Monday, January 28, 2013

Should a Dentist Choose PPO or Not?

Here is a great post from our friend Sandi Hudson at Unlock the PPO.

Feel like you’re pulling your hair out trying to figure out insurance? Even with the ease of electronic insurance filing there is still a large administrative cost associated with being an in-network provider. Delayed insurance payments, yearly maximums that have stayed stagnant for years combined with rising costs make dropping insurance plans seem an increasingly more attractive option. Wouldn’t it be great to get out of the insurance game all together? Maybe you can, but rarely do we recommend dumping all plans at once. Instead, we recommend you consider many factors that contribute to what makes you enjoy dentistry.
Dentistry by nature is a stressful profession and shaping your insurance involvement to reflect the type of dentistry you want to provide is one step in helping ensure a longer career. Many dentists have become burned out by getting busy with PPOs only to build a practice of running crazy with maximum patients yet declining profits. The sigh of relief from building a full patient base is quickly overshadowed by a packed schedule that isn’t producing the fruits that were seemingly promised. How do you determine what mix of insurance to accept, if any?
On the positive side, PPOs can be useful in generating new patient flow. By being listed as a Provider, the insurance company markets your practice to their list of insurance patients on your behalf. Start-up practices, in particular, need a quick influx of new patients and often PPO involvement is one way to accomplish that. Unlike traditional marketing expenses which can be expensive with little results, PPOs do not “cost” anything until the dentist has actually provided care for the patient. Many dentists do not have the time or inclination to become educated in the specifics of marketing campaigns making PPOs the default means of gaining patients. Some practices do marketing in addition to participating with PPOs, some are able to use PPO participation as their only form of marketing.  As the economy lags in most parts of the country PPOs are also being considered as a way to jump start production and new patient flow in areas that are continuing to battle decreasing production.
Drawbacks to PPOs are obviously the write-offs. You will collect less than your regular fees as an in-network Provider. How much less depends on the contract. Some insurance companies negotiate fees others do not, often depending on how many other Providers are in your area and how badly they need participating dentists to be able to sell their insurance plans to employers. As a practice becomes more established, typically the dentist continues to broaden the range of services provided. Newer services or cosmetic services such as implants and veneers are often excluded from coverage. If the dentist is heavily cosmetic based it becomes harder to work within the framework of PPOs because many do not allow you to pass the cost on to the patient even if they are non-covered services (depending on the state you practice in and the policy). These restrictions often limit the services that can be offered to PPO patients if reimbursement rates are not even enough to cover the cost of the procedure.
We encourage dentists not to look at insurance as a black and white issue. As a practice grows and changes over the years so will views on insurance participation. What may be a good fit at one point in a dentist’s career may gradually change as a practice builds the patient base, reduces practice debt or expands services. Our company helps you get control over which plans you take according to your personal and practice goals. For a free phone consultation visit our Contact Us page.
Find the original article here.

Monday, January 21, 2013

Should Dentist be an Employee or Independent Contractor?

As I am looking for a new job, I have seen some positions that are asking for the Dentist to work as an Independent Contractor.

My previous associate positions have been as an employee so I am not too familiar with an Independent Contractor position.

I am looking for some big pros and cons to taking a position as an Independent Contractor vs Employee.

Mainly the tax implications and what would be appropriate to ask for in compensation between the two.
  • Tax implications? To be brief, as an employee your employer pays half of your self employment tax, as an IC you pay all of it though only on the net taxable amount (after your business deductions and a deduction for half of your SE tax).
  • Different  in compensation as an EE vs IC, generally about 2-3%. So, if you get offered 30% as an employee, the employer could afford to pay you 32-33% as an IC and have about the same cash outlay.
  • In terms of other pros\cons of IC over EE:
    • You choose the business deductions you have and they'll be 100% deductible (assuming their all legit). Though with a flexible employer you can get the same deduction benefit from them at no cost to them PLUS they get to save payroll taxes.
    • The possibility of a retirement plan JUST for you (though you need to be careful if your deemed to "share" employees).
    • You choose your entity.
    • Costs associated with creating an entity and maintaining it.
    • As an IC you won't be eligible for employers benefits for their employee.
    • And there are many more....too much to write and all I can think of off the top of my head.

Here is an instructive article as well on being an employee versus an independent contractor.

For more information, please contact

Monday, January 14, 2013

Dental Fraud Checklist

Our friend Sandy Pardue from Classic Practice Resources has a brilliant checklist for a dentist to refer to in order to reduce the opportunity for fraud and theft in the dental office. You can view this dental fraud checklist here.

For more information, please contact

Tuesday, January 8, 2013

How the 2012 Taxpayer Relief Act Impacts Dental Practices

We've read through the tax legislation passed by our lawmakers and signed by the president.  We've highlighted the areas that we think will impact the majority of our dental clients. We focused on the issues our clients have some control over in terms of planning and minimizing the additional tax burden. The items below include laws that were just passed, laws that were previously passed and become effective January 1, 2013 and laws that have been in place that were set to expire yet extended or have been made permanent under the new tax law.

Congress passes 2012 Taxpayer Relief Act 

On January 1, 2013, the Senate and House of Representatives passed the “American Taxpayer Relief Act.” This act avoids the many tax increases that were originally planned as well as maintains many tax breaks that were scheduled to terminate. Nevertheless, the changes that were made include increases in income taxes for high-income individuals and reinstates some tax breaks that were set to expire.

The following are the focal points of the 2012 Taxpayer Relief Act:
Tax Rates: The income tax rates for most individuals will stay at the current rates of 10%, 15%, 25%, 28%, 33% and 35% respectively. However, a 39.6% rate will apply to income for joint filers and surviving spouses with taxable income above $450,000; heads of household above $425,000; single filers above $400,000; and married taxpayers filing separately above $225,000.

Commentary: For those that will be impacted by the higher tax rate, you should continue to look for ways to reduce your taxable income, whether it’s making sure your practice is paying for every legitimate business expense possible to lower your taxable income or re-visiting your retirement plans. Some taxpayers had lost interest in tax deferred retirement plans and instead, were looking for ways to beef up their long-term-capital gain income. However, as discussed below, with the long-term-capital gains rates going from 15% to 20% for some taxpayers and others adding another 3.8% on top of that for a total of 23.8%, we suspect tax deferred retirement plans will once again gain the attention they deserve.

Capital Gain and Dividend Rates Rise for Higher-Income Taxpayers:
The top tax rate for capital gains and dividends will permanently rise to 20% for taxpayers with taxable income exceeding $400,000 ($450,000 for married taxpayers); the overall rate for higher-income tax payers will be 23.8% when accounting for 3.8% surtax on net investment-type income like interest and certain dividend income, capital gains and net rental income for tax years beginning after 2012.

For taxpayers in the income tax brackets below 25%, capital gains and certain dividends will permanently be subject to a 0% rate.

Taxpayers in the income tax brackets from 25% to 35% will continue to be subject to a 15% rate on capital gains and certain dividends. For those subject to the 3.8% surtax, the rate will be 18.8%.

Commentary: Taxpayers impacted by the higher Long-Term capital gains tax and/or the new Medicare tax on investment income described below should review their capital gains & losses each year along with the projected taxable income to determine the best timing for cashing in on their Long-Term capital gains. There may be a year where your income is depressed, perhaps you purchased a practice, started a new practice, expanded your existing practice or invested in new furniture and equipment which would drive down your taxable income. You might have the opportunity to save 8.8% on those Long-Term capital gains by realizing them in those years. Or, maybe you have other appreciated property that you want to gift to other family members who may be on a much lower tax bracket. If planned properly, one could potentially save 23.8% on their Long-Term capital gain if an asset is gifted and sold to someone in the lower tax brackets where the capital gains rate is 0%.

New Taxes

Medicare tax on investment income. Starting January 1, married individuals and surviving spouses filing a joint return with Adjusted Gross Income (AGI) above $250,000, married taxpayers filing separately with AGI above $125,000; and individuals with AGI above $200,000, they will pay an additional 3.8% tax on the lesser of the individual’s net investment income for the year or the amount the individual’s modified adjusted gross income (AGI) exceeds the threshold amount.

Net investment income means investment income reduced by deductions properly allocable to that income. Investment income includes income from interest, dividends, annuities, royalties, and rents, and net gain from disposition of property, other than such income derived in the ordinary course of a trade or business.

Commentary: Some practices owners have had their practices pay rent for various assets or activities that were owned by the individual doctor or an entity that passed the rental income or loss to their individual returns. There was certainly no harm in paying a fair rent that was on the higher end of the range, however, these activities need to be reviewed since you might be generating an unnecessary tax of 3.8% if those assets or activities were generating net rental income. So those doctors who might own their practice real estate, or leasing their personal cars to the business or own their equipment in another entity, if your AGI exceeds the thresholds mentioned you should be discussing strategies with your Dental CPA. All doctors subjected to this new tax should also review their investments to determine if there are other types of investments that might not be subject to this tax, like tax-free municipals bonds or if there’s an opportunity to shift those assets generating the investment income to family members who may not be subject to this new tax.

Additional hospital insurance tax on high-income taxpayers. The employee portion of the hospital insurance tax part of FICA, normally 1.45% of covered wages, is increased by 0.9% on wages that exceed a threshold amount. The additional tax is imposed on the combined wages of both the taxpayer and the taxpayer’s spouse, in the case of a joint return. The threshold amount is $250,000 in the case of a joint return or surviving spouse, $125,000 in the case of a married individual filing a separate return, and $200,000 in any other case.
For self-employed taxpayers, the same additional hospital insurance tax applies to the hospital insurance portion of SECA tax on self-employment income in excess of the threshold amount.

Commentary: For those dentists that have an S-corporation you need to review the amount of wages you’re taking from the practice and make sure it’s reasonable while keeping it as low as possible. This is not a new strategy, however, once wages exceeded the social wage base and the 6.2% social security tax ended, some dentists weren't too concerned about the 1.45% they continued to pay on wages above the social threshold. Now, that tax will be 2.35% on wages that exceed the thresholds above and we suspect this will make some of those taxpayers pay a little more attention to the wages they’re taking through their S-corps.

Permanent and Temporary Individual Extensions
Various temporary tax provisions enacted as part of prior legislation were made permanent. The ones that will likely impact the majority of our clients which they may be able to control the benefit from include:

  • The liberalized child and dependent care credit rules (allowing the credit to be calculated based on up to $3,000 of expenses for one dependent or up to $6,000 for more than one) (Sec. 21);
  • The exclusion for employer-provided educational assistance (Sec. 127);
  • The higher contribution amount and other EGTRRA changes to Coverdell education savings accounts (Sec. 530);
  • The employer-provided child care credit (Sec. 45F)
  • The American opportunity tax credit for qualified tuition and other expenses of higher education was extended through 2017
  • Deduction for certain expenses of elementary and secondary school teachers extended through 2013 (Sec. 62);
  • Mortgage insurance premiums treated as qualified residence interest extended through 2013 (Sec. 163(h));
  • Above-the-line deduction for qualified tuition and related expenses extended through 2013 (Sec. 222); and
  • Tax-free distributions from individual retirement plans for charitable purposes extended through 2013 (Sec. 408(d)).
Business tax extenders
Here are some other changes that will take effect or were extended beyond 2011 that may impact some of our clients. Again, we will be discussing these issues separately with those clients that are specifically impacted by these issues.
Commentary: There are many more extended laws, however, we believe these are the ones that the majority of our clients MAY have benefited from in the past and continue to benefit from after 2012. We will be addressing these issues separately with our clients that have benefited from some of these provisions or may be able to benefit from them after 2012.

The act also extended many business tax credits and other provisions. Other business provisions were extended through 2013, and in some cases modified.
·         Fifteen-year straight-line cost recovery for qualified leasehold improvements, qualified restaurant buildings and improvements, and qualified retail improvements (Sec. 168(e));
·         Extension of subpart F exception for active financing income (Sec. 953(e));
·         Temporary exclusion of 100% of gain on certain small business stock (Sec. 1202);
·         Basis adjustment to stock of S corporations making charitable contributions of property (Sec. 1367);
·         Reduction in S corporation recognition period for built-in gains tax (Sec. 1374(d));
·         Increased expensing amounts under Sec. 179 to $500,000 and extended through 2013;
·         50% first-year bonus depreciation (Sec. 168(k)) was through 2013

Commentary: There are many more extended laws, however, we believe these are the ones that the majority of our clients MAY have benefited from in the past and continue to benefit from after 2012. We will be addressing these issues separately with our clients that have benefited from some of these provisions or may be able to benefit from them after 2012. For those practices that held off on purchasing larger pieces of equipment until 2013 expecting higher income tax brackets you now have the option of accelerating more than the expected $25,000 of sec. 179 deduction. This may be useful in keeping your AGI and/or taxable income below the various thresholds mentioned above. If you recently converted a C-corp to an S-corp and have a Built-In-Gains tax issue, speak with your Dental CPA about this to see if the recognition period has been reduced for you.

Permanent AMT relief: The 2012 Taxpayer Relief Act permanently increases the AMT exemption amounts to $50,600 for unmarried taxpayers, $78,750 for joint filers and $39,375 for married persons filing separately and indexes these amounts for inflation. In addition, the act permanently allows an individual to offset his/her entire regular tax liability and AMT liability by the nonrefundable personal credits which had originally not been instated.

Energy tax extenders - The act also extends through 2013, and in some cases modifies, a number of energy credits and provisions that expired at the end of 2011.
Transfer tax provisions kept intact with slight rate increase: the act prevents steep increases in estate, gift and generation-skipping transfer tax by permanently keeping the exemption level at $5,000,000. In addition, the act permanently increases the top estate, gift and rate from 35% to 40%. 

For a review of your specific situation, please contact one of our Dental CPAs at (800) 772-1065 or email us at 

For more information, please contact

Thursday, January 3, 2013

10 Tips to Grow Your Dental Practice

Here is a guest post from our friend Mike Pedersen of AZNetMarketing
Most dentists I talk to have a strong desire to grow their dental practice. Many have even hired so-called SEO gurus, website designers, local ranking experts, and consultants, but with very little success.
With the competitive landscape for most business niches, dental is no different. You can’t have a piece meal marketing approach.
You must have a strategy (plan) that is all-encompassing, covering all facets of both online and offline marketing, that work cohesively together, to get more new patients.

Below are what I consider the top 10 critical marketing elements you must have in place and work on consistently to grow your practice and be the leader in your locale.

1. Lead Generating Website

Notice how I didn’t just say website, I said “lead-generating” website. There’s a big difference. Of the hundreds of dental websites I’ve reviewed, I can only count a handful that are truly designed to attract new dental patients.
Unfortunately, web designers are not marketing experts. They are building their portfolio to attract more design or creative customers, not businesses that truly need leads. Unless they have a internet marketing background, it’s not wise to spend the $3,000-$10,000 on a website that does not convert.

2. Dental Blog

This could be part of number 1 above, but I am making it a separate category, as it is a crucial piece of your marketing pie. You see…a blog allows you to produce and publish valuable content that both your visitors, and the search engines love.
This will result in higher search engine rankings, and a perceived leader (authority) in your special niche of dentistry, whether it be veneers, invisalign, braces, implants or any other high transaction value cosmetic procedure.

3. Video Marketing

Youtube is the second largest search engine in the world, and more people are choosing to search and watch videos as opposed to reading text. This, as a dentist, gives you a huge opportunity to implement a video marketing strategy that will position you as the expert, making the decision to hire your much easier.
The only problem I see is many dentists who have a Youtube channel, but have not optimized it, or any of the videos to get more eyeballs. This ends up being a waste of time and money. Allotting a budget to have a video marketing company or consultant come in and do this for you is a wise business decision.

4. Reputation Marketing

This is an area that is exploding online. More and more people are making their buying decisions on social reviews. You’ve seen these before. You do a search, and Google shows local business listings.
Right in the listing, you’ll see a link to reviews. This is where people go immediately to read about the business. Are there any reviews at all? Are they positive or negative?
There is an entirely separate service for cleaning up bad reviews, and gaining new ones. As time goes on, businesses are going to be investing large amounts of money into their online reputation.

5. Local Listings and SEO

More and more people are searching for local services. If you don’t have a Google+ local page that is optimized with images, videos and offers, your competitors are going to easily outrank you and get all the phone calls.
Focusing on local seo and business listings is a wise decision of both your time and money. If you’re not found when your potential patient is looking for you, you lose!

6. Mobile Marketing

Take a look around you. Everyone is buried in their mobile phone. Texting, talking, skyping, you name it! Mobile marketing is exploding! Did you know that over 60% of local searches are done on the cell phone? Next year that number is expected to grow to 80%; and the following year (2014) it is said, mobile search is going to exceed desktop search.
With those types of numbers, you better “get mobile”. 
Again, there is a specific marketing approach that you must take if you want your mobile marketing investment to pay off.

7. Email Marketing

They say “the money is in the list“, and I tend to agree.
Its standard now to get patient email addresses, but what most dentists are missing is getting the email addresses of their website visitors. This is a massive lost opportunity that I would say 90% or more of the online dental websites are missing out on.
There is a specific strategy to maximize this approach. It can be a time consuming, time-sucking method, and one that I would recommend most dental practices hire out to the professionals who have experience in this.

8. SMS Text Marketing

Above we already mentioned mobile marketing, and text messaging is a close second. In fact, many marketing professionals would say text messaging goes in the same category as mobile marketing, but I beg to differ.
There are companies now that only offer SMS marketing. You may or may not need a separate company to achieve the results you’re looking for, but just imagine the ability to send appointment reminders for example. Very powerful stuff!

9. Facebook

We all know how big Facebook is. Over 1 billion active users! If you do not have a Facebook marketing strategy, you are losing out on a huge potential goldmine of prospective patients.
This is another area I’ve seen with hundreds of dental practices who are doing it all wrong. There are so many strategies you can implement just with Facebook, that it would take 5-10 hours per week just for this. 

10 Social Media

Social media is evolving all the time! With Twitter, Pinterest and now Instagram your demographic (teens) are there. They are tweeting to their friends. They are uploading to Instagram.
Pinterest is the fastest growing social network in the world, and it is a fantastic opportunity for you to pin your before and after pics, as well as any other event you have going on in your practice. 

But…the key to all this is to optimize what you’re doing for the best SEO results. If you don’t, you’re wasting time (and money) doing it, as you won’t see results.

These 10 tips (strategies) I’ve listed would take easily 40 hours or more a week if implemented completely. That is why you should consider a marketing firm, or consultant to do it, as we are the professionals, and can get you a better ROI than if you had a staff member “try it”.

The original post can be found here.

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