easy to position? Look for equipment that is reliable and ready for years of continuous use, with a track record for minimal service calls.

3. Reputation and Service
When your equipment isn’t working, you aren’t working. It’s that simple. So, research is key. What’s the track record of the chairs you are interested in purchasing? What is the historic record of service and repair? Ask your peers and service techs what products they know and recommend. Access to ongoing customer support is also key. Make sure you know you will be able to get the help, advice, and replacement parts you need for many years to come.

4. Cost of Ownership
Choose a chair with reasonable life costs—typically, the expense required for maintenance and repair over the chair’s expected life. Consider a solution with a reputation for functional simplicity and reliability, which may negate expensive maintenance costs and limit downtime in the future—meaning you have a higher return on every dollar invested. And, if you need a repair, make sure the technician is specifically trained to the manufacturer’s standards. This relationship means access to genuine parts, ensuring a higher standard of repair and longevity.

Look at the chairs that dentists have voted the best patient chairs for the past 12 years. Visit www.a-dec.com/best-dental-chairs to compare A-dec’s top three and help you get started on this important decision.

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