Cliff's Notes

The Business of Dentistry

The 80/20 Rule, Are You the 80 or the 20?

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Did you ever wonder how you are classified by the dental industry? Being in this industry for a long time I can tell you that there is so much data available that just by the way you run your practice determines your “growth” classification. The top 5% are the innovators and bleeding edge participants. Then there is the 80/20 rule. 20% of the remaining dental practices jump on board within the next 5 years and embrace change leaving the 80% waiting for the new and improved. Question, are you the 80 or the 20?

It was over 20 years ago when Rich Yangst walked into our office with a lead lined wooden box. That was my exposure to the Trophy X-Ray System., the first dental digital radiography system in the U.S. market. In 1997 Gendex Corp. introduced the Denoptics Phosphorus Plates but it wasn’t until 2010 that dental digital radiography became main stream. Mostly because of industry and peer pressure. Think about all those years you waited to implement digital imaging and now you can’t live without it.

Some of you younger folks may not remember Jackie Gleason as Ralph Kramden in the Honeymooner’s so you may want to watch this short seen https://www.youtube.com/watch?v=yRPMetvTAYw. Think about everything Ralph missed because of his fear of change. Change is inevitable so we need to embrace it.

Radiographic imaging is continuing to change …. X-ray film was replaced with sensors. X-rays will become obsolete in in the future and replaced by ultrasound. Temporary acrylics will be replaced by 3D printers, and impression materials are being replaced by digital scanners that also do shade matching. For your practice to thrive through the years to come you will need to prepare for the changes in an organized fashion by examining the ROI of each. A great place to start is the CariVu System by Dexis.

Why the CariVu and What is it? …. The CariVu is dental trans-illumination on steroids. I saw the original system, Difoti about 15 years ago (it is still called Difoti in Europe) and since Dexis Corp. took it over the technology has advanced dramatically. The ROI with this product is unlimited as is it’s ability to dramatically raise your standard of care. You can see inside teeth and find fractures and lesions that traditional x-rays can’t pick-up. The patient’s reaction to “no radiation” is a definite practice builder, however, there is a small down side. If patients know you have this technology they may be more resistant to x-rays. That is when you will need to explain that the CariVu cannot see below the gum line to examine the rest of the tooth. The reason the CariVu is a great place to start is because it is very affordable and can pay for its self in full in 90-120 days.

The 80% …. Everyone in an advancing industry will fall in line and implement new technologies, it will be required to run your business. The question is when do you jump in. My suggestion is to look at your practice and evaluate what will give you the best ROI and invest a portion of the increased revenue to implement the next level.

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February 26, 2017 Posted by | Uncategorized | Leave a comment

The Un-Seen Pain Maker – The Use Tax

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Get ready because it is coming. In fact, it’s been around for a long time but never really enforced. As a private citizen the Use-Tax doesn’t have any impact on your life, you have a spending window of around $5k and most of us won’t need that. Those that do are in such small numbers that the State doesn’t care. However, a business registered with the State, in my case New Jersey, is responsible to report all tax liabilities on all goods and services pertaining to the business operation. Whether or not sales tax is collected the business, by law, must remit any shortfall directly to the State Treasury Department.

Who is Responsible for Collecting a State’s Sales Tax? …… If a company has physical presence in a state they are required to collect that states sales tax. Physical presence does not have to be brick & mortar, having employees on the ground and doing business qualifies. However, if contact is made through interstate commerce and goods are received through an ICC service (UPS, FedEx, etc.) the seller is not required to collect your state’s tax and the responsibility is yours.

What is the Use-Tax? …… The Use-Tax (in New Jersey) is the state sales tax. Nobody charges sale tax, including the dental office, you are just obligated to collect it and forward it to the state. If a NJ based business receives goods or services and NJ sales tax was not collected, the business is obligated to report that transaction to the State and pay the amount due. The law is very clear and if you have any questions, please consult your tax advisor.

What is a Taxable & Non-Taxable Liability? …… This is a very difficult question because every state has different rules. Tax is due in the state where you take possession. For example, if you live in NJ and go to New York to buy something you would pay a New York sales tax. New Jersey accepts that, but if you go to PA to buy something and the tax rate is lower, NJ will want you to report and remit the difference. Another issue that complicates the equation is that different states classify taxable items differently. In NJ, 40% of the clinical supplies used are non-taxable when in other states such as NY, 98% are considered taxable.

How will Non-Compliance Hurt? …… As technology advances, more business tax audits will be conducted. I went through one and it is not fun. The state was in the building for 4 days. The company was clean and we always played by the rules. But a $250.00 purchase of copy paper from an out of state stationary supply slipped through the cracks. We were able to negotiate a settlement. A $17.00 tax liability cost us $2500.00 in penalties and interest on top of 4 days of accounting fees. The State of NJ has no published list of non-taxable items, only a general rule and if you choose wrong, you pay. During our audit we spent over an hour arguing about retraction cord, is it taxable or not? We won that one, it was the auditor’s judgment. That would have cost $15k. Ask your tax advisor for more information, laws change…….

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February 20, 2017 Posted by | Uncategorized | Leave a comment

Dental LED Curing Lights – What Who Don’t Know!

t2ec16hhjgmffobufofbbrklvzl9w60_35  LED Curing Lights were introduced to the dental industry a number of years ago. Their clinical effectiveness and success has been proven in thousands of studies and cannot be disputed. However, as George Harrison once wrote “all things must pass”… Nothing lasts forever.

It is true that LED “bulbs” last 10 times longer than traditional bulbs and burn much cooler, but unlike their counterparts they don’t just blow out. The deterioration of LED bulbs is a slow process and may be accelerated by multiple factors within a dental clinical environment. The lights effectiveness will diminish over time and will not give any warning until revealed by clinical failures.

Let’s start with the LED Crystal …The main cause of deterioration lies in the enlargement of defects in the LED crystal, which supply on thermal influence, as to high temperature. These defects do not participate any more in the light generation and the LED lose luminous flux, thus it’s brightness. This is where the old saying “you get what you pay for” comes in. When two competing products are so different in price, there is usually a reason and the reason is the quality of components such as the crystals.

The Crystal Housing & Lens … Quality crystals in a quality housing with a quality lens is essential for quality performance. Many housings and lenses are made of plastic or a low quality metal and that will accelerate deterioration of crystal defects due to temperature fluctuation. Debris build-up on the light exit points will create an excessive heat build-up and add to the strain on the crystals. At this point the light will not preform properly.

LED vs Restorative Material … This is a question that I have been asked my entire career and I was here when Dentsply first introduced the NuvaLight (ultra-violet) and the magic of light cure composites began. Whenever someone told me about a curing light that is so powerful it would cure in 5 seconds I would ask how long the material manufacturer recommended? The answer was usually 20 seconds. If the material manufacturer recommends 20 seconds, then you cure for 20 seconds because that is how long it takes for the chemical reaction to take place. With the emergence of LED lights nothing has changed, until today.

The New Game Changer … Technology is a wonderful thing, it actually fuels its-self. In dentistry we tend to think of technology as software and scanners but the technology used to create perfect clinical materials is now finding faults in trusted restorative techniques. A newly developed computer analysis is now available to measure the compatibility of an LED Light output to the material it is being used to cure. When a manufacturer (i.e. 3M ESPE, Ivolclar Vivadet) develops a light cure material, they “tune it” to their LED Light. Another manufacturer’s light may require a different curing time to avoid an incomplete cure or a burn (over-cure). New technology has revealed the possibility of over-cure as a for cause restorative failure. This becomes extremely critical when considering bulk fill composites.

The Answer … For years I thought it was all about the materials but now I believe it is all about a married system. A computer analysis of the LED Lights in your office and how their output relates to the materials you use takes about 1 hour and can be provided free of charge and I do suggest it. Please feel free to contact me at any time with any questions or concerns.

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February 5, 2017 Posted by | Uncategorized | Leave a comment

Hitting your Head on a Wall Hurts, Why Don’t You Stop? Talk to an Expert, it’s Free!

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So, What’s your pain? Everybody has some, it may be in the home or the garden but it’s there and it eats at you everyday. For most of you reading this rant the pain is at work. A private dental practice is more than just a business, it is a healthcare business that needs constant attention and flexibility for change. It needs your protection!

I Need More Patients … I hear this in almost every office I work with. Some of my clients talk about buying another practice to increase volume. But, unless your are merging the patients into your current location it may not be the smartest idea. Why spend money on another headache when you can invest in what you already have. This is a new world of healthcare and patients have more choices now than ever before. Why should they choose you? Being a nice person is not enough.

Insurance is Starting to Kill Me … Get used to this one because this is as good as it gets. Survival of the average dental practice will depend on patient insurance management. Patients don’t understand that dental insurance is not like their medical coverage. Having a clear vision of a patients dental coverage and communicating it with the patient will allow the maximum benefit of resources for both the patient and the practice. In 2017, PPO Management seminars can be very informative and you should attend a few with your office manager.

Employer / Employee Rights and Management … When I had my company this was the area of management I disliked the most. Dozens of personalities and issues all confined within departmental settings. Battles flaring up almost everyday and you can’t just tell someone to go home. Law and regulations make it very easy to be sued for wrongful termination and don’t think that your records or good intentions will save you because there will always be a settlement to stop the bleeding. Employee record keeping is essential and needs to be updated annually. You don’t know what you don’t know. I have very few clients that address this “time bomb” issue correctly.

Disaster Recovery … What do you do when you arrive at work and 5 fire engines are surrounding your building? What do you do when a partner or key team member becomes ill or dies? What does your family do tomorrow if you get crunched by a cement mixer on your way home tonight? You need to have a plan. You need to have a current evaluation of your practice with written instructions on how to execute a recovery plan and who should oversee it if you can’t.

Making Payroll … This is what makes the difference between an employer and employee. This is why you get to drive the nice car and take nice vacations. This is also what keeps you up at night . How many of us held back on cashing our checks because cash flow was slow. If you have never sat in this chair you can’t understand.

Fix the Pain! … In 2017 you can’t run a dental practice on your own. You need to consult with experts that stay current on changes in law and regulation. Please feel free to contact me with any questions or concerns. It’s time to make a plan.

Henry Schein 2GKASTooth2

January 15, 2017 Posted by | Uncategorized | Leave a comment

OK, One More Time! When Everyone Goes Right, You Go Left!

On Thanksgiving morning last year, the first thing I noticed when I walk down the driveway to get the morning paper was that there were two separate deliveries. This blog post, or news letter to some of you, is about marketing effectiveness. What are people looking at?

OK, back to the deliveries. Why were there two? There were two because of all the printed advertisements,. Why? Because human nature will trump technology, at least for the next few years. That is a bold statement coming form an old guy like me, but if you look at the reality and not the hype you may agree.go-it-alone

How many e-mails do you get per day? 20, 50, 100? How many do you read? How many do you delete? But, when you get home and look at the mail, you look at every single piece before throwing them on the table to sit there looking at you for a few days. Hey, we are all human and share the same traits, we don’t want to physically through something away. Marketing is all about Name Recognition and reputation. How you deliver your message and wrap the package will determine the effectiveness of your program. Also, never advertise discount prices, it does not attract quality patients and effects your PPO reimbursement.

The Web Page … Yes, everybody needs one. Your presence on the web gives a patient the chance to meet you and feel comfortable before they request an appointment. What the patient sees on the web needs to compliment what they hear when they call and see when they walk into your office. Telephone communication skills set the first level of comfort for a patient. Office décor needs to meet all patient expectations to achieve the next level of comfort.   Patient comfort is the first phase in treatment plan acceptance. The real question is how to get people to look at your page. What makes you different from the other 25 offices they see on a Google search.

The Marketing Plan … Marketing budgets should be set at 5% of the previous year’s collections. A marketing plan consists of several programs working together and complimenting each other. Printed advertisements are very effective in creating Name Recognition. Attractive signage (if possible) and coordinated mailings all contribute to establishing your brand. Yes, your Brand! Marketing is all about branding yourself (Name Recognition).

Selective Mailing … The U.S. Postal Service offers selective neighborhood delivery. With this service you can target specific areas that are local to your office. The cost of printing and mailing varies on the number of addresses but sending oversized postcards, every 3 months maybe one of the most effective ways to drive the public to your website. However, don’t think that the phone will ring off the hook, a successful rate of return is only about 3%. This is a marathon not a sprint. But if 1000 mailings done 4 times per year (4000 pc) at a cost of $6k generate 30 phone calls, well, you do the math. The lower range of the average patient value in northern NJ is $700.00/year. If all your marketing is coordinated correctly and the office’s patient communication skills are good, you could realize $21k in revenue for the $6k investment for the first year.

When everyone goes right, you go left … Don’t be afraid to be different. If you look like everyone else you will be lost in the pack. Your message needs to be communicated in the areas your competitors don’t go. Everyone follows the cyber path but how many engage in the old methods? The general public still checks the mail box and they are you target! You want that postcard sitting on the dinning room table for a couple of days. Just a thought.

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January 8, 2017 Posted by | Uncategorized | Leave a comment

Where Did All The Patients Go? Dentistry Down?

ask-the-right-questions  This is the single biggest question I have been asked in the last 2 months. And if you are in the 80% of the 80/20 rule then it is the same question you have been asking yourself. Yes, dentistry has been down for most of the region and there is no simple answer as to why, but we can speculate.

This year is an election year and regardless of your political beliefs, you have to admit that it has been the most negative one and a half years that we have witnessed in modern memory. You feel depressed, your team feels depressed and your patients feel depressed. Dentistry is not high on their agenda and your chair is the last place they want to be.

The market has changed, the emotional climate that we all live in effects our daily activities and keeps us adjusting our priority lists. Out of Sight, Out of Mind! That may explain what has happened to your daily schedule.

It’s time to re-focus, look at your marketing program and plan a coordinated effort to re-engage “lost patients” and attract new patients. Do you have name recognition? Who are you and what makes you so different? All your competitors are great dentists and they all accommodate insurance plans of some sort. Why should a patient choose you? Marketing 101 “Packaging is 95% of the Sale”, what does your package look like? Does it fit in with the demographic you are marketing to?

Let’s talk about demographics … How does your practice environment relate to your patient base and potential new patients? When I hear an office complaining about not having enough quality patients or patient referrals it usually points to the patient (customer) experience. If you want a general family practice, your external marketing effort should focus on women in the 35-50 year old range. Your practice environment should accommodate their expectations and appeal to their comfort. Marketing research shows that woman make the majority of healthcare decisions within their family structure. They bring hubby and the kids. They also talk about daily experiences and you want that great visit to the dentist to be in that conversation.

To establish a good marketing program that grows the practice the internal marketing program needs to compliment the external one. I have been very impressed with some of the patient referral rewards programs that I have seen. Sometimes it’s not the “thank you” gift but the way it is presented. Stu Lenard, my marketing guru, once said “Retail is Detail” presentation is everything. What does your package look like? Let’s face it, the cost of up-grading your environment is equivalent to 1-2 crowns per month. What’s the ROI? Please contact me with any questions or concerns.

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November 10, 2016 Posted by | Uncategorized | Leave a comment

In-House Dental Insurance Plans May be Illegal …

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The in-house dental insurance plan may be illegal in your state. Here in New Jersey the “good intent” may cost you hundreds of thousands of dollars. The fact is simple, you are offering insurance and you are not a state licensed insurer. BANG! You just broke a whole bunch of laws. Also, the higher your UCR the higher your reimbursement, that is pretty much a fact, but offering a special (i.e. $69.99 Cleaning, X-rays, Exam) may re-adjust your reimbursement to a lower rate and may require you to refund any patient that paid a higher rate during the promotional period and that includes insurance companies.

Healthcare providers are subject to additional consumer protection laws. If you are a PPO provider you are subject to insurance company rules and regulations. However, the rules keep changing. It is almost impossible for a dental office doing less than $1M/year to have the resources to understand and manage the ever changing landscape. Insurance reimbursements are fluid and constantly shifting and require continuous monitoring . Now is the time to think about “Out Sourcing”.

Simple economics … Out sourcing your PPO management program may cost $400.00/month. A team member may cost $600.00+/week. A PPO management company has multiple resources and can react quickly to changes in rates and law.

This past week I attended an outstanding presentation on PPO management and how to navigate and monitor the insurance system. I was amazed at the data the insurance companies compile to determine your reimbursement rate. Do you do “write-offs”? Maybe you should do “insurance adjustments”. Understanding the insurance market and managing it correctly could amount to thousands of dollars per month.

Another thing I noticed was the lack of interest in learning about such an important topic. Most dentist do not understand the insurance market and leave it to the office manager. The office manager does not attend quality seminars and the dentist assumes everything is being done correctly and legally.

Seminar attendance for the new generation of dentists is down and that is not good. They get there information on line but the interaction of a live session really brings things home. For a dentist, practice management sessions are not interesting but they are essential. A good business owner does not have to know how to do something but they need to know what can be and has to be done and then hold team members accountable.

As the cost of operations continue to rise, outsourcing is a very viable option. Outsourcing is nothing more than “shared services” and the only down side is having to pick the best company to work with. Get recommendations and interview several dental orientated companies and calculate the best ROI. The investment in third party specialists can be very rewarding. Would you ask a PPO management company to do a crown prep? Why do you think you can manage PPO’s? After all, you don’t know what you don’t know! Please contact me at any time with any questions or concerns.

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October 30, 2016 Posted by | Uncategorized | Leave a comment

Survival of the Fittest … Your Patient Base may be a Time Bomb!

thjqzm52xuYour Patient base is your future. Did you ever really study your “revenue base”? What is the average revenue value of each patient? Looking back at the all the practice valuations that I have done I have seen a range from $650.00/year to $1850.00. Both of those extremes were practices that grossed similar amounts ($1.2M) so why is the higher value more dangerous? The higher value base was one half the size with less than 900 active patients and that leaves the organization more vulnerable to outside economics and changes in the healthcare market.

 

Average Patient Value is the average dollar amount that a patient spends annually on dentistry. That should take into account the cost of 2 hygiene appointments and $300.00 in additional work. It doesn’t mater if the patients are private or insurance because your net receipts are used in the calculation. Remember, this is only an average, some patient may need $3000.00 and some just hygiene. The value is easy to find, take the number of active patients (24 months) and divide it into 12 months of receipts. The biggest problem here is that most dental professionals do not know how many active patients they have.

Patient Demographics is extremely important when managing the growth of a patient base. The average small practice (1-2 doctors) usually has a patient base within 10 years (+ or -) of the doctor. A dentist that is 50 years old will have an average patient base of 40-60. There are always exceptions but this average will hold true 80% of the time. This is a time bomb. As the base gets older it will shrink in size. A strong healthy practice has 1200 active patients per dentist. You want to engage 20-25 new patients per month to off set lost patients and the front end of your demographic model that will be needing less dentistry as they age.

Where is the Pain & Where is the Joy that your patients are experiencing in their lives? An endodontist told me a great story about what happened in his office. He practices Spa Dentistry and pays attention the “patient experience”. He completed a procedure on a 45 year old woman that was referred to him. When it came time to release the patient, she said “do I really have to go”? When the doc laughed she said it was so quiet and relaxing and now “I have to get home, make dinner and get the kids onto their homework”. You need to relate to your patients world and understand their personal concerns. That’s dentistry beyond the mouth. Be who your patients want you to be.

Healthcare Today has become a business. The dental practice that defines the “patient experience” as a priority will be rewarded with the greatest gift, a patient referral. Pay attention to growing the base with families, you need to continuously replenish the back end of your of your patient demographic. Please feel free to contact me at any time with any questions or concerns.

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October 16, 2016 Posted by | Uncategorized | Leave a comment

Survival of the Fittest, The Future of Dentistry, Part II

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My last rant about the “Survival of the Fittest” was surprisingly well received . I am not a professional writer, I write like I speak, but I guess the subject on the blog post hit a nerve. The responses and forwards along with transmission contact reports confirm the smaller market’s concern over the rapid advances in technology and their ability to afford it. That is a concern, but no different than any small market (50 or less employees) business in today’s economy. You need to be prepared because the time may come that you may need to decide if you want to be an employer or employee. If ownership/equity is your plan just understand, it’s not easy. But it can be exciting.

You have to like what you do. Most of the dental professionals I deal with love cosmetic and reconstructive dentistry, it’s an art that most people can’t do. They love sitting chairside and working with patients with assorted personalities. But those same great clinicians hate the management end of the business. All the requirements of running a healthcare based business can be overwhelming and quiet often the person sitting on the top of the mountain gets burned out and goes into autopilot. Autopilot can be addicting and dangerous.

Quality Management is the key to a successful organization. Leadership creates the quality. Here lies the problem for the average dentist. A dentist is a doctor, a specialist in oral health just like a cardiologist is a specialist in the functions of the heart. However, doctors are scientists and in most cases not managers but they can be leaders. A leader requires passion and passion is contagious when presented correctly. The development of a quality and well compensated team is the foundation needed to succeed in the future. Putting together a quality team can be difficult and hiring a recruiter or management consultant is not a bad idea. There are several that I think are excellent and I would be happy to share their contact information.

Quality Financial Consultants are essential for any successful business. In a dental practice the owner/decision maker is also the primary revenue generator and they need trusted advise. I always recommend advisors that specialize in the dental/healthcare world mainly because the daily operation of the business is unique. Most financial advisors are CPA’s but not all CPA’s are financial advisors. A good advisor will insist on consulting with you on a quarterly basis and provide tax planning solution within weeks of the end of your Q3. If your advisor is just doing your taxes according to what you give them, its time to start looking for a new “advisor”.

Technology & Diagnostics are requirements to succeed in today’s market. Top quality management and 3rd party consultation are investments in your practice. You need to engage in the digital revolution and “focus on what can go right”. Now is the time to get started. Please feel free to contact me with any questions or concerns.

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September 14, 2016 Posted by | Uncategorized | Leave a comment

Survival of the Fittest! The Future of Dentistry

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Charles Darwin studied evolution and change. I believe he was correct in stating that adaptation to change is the key to survival so it puzzles me when I see people resist it. We all need to embrace the changes in providing healthcare because the advances in technology are speeding up the evolution.

Dentistry (Oral Health) has always been the step-child of medicine and the dentist was never considered a “real doctor” well, that has changed. The advancements in technology has opened the door to a new world of diagnostic capabilities. Dentistry can now detect many systemic conditions before the patient exhibits symptoms. Now think about that from the Insurance company’s view. They are fully aware that early detection and treatment is financially beneficial to them. Early detection leads to cures and that means less professional intervention. Yes, outside of your office it is all about the money.

As we move into 2017, insurance will have a greater impact on our society. No matter which direction politics take us the landscape will continue to evolve at a faster and faster pace. So, how do we survive in this new environment? We embrace the change.

Where will your dental practice be in 3 years? How about 5? I can tell you that if you are still around in 10 years your practice will be nothing you would recognize today. In the next year the 3D printers will be functional in the dental office. Your going to scan your clinical preparations and if you use an outside lab, be able to pint out a temporary crown or appliance the minute you finish the prep. Your diagnostics will all be 3D and you will be looking deeper into the human anatomy than ever before. Radiation will be a thing of the past once the software is available to incorporate ultrasound. And then there are the specialist. The private dental office will have less places to refer to because the specialists will be working in general practices. To survive as the market shifts all clinical procedures will need to be kept in-house.

In 2020 Electronic Health Records (EHR) will be required by all dental professionals. That requires updating software and a plan to integrate digital components and solutions. Saying you have digital radiography is not enough but it is a start. The standard dental practice will need to utilize new technologies to accommodate new diagnostic codes being made available by the ADA and AMA. Also, If you have not started moving towards the “paperless environment” you are working behind the curve. The State of New York already requires E-Scribe and it won’t be long before the other 49 states follow. The train has left the station and it is time to start running and jump on-board.

Now lets talk about the value and “curb appeal” of a practice that is preparing for transition. Young professionals looking to establish their own practice will be more attracted to an organization that is well entrenched in the digital revolution. Today’s graduates do not know how to develop x-ray film and in the very near future they won’t be taught how to use impression materials. They learn the advanced digital formats and when entering residency programs their skills will be honed with digital imaging and diagnostics. The age of dental chairs, lights, compressor, etc. are not the value, as most sellers think. The value is in the ability to practice 21st century dentistry the way new dental professionals are taught and the amount of funds needed for additional investments required to grow a business in the fast paced healthcare revolution.

Please feel free to contact me with any questions or concerns and your comments are always welcome.

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September 5, 2016 Posted by | Uncategorized | Leave a comment