News & Tech Tips

Is Your Office Ready to Grow? Dental Office Expansion Series (Adding An Associate)

Part 1: The Right Reasons

One of the most challenging decisions facing a seasoned practitioner is whether to add a new associate to the practice. Reasons abound for why dentists may entertain the idea. Often, doctors are motivated by thoughts of cutting back, increasing profits, or exiting the practice altogether.

Most dentists are hesitant to leap into adding an associate. In addition to the concerns that accompany upsetting the office’s status quo, there are unsettling questions to ponder, such as whether there is enough work for an extra dentist, how to distribute the workload, the monetary impact on the practice, and whether the patients and staff will bond with the newcomer. Fueled by their colleagues’ gruesome stories of bad associate relationships, it is no wonder doctors are wary of taking on the challenge of entering into an associateship agreement.

In this three-part series, you can explore your readiness for an associate and discover practical tips for setting up your office for a successful growth or transition cycle. In Part 1, you will learn how to evaluate your reasons for hiring an associate. Part 2 will provide practical metrics for ensuring it is the right time to hire, and Part 3 will explore tips for finding the right associate for your office.


It All Starts with Why

While there are many reasons practitioners begin to explore adding an associate to the office, these reasons broadly fall into three categories: capacity, growth, and succession.



Capacity is the office’s ability to deliver timely and appropriate care to its current and potential patients. If patients cannot schedule within two or three weeks, the office has capacity issues that should motivate the practice owners to find out why. The inability to schedule patients promptly may be a symptom of poor operations. Alternatively, it may signal a need to add a provider. Diagnosing the real problem with the business is critical to enacting a satisfactory solution. Otherwise, dentists may try to solve capacity issues by adding an associate and later discover the real problem is poor policies and procedures.

When evaluating the cause of the capacity problem, practitioners should always begin by scrutinizing their office’s operations.


Operational Capacity. Diagnosing problems with operations begins with reviewing the office’s pace and procedures. Pace refers to the rate at which the staff performs daily tasks, such as operatory turn-around times, instrument processing times, checkout times, and scheduling efficiency. Poor systems, lack of automation, untrained or unprepared staff, weak oversight, deficient accountability, and other operations issues lead to unnecessarily long appointment times. As appointment after appointment runs behind due to inefficient processes or unprepared staff members, the wasted time begins to impact scheduling.

Before pursuing the addition of an associate dentist, ensure that these types of issues are not causative. If you uncover inefficiencies, take the time and effort to inform and train staff, establish accountability guidelines, and offer actionable feedback to staff members. Automating office procedures, such as insurance processing and billing tasks, is a reliable cure for procedural inefficiency. The correction for chairside inefficiency comes through increased training and oversight. After resolving the operational issues, owners should re-evaluate the office’s scheduling capacity. If the problem still exists, owners should determine if the problem is provider-related.


Provider Capacity. Provider capacity is the work each provider can perform during the work week. Since office inefficiencies are now corrected, owners are more confident that the scheduling issues are due to provider capacity. It is imperative to note that practitioners can create capacity issues because of their unique personal characteristics. All dentists operate differently regarding skill sets, work/life balance guidelines, and how many hours they can comfortably work each week. Consider your business from the perspective of your skills, work/life balance, and work constraints that characterize your practice, and determine if these elements contribute to the problem.

Skill Set. Some doctors enter their careers with additional residency training or continuing education experiences that add valuable skills to their practice. Doctors who enjoy performing advanced or complicated procedures may limit their availability to complete routine procedures, creating an office capacity problem. For example, suppose you operate a thriving implant practice or are heavily involved in sleep appliance therapy with a physician group. Treating these  patients may use so much time that you cannot schedule more routine restorative procedures on other patients. Be aware that ignoring one group of patients’ needs for another is a misstep for any practice. Patients who have entrusted you with their oral healthcare deserve your best efforts to provide prompt treatment. If exercising your favorite skills is hampering scheduling, consider hiring an associate to provide routine care so you can focus on your niche.

Work/Life Balance. All dentists are unique in their quest for work/life balance. Sometimes, the dentist cannot practice full-time due to caregiver responsibilities for children or aging relatives, volunteerism, or other essential or non-negotiable commitments. Each doctor must balance the responsibilities of being an oral health care provider with their personal or life goals. Consider the patient population’s needs and assess how to maintain the optimal work/life balance without diminishing patient oversight. If you cannot see patients promptly, consider an associate to help you support your desired work/life balance and your patient’s best oral care.

Work Constraints. Some doctors may need to limit time at the office due to health concerns that make it difficult to stand or sit for prolonged periods. Others may suffer from ailments that require frequent breaks for nourishment, appointments, or self-care. These necessary constraints may negatively impact capacity. Suppose your work constraints make it impossible to carry a sufficient schedule alone. In that case, it may be time to add an associate.



 Some dentists have excess finished or unfinished operatory space or building space. Maximizing the office’s productivity by utilizing the unused space seems logical. Other dentists may have dreams of opening satellite offices to serve patients in nearby communities. In either case, the office needs extra hands to realize these growth opportunities.

Careful business planning, including demographic studies and financial projections, is essential if owners decide to grow. The growth process will strain the current business due to the demands of planning and executing the plan. Prepare staff members for additional time constraints and scheduling difficulties. Dentists interested in these options must carefully weigh challenges, costs, benefits, and timing of growth. In Part 2 of this series, we will explore these elements in more detail.



 A common reason for pursuing an associate relationship is due to an owner’s succession plan to transfer the practice. Some doctors seek associate relationships to identify and train a quality, like-minded dentist to assume business control in a specified timeframe. In this way, owners perceive they can slowly pass the reins of practice ownership to the associate. This arrangement helps the associate acclimate to the demands of the practice. It provides the staff and patients with access to the new owner during a timed transition. If this is the seller’s intent, it is wise to establish an open relationship from the outset. Avoid using an associateship as a “try before you buy” arrangement. Owners should ask the candidates about their expectations for the associateship and be ready to share their own. If both parties want to transfer the business, independently seek legal counsel to delineate equitable terms. Nothing could be more discouraging than to have unequal expectations from the association. Honest communication is foundational to trust building, and trust is essential to successful dentist-associate relationships. In Part 3 of the series, we will explore how to attract associates interested in purchasing the practice and suggest guidelines for a successful business transfer.


Key Takeaways

When considering adding an associate to your practice, consider the following:

  • Begin examining associateship options by evaluating why you need an associate.
  • Evaluate operational efficiency before assuming adding an associate will solve capacity issues.
  • Assess if an associate is necessary due to provider capacity issues.
  • Weigh challenges, costs, benefits, and timing when pursuing growth opportunities.
  • Develop succession plans encompassing the seller’s desire to transfer ownership to the associate.

Adding an associate to your practice may seem daunting. Understanding your motivations for pursuing the relationship will enable you to proceed confidently through the process.

Inventory management systems: What’s right for your business?

If your business has significant inventory on its balance sheet, it can be costly. The carrying costs of inventory include warehousing, salaries, insurance, taxes, and transportation, as well as depreciation and shrinkage. Plus, tying up working capital in inventory detracts from other strategic investment opportunities.

Reducing these costs can help improve a company’s profits and boost operating cash flow. Here are two alternative inventory management systems to consider.

1. JIT method

Just-in-time (JIT) inventory management involves planning shipments of raw materials to arrive just before they’re required. This saves money in inventory costs by reducing the amount of inventory on hand. It also increases production responsiveness and flexibility. Elements of JIT management include:

Smaller lot sizes. This allows your company to be more flexible and meet changes in market demand. It can also decrease inventory cycle time, lead times, and pipeline inventory. Because lot sizes are smaller, companies that use the JIT method can achieve a consistent workload on the production system.

Tighter set-up times. By reducing set-up times and the associated costs, you can afford to produce smaller lot sizes. Also, if your company is inefficient on machine setups, you’ll likely change products less often.

Flexibility. A flexible workforce can quickly reassign tasks during bottlenecks or unplanned spikes in demand.

Close supplier relationships. Suppliers must provide frequent, on-time deliveries of high-quality materials. So, close ties with them are vital to the JIT system. Long-term relationships with suppliers promote loyalty and improve overall quality.

Regular maintenance schedules. For companies with a high degree of automation, preventive maintenance is critical. Unplanned downtime can be disruptive and costly.

Quality control. JIT systems are designed to control quality at the source, rather than later in the process. For that reason, production workers are responsible for their own work, and if a defective unit is discovered, it’s returned to the area where the defect occurred. This makes employees accountable and empowers them to produce higher-quality products.

2. Accurate response method

Accurate response inventory management systems focus on forecasting, planning, and production. The underlying premise of accurate response focuses on flexible processes and shorter cycle times to better match supply with demand. By speeding up the supply chain process, management can delay decisions regarding raw materials, obtain more market information, and better determine production requirements.

This inventory management method incorporates the following key elements:

Overall performance. Accurate response measures the cost per unit of stockouts and markdowns. Then it factors this information into the overall evaluation of the company’s performance. Let’s say your company can’t meet demand. The lost sales would be factored into the overall costs, which would then justify increasing production to obtain and maintain customers.

Predictable and unpredictable products. Predictable products can be made further in advance to “reserve” capacity during the selling season for unpredictable products. Then your company won’t have to accumulate and pay for large inventories.

For more information

Incorporating JIT and accurate response techniques can dramatically improve your company’s efficiency. Lowering inventory levels cuts operating capital needs and gives you a competitive edge. Reducing the expenditures for warehouses, employees, and equipment produces a stronger balance sheet and income statement and improves cash flow.

Contact us to discuss whether it makes sense to implement these systems at your business.

Solid financial reporting can help attract debt and equity financing

Financial reporting plays a key role when a business needs funds for continued operations and strategic investment opportunities. Lenders and investors will generally want to review your company’s financial statements before they give it money. Timely, reliable reports can increase the odds that a bank will approve your company’s loan application and equity investors will provide capital.

Relevant financial information

Financial statements are a must-have for any organization. The balance sheet reveals how much its assets and liabilities are worth based on historic costs. The income statement tells investors and lenders how profitably and efficiently the company has performed during the accounting period. The statement of cash flows details sources and uses of cash from operating, investing, and financing activities. This information helps company insiders — as well as lenders and investors — make better-informed business decisions.

Lenders and investors monitor the financial condition of companies in their portfolios on an ongoing basis. They’re particularly focused on industry sectors that are susceptible to market fluctuations, such as real estate, construction, restaurants, and retail. Business owners should be prepared to respond to changes in their stakeholders’ reporting requirements if the economy gets tough or simply changes.

Levels of assurance

While financial statements can be prepared in-house, lenders and investors typically prefer reports that are prepared by outside accounting firms. CPAs offer the following three types of historical financial statements under U.S. Generally Accepted Accounting Principles (GAAP):

  1. Compiled statements. These provide no assurance that the financial statements are accurate, complete, and comply with GAAP.
  2. Reviewed statements. These provide limited assurance that the financial statements are accurate. Typically, your accountant will review the statements to ensure that obvious errors or misstatements are corrected.
  3. Audited statements. These provide reasonable assurance that the statements are free from material misstatement and conform to GAAP. Audits are seen by many as the “gold standard” in financial reporting.

In some cases, compiled financial statements — the option that provides the lowest level of assurance — might suffice. But when a stakeholder decides to manage risk more closely, it could require reviewed or audited statements. As the level of assurance increases, so too can the associated cost to prepare the financial statements. A close partnership between your company’s accounting department and its CPA firm is critical to minimizing the cost and lead time associated with preparing financial statements.

In addition to the types of statements lenders and investors may request, the frequency of statement production also may change. For example, they may request interim statements (typically quarterly or mid-year) that summarize a reporting period of less than a full financial year.

What’s right for your business?

Financial statements provide a wealth of data and insight into what drives your company’s revenue, profits, and value. Above all, solid financials demonstrate to lenders and investors that management is proactively monitoring financial performance. Contact us to determine what level of assurance and frequency is appropriate for your company based on its current needs.

Should your business offer the new emergency savings accounts (PLESA) to employees?

As part of the SECURE 2.0 law, there’s a new benefit option for employees facing emergencies. It’s called a pension-linked emergency savings account (PLESA) and the provision authorizing it became effective for plan years beginning January 1, 2024. The IRS recently released guidance about the accounts (in Notice 2024-22) and the U.S. Department of Labor (DOL) published some frequently asked questions to help employers, plan sponsors, participants and others understand them.

PLESA basics

The DOL defines PLESAs as “short-term savings accounts established and maintained within a defined contribution plan.” Employers with 401(k), 403(b) and 457(b) plans can opt to offer PLESAs to non-highly compensated employees. For 2024, a participant who earned $150,000 or more in 2023 is a highly compensated employee.

Here are some more details of this new type of account:

  • The portion of the account balance attributable to participant contributions can’t exceed $2,500 (or a lower amount determined by the plan sponsor) in 2024. The $2,500 amount will be adjusted for inflation in future years.
  • Employers can offer to enroll eligible participants in these accounts beginning in 2024 or can automatically enroll participants in them.
  • The account can’t have a minimum contribution to open or a minimum account balance.
  • Participants can make a withdrawal at least once per calendar month, and such withdrawals must be distributed “as soon as practicable.”
  • For the first four withdrawals from an account in a plan year, participants can’t be subject to any fees or charges. Subsequent withdrawals may be subject to reasonable fees or charges.
  • Contributions must be held as cash, in an interest-bearing deposit account or in an investment product.
  • If an employee has a PLESA and isn’t highly compensated, but becomes highly compensated as defined under tax law, he or she can’t make further contributions but retains the right to withdraw the balance.
  • Contributions will be made on a Roth basis, meaning they are included in an employee’s taxable income but participants won’t have to pay tax when they make withdrawals.


Proof of an event not necessary

A participant in a PLESA doesn’t need to prove that he or she is experiencing an emergency before making a withdrawal from an account. The DOL states that “withdrawals are made at the discretion of the participant.”

These are just the basic details of PLESAs. Contact us if you have questions about these or other fringe benefits and their tax implications.

Best practices for M&A due diligence

Engaging in a merger or acquisition (M&A) can help your business grow, but it also can be risky. Buyers must understand the strengths and weaknesses of their intended partners or acquisition targets before entering the transactions.

A robust due diligence process does more than assess the reasonableness of the sales price. It also can help verify the seller’s disclosures, confirm the target’s strategic fit, and ensure compliance with legal and regulatory frameworks — before and after the deal closes. Here’s an overview of the three phases of the due diligence process.


1. Defining the scope

Before the due diligence process begins, it’s important to establish clear objectives. The work during this phase should include a preliminary assessment of the target’s market position and financial statements, as well as the expected benefits of the transaction. You should also identify the inherent risks of the transaction and document how due diligence efforts will verify, measure, and mitigate the buyer’s potential exposure to these risks.


2. Conducting due diligence

The primary focus during this step is evaluating the target company’s financial statements, tax returns, legal documents, and financing structure. Additionally, contingent liabilities, off-balance-sheet items and the overall quality of the company’s earnings will be scrutinized. Budgets and forecasts may be analyzed, especially if management prepared them specifically for the M&A transaction. Interviews with key personnel and frontline employees can help a prospective buyer fully understand the company’s operations, culture, and value.

Artificial intelligence (AI) is transforming how companies conduct due diligence. For example, AI can analyze vast quantities of customer data quickly and efficiently. This can help identify critical trends and risks in large data sets, such as those related to regulatory compliance or fraud.

If a target company maintains an extensive database of customer contracts, AI can analyze every document for the scope of the relationship, contractual obligations, key clauses, and the consistency of the terminology used in each document. Sophisticated solutions can analyze the target’s financial records and even produce post-acquisition financial statement forecasts.


3. Structuring the deal

Information gathered during due diligence can help the parties develop the terms of the proposed transaction. For example, issues unearthed during the due diligence process — such as excessive customer turnover, significant related-party transactions or mounting bad debts — could warrant a lower offer price or an earnout provision (where a portion of the purchase price is contingent on whether the company meets future financial benchmarks). Likewise, cultural problems — such as employee resistance to the deal or incongruence with the existing management team’s long-term vision — could cause a buyer to revise the terms or walk away from the deal altogether.


We can help

Comprehensive financial due diligence is the cornerstone of a successful M&A transaction. If you’re thinking about merging with a competitor or buying another company, contact us to help you gather the information needed to minimize the risks and maximize the benefits of a proposed transaction.