Cliff's Notes

The Business of Dentistry

Dental Consumable Analytics Control Your Overhead in Real Time!

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The American Dental Association has been tracking dental office operating expenses for years. Every area of organized operational data was collected from responding ADA members by a series of Q&A’s. With this data available you can evaluate your overhead investment and possibly plug up some of those holes in the ship that you didn’t know were there. Your category spend information can be found on your P&L statement and if the data was entered correctly the calculations are very simple. A certain percentage of the practice’s gross revenue is assigned to each business category (i.e. rent, salaries, supplies, lab, etc.) and now you have the information to formulate a practical budget.

A Practical Budget … It is hard for a “fluid” busy dental practice to budget consumable products and anticipate growth. But, there is a method and formula that works. Larger business always have operational budgets for both consumable and revenue generating investments. Note the word “investment” and not “expense”. Everything a business does should be looked at as an investment with a predictable return. A dental office’s quarterly investment on consumable supplies is one of the smaller line items on a financial P&L but one of the most fluid and requires time and effort. Time is money and the investment in supply ordering time should be considered as part of your “supply spend” budget.

Supply Spend … Most dental practices are small business. A small business in the U.S. is a company with gross revenues under $50M and most private dental practices fall in the lower end of that number. The process of supply procurement is usually given to a team member with instructions to “get the best deal”. That is a consumer mentality and not practical for an on going business. The ADA, through member research, reported that the average dental practice invests 6.5% of their gross production on clinical supplies. Inventory management is controlling that number (not line item cost) and getting it as low as possible while investing the least amount of time on this “non-revenue generating operational task”. A predictable working budget is based on accurate and detailed analytics.

Detailed Analytics … In today’s fast paced economy, everything is based on data. Is there any one supplier that can provide analytical reports on everything you use? Probably not because your spending time shopping for the cheapest price and not the overall value. Value is reducing that 6.5% to 5% or less and shifting “shopping time” to productive time and increasing revenue. What is value? It is competitive pricing, fast delivery, 6 or better inventory turns per year, minimal back-orders, and detailed analytics on product usage with experienced consultation free of charge. Detailed analysis will breakdown products by categories, quantity, spend, and manufactures. With this information you now have “buying power”. But, how do you get there and how do you start?

How do you get there? … Data entry is the key factor and maybe the hardest part. But, I can take most of that burden off your shoulders. I have the analytical formula and the software programs to organize the supply data and give you all the information that is needed to establish a formulary that will achieve multiple inventory turns, reduced lost inventory, create a predictable budget, and get your supply spend below 5%. It’s time to reduce the inventory footprint on overhead. Please feel free to contact me at any time with any questions or concerns.

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July 29, 2018 Posted by | Uncategorized | Leave a comment

Keeping it in House “Out Patient Services”

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The other day I was talking to my Primary Medical Healthcare Provider about my Primary Dental Healthcare Provider and how changes in delivering healthcare are effecting the patients, clinical operations, and the cost of doing business. Most medical offices in my little corner of the world are part of groups. Those groups have specialists and hospital affiliation for diagnostic testing (economies of scale), but the dental healthcare system does not.

Dental Healthcare … Statistics tell us that dental healthcare professionals make more money than medical professionals at the same level. However, the cost of operations weighs much heavier on the dental community. When I was in Dr. Peter’s (MD) office I noticed his Ritter exam table, Ritter is a Midmark Co. and the exam table probably costs about as much as a Midmark dental chair. But, there was no x-ray, overhead light, high & low speed handpieces, lasers, and you know the rest. Dr. Peter refers to central out-patient services for diagnostic testing and clinical procedures. Your dental office is part of out-patient services, you do same day clinical procedures and in the near future you have to consider being a One Stop Shop.

One Stop Shop … In my opinion, the dental office of the future will need to offer all special services (Endo, OS, Perio, Pedo, Ortho, etc. ). All of these services are individual revenue streams and profit centers. Specialist graduating a dental specialty program today, unless they have a unique situation, will not have their own practices. They will be working for a group or they will be a traveling specialist. With more GP’s doing endo, implants and ortho, the specialist of the future will not be able to justify their own office, considering the cost of operations and relying on referrals. Also, with falling insurance reimbursement rates the general practice will need the added volume to offset the loss of net revenue.

Net Revenue … I have been in the dental industry for over 40 years. I have seen the changes in healthcare over the decades and changes happen in medical about 5-7 years before dental. Everything the dental office deals with today has been effecting medical for years. So why not predict that the future of dentistry will be to provide in-house, all out-patient services. The direction healthcare is talking is insurance based and that means more expense in providing secure digital diagnostic information to insurance carriers. The technology required to comply with all the new formats and diagnostics is a large business investment so maybe it is time to consider “economies of scale”

Economies of Scale … You want that new CBT that does bitewings. The more that machine is used, the more revenue it generates. That $7k implant motor generates revenue every time it is used. Your new Tri-Auto ZX2 endo system adds billable procedure codes to your day. By utilizing specialties the shared cost of operations will benefit the practice as well as the patient.

Out-Patient Services … In a practical sense, a dental office is an out-patient clinic. The quality of the clinic and the services they offer are at the discretion of management, but by offering as much as possible in-house, you will attract new patients and capture a good part of your lost revenue. Please feel free to contact me at any time with any questions or concerns.

Total Health

July 23, 2018 Posted by | Uncategorized | Leave a comment

Class Action Liability Risks for Violations of ADA and New York Human Rights Laws

In January 2018, the federal government conformed its website accessibility requirements to the Web Content Accessibility Guidelines (WCAG), an international set of standards intended to make web content more accessible to users with perceptual or physical challenges. The WCAG addresses low vision, color perception, cognition, manual dexterity, screen reading technology, and other issues related to user abilities. The Department of Justice (DOJ) promised to do the same in the private sector by mid-year, but that initiative has been deferred.

As a consequence, there has been a surge of class action lawsuits alleging Americans with Disabilities Act (ADA) violations based on access to website information that the Courts have been addressing individually. The first federal court decision that a website violated the ADA was in early 2017. The decision was followed by 800 federal lawsuits that year alone, alleging ADA as well as state law civil rights violations. (New York led the way with more cases than any other state). Until a clear standard is set by Congress or the appropriate regulatory agency, web site ADA lawsuits will continue to increase.

The ADA prohibits discrimination on the basis of a disability “in places of public accommodations”.  As such, any business is potentially an ADA class action target. Class actions require only one named plaintiff (who brings suit individually and on behalf of those “similarly situated”), and one defendant (potentially, you). Whether you are a large or small business, brick and mortar, or web-based only, defending an ADA/Human Rights Law class action promises to be costly in two ways. Not only is there the risk of a potential damage award, the ADA is a “fee shifting statute.” As a result, a defendant must pay its own legal costs to defend the action and may be required to pay those of a successful plaintiff as well. These costs alone may run into the tens or hundreds of thousands of dollars.

Now, with the website accessibility lawsuit floodgate open, it imperative for businesses to ensure ADA compliance. The easiest and most economical approach is a website compliance audit and action-item checklist conducted by legal counsel experienced in ADA website accessibility issues. For instance, does your website include:

  • Visual Alternatives (pre-recorded text for audio, descriptors for images)
  • Sound alternatives (text descriptors for audio)
  • Color Contrasting (that meet the minimum ratios)
  • Key board navigation (i.e. function and/or tab key, not mouse-only options)
  • Adjustable font size (without content or acuity loss)
  • Semantic HTML (descriptive headings that identify the content that follows)

Many of these features are easy (and inexpensive) to implement once you (and your website consultant) know what is required.

This article was published by the Mandelbaum Salsbug, www.lawfirm.ms, Cyber Security Team.

Cyber security directly effects your HIPPA management program. Are you secure? Please feel to contact me at anytime with questions or concerns.

 

July 8, 2018 Posted by | Uncategorized | Leave a comment

The Change in State Sales Tax Law

“The U.S. Supreme Court, in a landmark 5-4 ruling, basically gave states the green light to have online retailers collect sales tax, just like any local retailer. The message of that decision for e-commerce players? They’ve grown so big that they can’t get any special breaks anymore, at least when it comes to collecting sales tax, regardless of whether they have any physical presence in a state”. … Forbes https://www.forbes.com/sites/andriacheng/2018/06/22/what-supreme-courts-internet-sales-tax-ruling-says-about-the-state-of-retail/#29618c791e9c

State sales tax laws are regulated by the individual states. In New York, the county governments add their piece What items are taxable are also decided by the states and it varies quite a bit. For example in my state, New Jersey, 35%-40% of dental clinical materials used are taxable, in New York it’s 95%. There is no published list, just an overall consumer tax concept so it is left to the discretion and interpretation of the state tax auditor.

State Tax Auditors … New Jersey just settled a state budget fight, the issue was what taxes to raise. The state also plans on more random audits of business to collect unreported USE tax. In healthcare, the auditor is not going to break down taxable and non-taxable items and out of state vendors will resist the obligation to collect tax. However, when requested, they will have to submit sales reports to any state that requests it.

The State Request … I strongly suggest that at the next quarterly meeting you have with your tax advisor you discuss your ability to provide information requested by the state should you be chosen to be audited. You will be asked to produce 3-5 years of invoices both payables and receivables, tax returns, bank statements, employment records, and schedule an on-sight visit. It’s not fun and you can’t win so be prepared. States are preparing to cash in on internet sales.

Internet Sales … Not all internet sellers will collect sales tax and it will be nearly impossible for a state to track internet sales directly from small vendors so audits will continue. On-line sellers eBay, Amazon, Wayfair, and others with a large web presence will turn over sales through their organizations when a state’s sales tax is not collected. The state will use technology and artificial intelligence to assimilate the data and send bills with interest and penalties. Repeated state billing will raise red flags and initiate a physical audit. Some of this scenario is personal speculation, but can you argue with it? States need revenue and with today’s technology, sales tax is low hanging fruit. There is an old saying “if you want to play, be prepared to pay”.

Play & Pay … You don’t want to be audited, it is an experience that could change your life. When you get that first letter asking you to contact (Mr./Ms.) from the State Division of Taxation you know you already lost. You will need to supply everything within 30 days and when you do, you will be asked for more or missing documentation. Every area of your dental practice will be examined and unfortunately nothing is perfect. If you cannot provide accurate information you will be penalized. Ask me, I know first hand.

Being prepared … I recently was asked to reproduce 3 years of invoices for a client that was under audit. The office was as clean an organized as possible but between accounting fees, USE tax violations, interest and penalties the bill was about $9k. The best way to avoid an audit is not to raise red flags. No one charges tax, we just collect it. Keep your business relationships only with organizations that recognize and participate in your state’s laws and regulations.

The Argument … I experienced a business state tax audit and the auditor was on-site for 4 days. There was an hour argument over “retraction cord” if it was taxable or not! We won that one but they did find a $17.00 error that cost us $2500.00. Do it right and you will minimize the damage. Be prepared! Consult with your tax advisor today and please feel free to contact me at any time with any questions or concerns.

July 1, 2018 Posted by | Uncategorized | Leave a comment