Do you want to grow your dental practice? Throw out the box!

It’s an expression so common that it’s become a cliche:, “you have to think outside the box.”

But whether you are inside the box or outside the box, it’s still seen as the “safe space” you can retreat to when things get tough. But is it really that safe?

Let’s take a look at the current state of our business.   

  • The cost of a dental education continues to skyrocket with an average student debt of almost $300.000!  
  • There are more Dentists than ever electing to become employee’s rather than owners
  • Dental insurance companies are still squeezing the profit out of every procedure making it more and more difficult to be profitable.

Meanwhile, Managed Service Organizations are growing faster and making it even more difficult for solo practitioners or small group practices to succeed.  

So I say that it’s time to throw out the box if you want to compete and succeed on your own terms.

There are no shortage of consultants out there ready to give you answers. But most of them have never practiced dentistry. So they have a very limited view of what we are capable of doing and where our businesses can find opportunities to grow.

I still practice dentistry five days a week and I’ve built a large dental practice in Massachusetts with 14 locations providing a full range  of dental care to patients.However, changing rules, regulations, and dental insurances are taking a toll. Every year things just seem to get tighter and tighter with very few options on the table to grow.

At least that’s the way it seems if you aren’t willing to kick aside expectations and look for opportunity.

About five years ago I started to implement Botox and Dermal fillers into the Practice. This is a natural progression for dentists and I am here to say to embrace these cosmetic treatments!  Get trained, get your team on board and be aggressive and proactive! I challenge you to consider additional treatment modalities that allow you to side-step insurance companies altogether because they are strictly fee-based.

Your position as a trusted practitioner in your community makes you uniquely qualified to perform additional services at a high level and for a full fee

In addition to Botox and Derma fillers, some other treatment options to consider adding to your offerings include:

  • Radiofrequency treatments (RF) to tighten the skin around the face and neck. Each treatment takes only 5-10 minutes and maintenance is every 4-12 months.
  • Laser treatments to remove red and brown spots on and/or around the face, spider veins, unwanted hair and tattoos as well as scar tissue or wrinkles. Each treatment takes between 25-60 minutes and usually can be completed in 2-4 visit with each visit scheduled 4-6 weeks apart.
  • You can also use both RF and Laser to remove unwanted adipose tissue under the chin, sub mental area inner and outer thighs and abdomen.  These treatments usually can be completed in 2-6 treatments scheduled 6-8 weeks apart and each session lasting between 25-60 minutes.
  • Hydra facials, which replenish the youthfulness of the skin in 30-40 minutes taking years off your patients skin and is maintained by a follow up visit every other month.
  • Kybella injections in the sub mental area to remove unwanted fat or adipose tissue causing the dreaded double chin.
  • PDO sutures or what is commonly referred to as a lunchtime facelift almost instantly taking years off your face.

Does the thought of providing these services scare you? IT shouldn’t! We may not be Dermatologists or Plastic Surgeons, but we are skilled practitioners who are well positioned to elevate Spa Dentistry to something far above warm towels, relaxing music and simple massages.

You already have a captive clientele.  A majority of our patients want to improve their looks.  If they aren’t getting it from you they will find an alternate service provider to do it.  Take the action steps necessary to position yourself for the future.

For Dentist’s who remember a time when the fee you charged was actually your reimbursement, the proposed treatment options I’m suggesting are all fee for service!  They are all considered elective, non-surgical and the demand is high. Interest and awareness is enormous so consider adding additional procedures and services to you practice today.  Be first to implement this in your area – not the last.

Of course you need to be aware of your  state’s regulations. Some states may require you to work indirectly or directly under a Physician’s license.  Other states may require you to have an Esthetician’s license. However in most cases, you will delegate these procedures to a Physician Assistant, Nurse or Lic. Esthetician

In 1983, my first year in business, I put in my first dental implant.  Back then there were enormous resistance,s, but today, only 3 decades later, it is considered the standard of care in many cases.  So throw out that box, step out of your comfort zone and consider the possibilities!

Kevin Coughlin DMD, MAGD, MBA, LE is a practicing general dentist, who has a consulting business, Ascent Dental Solutions LLC, with a focus on education, training development and knowledge. Dr. Coughlin has a Non-Surgical company called Ascent Laser Aesthetics LLC.  He has taught practice management, lectured and written six books on the business of dentistry with an expertise in dealing with MSO’s and DSO’s. Dr. Coughlin has over 100 podcast on Apple radio, Ascent Radio and several webinars. His last book is the Non-Surgical Guide to Aesthetics, available on Amazon, to help patients and clients along with team members to understand quickly and easily options to make you beautiful on the outside.

 

The rise of corporate dentistry is relentless

The rise of corporate dentistry is relentless. With rapid expansion and almost limitless budgets, dentist/owners are being forced to compete against entities with incredible purchasing power and efficiencies of scale that are almost impossible to achieve as a solo owner.

Shockingly, many dentists aren’t even aware of this growing threat to their business. Corporate dentistry  – which include Managed Service Organizations (MSOs) and Dental Service Organizations (DSOs) – is growing at a rate of between 40 and 45 percent each year.

What is the difference?

Dental Service Organizations are usually chains and run like franchises. Some have a universal look and feel along with strict franchise practices and branding. Some existing dental practices may be permitted to retain their own unique character and feel. However behind the scenes the operations are often changed to favour certain suppliers and adopt uniform business practices.

If you are a dentist who hates the nuts and bolts of running a business, I can certainly see the appeal of such an arrangement. However, if you are like myself, and have an entrepreneurial outlook, such a scenario might seem a bit constrictive.  

The bigger issue is with the second type of corporate arrangement, Managed Service Organizations or MSOs, and its relationship to venture capital and equity firms.

Equity firms typically invest short-term.  When they get involved with dental firms the goal is to triple or quadruple their money over a 3 to 7 year timeframe. This puts a lot of pressure on the dentist and staff as the investors constantly demand increased efficiencies to maximize profits. If you hated running a business before, this model is not going to change how you think about it.

Long-term sustainable growth is not the goal. Maximizing return for investors in the short term is. Indeed what often happens is that the practice is flipped to new ownership frequently as the old owners cash-out. And the process of revenue squeezing starts all over again.

This focus on short term results can damage a practice’s reputation in the community and leave it open to competitors who are taking a longer view and choose to compete on service rather than price.

In the end how you run your business is up to you. The important thing is to have all the information and understand the ramifications, both positive and negative, before you make any decisions.

Ready to Get Started?

If you are interested in learning how to take your dental practice to the next level, please contact Ascent Dental Solutions today at 413-224-2659 to learn how Dr. Coughlin can help.

Three most common problems surrounding dental payroll

Handling payroll is one of the most arduous tasks a dentist/owner has to deal with on a regular basis. Doing it yourself eats up valuable time that would be better spent treating patients. I recently spoke to Jamie Scherban, Senior Business Consultant at Paychex to discusses the most common problems dentists face regarding payroll.

When I started out back in 1983, there was no punching in or punching out. My office worked on the honor system. This worked well until I got into trouble with a disgruntled employee.

I then moved to sign in sheet to a punch clock – both of which also got me into trouble. Obviously administration was not part of what I was taught in dental school. And it showed as I made mistake after mistake until I finally outsourced this part of my practice to someone who knew what they were doing.

A dentist with 6-10 employees can spend anywhere between two to four hours a week focusing on payroll. “Our job is to give that doctor the ability to earn as much as they can based on the hours they work,” according to Scherban. “They should be focusing on their practice rather than focus on this stuff.”

When Scherban comes into a practice, any practice, he generally finds them making the same three mistakes that cost them time and money.

1-Incorrect setup

Did you set up the business correctly with the state and IRS? Even with existing businesses a lot of the time taxes are filed incorrectly because they were set up incorrectly. This results in late filings, penalties and notices from the tax man.

2-Filing taxes on time

Dentists are generally very good at being dentists. However when it comes to general administration duties like payroll tax filing – things can get overlooked. So taxes are not filed on time.

3-Managing employees

How do you manage benefits and time off? How do you track who punched in? Did they punch out?
This takes time away from the core business of being a dentist. So finding a solution that takes these issues off the table reduces the stress and makes the workplace run more smoothly and with less conflict.

In the end it is your responsibility to ensure that everything is properly tracked. If you choose to do it yourself, you are going to spend less time with billable patients which will cost you money. So it just makes sense to outsource this type of admin to a company such as Paychex, so that you can strike one of the least interesting tasks off your to-do list.

Using online testimonials to promote your dental practice

Dental Practice Transition Checklist: Making a Smooth Transition

Can you really love the business of dentistry?

Dental associations need more business education programs

As a dentist it’s very unlikely clinical skills are your biggest challenge. Dental schools are very good at teaching the mechanics of our profession.

What they are not so good at is preparing us for running a business.

For most of us it’s a trial by fire. The average dental graduate comes out of school with a mountain of debt.

According to the American Dental Education Association (ADEA), the average debt per graduating senior is $287,331 (according to a 2017 survey).

That’s a big hole to dig yourself out of.

And starting a practice of your own isn’t cheap either. According to Bank of America, the average cost to set up a dental practice is just over $400,000.

That’s just the start up costs. Let’s say you’ve managed to secure financing and open your doors. Being a dentist today is not the same as it once was. Where we once were able to grow our business over decades, today there is increased competition from Managed Service Organizations and Dental Service Organizations that can leverage their size and buying power to negotiate better deals than a single dentist can hope to get in their wildest dreams.

At this point you might be thinking that there is really no hope. But that’s not the case. These organizations got where they are in the marketplace because they identified the lack of business experience most dentists bring to the table.

As a working “wet-finger” dentist myself, I believe it is the responsibility of  local, state and national dental associations to help their members learn more about what they are facing and give them the tools to compete against these MSOs and DSOs so they can continue to thrive and grow.

In addition to one-on-one coaching and consulting for dentists, I regularly offer free webinars to dental associations to bring attention to this issue. If you are in a leadership position at your association send me a note and let’s talk about a free session for your members.

If you are a member, make an introduction. Connect me with your programming or education person and I’ll do my best to set something up so you and others in your dental community can learn more about MSO’s, DSOs and corporate dentistry.

Selling a Dental Practice to a Corporate Buyer

If you are selling your dental practice, it is important to be aware that not all buyers are individual dentists. Corporate buyers are becoming more and more common. The two categories of corporate buyers are dental management organizations (DMOs), and small group networks (SGNs). The main differences are that DMOs are large, owning from 30 to several hundred dental practices, and that DMOs have virtually unlimited resources. SGNs are small, typically owning less than 20 dental practices, and are limited in their available investment capital.

Assessing the Offer

Regardless of which type of corporate buyer has put an offer on the table, it is important to carefully assess the offer. Fortunately, there are 5 simple steps to help you decide whether the offer is right for you.

Know your value: You cannot accurately assess the offer that is made unless you understand the valuation of your practice. There are numerous ways to perform this valuation, and there are many complex factors that can affect the value. Therefore, a professional valuation is always advised.

The buyer may make an offer that is significantly higher or lower than your valuation. If this happens, it is important to learn why. Get professional advice if you are considering an offer outside your valuation range to be sure you are getting a fair deal.

Understand the buyer: You probably already know that you need to investigate the financial strength of any prospective buyer. For a corporate buyer, this should include asking your accountant to review the company’s earnings expectations, financial statements, and tax returns. Also check references and reviews, with an eye toward developing an informed picture of the company’s track record of purchases and sales.

In addition, it is important to understand the buyer’s goals. Corporate buyers want to acquire the existing patient base and grow the practice’s profitability. They generally want to retain the current owner as a manager, which may or may not interest you. They also have an existing transition process focused on cutting costs and maximizing revenue. Your economic goals become tied to the corporation’s.

Know the payment structure: Regardless of who buys your practice, financing will likely be involved. With a corporate buyer, though, the structure may be highly complex. For example, a portion of the purchase price may be contingent on your ability to hit certain goals and objectives over a predetermined number of years. In addition, you may receive a portion of the purchase price as equity in the company rather than cash. You may even be required to purchase additional equity.

Know the risks: Signing a contract with a corporate buyer involves a great deal of risk. You do not know the corporate buyer that well, and there is no recourse for equity stakeholders if the company goes belly up. However, if you are willing and able to assume the risk, are willing to work hard to hit goals and objectives, and feel confident in the purchasing entity, you could make a strong return on your investment.

Because corporate purchase agreements are highly complicated and involve high levels of risk, it is vital to seek professional advice. Only you, your financial advisors, and your dental business advisor can determine whether a corporate buyer makes sense for you.

Ascent Dental Solutions is a full-service agency dedicated to helping dentists build their practices and map out their careers. It is the brainchild of Dr. Kevin Coughlin, who earned his doctorate at Tufts University School of Dental Medicine and currently serves as a faculty member there. While Dr. Coughlin continues to practice dentistry as the principal owner of the 14-location Baystate Dental PC, he has a strong passion for helping fellow dentists maximize their success. If you are interested in learning how to take your dental practice to the next level, please contact Ascent Dental Solutions today at 413-224-2659 to learn how Dr. Coughlin can help.

Dental Practice Valuation: How Much is Your Practice Worth?

Like anything else in life, there is an easy answer to the question, “How much is my dental practice worth?” “However much someone is willing to pay.” The reality is that you can have valuations done all day long, and they will conflict with each other because they are based on different methodologies, and at the end of the day, none of them really matter if no one is willing to pay the valuation price. Still, valuation is a vital component for both buyers and sellers, so it is important to have a professional valuation completed.

Academic vs. Real World Valuation

It can be argued that there are two basic ways to value a dental practice: academic and real world.

The academic approach is used to generate a written appraisal. There are many different formulas, generally based on capitalization of earnings, discounted cash flows, or even net tangible and intangible assets. Take a few years of data, apply a generally accepted multiplier, do some hand waving, and arrive at a number. If performed by a financial expert with subject matter knowledge in dental practices, this will arrive at a reasonable valuation.

The real-world approach acknowledges both the usefulness of appraisal formulas and the importance of understanding the market. Practice brokers specialize in dental practice sales transactions, and are experts in the current marketplace. While there is no central database of dental practices that are currently on the market or have recently sold, practice brokers have enough experience to know what similar practices are generally selling for.

The Limitations of Valuations

Of course, the problem is that no two dental practices are ever truly that similar. One might be owned by a dentist who has fine-tuned overhead expenses to an extremely low level that a buyer may not be able to match. One might have a base of long-time patients who have had all major procedures done and only come in twice a year for cleanings. Perhaps the selling dentist does rare procedures that the buyer cannot or does not want to perform, or maybe the seller is unusually speedy at performing complex work. The patients might be extremely loyal to the selling dentist, and many may decide to leave rather than stay with the new dentist.

On the other hand, the buyer might be a hot new dentist who performs virtually all services in-house, while the seller referred most complex cases out to specialists. The buyer might be more marketing savvy, or more committed to digital dentistry, or have more of a flair for the business side of the practice.

Likewise, the value of the office lease must be considered. Is it stable, and are the payments reasonable? What about the location of the practice? Is it in an up and coming neighborhood, a long-established one, or an area that is in decline? Parking, visibility, staff, reputation, and many other details must also be taken into account.

All these factors and more make dental practice valuations both an art and a science. Because dental practices have few hard assets, and are not interchangeable commodity goods, it is crucial that any valuation be performed by an expert who understands what happens after a practice is sold. The best valuations are done by those who are excellent at quantifying the likely future productivity and profitability of the practice for the buyer.

Ascent Dental Solutions is a full-service agency dedicated to helping dentists build their practices and map out their careers. It is the brainchild of Dr. Kevin Coughlin, who earned his doctorate at Tufts University School of Dental Medicine and currently serves as a faculty member there. While Dr. Coughlin continues to practice dentistry as the principal owner of the 14-location Baystate Dental PC, he has a strong passion for helping fellow dentists maximize their success. If you are interested in learning how to take your dental practice to the next level, please contact Ascent Dental Solutions today at 413-224-2659 to learn how Dr. Coughlin can help.