Monday, June 30, 2008

A Different Twist on Dental Bonuses

Here is one dental bonus plan that I recently heard about (and like quite a lot). If you use a monthly system, pay out only 50% of the bonus amount for each month the team hits the goal\bonus.

At the end of each calendar quarter, IF they met the goal for each month in that quarter they get the other 50% for the 3 months.

The client said that when they instituted this twist in their bonus system they began to see consistency in hitting their monthly goals.

This post first appeared on DentalTown.

Send your questions to Tim Lott, CPA, CVA at tlott@dentalcpas.com

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How to Pay Dental Independent Contractor

How do I pay an independent contractir if the check in his name is deposited in my account. Thought of having him take check and pay me 1/2 as rent.

Well I'm confused. Who billed the patient? If they're truly an IC wouldn't the billing go out under your practice and you pay them for their services? That's generally how an IC works. If they're space sharing or subletting, and they bill for services, then rent appears to be the correct arrangement. Don’t mix the two.

This post first appeared on DentalTown.

Send your questions to Tim Lott, CPA, CVA at tlott@dentalcpas.com

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Friday, June 27, 2008

Fair Pirce for a Dental Patient Chart

Can you comment on the price for a chart? I've heard $150 here in N.C. for a chart-only purchase. I know you've advocated a % of collections paid over years.

Sorry, there's no real empirical data to provide any cold hard facts about the price of a chart. The reason is MOST practices that are sold are based on 100% asset sales and the allocation to goodwill usually includes the "charts". However, it includes all the other intangible stuff as well so there's generally NOT an allocation to just "charts".

Beyond that, I know I’ve read where folks bought charts for a fixed $35 per chart and then there are the "chart" sales based upon a percentage of revenue over a number of years and those sales are rarely reported anywhere.

If I had to offer an opinion on a "fair" range for chart "value", I'd start with your number of $150 and as much as $500, mid point being approximately $300-$350ish.....

This post first appeared on DentalTown.

Send your questions to Tim Lott, CPA, CVA at tlott@dentalcpas.com

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Wednesday, June 25, 2008

Dental Practice Valuation Questions

Here is an exchange I had with a dentist recently on how to value his practice.

Can anyone tell me their thoughts on how you value a practice that is 90% PPO. Is there any good will with this type of practice?

Probably, even though it is a PPO, patients usually have choices on dentists within the PPO network, so the fact that they're choosing your practice over another means something.

I am currently practicing with my father and am a 49% owner in the practice and am trying to determine how we can set a value on our shares to determine a buyout.

Have the practice pay for a valuation specifically for this purpose. A valuation professional with experience in dental practice valuations AND who isn't looking to broker the practice will be perfect.

I am producing 150 to 200,000 more per year than he is without including hygiene while seeing the same number of new patient prophys.

That’s generally a compensation issue, NOT a valuation issue.

He seems to think his shares are just a valuable as mine even though I have produced somewhere around 900,000 more than he has in the last seven years while only making 50,000 more in those years.

Was some form of agreement for you to earn less and work more (sweat equity?) Shares are valued the same and what you have is a compensation issue. Now if you're going to argue that you shouldn't have to pay full price for his half because of the compensation arrangement.....well I hope it doesn't blind side him.

Yes, he has been here 30 years but most of the patients that have stayed with him have only stayed because we were on their plan. Our philosophies are so different and I am trying to determine a buyout plan or exit strategy. Any thoughts would be great.

Hopefully he's on board with the thought of a buy-out plan or exit strategy. If he's not, it may not matter who you get to value and assist with your ideas. The only way it'll fly is if he's on board and he'll probably want some input. I know I would.

This post first appeared on DentalTown.

Send your questions to Tim Lott, CPA, CVA at tlott@dentalcpas.com


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