December 5, 2016
Over the years I have often written about the benefits, both to your practice and to your patients, of offering outsourced financial arrangements as a viable payment option for dental treatment. The practice receives full payment at the start of treatment, and the finance company assumes all of the risk for collecting the borrowed amount. For this valuable service, the finance company is paid a “merchants fee” by the dental practice. That merchants fee essentially underwrites the loan allowing the practice to offer interest-free promotional packages to patients.
Most of the time these arrangements work out seamlessly. But in a significant number of cases – more than you might expect – a massive PR problem occurs when a patient owes an outstanding balance at the end of the promotional period. Why does this happen? Because some of the major well-known finance companies – instead of sending monthly statements for the agreed-upon payment that will fully amortize the loan – deceptively send monthly statements saying “minimum payment due”. The patient is then billed an egregious interest rate – often in the 25% annual interest range – on the TOTAL amount of the original loan and not just on the outstanding balance.
This is referred to as retroactive interest. As you have probably experienced, patients are really upset when this happens to them. They are angry and even blame your office for offering the plan. That, of course, is not helpful for your reputation.
You might want to check out Lending Club Patient Solutions. The plans they offer are transparent and feature easy to understand terms with monthly payments paced to pay off within the promotional period. And these plans have no retroactive interest. If a patient does not pay off their balance within the promotional period, interest will only accrue on the outstanding balance on the date the payment plan ends and NOT from the date of the initial purchase. Lending Club also prides themselves on offering exceptional customer service. They answer the phone promptly, and the person who answers will be the one to guide you through the entire process.
Another feature I like is that your practice can tell Lending Club which interest free promotional packages you will offer. That way – if the patient doesn’t make arrangements in your office, but instead prefers to call from home – they can only be offered plans you have agreed to.
You can call Lending Club Patient Solutions at 800-630-1663 for more details. I will be interested in your feedback.
November 21, 2016
Full disclosure – this blog has absolutely nothing to do with dentistry – but I hope you will read it anyway. My wife and I were recently in New York City for a quick two day whirlwind of business, theatre, and dinner with friends. The unquestioned highlight of our visit was a two hour guided tour of the 9/11 Museum at the lower tip of Manhattan. A year ago, on another trip, we had gone to see the new World Trade Center building and the memorial pools, but didn’t have the time to visit the Museum.
The 9/11 Museum has been constructed within the actual footprint of the North and South towers that were destroyed. This is hallowed ground. At one point, you are seven stories below street level on the bed rock of Manhattan. It is very overwhelming to visit this museum. Bring a handkerchief. The minute by minute account of what happened on that Tuesday morning 15 years ago is dramatically portrayed with video, photography, and the real size artifacts of twisted steel and damaged fire engines. Almost 3000 innocent people lost their lives, and their families were forever impacted.
I can not help but think that as we celebrate Thanksgiving and enter this Holiday season, we should remember the resilience that the citizens of New York and our nation as a whole displayed in dealing with this unspeakable horror. Perhaps that will help us now and give us courage and optimism as we try to understand and cope with the current economic and political issues that are seemingly dividing our country.
November 7, 2016
Dental Purchasing Group (DPG) is a dental specific group purchasing organization that was started almost 4 years ago. I originally wrote about this company early in 2016. I was impressed with it then, and even more impressed today.
The company has added 300 doctors and over 100 new offices in the past year.
Seth Josephs, the co-founder and CEO, told me that he estimates that based on its negotiated pricing from vendors within the network, DPG member offices will save $1,000,000 in calendar year 2016.
Ten new unique vendors have been added this year including Lighthouse 360 (patient communication software), Prexion (one of the major players in 3-D scanners), and Alpha NetSolutions (a well respected regional IT company).
Prior to this year, DPG members would receive a hard copy vendor book. A big upgrade has been the creation of a new website that makes it easy for members to access valuable information. This is especially helpful now that so many new vendors are being added. New offices can also sign up online and seamlessly have access to all member benefits.
DPG continues to offer the first 12 months free, and then $99 annually for each subsequent year. I asked Seth why more offices haven’t joined. “We all have learned the hard way that if something sounds too good to be true, then it probably isn’t true. Unfortunately we are having a difficult time overcoming this ingrained attitude.”
I encourage all of you who read my blog posts to check this company out. There are no hidden fees. Do the math – if you already buy from these vendors anyway, by being a DPG member, you get an additional substantial discount. And if you discover a new vendor that you want to buy from, you get the DPG member discount. You can call Seth Josephs directly at 978-609-4281 or visit the website.
October 25, 2016
My wife and I had a wonderful experience a few weeks ago when we had the opportunity to attend the regional conference of EO (Entrepreneurs Organization). My older son co-chaired the event that was held in downtown Boston. The overall theme of the conference was how to build resilience. One of the headline speakers was the amazing Warren Rustand. He lectured to us on his strategies for building strong and resilient families.
The audience was packed with busy successful business owners. Rustand was preaching to the choir. His main message: when you are working so hard to build a thriving business, it is so easy to forget your main role in life, which is to be a great parent to your children. You are a parent every day, and it is a huge responsibility and your biggest obligation. But it is so tough to fulfill this role because your bandwidth is stretched and your plate is full.
I couldn’t help but think of how many of my clients fit this profile. Eight to ten years of college and postgraduate studies before you earn dollar one. Pressure to perform. Pressure to grow. Pressure to get ahead . Pressure to be the best. Pressure to keep up with the challenges of a busy practice. In that environment, how can you possibly focus and think about family and parental responsibilities? Here are two ideas for your consideration.
• Don’t prioritize your schedule – instead schedule your priorities. Block out the two hours required on a Tuesday morning at 10 AM to attend your daughter’s – or yes, your granddaughter’s – piano recital. You know about it, so just make sure you go. How about that high school football game at 4 PM on a Friday for your son or grandson? It is so important for you to be there to support and cheer him on. If you must, start earlier or work later or come in on your day off to recover the lost production.
• If it is worth doing, just do it! These children and grandchildren grow up so quickly! You miss a lot in the blink of an eye. You have to somehow create the balance in your own life to be able to be truly present in theirs.
Schedule your priorities – don’t prioritize your schedule!
Please take the time to watch this wonderful three minute video by Prince Ea. It is so relevant and so well done. It says it all!!
October 11, 2016
I have been writing blog posts since 2010 advocating for the many advantages of case presentation using a tablet like an iPad. Loading photos onto the iPad is now seamless and almost instantaneous. And there are apps that you can download to a tablet that show beautifully designed drawings or graphics that illustrate dental problems and solutions to those problems. Sitting with your patient looking at photos on a computer screen compared to looking at photos on a tablet that can be manipulated – well it just isn’t even close! The level of intimacy and the clarity of the images is so far superior when you use a tablet.
The Microsoft Surface Book is an impressive tool that takes case presentation and treatment planning to a new level. It is a device which merges the power and performance of a laptop with the flexibility and mobility of a tablet. The screen detaches from the keyboard at the touch of a button and easily clicks back into place. The tablet (screen) is large at 13.5 inches and provides amazingly crystal-clear images and sharp color contrast. It obviously is a significantly larger screen for display to your patient then a conventional tablet. It also has a stylus that allows you to draw directly onto the tablet.
I see the principal use for this device to assist the treatment coordinator when he or she is making financial arrangements and closing the case after the doctor has presented treatment options. The coordinator can sit with the patient and refer to and review the treatment options using the tablet. Then with one click, the tablet can be re-attached to the keyboard and that laptop can support all of the practice management systems and can print out financial and insurance documentation.
Take a look and decide for yourself. It is a bit pricey – but used correctly it will be well worth the cost.
September 26, 2016
This is my annual “don’t jump off the bridge” message to dentists. September is traditionally the slowest month of the year for production and collection. And September is the final month of the third quarter (July through September) which is the slowest quarter of the calendar year. But every year, dentist forget this – panic – and deduce that their practice must be succumbing to the competition. The knee-jerk response is to lower fees and charge less.
Don’t fall into that trap. Please realize and understand that there will always be someone who can sell what you sell for less money and deliver it quicker than you can. The eminent business guru Seth Godin recently posted that “once you decide to become a cheap commodity, all the choices you made to be a non- commodity fall victim to your pursuit of cheap.”
The solution is not to try to compete on price but to compete on quality. Your competition is not from the dental office across the street. It is from college tuitions and vacations and automobiles.
Exceptional quality clinical dentistry in conjunction with a consistent commitment to exquisite customer service at every level will have people in your town raving about how well they were treated, how their time was respected, how they were given choices of treatment, and how they felt like a person and not a number.
Practices with “busyness” problems are often unwittingly their own worst enemy. Business hours Monday through Thursday – 8 to 4 – shows no understanding of the need to be available. And why would you not answer the phone over the lunch hour? How about not allowing someone to leave a message?
The good news is that you are still standing. Now that September is almost history, get back to basics and concentrate on making it easy for people to do business with you. When people know how much you truly care about them, good things will happen. And as I’ve said many times regarding customer service – it is not hard to be good when everyone else is so bad!
September 12, 2016
My last two blog posts have discussed wealth accumulation strategies guaranteed to provide the necessary funds for a comfortable retirement. Qualified pension plans and whole life insurance are relatively easy to implement provided you can find the discipline and the available cash to contribute. Owning your own real estate is a horse of a different color, and requires much more of an entrepreneurial spirit and creativity. But the returns can be outstanding.
Instead of paying rent to the landlord, be your own landlord! It is easy to set up a separate entity to own the real estate. The rent payment is made with pretax dollars and of course is a 100% tax-deductible business expense of the practice. And you can – within reason – pay an above market rate to reduce your debt sooner.
I would advise this for any dentist planning to practice for another 15 years or more. Over 15 years – let’s say your current rent is 5K/month. That equals 60K/year which equals a staggering 900K over 15 years!! And we know it will be more than that because rents customarily increase by 1-2% every year. All that money is gone. Disappeared. You have absolutely nothing to show for it. Unfortunately, it is all part of the cost of doing business. If instead, you owned your space and retired the mortgage over that 15 years with your rent payments, you now have a debt free property that in the worst-case scenario has maintained its original valuation.
Here is another collateral benefit for you to consider. Studies have shown – and I have seen this happen with many of my clients over the years – that if you move your office even 4 or 5 miles but stay within the same town, every existing patient remains with the practice and new patient flow increases by 35 to 40% in the first year! And amazingly enough, it continues at that increased level for the next five years! I’m not sure why this happens, but it does. By buying an existing condo space or professional office or actually building a new structure, you also have the potential and the opportunity to design a better layout with room for growth. And money currently is so cheap – at historic low rates – that I see mortgage costs not exceeding – or minimally exceeding – your current rent costs. I honestly don’t believe there has ever been an easier time for dentists to borrow money.
So take a hard look at your current occupancy arrangement and explore your options. Saving for retirement by making contributions to pension plans or a whole life policy requires finding additional dollars. Saving for retirement by owning your own property simply means keeping the dollars you are currently paying to someone else!
August 29, 2016
In my last blog post, I discussed the many benefits of qualified retirement plans. As great as they are, however, sometimes these plans are not the proper economic fit. In one example, let’s talk about a doctor who is much younger than the staff. And perhaps there is an especially large staff. My rule of thumb is that if the doctor can keep 78% or more of the total contribution, then that is a favorable situation. But in the situation I am describing, the doctor may only be ale to keep 40 to 50% of every dollar contributed.
Another example might be a doctor earning enough money to contribute more than the 401(k) maximum. And a defined benefit plan coordinated with the 401(k) would allow him/her to do this. But again – with an unfavorable census – with some staff members as old or almost as old as the doctor- the costs to do this are prohibitive.
Welcome to the world of a properly designed whole life insurance policy that can serve as an amazing wealth accumulation vehicle. And if you own your business as most dentists do, there is no requirement for other employees to participate in the plan. So the entire dollar amount that you want to set aside for retirement goes only to you! There are numerous benefits to using whole life as a retirement strategy.
• There is guaranteed protection of your principal. The cash value accumulating in the plan is not subject to the fluctuations of the stock market.
• There is a guaranteed rate of return. Usually with a top line insurance company, that rate of return is in the area of 4 to 5%.
• The money in the plan accumulates tax-deferred. The concept is similar to a Roth IRA. When you put the money in, it is with after-tax dollars – so there is no sheltering effect as when you contribute to a qualified plan. But when you take the money out, it is tax-free!
• There are no age restrictions or limitations as to when you can withdraw the money. With pension plans, there may be penalties if you withdraw before age 59 1/2. Also, you must take required minimum distributions from your pension plan starting at age 70 1/2. Of course, those distributions are taxed at whatever the ordinary income tax rate is at the time of the withdrawal.
• You can also borrow from the cash value of the whole life policy – at any age and at any time – without having to pay a tax or a penalty. This is a big benefit compared to the many restrictions you would encounter if you borrow from a qualified plan.
• Of course, the death benefit of the whole life policy is guaranteed for the rest of your life. That death benefit is tax-free to your beneficiaries.
• With these newer well-designed whole life policies, there are also riders included for disability and long-term health care. These are almost too good to be true.
I would certainly encourage you to consult an expert on the many advantages of acquiring a whole life insurance policy. Randy Fine of Robert Fine & Associates is as good as it gets. Randy is extremely knowledgeable and creative with years of experience working with dentists and other high net worth individuals. He has helped many of my clients and I feel totally comfortable recommending him. You can reach Randy at 508-889-6329.
August 15, 2016
I have always been of the belief that if early on – probably by age 30 – you start “saving your age in thousands” in a qualified retirement plan – e.g. 31K at age 31, 32K at age 32, etc. – and you continued to do that for the next 35 years – you would accumulate enough money to comfortably retire at age 65. That amount would easily be in the three and half to $4 million range – even with conservative return expectations of 5%.
You could then continue to maintain your current lifestyle and work because you want to and not because you have to. I’m speaking from my own personal experience and my observations of successful clients over these many years.
In my opinion, qualified (approved by the US tax code) retirement plans are like the eighth wonder of the world! The amount of the contribution you make to the plan shelters your taxable income for State and Federal. So if your W-2 income was 250K and you made a contribution of 40K, your reported taxable income would be 210K. The money contributed to the plan grows and compounds tax-deferred until the money is withdrawn. You pay ordinary income tax on the amount of the withdrawal when it is made. Contributions that you make for staff are fully tax deductible as a business expense.
If you are lucky enough to have started down this path an early age, you are to be congratulated. Just continue to stay the course. But many doctors were not that fortunate. Maybe they were uninformed – or didn’t have the discipline to save – or simply didn’t have the money available. Now they are age 45 or 50 – finally have more disposable income – and are recognizing they are seriously behind the curve on retirement planning. How do you catch up?
There are two types of qualified plans: defined contribution or defined-benefit. 401(k) plans seem to be the most popular and they are a type of defined contribution plan where employers can match their employees’ contribution up to a certain percentage and also make additional contributions under a profit-sharing feature. For 2016, the maximum allowable employer/employee contribution limit is 53K or 59K for those over age 50.
A defined benefit plan is a cash balance pension plan under which an employer credits a participant’s account with a set percentage of his or her yearly compensation. This can be paired with a 401(k). It often is a fabulous strategy for older doctors much closer to retirement age than their employees. With a favorable census, you have the opportunity to annually put away 100K or more. The plan by law must stay in place for at least three years. When the doctor retires, the plan can be terminated, and the monies that have accumulated for the doctor and for the staff can be moved into an IRA.
The rules and limits on retirement plans change frequently. You need a true expert in this field to advise you. And I would choose this person separate and apart from a financial advisor who would be making investment choices.
According to recent statistical data, if either you or your spouse live to age 65, at least one of you will live to age 90! And just in case you forgot, it takes a lot of money to live well. So do yourself a favor and at least get informed. I highly recommend Seth Larner at Compass Retirement Consulting Group. You can call Seth at 603-661-9330.
August 2, 2016
It is a privilege to work, and don’t let anyone tell you differently. But the best scenario – especially when you are older and getting closer to the end of a clinical career – is to work because you want to work and not because you have to work.
One of the major reasons that we remain in a “seller’s” market for dental practice transitions is that there are fewer practices for sale than the number of doctors looking to buy. Many doctors who were planning to retire at 65 have come to the realization that they can’t afford to sell and still maintain their current lifestyle. For the first 11 years of the 21st century, the stock market was a bitter disappointment with essentially no growth. And many doctors, understandably nervous when the market crashed and lost so much value in 2008 and 2009, sold to protect their portfolio but unfortunately never bought back in as the market totally recovered.
So age 75 or 72 has become the new 65. Doctors continue to have to work longer than they ever thought they would. For whatever reason – bad advice, bad execution, lack of understanding – these professionals never anticipated how much money they would need in retirement. Life expectancies continue to lengthen. Statistically, if both you and your spouse make it to age 65, one of you will live to 90! And living longer obviously requires lots of cash. So how do you prepare yourself for this challenge? How do you make the supposedly golden years truly golden?
Over the next few months, I plan to write a series of blog posts all about ways to aggressively save money. So many of the rules have changed, and more products than ever before are available to the motivated and informed doctor of any age. Stay tuned. As always, I will look forward to your comments.