Dental Financial Wellbeing

Are you a dentist just out of dental school with a practice to run and you’re not prepared for the business aspects? You might be making financial mistakes every day and not even know it. You could have major financial problems coming your way and won’t know it until it’s too late.

Across the country dentists are struggling. The percentage of dentists who describe themselves as “not busy enough” is increasing all because of a growing supply of working dentists and shrinking demand. If you find yourself with more time than patients, you could be in trouble. With dental care among adults decreasing and the continuing changes in dental insurance, it’s harder and more important than ever to get control of your finances.

Financial decisions – For some dentists, every financial decision causes panic, even the routine ones. If you don’t have sufficient cash flow, you won’t have the money to confidently spend on the things you need to grow your practice. Some of this can come from poor management of overhead. As a percentage of your revenue, you should be running your practice at about 55% to 60% overhead. Anything higher than 60% can mean you are heading for disaster.

Debt – If you’re afraid of debt, this can only make the problem worse. When you try to pay cash for everything, it means you don’t have cash things that come up, and this puts you in a position where your problems feed one another and send your finances into oblivion.

Retirement – Poor cash flow also leads to poor long-term savings, which can delay and dramatically reduce the quality of your retirement. If your money is sunk into overhead costs and tax bills, you won’t be able to adequately save for retirement. To maintain your current lifestyle after retirement, you need to manage your money intelligently today.

Are you spending more time managing your practice than seeing patients? If so, you need help, before it’s too late. Seek financial guidance now, and get your practice back on track.

Foreign Bank Accounts and Other Foreign Financial Assets

You must report worldwide income on your US income tax return. If you have an “interest in” a foreign bank or financial account you must check “yes” on Schedule B of your tax return. You may also have to file Form 8938 with your return to report foreign accounts and assets. Additionally, you may have to file an FBAR (114) report separate from your income tax return each year.

The Foreign Account Tax Compliance Act (FATCA) brings us more global bank transparency, and aims to discourage offshore tax evasion. FATCA brings with it large civil penalties and possible criminal sanctions, thus enticing taxpayers to be more forthcoming in reporting their non-US income and assets.

U.S. persons holding any financial interest in, or signature or other authority over, a bank, securities, or other financial account in a foreign country are required to report the account to the US government if the value of the account(s) exceed(s) $10,000. This is done on a Report of Foreign Bank and Financial Accounts (FBAR, now 114). Since 2003 the IRS has had the task of enforcing the required FBAR (114) filing and assessing the harsh penalties for non-compliance. Currently penalties are $10,000 per account that goes unreported, and $100,000 or 50% of the account’s value for willfull failures to report.

Form 8938, Statement of Specified Foreign Financial Assets, may also be required to report foreign accounts and assets such as:

• Financial accounts maintained at foreign financial institutions
• Foreign retirement accounts
• Direct ownership of stock in a foreign corporation (outside of a financial institution)
• Foreign life insurance products
• Foreign partnership interests, such as foreign hedge funds and foreign private equity funds
• Foreign deferred compensation arrangements
• Beneficial interests in foreign trusts or estates

The reporting requirement for Form 8938 has various thresholds with a minimum reporting threshold of $50,000. Similar to the FBAR (114), there are significant penalties for failure to file Form 8938.

Every year, careful consideration needs to be made to determine if foreign reporting requirements affect you. Please keep these factors in mind throughout the year in order to be fully compliant once tax reporting time is upon us.

Missed Opportunities for Growing your Dental Practice

There are patient statistics dental practices are not tracking and knowing these facts can assist in the growth of your practice. Here are a few types of patient tracking that should happen in a dental office.

Tracking where new patients are coming from is essential. You can include it on a new patient questionnaire or on your health history form that all new patients fill out or as a part of your new patient hygiene note.

Your front office staff should compile this information for you on a monthly basis. If most of your patients are coming from referrals, expand your referral base and start asking for referrals. If most of your new patients say that they just searched the internet, follow up that question by asking them if they visited your website. You will be surprised to hear how those two go hand in hand. People don’t just see you somewhere and decide to come to your dental office.

If you find new patients are coming from a particular source, you want to invest more time and money into that source. If you don’t know what that source is, it’s pretty hard to know where to invest more money, time, and energy.

Once you have a handle on where your new patients are coming from, you need to find out where they are going. Patients move, die, switch dentists, and it is not possible to retain100% of patients over a career. But there are some things you can do to improve your retention percentage.

Overall, with new patients:

• One-third of new patients stay in your practice and do the treatment you recommend
• One-third stay and may not do the treatment that you recommend today, but they may do this treatment in six months or a year
• One-third will leave, not necessarily because of you or your staff, but for whatever reason

While it is very important to increase your new patient numbers, it is more important to keep the ones you are already have. How can you increase the number of patients you keep? You need to know where your patients are going.
Keep track of how many patients are leaving your office with a next appointment. If patients aren’t accepting treatment but they are making their next recall appointment, you are more likely to retain them as a patient. Track this and meet regularly with your staff to review it.

The best way to retain a patient is to get them scheduled while they are in your office. The longer that it takes for them to schedule a next appointment, the less likely are to come back. The goal with every new patient should be that they leave with a next recall appointment.

It has been shown that new patient value is significantly higher in the second and third years of being a patient. Treatment planning is a personal style, but acceptance is significantly higher if they continue seeing you as their dentist. Initially they may not trust you and may need more time before they are ready to have you do their treatment.

Dental consultants sometimes talk about a short call list or a cancellation call list. Every office has the potential to put this into place and at the same time track whether treatment recommended is actually scheduled. Keep a few spreadsheets and have your front office write down the names of patients who need treatment and whether or not they schedule.

When you have a cancellation, this is your list of patients to call and make your way down the list. Use this when there is a cancellation or when tomorrow’s schedule starts falling apart. The rule should be if by today at noon, tomorrow’s schedule is light; you can devote the afternoon to filling it. Sometimes this is a difficult concept for team members to embrace, but filling the schedule is the most important thing they can do. This becomes significantly more efficient if they have a list of patients to call.
Many issues in practices could be avoided just by knowing these statistics, there is power in knowing the numbers. When you know your numbers; you can make educated decisions as to how to grow your practice.