Friday, October 25, 2013

Making a Dental Associate A 50/50 Equity Partner

Lately we have been hearing from dentists and associates about the feasibility of creating a 50/50 partnership. Before this is contemplated there are some questions to be answered and considerations to be weighed.

Here are a few that we feel are important:

  •   Is your practice large enough patient base wise for two full-time doctors?
  •  Is the physical space larger enough for two doctors to work at the same time or will you be doing a split schedule?
  • Is your business house (the practice systems, processes, etc.) in order?
  • Is your personal house (any legal issues with either party such as pending divorce) in order?
  • How long has the associate worked with you and are you comfortable with his/her practice style?
  • Why did you hire the associate in the first place? Was it simply for coverage so you could cut back, or was it to have an in-house buyer when you are ready to retire?
  • How does the associate’s patient base compare to yours? In other words has the associate been given insurance based patients and smaller/routine cases compared to your fee for service bigger ticket cases.
  • Is the associate going to be a 50% owner immediately or over a period of years?
  • As the original owner allowing a 50/50 partnership, are you willing to give up or share control of the practice you built?
  • Is the associate capable or willing to take over any administrative duties you currently perform?
  • Does the associate get along well with your staff and patients?
  • Has the associate added to the growth of your practice?
  • How will you share the new patients?
  • Does the new doctor perform any procedures that the seller doesn’t and vice-versa?


For further information, please contact our friendly and wise Dental CPAs at (800) 772-1065 or info@dentalcpas.com






Monday, October 21, 2013

Dentists Who Represent Themselves When Leasing Office Space Have Fools For Clients

 This is a guest post from our friends at the Dental Attorneys


Putting the final touches on a lease agreement you just negotiated, with what you believe are very favorable terms, is a time to celebrate. Dream office. Great location. Generous tenant improvement allowances. In fact, you’re feeling great and you want to shout with glee about it. There’s just one minor issue you don’t know about: the landlord feels the same way. There’s no wondering why the landlord feels the way he does either, since there weren’t any lawyers to deal with and the dentist thinks he essentially got everything he was after. That dentist just doesn’t know it yet, but by representing himself without a lawyer representing him, problems will likely be inevitable and costly.

Dentists should remember they treat patients. Lawyers negotiate contracts.

Once the lease is signed, you and the landlord often have opposite goals. The landlord wants the lease in effect as soon as possible so he can begin collecting rent from you, even if it’s going to take three, four or even five months to “build out” the office space to your specific conditions. You just want to get into a nice, attractive new space and start running your practice. But how would you know that if a contractor lags on building out your space, he should be the one paying the rent for that extra time, not you. And neither the landlord, nor the contractor, is likely to tell you this, either.

When leasing space for that dream office, you should try to gain every concession possible from the landlord so that when it comes time to pay that first month’s rent, it isn’t overwhelming.

If your landlord is building out the space, he will try to economize on every item, reducing his costs and increasing his net profit on top of the cash already paid to him, a lot of cash for the initial and standard five- or 10-year lease agreement. Your ultimate goals may be the same – long-term financial efficiency, but again, you are at opposite ends of the spectrum when it comes to your dream office.

If you and your attorney agree that the landlord will build out the space and act as a general contractor, you should be prepared to tell him what type of cabinetry you want, whether you want Berber carpeting or tile flooring and where you do and do not want your restrooms located. You should have every detail spelled out: sinks, staff break rooms, patient waiting areas, built-in desks, areas for administrative duties, and the like. But, again, you treat dental patients. Lawyers advise clients on leases. It is sort of like asking an MD to fill a cavity, or you to perform breast enhancement surgery. Competent lawyers are the ones you should turn to when negotiating a lease because the handful who specialize in dental practice law, know all the nondental items you don’t.

With lawyer in tow, and you deciding to take an active role in the building out of your office, there are many issues and items that must be addressed.

In the paragraphs that follow, the authors examine common lease issues that most dentists don’t know about when negotiating their leases.




Office Build-Out Issues

Most leases provide the dentist with a limited time to complete the build out of their space, and the landlord will even try to start the build out period before the lease is even signed. Therefore, you should require that the landlord have a limited time to review your plans, and you should put penalties in your construction contract so that your contractor has to pay your rent if he doesn’t finish on time.

Another common build-out issue is the tenant improvement allowance the landlord gives you. When you negotiate the rent, the landlord will rent the space based upon the leasable square footage, typically measured from the exterior walls of the entire unit. However, the landlord will routinely give the dentist a tenant improvement allowance based upon the usable square footage, causing the tenant improvement allowance to be 10-20% less than had it been based on the leasable square footage. Always insist that the tenant improvement allowance be based upon what you are leasing, i.e., leasable square footage.

Rent Increases

Nearly all leases have rent escalation clauses, which are either contractual in nature or that are tied to one of any number of commonly used economic indexes, such as the consumer price index, cost of funds, and others you know from watching Lou Dobbs on CNN. This is what you and your landlord will be negotiating and, with any luck, your lawyer can talk him into tying such increases to one of the less volatile indexes. There should always be a ceiling on such increases, just as the landlord will insist on a floor for the same indexes.

Damage to Office

Earthquakes, fires, floods, even riots are part of the landscape in California. The authors have noticed all too often in their practice that one of the victims of these calamities is the dental practice owner. The typical lease provides that if the dental lease office is damaged, the lease remains in effect if the landlord elects to rebuild, but imposes no time limit on when it is to be rebuilt. Some leases even require the tenant, or the tenant’s insurance company, to continue paying the rent while the office is unusable. While most of the time rent is abated, even the highly motivated landlord can have difficulty rebuilding, usually because of building permit delays (in the case of widespread destruction) or because insurance companies won’t pay enough to cover the cost to rebuild. The authors have seen numerous situations where a dentist, tired of waiting for the landlord to rebuild, built out a new office at a significant cost only to have the landlord call back two or even three years later and tell the dentist he must return and start paying rent because the dentist’s lease was still in effect.

The solution? Insist on having the landlord start repairs within a certain time period (e.g., 90 days) and complete the repairs by a certain date (e.g.,, 180 days). If the landlord fails to meet these goals, you should have the option to terminate the lease so you can move onto a new location.

Subordination Clauses

The subordination clause is an almost invisible clause in most leases because of the intricacies of the mortgage foreclosure clauses. These clauses typically require that your lease will become subordinate to any new financing the landlord places on his or her building. If our real estate bubble ever bursts, many landlords will lose their buildings as rents decrease and they can’t pay the mortgage. If a lender forecloses and there is a new owner, the new landlord does not have to honor your subordinated lease, and you may lose your dental office space. However, most landlords will allow modification to these clauses during lease negotiations because they know they won’t own the building if this ever becomes an issue. Therefore, always ask the landlord for a waiver of such clauses.



Assignment Clauses

A typical landlord wants to control who occupies his or her space and will insert clauses that virtually destroy a dentist’s ability to sell his or her dental practice.

For instance, it is common to have recapture clauses in the lease, allowing the landlord to cancel the lease if asked to assign it to the dentist buying your practice. They almost always have a clause making the lease renewal options personal in nature, so that when you try to sell your dental practice, you only can assign the lease through the current expiration date. If this is the case, the buyer’s lender won’t finance the sale because they want the lease to last as long as the lender’s loan will be in effect (i.e., 7-10 years). Many landlords may insert clauses that give the landlord a right to claim a portion of the profits you receive from the sale of your dental practice.

Virtually all standard form leases contain provisions which keep the original tenant on the hook for the rent through the expiration of the term, including all option periods. This occurs whether the lease specifically states this, or if the lease is silent as to when the tenant is released from liability, by operation of law. You want to ask the landlord to release you from liability, either at the time you sell your dental practice or at the end of the current lease term, so that you don’t remain liable throughout the entire lease term. Even if the landlord won’t release a tenant at the time of assignment, they usually will allow a release at the end of the then-lease term, based on the argument that if the buyer is a bad tenant, the landlord has lease remedies which allow the landlord to deny the buyer the right to renew the lease term.

Recapture clauses should be negotiated out of leases, as should all options - personal language. Leases should not give the landlord any right to make a claim upon the purchase price you received for your practice. You should try to obtain a release of liability to avoid the nightmare of a default occurring well after you have retired and are unable to take over the office.

These assignment clauses can destroy the nest egg you are building in a successful dental practice. This is why it is so important, whether you are buying a dental practice or building one from scratch, to have an attorney with experience in the dental field assist you with your lease negotiations.

The list of legal “dos” and “don’ts” for dentists astounds most of them when we sit down for an initial conference on selling, buying, relocating, leasing, or otherwise affecting the ownership of a dental practice.

It is often said that he who represents himself has a fool for a client. As the reader can tell from the points raised above, a dentist representing himself rather than utilizing an experienced dental attorney can miss issues which could make their dental practice relatively worthless. With such a valuable investment as a dental practice, it obviously is in the dentist’s best interest to retain the services of an expert in the leasing area.

Jason P. Wood, B.A., J.D. and Patrick J. Wood, B.A., J.D.


Jason is an associate attorney in the law firm of Wood & Delgado, and Patrick is the founder and senior partner of Wood & Delgado, a law firm which specializes in representing dentists for their business transaction needs. Wood & Delgado represents dentists in California, Nevada and Colorado.



Thursday, October 17, 2013

How a Dentist Can Balance the Chaos - Ten Tips to Create a Better Work Life Balance

Here is another guest post from our friends at ETS Dental by Tiffany Worstell

I feel like I should start a support group with this introduction, but…
Hi, my name is Tiffany and I suffer from horrible work/life balance.  I work full time, am taking classes online, and I am raising two kids.  Throw into the mix household chores, two dogs, Girl Scouts, viola lessons, marching band, and a plethora of other projects going on at any given time, and you have a snapshot of my life.   Just writing this down is making me nervous.  What am I forgetting that needs to be taken care of or done tonight?!
Crazy thing about my little chaotic snapshot above is I know I am not alone. Life is crazy anymore.  Looking around my office, each one of us has a handful or two of other activities and responsibilities.  Chances are your office is the same way.  Life happens regardless of your title or position.
So, how do you balance it all?  Initially, I started looking for sites with tips, but I decided it was better to get real life answers so I took my question to my colleagues and Facebook followers.  Some answers were almost universal; some were a little more unique.  Here are some highlights….
Ten things you can do to create a better work life balance

  1. Limit the amounts of time that you do work stuff at home or vice versa.
  2. Use a calendar!  Scheduling events makes it easier to know what is coming up and plan accordingly.  Google Calendar is a favorite for many of those that responded.
  3.  Create lists.  Do what must be done first.  Do what you do not want to do and get it out of the way.  Once something is completed, check it off and move on to the next.
  4. Turn off your alerts; do not be a slave to your phone.  Check your emails on your own terms; not with every beep, buzz, or blinking light.
  5. Take some time for what makes you happy: read a book, watch a movie, go for a run, exercise, or go out for a drink with a friend.
  6. Find some peace.  Pray.  Meditate.  Get a massage. 
  7. Get help!  This was a tough one for me, but there is no reason that my kids couldn’t straighten up the house while they are waiting for me to get home or wash the dishes from breakfast.  They even like starting dinner once in a while. 
  8. Don’t be afraid to let go.  One of my Facebook friends said it best, “When I was working full time, was a full time graduate student and a single mom I achieved balance by letting go of things that do NOT last-dishes, dust and laundry.  Instead, I chose football practice, school activities and a kid flick.”
  9. Say no.  I struggle with this one, but it is okay to not do everything all of the time.  If something is not important to you, let it go and focus on what needs your attention.
  10. Find what works for you.  Take advantage of the time you have; I study on my lunch breaks and can knock out a good bit of my reading without interruptions which helps me immensely.  A colleague wrote, “Having the opportunity to work remotely is a huge thing for me.  It helps me not to feel guilty about going to my kids’ activities (games, etc.) and I make up my time in the evenings when they are engrossed with homework.  Sometimes they will come and hang out in my office as they do their homework and we’ll all be ‘working’ together.” 
I guess I have some pretty smart colleagues and friends!  Of course this is only a small sampling of the ideas out there; what do you to do to make your own chaos work?  I would love to hear what works for you.    

"Life is too short to wake up in the morning with regrets, so love the people who treat you right, forget about the ones who don't, and believe that everything happens for a reason. If you get a chance, take it. If it changes your life, let it. Nobody said life would be easy, they just promised it would be worth it. 
-Harvey Mackay 



Tiffany Worstell is a nationwide Recruiter for Dental Staff at ETS Dental. She can be reached at tworstell@etsdental.com or 540-491-9112. ETS Dental is a Dental Recruiting firm specializing in finding and placing General Dentists, Dental Specialists, and Dental Staff throughout the United States. www.etsdental.com

Tuesday, October 8, 2013

What Can a Dentist Do When a Patient Complains That Their Fees Are Too High?

Here is a guest blog from our friend Sandy Pardue who can be reached at info@classicpractice.com or by phone at (800) 928-9289.


When a patient says, your fees are too high show surprise and say, Our fees are too high? and wait for their response to see what they have on their mind. Sometimes people do not say what they mean. They might think it should cost less, or they may think they cannot pay the whole fee now. This is what you must find out.

Ask:
What do you think was too high?
What would have been a fair fee in your mind?
I suppose it is possible a mistake could have been made, etc.

They may be asking to reduce the fee. If they are a senior citizen over the age of 65, you can tell them they are entitled to a five percent discount. For anyone else however, tell them, {{Mr(s). _, I know it may seem that way but our fees are really in line and we are proud of our fees.}}

I'm glad you are concerned about the cost because that is one of our advantages for the quality work we do. People remember poor quality more than they remember a fair fee and Dr. really does quality work.
Dr. is an excellent dentist and he has such a good reputation. He really tries to go the extra mile to take care of his patients. He is always available to you. Dr. Tooth is here on Saturdays, Sundays and holidays when necessary. He takes such good care of his patients.
Back to the fees, Dr. Tooth keeps the fees in line in the acceptable (or average) range. He stands behind everything he does.

Or:
We charge very fair fees for the highest quality of service and treatment and we always go that extra mile to take good care of you. We will make sure you get the best of treatment.
If they insist your fees are higher than others, show them our fee comparison schedules (which by the way, shows nothing about the high quality we deliver). __ Mr(s)., I am glad you brought that up and I appreciate how you feel. Our fees are very fair fees especially compared to others in this area and nationally. Here, I'll show you a comparison of our fees with others if you like. (Show them a list of fees compared with other offices in the area and around the nation for the services they are getting.) Also, Dr. Tooth is well recognized for his excellent work. Our fees are not higher than others across the nation. Use the fee comparison schedules.

If your fee is higher (which is very rare) say, Our fee is only two or three percent more than the average and less than the U.C.R. (Usual and Customarily Reported). We definitely do make the extra effort to give you excellent service and quality. Our extra service is worth more, but we don't charge for it.

Or,
Are you concerned about a small extra fee, or the high quality of service? If you pay too little and don't get what you need or want, you waste your time and money. You know, you get what you pay for.
It is very important to get why they are upset and handle it with good communication skills.

If They Want to Change Dentists Because of Fees

If you fail with the above say, Let me have Dr. Tooth call you. I know he will care how you feel. If they refuse, have the doctor call them anyway.

If they are really solid and will not budge say, I will tell Dr. Tooth and I know he will miss you. We'll still have your records on file, so if you ever have an emergency or any problems at all, just give us a call.

Join Sandy in New Orleans for one of her Spice Up Your Practice seminars for many more practice building ideas, team training and organizational systems to grow your practice. Call her at 800-928-9289 or visit her website at www.classicpractice.com. She is looking forward to speaking with you!

Tuesday, October 1, 2013

Dentists - Charge the Batteries and Change the Scene

Here is another guest post from our client Dr. Lurie on his "Mistakes Made and Lessons Learned".

It seems to me that in the course of practice, there comes a time to charge the batteries and change the scene. This can be both physical as well as mental (emotional). Allow me to ramble on this one for a few minutes. You leave the house at the same hour every day for a routine drive to the office, usually over the same route, and arrive at a destination that you have seen every day, with the same people, decor, aroma, and basic schedule. This goes on for days, weeks, months and years. It is, of course, the office and we accept this as our workplace and how it fits into our daily routine of work. Now, think about the few days that were different. Perhaps there was a traffic jam, an early morning meeting, a half day of continuing education, a birthday celebration that the entire staff is helping to celebrate. Was not this a day that was different and "charged the batteries"?

This leads me to think about ways and efforts that can be incorporated into our work lives that can do this on an occasion and have long lasting effects and advantages.  I remember a time when I could not stand my private office.  It was the same four walls that I worked in for many years.  I wasn't even aware that it was dragging me down until my wife popped in one day and suggested that we must do something about this.  And then, we turned it into an office project with the staff and a decorator, with input from everyone.  Of course, this would come back to haunt me later on.  Anyway, it was fun and it really did give me a tremendous emotional lift and it became a place where I could recharge the batteries, work, and interact with the patients in a non-dental setting.  So this is an example of a physical change.  Gradually, these changes took place in the waiting room, the business office, and, most importantly, the staff lounge.  This was a tremendous boost for all of us and we had again, found a sanctuary that we all could share.  Incidentally, this became the room for the "dreaded staff meetings" that I discussed in a previous blog.  But you get my point - a fun way to change the monotony of the place where so many hours are spent.   The added benefit of "team" input was great and this, of course, adds the emotional benefit of the revision.  The energy in the office was off the wall and lasted for years as we all became closer, knowing that this was our project and our stamp.  Obviously, our staff turn-over was minimal and staff was on-board for many years.  So the uplift in decor helped in many directions. 

With this in mind, I tried to think of things that would keep us energized and focused.  These would fall into the mental (emotional) category.  An example would include all special occasions that the staff wanted to share----birthdays, anniversaries, and other celebrations were welcomed and planned.  The planning of the event was the key and time was set aside in the work day for this.  I think that this is part of the whole recharging of the battery that I mentioned earlier.  The routine was changed, the day was different, and the effect lasted for quite some time.  These are just examples but I think you get the picture.  One could add: trips, meetings (both professional and social - i.e.museum of art trip with spouses), or joining with another office for a continuing education evening, or a fashion show at a department store, etc...  The possibilities are endless but I urge you to consider them for your own peace of mind and to add the activity of "fun" into the practice. 

Another area that I found had a profound effect on managing stress was an activity that we called "Mentoring of the Patients" and I will tease you with this and discuss it in my next article.

More Mistakes Mad and Lessons Learned next time.  As always, I would love to hear from you and share your ideas and experiences.


Dr. Donald B. Lurie
donald.lurie@att.net
Phone:  717-235-0764

Cell:      410-218-2228