Managing Your Dental Practice(And everything you always wanted to know about it but were afraid to ask.)Gregg S. Rothstein DMDDirector, Penn Dental Medicine at Sayre Health CenterClinical Associate ProfessorPrivate Practice, Bucks County, PAGregg@TodaysDentalCare.comEverything you ever wanted to know about running a practice and were afraid to ask.Everything you ever wanted to know about running a practice but you didn't know who to ask.Our First 90 Minutes...Biography Temple 2001Biography Temple 2001 GPRBiography Temple 2001 GPR VAMC PHL 2001-2 High Volume, "Mill" Type office associateship.Biography Temple 2001 GPR VAMC PHL 2001-2 High Volume, "Mill" Type office associateship. Insurance-Free Associateship.Biography Temple 2001 GPR VAMC PHL 2001-2 High Volume, "Mill" Type office associateship. Insurance-Free Associateship. Practice Purchase and Transition. Major Land Development for new office with practice relocation.Penn History2006-2011:Penn History2006-2011:2011-present:Practice Management"Just do good dentistry and treat your patients well and you will be successful."Unnamed Dental Instructor, Temple University School of Dentistry 1997, 1998, 1999, 2000.Life as a dentist in private practice is hard because:1.We work in a very small, very dark , confined space doing surgeries on patients who are wide awake.2.Most people don't like coming to see me.Life as a dentist in private practice is hard because:3.I see my work at least every six months and there are some things I would do differently.4.People expect everything I do to fix their mouths to last longer than anything else they buy.Life as a dentist in private practice is hard because:5.I send my impressions off to a lab and no matter what mistake has been made, I own it.6.Seeing people in pain is never fun.Even worse: causing people pain.Life as a dentist in private practice is hard because:7.Seeing people transfer their fear of dentistry to their children is frustrating.8.People, materials and treatment don't always work the way you expect.Life as a dentist in private practice is hard because:9.Watching people take ownership in their homes, cars and phones, but then not spending their own time and money to take care of their mouth unless the government or their employer pays the entire bill is frustrating.Life as a dentist in private practice is hard because:10.When I see a patient who is the victim of an unscrupulous dentist, I get upset.11.Insurance companies make the delivery of treatment complicated and confusing to patients.12.Being king and in control of your own world by owning a business is great, except for when it's not.Life as a dentist in private practice is hard because:13.I am surrounded by technology, but selecting the right things for my practice is difficult.14.Practicing dentistry takes a toll on my body that will not be realized until my retirement.Life as a dentist in private practice is hard because:15.Feelings of depression are very real and overwhelming.16.Everything is more expensive when you add the word 'dental' do it.Life as a dentist in private practice is hard because:17.Hiring, managing, and firing staff is a huge responsibility.18.My staff often doesn't understand my frustrations.Life as a dentist in private practice is hard because:19.When I'm not working, my office is idle.20.People judge the quality of my dentistry by everything but the quality of my dentistry.Life as a dentist in private practice is hard because:1.We work in a very small, very dark , confined space doing surgeries on patients who are wide awake.2.Most people don't like coming to see me.3.I see my work at least every six months and there are some things I would do differently.4.People expect everything I do to fix their mouths to last longer than anything else they buy.5.I send my impressions off to a lab and no matter what mistake has been made, I own it.6.Seeing people in pain is never fun.Even worse: causing people pain.7.Seeing people transfer their fear of dentistry to their children is frustrating.8.People, materials and treatment don't always work the way you expect.9 Watching people take ownership in their homes, cars and phones, but then not spending their own time and money to take care of their mouth unless the govt. or their employer pays the entire bill is frustrating.10.When I see a patient who is the victim of an unscrupulous dentist, I get upset.11.Insurance companies make the delivery of treatment complicated and confusing to patients.12.Being king and in control of your own world by owning a business is great, except for when it's not.13.I am surrounded by technology, but selecting the right things for my practice is difficult.14.Practicing dentistry takes a toll on my body that will not be realized until my retirement.15.Feelings of depression are very real and overwhelming.16.Everything is more expensive when you add the word 'dental' do it.17.Hiring, managing, and firing staffis a huge responsibility.18.My staff often doesn't understand my frustrations.19.When I'm not working, my office is idle.20.People judge the quality of my dentistry by everything but the quality of my dentistry.And one reason of many dentistry is awesome.It keeps us coming back for more."The Best Cosmetic Dentistry Ever"Facts:We work in our practices to help people and educate them.We work in our practices to help our staff.We work in our practices to build relationships.We work in our practices to better our community.We work in our practices to be a respected member of society.We work in our practices to make a difference.We work to make a reputation for ourselves and our profession.We work to provide for our families and to create a legacy.We work to earn the trust and respect of our patients.+30 more reasons of your own.Facts:We work in our practices to help people and educate them.We work in our practices to help our staff.We work in our practices to build relationships.We work in our practices to better our community.We work in our practices to be a respected member of society.We work in our practices to make a difference.We work to make a reputation for ourselves and our profession.We work to provide for our families and to create a legacy.We work to earn the trust and respect of our patients.+30 more reasons of your own.PROFITABILITYA Really Good Place to Start...Systems DependantNOTManager DependantGoods vs. ServicesStuff to get.Getting stuff done.The 15 Second PB and J.(A tribute to the efficient dental office.)Who Are You?Do You Know Yourself?Mission Statement--Major FeaturesDefines your key marketDefines your contribution to that groupDefines what makes you distinct in that effortServes as a framework for evaluation of activity"FedEx will produce superior financial returns for shareowners by providing high value-added supply chain, transportation, business and related information services through focused operating companies. Customer requirements will be met in the highest quality manner appropriate to each market segment served. FedEx will strive to develop mutually rewarding relationships with its employees, partners and suppliers. Safety will be the first consideration in all operations. Corporate activities will be conducted to the highest ethical and professional standards.""To provide the fast food customer food prepared in the same high-quality manner world-wide that is tasty, reasonably-priced & delivered consistently in a low-key dcor and friendly atmosphere."To guide the patients in our community along a path of optimal dental health and wellness for life.To non-judgmentally deliver the highest possible level of care with empathy and understanding.To treat our patients as individuals.To deliver care with first class, five star service.To respect our patients' time.To consistently deliver more than would reasonably be expected.We will provide the best dental care possible to both children and adult patients in the most pleasant and stress-free environment.Our continued success depends on making our patients feel comfortable in our office, fostering their trust in our abilities, and demonstrating our commitment to their dental and overall health.Our aim is not to have the best dental practice in Richboro, but rather our aim is to have the best dental practice in the world.Gregg S. Rothstein, DMD and Associates, PCFact:Everything that a patient experiences while seeking care at your office is a reflection of you personally or your treatment philosophies, and is an opportunity to create value in their eyes and thus grow your practice.The better you are at maximizing these opportunities, the more successful you will be.Three Areas to Manage in Your Practice1.The front end: Any areas the patient experiences that are non-clinical.2.The back end: Clinical areas that patients experience in the course of care.3.Everything else:Components of practice management that are invisible to patients.Three Areas to Manage in Your Practice1.The front end: Any areas the patient experiences that are non-clinical.2.The back end: Clinical areas that patients experience in the course of care.3.Everything else:Components of practice management that are invisible to patients.Corporations: 5 Reasons to Incorporate.1.Limit personal liabilityWith Litigation: Protection of personal assets.You personally are working as an employee of the corporation.Liability in the event of malpractice or injury is typically limited to business assets and insurance.With Debt: In the event of default, creditors' recourse is restricted to business assets.Corporations: 5 Reasons to Incorporate.2.Tax flexibility.(See below)3.Perpetual Existence:When you sell, your corporate structure can exist beyond the sale (as in the sale of business assets only), or you can sell the shares of the corporation in part or whole to transfer the business.Corporations: 5 Reasons to Incorporate.4.Tax deductible expenses:Corporations deduct expenses, including salaries, before income is allocated to owners.5.Name protection:Your business name is protected and may not be duplicated once registered with the Department of State.Types of Corporations:C:May be owned by more than 100 individuals.May be owned by non-US citizens.Separate taxable entities.File a corporate tax return (Form 1120S).Taxed at the corporate federal rate (35%).Can be owned by other entities.S: Must be owned by fewer than 100 individuals.Must be owned by US citizens.File an informational only tax return (Form 1120S).Pass-through taxable entities (see below).Elected--Your corp. must "elect" to operate as an S.Why Most Dental Practices are $-Corporations:Profits/losses are "passed through" and are reported on personal tax return.Tax is paid at the individual level of the officers.We don't like paying corporate tax rates! (as we would in a C-corp)Combined federal and state corporate rates can be very high.Federal: 35%State: PA 7%, NY12%, NJ 10.5%, DE 7%Duties of a Corporation-Documents of Formation, the "Articles of Incorporation" must be filed with the state.-Bylaws must be written at the time of formation.-Stocks and stock certificates must be issued.-Annual director meetings must be held.-Annual reports must be filed with the state.-Fees for formation and recordkeeping.Vs.ProductionCollectionTrack Business Activity--AccountingAccrual basis for accounting:Include items when earned and deductions when they are incurred.Will pay tax on your accounts receivables.Payables are typically 10-20-30K/mo.; receivables can be much higherCash basis for accounting:Includes income when it is received and deductions when they are paid.The currency of our business is ca$h."Profit" DefinedThe difference between the amount of money collected and the expenses paid out in the business' operation.Profit = Collections - Operational ExpensesProfit = Doctor payIn an Ideal World...Collections = ProductionsIn the Real World...Production - Adjustments1.Courtesy2.Insurance3.Re-do's4.Promotions5.BenefitsCollectible ProductionCollections = Collectible Production - Bad DebtProfit = Collections - Operational ExpensesTo ProductionThe dollar value of the treatment you provide:YOUR ESTABLISHED FEE.PPO Ins. Co. "A" -- You are In Network.Procedure Production UCR Contracted AllowanceInsurance PaysPatient Pays Adjustments to ProductionCrown $1000 $600 50% $300 $300 $400MOD Resin$300 $200 80% $160 $40 $100"Write Off" Defined:A reduction in value of earnings.Three Areas to Manage in Your Practice1.The front end: Any areas the patient experiences that are non-clinical.2.The back end: Clinical areas that patients experience in the course of care.3.Everything else:Components of practice management that are invisible to patients.Accounting Software$229The Income Statement aka P + LPurpose: To demonstrate whether the business (not the owner) has made or lost money for a specific period of time.Fixed Expenses: Those that cost the same amount per month regardless of business volume. (rent, license fees, trash removal, web access, insurance, etc.)Variable Expenses: Vary proportionately with the amount of business volume. (labs, payroll, supplies, utilities, etc.)Payroll Expenses-22-28% of Gross Receipts-Hourly Wage-Payroll Taxes (SS, Medicare)-Paid time off-Medical Insurance for staff/families-Corporate match for retirement plans-Payroll processing fees-Dental benefitsHourly WagesDental Hygienist: $30-$40/hr.Chairside Dental Assistant: $18-$24/hrFront Desk/Receptionist: $18-$24/hrEFDA: $22-$30/hrSwing Assistant: $12-$17/hrAdditional CompensationPTO: As the employee takes it, or as a rate applied evenly to each pay period over yr.Medical Insurance:Personal Choice PPO IBX=~$600/mo.Payroll Taxes: FICA 1/2(12.4% up to 106k for SS + 2.9% Medicare no limit)Match to 401K: Dollar for dollar up to 4% of gross incomeDental BenefitsThe Real Cost of an Employee(40 hrs/week = 160hrs/month, 48 weeks/yr)Hourly wage:$36 UniformFICA-SS (6.2% gross): $2.23 C.E.Fica-Medicare (1.45% gross) $0.52 BonusPTO: (2weeks/48 x $36, or80/1920hrs x $36): $1.50Holiday (6/240 days): $0.90Medical ($600/160hrs): $3.75SH 401K match (4%xgross) $1.44Dental (2 hyg/exams/rads+$400 restor.)$600/1920 hrs $0.31Your $36 employee......Costs $46.65 per hour!CODE BROWN!WWYD?Processing PayrollA DemonstrationInsurance Expenses (2-3%)Professional Liability Medical ($7200/yr)General Liability DentalBusiness Interruption Life ($2M/$2000)Practice Contents Disability Income($70K=~$4500/yr)Employment Practice Liability Umbrella (?)Employee Dishonesty3rd Party ERISA (Employee Retirement Income Security Act)Riders for Flood, Electronics, Radiography equip., etc.-------------------------------------------------------------------Annual Cost: ~$4,000-$8,000/yrDisability overhead ($2400/yr) Worker's Compensation ($1500/yr)Professional LiabilityTypically $1M/$3M, $2M/$3M,or $3M/$5MCarriers: EDIC, Brown & Brown, Med. ProtectiveRetroactive date:Date after which you are covered for negligent acts; typically prior to the inception of a policy.Claims Made: -Coverage for incidents after the retroactive date and are reported during the term of the policy.-Coverage for prior acts after the retroactive date.-Tail needed:to cover incidents that have not been reported but did occur during the policy term.-CheaperOccurrence:-Coverage for incidents during the coverage period, regardless of when it's reported.-No prior acts covered.-No Tail needed: Incidents are covered if they occurred during the policy period.-Expensive--You are pre-paying for a tail whether you need it or not.Workers' Compensation Insurance-Coverages:Medical expenses and wage replacement for injuries to employees during the performance of job duties.-Coverage by employer mandates that employees surrender the right to sue the employer for negligence.-Not optional.-Premiums based on annual payroll, and type of business.Rates are regulatedby the state and can vary state to state.-Save money by exempting the corporate officers.Disability Income Vs. Disability Overhead Insurance(You need both unless you're loaded.) Disability Income:-Replaces lost wages -Can be paid with pre-tax dollars (benefits are taxed), or post-tax dollars (benefits untaxed)-Limits of coverage: typically 60% of gross income as benefit.-"Own Occupation" Clause--Considers you totally disabled if you cannot perform the duties of your own occupation.Disability Overhead:-Reimburses business operating expenses up to limits of coverage-Paid with pre-tax dollars as operational expenseFactors in Insurance Carrier Choice:-Definitions of disability-Tendency to pay claims-Insurer's financial strengthRent Expense (4-6%)-Typical $18-$28 sq. ft./yr professionl space divided over 12 months.Common Rental pitfalls:-Terms (rate increases, length)-Fixtures-Assignment-Signage-Equipment-Signer/guarantorCommercial leases are not like residential leases!Bank Service ChargesCredit Card processing fees: ~2-2.5% of card chargesHealthcare financing:6, 12, 18, 24 months-Dr. pays interest24, 36, 48, 60 months-Pt. pays interestDental Supplies 6-8%-Schein>Patterson>Benco>Darby-Net 32 (beware of grey market)/Dental Deals Online-Ebay-CostcoAdvertising and Promotion 1-2%Yellow Pages: 1/2 page full color >$1000/month.WebsiteSocial MediaGroupon/Living SocialDirect Mail:1% ROINew resident mailer/welcome wagon