In our latest podcast episode, we delve into the current state of the dental industry, exploring both the challenges and opportunities that lie ahead. This listicle-style summary captures the key takeaways from the discussion, providing you with valuable insights into the evolving landscape of dentistry. If you’d like to listen to the podcast, it can be found at the bottom of this article.

Let’s dive in!

Challenges:

1. Hygiene Crisis: A 12% workforce reduction during COVID has created a shortage of dental hygienists, driving up their pay and making it difficult for some dentists to afford them. This in turn leads to fewer patient visits, impacting practice revenue.
2. Rising Costs: Inflation has caused the cost of supplies, equipment, and other goods and services to skyrocket. This makes it harder for dentists to be profitable and often leads to higher costs for patients.
3. Staffing Shortages: The hygiene crisis is just one aspect of a broader staffing shortage impacting all areas of dental practice. Finding qualified and reliable employees is proving difficult, and high turnover rates only exacerbate the problem. Short-staffing can lead to burnout and reduced quality of care.
4. Reimbursement Challenges: Insurance companies often reimburse dentists at low rates, making it hard to cover expenses. Constant changes in regulations add to the administrative burden and make it difficult to plan for the future. Low reimbursement rates also make it difficult to provide affordable care to patients.
5. Changing Consumer Landscape: Patients are more cost-conscious than ever before and are comparison shopping for dental care. Online reviews and reputation management play a bigger role than ever before, requiring dentists to adapt their marketing and communication strategies to reach new patients. There is also a need for greater transparency in pricing and treatment plans.
6. Regulatory Burden: Dentists must comply with a complex and ever-changing set of regulations. Administrative tasks take time away from patient care and compliance costs add to the financial strain on dental practices. There is a need for simplification and streamlining of regulations.

 

Opportunities:

1. Technology and Innovation: New technologies are emerging that have the potential to improve dental care and efficiency. Examples include digital imaging, 3D printing, and teledentistry. While adoption can be expensive and time-consuming, technology has the potential to overcome staffing shortages and provide better care for patients.
2. Student Debt Burden: Dental school is expensive, leaving many graduates with significant debt. This can be a barrier to starting a practice or owning a business. However, there is a growing movement to address student debt and make the dental profession more accessible.
3. Public Perception: Many people have negative perceptions of dentists and dental care. This can be a deterrent to seeking preventive care. Dentists have an opportunity to improve their image and educate the public about the importance of oral health.
4. Future of the Profession: Despite the challenges, the future of dentistry is bright. Dentists who are able to adapt to change, embrace innovation, and manage their businesses effectively will be the most successful.

 

Business Tips for Aspiring Dentists:

1. Start Early: Begin thinking about your business vision early, even during your studies. This helps you make informed decisions about your future practice, including location, software, and lab partners.
2. Network: Build relationships with other dentists, accountants, attorneys, and other professionals who can provide guidance and support. Attend dental meetings and conferences to stay up-to-date on industry trends.
3. Understand Business Basics: Familiarize yourself with accounting, depreciation, and compliance regulations. This will help you make sound financial decisions and avoid costly mistakes.
4. Research Products and Services: Take the time to research different products and services that can benefit your practice. Consult sales reps and other dentists for recommendations.

 

Bonus Tip: Find a mentor. Having a mentor who can offer advice and support can be invaluable as you navigate the challenges of starting and running a dental practice.

By understanding the current state of dentistry and taking steps to prepare for the future, aspiring dentists can enter the profession with confidence and build successful practices.

Nothing is like walking into your dental practice and discovering that the schedule has fallen apart. The cause may be the first warm and sunny day in spring after a long winter or a new round of flu spiking in your area. Whatever the cause, broken appointments are frustrating and unavoidable.

Sometimes, it is possible to patch a productive day together using a short-notice patient list or by gleaning some work out of hygiene, and at other times, all efforts result in no significant change to the dismal prospect of a long day for no gain.

When a day’s production evaporates, and no effort to redeem it works, it is best to use the time to attend to other practice priorities. One tip for maximizing the lost time is to develop a list of neglected tasks. Keeping a to-do list can help you rebound quickly from feeling like you wasted your day. Tasks on this list may be important but not urgent in the day-to-day business operations. The tasks should be able to be accomplished quickly. They should also significantly impact keeping the practice healthy and compliant. Examples include the following:

• Updating the medical emergency kit: Make a list of expired drugs and re-order them. Throw out expired drugs. Re-stock disposable items like band-aids and cotton swabs.
• Update the patient list: After years of practice, the patient list is likely full of names of people who have moved away or no longer receive services at your office. Most experts agree that the active patient list should include patients seen within the last 18-24 months. Identify the people who fall outside that date range. Print some labels to mail a reminder or utilize your text and email systems to invite them back to the office for a check-up. If you know they will not be returning, use the mechanism in your office software to inactivate them.
• Deep clean the patient spaces: Walking into an office with dust on surfaces and grime on the floor is unappealing. Insects get in and die on windowsills, and waiting room chairs scuff walls. Apply some elbow grease to the waiting room and thoroughly clean the surfaces and decorations. Don’t forget to dust off the plants and clean the windows. Cleanliness is an excellent way to show patients that your office is intentional about details.
• Perform some training: Dentists have many compliance requirements. An empty day is a great time to indulge in some training updates. Review your radiology update requirements, perform some OSHA or HIPAA training, talk about handling sharps, and what to do if there is a conflict in the waiting room. Discuss ways to improve patient service or spend time resolving staff issues. Take time to verify that you have posted current employee posters. Whatever tasks you complete, document conversations, and have attendees sign that they were trained or informed.
• Design a patient appreciation gift: There are always patients who are office ambassadors. Show these patients some appreciation by taking the time to design and purchase thank-you gifts for them. Everyone loves to be recognized, so show your supportive patients that you appreciate their trust in your office.
• Plan a staff outing: Patients are not the only people who like appreciation. Your staff is the glue that holds the office together. Thank them for their service by planning a small get-together or planning a day to buy lunch for them. A cohesive office is a treasure, so show the staff you care.
• Close early: Never underestimate the value of having a good work-life balance. If patients are willing to come in early, try to move them forward and let the staff have an early night. The gift of time is always appreciated! Staff members will enjoy your flexibility and may complain less when they are kept late on another day.

You can never eliminate broken appointments. Hopefully, the next time they happen in your office, you can use these tools to seize all of the production you can and then find other tasks to accomplish that are important to your practice’s success.

One common problem that dentists face is that they spend ample time working in their businesses and not much time working on their businesses. They can hardly be blamed, for while the hygiene department is a crucial contributor to production, dentists are responsible for most of the daily production total. The pressure to produce is intense. Visions of loan payments, payroll, and personal obligations merge into a specter that roars to dentists about imposter syndrome and failure. A combination of pride, urgency, and fear can keep dentists pinned to the chair in a desperate attempt to produce at all costs and ignore less urgent needs. If this mindset takes hold, practitioners risk developing tunnel vision in which the target is production, and every possible arrow is shot toward the bullseye without much thought to taking time to aim.

Production is critical to the success of a dental office. There is no doubt about that. But production is not all that is important to success. A production mindset can prevent dentists from thinking about their practices holistically and can limit the attention paid to other critical numbers, like weak collection ratios and skyrocketing expenses.

Production shortsightedness prevents dentists from dealing with the other crucial numbers in their practices. How can practitioners prioritize production without developing a production blind spot? Below are some tips for keeping a balanced approach to all the essential practice numbers.

• View production goals as ideal objectives, not as absolute requirements. No one can accurately predict whether the multi-implant patient will show up for her appointment or if the weather will prevent a patient from making it to the office. Production is fluid from day to day. Sometimes, it is possible to redeem the lost appointment by keeping a list of patients who are available on short notice. These patients should live close to the office so they can fill the empty spot without causing you to run behind. But when a day’s production evaporates, and no one can fill the gap, make use of the time to attend to other practice priorities.
• Evaluate your office’s scheduling practices. If no-shows are common in your office or treatment plans are gathering dust, it may be time to evaluate the office’s scheduling policy. Faltering production numbers can be an early indicator that scheduling needs attention. If you use block scheduling, ensure you have detailed the contingencies for instances when the block remains empty. For example, if you instruct schedulers to keep a two-hour crown and bridge block open from 2 p.m. to 4 p.m. on Wednesday, tell them when that reserved spot can be released to schedule other appointment types. Be specific in your wishes. Otherwise, each staff member may use different criteria.
• Schedule time each month to intentionally evaluate other office metrics. High production numbers can be a panacea for dental offices. Completed treatment does not always equal money in the door if the bill for services remains outstanding. However, production is only one factor in the income equation. Dentists focusing on production will likely underperform in working on their businesses because they spend too much time working in them. Below are other metrics besides production that need monitoring for improved productivity.

 

Accounts Receivable Aging:

Evaluating your practice’s accounts receivable aging is a significant step toward getting paid promptly for the production of the past. Many offices overlook the necessity of routinely and intentionally looking at how long it takes them to get fully paid for the procedures. Aged accounts receivable are divided into distinct categories. These categories are: 0-30 days, 31-60 days, 61-90 days, and > 90 days. Below are some practice benchmarks

Collections experts report that the ability to collect amounts past 60 days drops from 90% to 70%, so staying active in getting accounts paid within the first 60 days past the service date is critical.

Some offices make the mistake of beginning the aging process from the date of an insurance payment. Avoid this tactic. This aging method improves the look of the accounts receivable aging report but re-sets the timer on the collections process, which results in less cash flow today.

 

Collections:

A careful examination of the company’s accounts receivable aging report is likely to lead to an inspection of its collection practices. According to Watson (2022), 17.8% of people in the United States have medical debt in collections. The Consumer Financial Protection Bureau states that, in 2021, medical debt was the most common debt that appeared on credit reports.

Credit reporting rules have recently changed. The No Surprises Act became effective on January 1, 2022. This federal law protects patients from receiving bills when being treated by an out-of-network provider in an in-network facility such as an emergency room or urgent care facility. This act requires private practitioners, including dentists, to provide uninsured and self-pay patients with good faith estimates of the cost of services before treatment. Fees that exceed $400 of the estimate are subject to the patient initiating the Patient-Provider Dispute Resolution process.

The three nationwide credit bureaus (Equifax, Experian, and TransUnion) changed their credit reporting guidelines in 2022 to support consumers facing medical debt. Effective July 1, 2022, paid medical collection debt is no longer included on consumer credit reports. Additionally, these agencies increased the time before reporting will begin on unpaid medical debt to one year. The agencies will only report on outstanding medical debt that exceeds $500.

Dentists must develop lawful collection practices in their offices that prevent debt from accumulating by implementing policies that help patients understand their financial obligations for treatment rendered before beginning treatment. It is wise to provide detailed treatment plans for all patients, review the costs associated with treatment at each step in the treatment plan process, and set clear expectations for settling accounts.

 

Expense Reports:

The hectic pace of a dental office lends itself to putting recurring purchases on autopilot. It is easy to “set it and forget it.” This philosophy encourages waste and prevents offices from routinely monitoring their subscriptions and monthly orders. As a result, it is not uncommon to have recurring charges mount up over time. Auditing your subscriptions and regular expenses is a great way to increase the office bank balance without increasing production.

Dentists should schedule a monthly meeting to review expenses and plan for any necessary changes in the budget. It is beneficial to schedule a yearly review of the contracts for the office’s credit card processing service, toothbrush ordering, IT services, and other subscription services to ensure that the fees are reasonable and that the service is still relevant to the dental office needs.

 

Insurance Contracts:

Insurance contracts do not always favor the provider. It is not unheard of for a dentist to enter into a contract paying less for procedures than the cost of providing the supplies. This inequitable payment may go unnoticed unless providers schedule yearly insurance payer audits. It is not feasible to tackle every insurance contract yearly. Instead, devote time to examining two or three contracts for unsatisfactory conditions that you have encountered. Contact the company and request a review of the contract terms. If you cannot renegotiate more favorable terms, it may necessitate evaluating whether your office should continue participating with the payer.

 

Managing a dental office is complex. Focusing on production is a daily necessity. However, there are many other critical metrics to monitor. Try to implement a plan for addressing all the crucial numbers in your dental office. You will soon enjoy a more balanced and accurate view of your practice.

 

 Looking for more Dental Articles? Click Here!

 

 

References:

Watson, A. M. (2022, November 11). 5 rights you have around medical debt collection. GoodRx Health. 5 Rights You Have Around Medical Bills and Debt Collection Laws – GoodRx

Resources:

Transunion. (2022, March 18). Equifax, Experian, and TransUnion support U.S. consumers with changes to medical collection debt reporting. Equifax, Experian, and TransUnion Support U.S. Consumers With Changes to Medical Collection Debt Reporting

 

 

Business owners have about 80% of their net worth locked up in the business; therefore, only 20% is liquid (Snider, 2023). Owners expect the stockpile of wealth to be unlocked in the future when the business transitions. However, experts tell us that 80% of businesses on the market fail to sell. All that wealth is useless if the company is not transferable! Sadder still is the owner’s dependence on that wealth to live well in their next act. Such owners have come face-to-face with their wealth gap. They must retire with less to live on, which is likely why 75% of business owners “profoundly regret” selling their business 12 months later (Snider, 2023).

What is a Wealth Gap?

A wealth gap is the difference between expectation and reality (Goodbread, 2023). It happens when owners assume a business value that never materializes. It results from adding the owner’s actual assets to a “guess” of their business’s value. Below is an example to consider.

Suppose you have actual assets of $2M. These assets are in your house, cars, IRAs, and other tangibles. The value of the business is not considered at this point because you do not know the actual value you will reap. Suppose also you wanted to have $400K per year in retirement. To live on $400,000 per year for 25 years, you would need $10M.

$400,000/year X 25 years=$10,000,000 

 

Since you currently have $2M, you are $8M short of your goal. In this example, $8M is your wealth gap.

Now is the point at which you begin to factor in the value of the business. In our example, the owner would need the net proceeds from the sale to be $8M to close their wealth gap. If realizing net proceeds of that magnitude is impossible, then the owner cannot close the wealth gap, and lifestyle adjustments are necessary.

Calculating the wealth gap shows how far away the goal is from reality. If the owner in our scenario is retiring, suffering from health problems, or facing other life obstacles and discovers the gap at the time of exit, the expected $400K per year reduces to $80K per year, based on the actual wealth they possess. It would be devastating to realize too late that your retirement budget is five times lower than expected!

This example should reinforce that exit planning is a good business strategy, not something that occurs when the owner is ready to sell. It should also motivate all business owners to examine their wealth status closely now. Fortunately, owners motivated to close the wealth gap can begin a journey to improve the value of their business, which in turn can help make their goals a reality.

To help you design an achievable plan, consult a Certified Exit Planning Advisor (CEPA). CEPAs help owners think about the state of their business throughout the company’s life. They can help owners improve the value of their company by using de-risking strategies like improving operations, guiding compliance, and helping develop written policies and procedures (structural capital), all things that impact the value of a business. De-risking helps owners protect what they have and paves the way for future growth.

Once de-risking is complete, CEPAs can guide owners into improving the profits and value of their business. Owners address their company’s human (people), customer, and social (culture) capitals. Since these intangibles make up 80% of the value of a business, it is easy to see that these improvements can significantly increase the sale price. Through a carefully constructed individualized plan, owners can take control of their companies and gradually implement changes that directly influence their business’s selling price.

Whalen CPAs has two CEPAs who are ready to assist you. Imagine the peace of mind that comes from acknowledging your wealth gap and devising a plan to close it.

Contact Whalen today!

Resources

Goodbread, J. (2023, August 21). Financial planning for business owners [Presentation]. CEPA: 2023 August,  Online.

Snider, C. M. (2023). Walking to destiny (2^nd ed.). Think Tank Publishing House.

Managing accounts receivable (AR) is a fundamental aspect of financial health for any business. A robust AR system ensures steady cash flow, minimizes outstanding balances, and fosters strong client relationships. This comprehensive article delves into AR management, offering ten actionable insights to optimize your receivables processes and drive financial success.

 

1. Effective Data Collection: The foundation of effective AR management lies in accurate data collection. Comprehensive client information, including accurate contact details, lays the groundwork for seamless invoicing and follow-ups. Train your staff to confirm the contact details at every client interaction to maintain communication.
2.  Tailored Payment Term Flexibility: Customize payment terms to suit your business and clients. Offering flexible terms can incentivize timely payments while aligning with your clients’ financial cycles. Upon account set-up, inform clients of your billing policies. If possible, arrange billing multiple times monthly to capitalize on pay cycles.
3. Immediate Invoice Dispatch: When you deliver your product or service, the clock starts ticking. Don’t delay invoicing; immediate issuance improves transparency and signals professionalism.
4. Automated Reminders: Gentle yet persistent reminders significantly enhance collection rates. Implement automatic reminders for approaching due dates, ensuring your clients get regularly reminded of their obligations.
5. Employee Training on Procedure: Educating your staff about AR procedures is vital. From invoicing to communication, ensuring your team understands their role in the AR process bolsters efficiency.
6. Embrace Payment Automation: Automation isn’t just a buzzword; it’s a game-changer. Automated invoicing, reminders, and payment processing streamline the process and reduce human error. Set up online payments so clients can promptly pay invoices. Offering online payments removes a barrier to prompt payment because people may not have stamps available or may not use checks.
7. Streamline Dispute Resolution: Promptly address any disputes that arise. A straightforward and efficient dispute resolution process prevents payment delays and preserves client relationships.
8. Incentivize Early Payments: Consider offering discounts or incentives for early payments. This strategy can nudge clients toward settling their invoices promptly. Discounts of only a few dollars are often attractive to budget-conscious people.
9. Multi-Channel Communication: Communicate with clients through multiple channels. While emails are effective, a mix of phone calls, text messages, and postal mail can keep the bill on the client’s mind. Many older adults avoid using technology, so use methods that reach all clients.
10. Regular Accounts Receivable Check-Ups: Just as your health requires regular check-ups, so does your AR management. Schedule routine reviews to assess the effectiveness of your strategies and implement necessary improvements. Run an accounts receivable aging report monthly and look for accounts overdue by 60+ days. The rate of payment for invoices aged past 60 days drastically drops. Work hard in the first couple of months to secure payment. Offer payment plans for lagging accounts with contracts outlining the frequency and amount of each payment.

Optimizing accounts receivables management in a dynamic business landscape is paramount to financial stability. Implementing these ten insights will streamline your AR processes, bolster client relationships, enhance your cash flow, and pave the way for sustained business growth. If you are struggling with where to start, we can help. Contact Us