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Dental practices succeed and flourish when they have efficient and effective communication meetings. Take the Morning Huddle, for example. This episode illuminates the importance of communication. The team can't know what you want, if you don't say it!

We see doctors and their team become frustrated because someone was placed in a position with little or no training; or worse, continuing to do something the same way expecting a different result. This episode illuminates the importance of team training.

Episode 1 of our "Tip Series" begins with  Treatment Plan Acceptance.  Nearly every practice struggles when it comes to gaining  patient commitment but it doesn't have to be that way. Sheena Hindson, RDH and practice coach offers some ideas on how to overcome this common, yet costly, obstacle.  Treatment planning is often turned into a session of clinical jargon, the last thing a patient wants to hear.  Everyone knows the old saying, "it's all Greek to me".  Well, that's what patients hear when a clinician starts rattling off something that is more suited to a room full of dentists getting continuing education. Listen up for some simpler approaches and watch your treatment plans become production. 

Regardless of where you are in your career, selling to a Dental Support Organization is complicated. The devil is in the details. On the surface, a seller is mesmerized by an offer that may not be so straightforward. Upon closer inspection, a blind spot emerges. Our podcast exposes what you need to know in order to navigate the DSO landscape.

Getting ready for the North Carolina Dental Society Annual Session at Kingston Plantation. We will see you there...

Welcome, You are here at the Beacon! I am your host David Darab…prepare to have your Blind Spots Illuminated!So…It’s very appropriate, since our Team here at OmniStar Financial and Dental Systems Optimization are Experts in Blind Spots, that we devote this episode to Cognitive Biases which create Blind Spots.Let’s kick off our discussion with a quote from one of my favorite thinkers, Professor Richard Feynman, A theoretical Physicist, Exceptional Teacher, and Contributor to the Manhattan Project.> “The first principle is that you must not fool yourself and you are the easiest person to fool.”> Richard P. FeynmanIt is possible for people to be confused or unaware about something rather important.  The fact that most people don’t know they are missing it doesn’t make it any less of a problem for them or their practices.This is the best definition of a  Blind Spot!For those of us that remember the movie City Slickers,  you may recall the main character played by Billy Crystal,  went out West with his friends to find themselves during a midlife crisis.  There he meets his guide, Curly, played by Jack Palance, a rough and leathery cattle rancher that will show them all a thing or two.    Curly teaches them about the “one thing”, the secret of life that everyone must figure out for him or herself!Well, we all have “one thing” that we carry around that is unique to us, and it too is so very important to figure out.  This one thing is with us at all times, at every twist and turn life throws at us.   Every time we are facing a challenge or problem that requires us to make a decision this one thing is there, hiding silently, but contributing loudly to our choices, direction, and decisions…that one thing is our Cognitive Bias.  It is unique to each one of us.  If we are not aware of its presence or its powerful influence it creates Blind spots.  A blind spot is something that is critically important even though we are unaware of it.   The fact that you don’t know you are missing it doesn’t make it any less important.  In fact, because you are unaware it becomes even more important.Here at OmniStar, it’s our Tag Line “Illuminating Blind Spots”.  We consider it Job #1 to help you find, Illuminate and see your Blind Spots!  It’s what we do because you can’t see your blind spots alone.“We see what you are incapable of… that's what we do.” David Darab, DDS, MBACognitive Biases affect how we make everyday decisions, big and small as well as how we think about and invest our money and create our wealth.A cognitive bias is an error in cognition that arises in a person’s line of reasoning when decision-making is flawed by personal beliefs.When the Bias is unseen by the individual but seen by others, it is a Blind Spot.The Cure here is recognizing and acknowledging that they exist.  Once you become aware of these Cognitive Biases they are no longer Blind Spots.I am subject to this, as I bet you are too, in the areas of clinical practice, business decisions as well as finances and investing.I tend to “cubbyhole” things, giving a lot of weight to my time in the business.  I think to myself…I have done this for 30 years, I have seen everything, I should be good to go!  But that is not always the case.  Just because it looks the same doesn’t make it the same.  I can still find myself in “the ditch” when I overlooked a small feature or minor detail that has snuck up and “bit” me.  So let’s dig deeper here.Let’s Illuminate for you what Cognitive Biases Exist so they will be less likely to create Blind Spots!Understanding Cognitive Biases first starts with understanding Heuristics.So what are Heuristics??Heuristics are mental shortcuts that ease the cognitive load of making a decision, we use them all time. … Examples of heuristics include rules of thumb,  an educated guess, or been there and done that!When considering the term “Cognitive Biases”, it’s important to know that there is an overlap between cognitive biases and heuristics.  At times these two terms are used interchangeably but they are not exactly the same.In his book, *Thinking, Fast and Slow*,  Professor Daniel Kahneman defines heuristics as“a simple procedure that helps find adequate, though often imperfect, answers to difficult questions.”He also defines the relationship between Cognitive Biases and Heuristics as follows:“… cognitive biases stem from the reliance on judgmental heuristics.”Putting this together we see that…Heuristics are the “shortcuts” we use to reduce complexity in judgment and choice, Cognitive Biases result from the gaps between what “should be” and the Heuristically determined behavior.According to the Cognitive Bias Codex, there are an estimated 180 cognitive biases.  This codex is a useful tool for visually representing all of the known biases that exist to date.The biases are arranged in a circle and can be divided into four quadrants. Each quadrant is dedicated to a specific group of cognitive biases:1. What should we remember?Biases that affect our memory for people, events, and information2. Too much informationBiases that affect how we perceive certain events and people3. Not enough meaningBiases that we use when we have too little information and need to fill in the gaps4. Need to act fastBiases that affect how we make decisionsCognitive biases can have a devastating effect on our business decisions as well as decisions relating to personal finance and wealth.  At OmniStar we are experts at Illuminating Blind spots, so let’s take a look at what these Cognitive Biases are.  Because…as it is said…What has been seen cannot be unseen, what has been learned cannot be unknown.There are over 40 cognitive biases that negatively impact our ability to make sound financial decisions.  I won’t bore you with an exhaustive list, but let’s hit some of the most common ones and see if any of these might ring a bell, and possibly be hindering your decision making ability.Some of these biases include:Overconfidence BiasIs when confidence in our own judgment is greater than the objective accuracy of those judgments.  It results from someone’s false sense of their skill, talent, or self-belief.  It can be a dangerous bias and is very prolific in finance and business. The most common signs of overconfidence include the illusion of control, timing optimism, and the desirability effect, the belief that something will happen because you want it to.Self Serving BiasSelf-serving cognitive bias  is the propensity to attribute positive outcomes to skill and negative outcomes to luck.  In other words, we attribute the cause of something to whatever is in our own best interest. Many of us can recall times that we’ve done something and decided that if everything is going to plan, it’s due to skill, and if things go the other way, then it’s just bad luck.Herd MentalityHerd mentality is when you blindly copy and follow what your friends, colleagues, and peers are doing.  When you do this, you are being influenced by emotion, rather than by independent analysis.Loss AversionLoss aversion is a tendency for investors to fear losses and avoid them more than they focus on trying to make profits. Many investors would rather not lose $2,000 than earn $3,000. The more losses one experiences, the more loss averse one likely becomes.  It is common for both professional and amateur investors to hold on to losing investment positions for too long, whilst selling winners too soon.> “In human decision-making, losses loom larger than gains.”> Kahneman and TverskyFraming BiasFraming is when someone makes a decision because of the way information is presented to them, rather than based just on the facts. In other words, if someone sees the same facts presented in a different way, they are likely to come to a different conclusion about the information.You may choose to purchase capital equipment, buy a car, or purchase an investment depending on how the opportunity is presented to you.Anchoring BiasAnchoring is the idea that we use pre-existing data as a reference point for all subsequent data, which can skew our decision-making processes.  If you see a car that costs $75,000 and then another car that costs $30,000, you could be influenced to think the second car is very cheap. Whereas, if you saw a $5,000 car first and the $30,000 one second, you might think it’s very expensive.Confirmation BiasConfirmation bias is the idea that people seek out information and data that confirms their pre-existing ideas. They tend to ignore contrary or conflicting information. This can be a very dangerous cognitive bias in business and investing.  Using confirmatory bias, we tend to search for, interpret, and remember information in a way that confirms our existing preconceptions. This unconscious bias makes it possible to miss findings or ignore evidence that could otherwise change our view.Hindsight BiasHindsight bias is the theory that when people predict a correct outcome, they wrongly believe that they “knew it all along”, which falsely inflates their confidence for future decisions.The Curse of Knowledge BiasWhen knowledge of a topic diminishes our ability to think about it from a less-informed, but more neutral, perspective.  I call this…“You don’t know what you don’t know paradox!”or,  “a little knowledge can be dangerous” bias.Blind Spot BiasDemonstrated when we think we’re less prone to cognitive bias than those around us.  People see themselves differently from how they see others. They are immersed in their own sensations, emotions, and thoughts while at the same time their experience of others is dominated by what can be observed externally.Information BiasSometimes we tend to seek information even when it does not affect action. Better decisions can often be made with less information – more is not always better.When we constantly seek more information we are falsely concluding a better decision will result.More information is not always better.Better information is better.Optimism BiasThis is seen when we tend to overest

This episode will take a look at your schedule, most importantly how to make your schedule hum with productivity and not business!Let’s start with a quote from Stephen Covey…we all know him from his best-selling books,  The 7 Habits of Highly Effective People, First Things First, and Principle-Centered Leadership.Stephen says…"The key is not to prioritize what's on your schedule, but to schedule your priorities."I, you, we are constantly bombarded by marketing messages vying for our attention and clicks.These are commonly presented with email subject lines like the following I received over the past week…* How to help your practice emerge from the Pandemic…* Dentists' biggest practice challenges…* Steps to Take for an All-Star Practice…* Positioning your practice for Growth…* How to Turbocharge your Practice…* Marketing Ideas that will take your practice through the roof…Our Team here at OmniStar  DSO is all about "Simplifying the Complex!"I can think of no better or more productive area to focus on than your Scheduling Framework or Template.  Our Subject line will be… Scheduling…are you hitting your Target?Get your scheduling meme right, and everything else will flow.Yes, there are many essential and critical KPIs to monitor and track; we coach and teach our clients.   The beauty of designing a scheduling framework is that it is easy to tell how well your Team is meeting spec.  If your block booking is set up correctly,  it should be obvious how well your Team is doing just by looking at the scheduling screen on your computer.Yes, there are other important tasks and goals your practice must monitor and achieve.  You must collect patient payments, keep receivables low, manage your employees, control operational and administrative expenses along with clinical supply costs.  And last but not least, you must provide exceptional dentistry.With that said, getting your scheduling dialed in should be a high priority.For me, “dialed in” means…having all of your chairs full with the optimal mix of ideal procedures, patients, and treatments.Let's work through some Scheduling Axioms that we use in my practice and coach our clients on.Remember, get your scheduling meme right, and everything else will flow.I use the following Axioms as my scheduling foundation. Axiom 1: Being Busy is NOT the same a being Productive.Busy people; work at a frantic pace, are rushed, work harder, micro-manage, are fueled by perfectionism, multi-task, prioritize simple and mundane tasks and say "yes" by default.In contrast, Productive People; prioritize the most important tasks, work at a steady pace, are relaxed, work smarter, are fueled by purpose, focus on essential and complex tasks, delegate the simple, mundane, and repetitive tasks, and can say "no".Remember, it's ok to say "no." You are not the Coast Guard or US Military; you do not have to go out and rescue everyone.  “Stay in your lane,  bro…” as the AT&T commercial says.along with “Just Ok, is not Ok!”With these ideas in mind, one can begin to see that a jam-packed schedule may or may not be a productive schedule.  So let's get productive…Axiom 2: Prioritize your Schedule for ProductivityCategorize and colorize your new patient exams, consults, and procedure mix on your schedule.  Determine for yourself what your ideal procedure mix is.  This will be different for everyone.  What do you enjoy most in your practice? There should be lots of time for these appointments.  What do you enjoy least? There should be very little time, if any, for these procedures on your schedule.  As you become busier, these may be procedures you will refer out or cease performing completely.  Remember from Axiom #1- it's ok to say "No."Let's make some business comparisons to help drive home this point.Your New Patient Exams, Consults and Treatment Presentation appointments are like Inventory in a manufacturing or merchandising business.  It is an Asset waiting to be converted into a Product, your Dentistry.  Your Procedure or Treatment Schedule is analogous to your Production Line, where you covert that asset into your dentistry, and in the process generate revenue.If your Inventory of New Patient Exams, Implant Consultations, and Treatment Presentations is low,  your conversion of these assets into Implants, Crowns, and Bridges, or Restorations will be low too.Put another way…You can't schedule the production if you don't schedule the patient exam.So, you need to balance the availability of a precise mix of new patient exams and treatment presentations to keep your treatment schedule full.It's a balancing act; too many new patients will delay care without sufficient treatment appointments, keeping patients waiting.  If patients have taken the time to visit you and your office, they are highly motivated. Please don't make them wait!A sidebar here…the lag time between diagnosis and treatment is a critical KPI.  As this time lengthens, the practice owner may consider expanding hours,  expanding the physical plant, or adding a provider.This can be a Blind Spot for a practice owner.  A Profit Leaks Analysis by our experienced Team at OmniStar DSO can help identify if you have a bottleneck in your practice that needs to be corrected.Axiom 3: Rocks, Pebbles, and SandTime is a finite resource.  Use a Block Scheduling Framework to allocate your time and schedule.  I like to use the Rock, Pebble, and Sand analogy when designing a maximum productivity schedule.Rocks are your anchors, your most enjoyable, productive, and profitable procedures.  These will tend to be longer appointments.  They should be added to your schedule first and always have the highest priority.  These treatments should be scheduled at your most productive time of day.  Remember, this is unique to you.   Your Rocks are the cornerstone of meeting your daily production goals.After Rocks comes Pebbles, smaller, more limited treatments with shorter appointment times that are used to fill in around your Rocks.Finally, add the Sand; short appointments, post-op checks, limited emergency exams, and very brief restorative appointments.  These are scattered to fill your gaps between the Rocks and Pebbles.Sometimes it helps to think of Rocks, Pebbles, Sand in reverse.  If you start with the Sand, you will never add enough Pebbles and Rocks to make for a productive and profitable schedule.  You will have created BUSY, but NOT productive and violated Axiom #1- Being Busy is NOT the same a being Productive.Next…Axiom 4: Block Opportunity and Emergency Time into your schedule every day.I want my schedule to be on autopilot.  I do not want to be tracked down in a treatment room or in a hallway, or at my desk and asked what to do with a patient or referring office that is on the phone.  After all, I have hired people who should be scheduling for me.  I have found that "on the fly", “in the hallway” and "armchair" scheduling is not productive.  It is paramount that you empower and train your staff exceeding well, and hold them accountable so that they can make these decisions for you.  They will know and should know, more about the schedule than you.  Your scheduling staff should be the ones micromanaging this.  When they do make sound decisions and hit the Bull's Eye with a full and productive day, make sure to praise and recognize them for their achievement.  After all, it will not happen every day.  The one thing that can throw a monkey wrench into the best schedule is Emergencies and Urgencies, so we must plan for these eventualities.  These are excellent sources of new patients and new referrals for your practice and should be accommodated.  To make this easier for all, earmark the best time slots for these patients on a daily basis.  This can be determined in your morning huddle, where open slots for emergencies can be identified.  Bingo, they no longer have to ask you!  Let’s get these patients in and triaged.A side note here.  As a specialist, I recommend that our referring dentists see their emergencies immediately before and/or after lunch.  If a referral is needed, there is still time in the day to accomplish that.The veritable 4 pm emergency slot will unlikely have time to be seen by you, referred, and treated by a specialist that same day.  There is nothing more frustrating for everyone; the patient, the referring dentist, and the specialist to have to appoint an emergency patient the next day.  Finally, in addition to emergencies, identify an opportunity slot every day.  This can be a highly productive treatment and one that you enjoy.  For our oral surgery practice, we will always have time to see a patient with a painful, infected wisdom tooth; that's what we love to do!And last, but not least…Axiom 5: Keep ScoreIf you don't measure it, you can't manage it…especially your schedule.I know there are countless reports your Practice Management Software can print out to monitor your scheduling.   By the nature of reports, they are historical.  The schedule is so critically important that I monitor it daily.I prefer a real-time assessment and visualization of our scheduling efficiency.  To accomplish this, I do the following.Daily, the doctors, and our administrative staff scan the schedule several days ahead, identifying available appointment times at each of our locations.  If one location is booked full, they are aware that appointments can be scheduled in the other locations.Next, I briefly meet with my Treatment Coordinator at the end of every day.  I want a summary of every new patient; did they schedule? do they need to check with family? do we need to verify a secondary insurance? do they need to apply for Care Credit?If they did not schedule and treatment was recommended, there is a follow-up plan for each patient.  We start by doing whatever we told them we would do, and reach back out to them once the required information is obtained.  If they indicated they would call

Welcome…You are here at The Beacon…So glad you found us…I am David Darab, your host for this episode.Prepare to have your Blind Spots Illuminated “To begin, begin.” said William Wordsworth.Let’s do that and get started.It’s the New Year, 2021…Happy New Year to You!  We are all excited to see 2020 end, and our hopes are that the countless challenges we faced last year will soon come to an end too!The New Year is a time of reNEWal, time for a fresh start, and a time to reset, recalibrate, and recharge.  It is also a time we are constantly reminded about our New Years Resolutions.  Seems  that we can’t say New Year’s without adding the Resolution part too.   Every year we pass this same threshold with the same hopes and desires for the year ahead.What will you do??…do you have a plan??Will you offer up some recurring laundry list of New Year’s Resolutions like you may have done many times in the past;I’ll go first…- lose weight- workout more- eat better- work less- spend more time with your family- save more- spend less- read more books- watch less Netflix- etc, etc, etc…. I can’t  help asking you, “How’s has your plan been working for you?” You getting things done?You Moving your needle?You Accelerating?Are you Reaching your Goals?If your response was not a resounding  YES, You are not alone.   The experts tell us that half of all adults make New Year’s Resolutions, but less than 10% follow through on their goals each year.  In reality, by Valentine’s Day, you may find yourself in the same “rut” as before.Fighting these poor odds and without a better strategy I gave up on New Year’s Resolutions years ago.The Truth is … Resolutions don’t work. Action does.I anticipate if you are like me, you know deep down, in your heart of hearts, that you could do better, achieve more, and become a better version of yourself.During these first weeks of the New Year Social Media and the Internet, heck…even my PodCast here… will have expert after expert share their guidelines, rules, hacks, shortcuts, and strategies for achieving more.How about, for a change, instead of getting burdened with lists, journals, apps, processes, and other people’s ideas, we just Resolve to do One and only One Thing.Act…Let’s make a New Year’s Resolution to Decide to Act this year!  Let’s put aside all of our thinking, prioritizing, researching, and list-making and exchange it for one simple task… to Act!Of course, Simple does Not mean Easy!We are all very intelligent, with lots of knowledge of the things we know we should do.  Just look at the list you create each year.I hate to break it to you, but Knowledge is the Easy Part…We all know that to lose weight we should eat better and become more active…We all know that to grow our Wealth we should spend less and invest more…But knowing is the easy part…taking Action is the hard part, that’s why it is so challenging to achieve and so easy to come up short year after year.This point is key and worth repeating…Knowledge is the Easy Part, Action is the Hard Part.It is your Action that leads to the Change you wish to make.The Words “Resolution” and “Goal” are Nouns, not Verbs.While the Words “Decide” and “Act” are Verbs defining Action.I like to use the acronym D.A.T.E…D…A…T…E forD.ecide toA.ctT.oday andE.verydaySo…why is taking Action so very Hard?Why is it so hard to 1. Decide and 2. Act?Let’s dig deeper here and go down a rabbit hole, deconstructing this process so you can understand better the challenges and roadblocks to Action.Once this is understood,  it easier for you to conquer.I’ll take it for granted that those listening here are all high achievers, driven, competitive, and highly successful.  We want and demand the very best from ourselves.  We are, at most times, our staunchest critic.  Failure is not an option, nor something we tolerate or enjoy, after all, we are “Perfectionists”. But alas, there is no such thing as Perfection.  A belief in Perfection is in fact a defense mechanism.  Waiting for Perfection gives you a way out, it gives you an excuse.  It lets you stall, it requires you to do more research, to think some more, and avoid doing anything that might possibly fail.  Because as we just said, failure is not an option…especially for a perfectionist.But, and here is the kicker…with the risk of failure, comes an even greater reward…the reward of success, of accomplishing something important, of creating the change we so desperately need, want, and desire.There is an irony here…we want one thing, yet do another…Does any of this sound familiar…does it sound like Resolutions, Rationalizations or Goals not achieved…??!!The contradictions never end.Why is it so difficult to do what we say we’re going to do?The answer is …as Seth Godin says, our “Lizard Brain”, or as Steven Pressfield calls it,  “The Resistance”, our Inner Barrier.The Resistance is that little voice in the back of our head telling us over and over to back off, be careful, go slow, watch out, this is risky, compromise.  The Resistance grows stronger and stronger the closer we get to achieving what we really want, the closer we get to Action.  That’s because the Lizard Brain, or amygdala, that pre-historic area of our brain stem,  hates change, hates achievement and risk.  After all, it is the amygdala that is responsible for our fight or flight response.  It is there to protect us, and it acts even without us knowing.So, we have decided to Act in order to achieve our goals, but for many, just as we are on the verge of action our primitive Lizard Brain, this Resistance,  beckons us louder and louder to hold back. It is much like the effect Krypotite has on Superman…the closer he gets… the weaker he becomes.So…How do we Slay and conquer this Resistance, this Lizard Brain, this Inner Barrier, the Amygdala you ask??We slay it by Turning Pro, as in Professional, and leaving our Amateur ways behind us.Let’s consider the differences…as described by Steven Pressfield in The War of Art (a great read see the show notes for a link).An amateur plays for fun, a Pro Plays for keeps.To the amateur the game is his avocation, to the Pro, it’s his vocation.The amateur plays part-time, the Pro full-time.The amateur is a weekend warrior, the Pro is there seven days a week.The amateur attempts perfection, the Pro achieves something remarkable.The amateur delays and procrastinates, the Pro Decides and Acts.The Resistance hates it when we turn Pro.So…for this New Year’s Resolution let’s try something different.  Let’s show up every day, no matter what, and decide to do act.  Because we now know that no matter how small each act might appear, it is facing your Lizard Brain head-on and completing what you started that is most important.  Each small act taken together builds on the one before allowing us to achieve our goals and move our needle.   With each achievement, we grow stronger and more confident and The Resistance,  your Lizard Brain, that Inner Barrier gets weaker and weaker.Now that you understand better what may have been holding you back, what are you going to do about it?What new decisions and actions will promote your progress? Are you starting them today?Too often, we schedule a time to adopt, embrace, and initiate better habits in the future. “I’ll start tomorrow, or next week, or next month, or whenever.   We now know those are simply excuses.Yes, I know, Biology, evolution, and past failures are all conspiring against you.  It doesn’t matter. The solution to launching a better way of being is easy.  Simply Decide to begin.  Decide to Act.In the final analysis, it comes down to your willingness to decide that today is the day, and now is the time to begin. The time to take your first small step into your potential.Every day you can decide to do things better, or do things worse.  It’s your choice.So…Let’s review…New Year’s Resolutions don’t work…Decisions and Actions do!You now know that biology and evolution, create an Inner Barrier, a Resistance called your Lizard Brain, powered by your amygdala, which has thwarted your efforts in the past…You are now armed with a strategy to conquer this force…Action!The more you Act the easier the next Action becomes…And finally,I’ll end with a quote from Walt Disney…”The best way to get started is to quit talking and begin doing.”So that wraps things up for this Podcast.  We hope that this information has created a few “Ah-Ha” moments to help you make great things happen this year.   Please share this podcast if you found it helpful, and leave a review on iTunes too.  We welcome your feedback and suggestions for future podcast sessions.  You can always find me, your host, David Darab, at my Twitter handle, @ddarab.Thank you so very much for tuning in and listening.  We are very grateful for your time and attention and so very pleased to have you in our audience.We wish you a happy and healthy New Year._______________________________________________________________________REFERENCESThe Practice; Seth Godinhttps://www.amazon.com/Practice-Shipping-Creative-Work/dp/0593328973/ref=sr_1_1?dchild=1&keywords=the+practice&qid=1610296940&sr=8-1 The Art of War; Steven Pressfieldhttps://www.amazon.com/War-Art-Through-Creative-Battles/dp/1936891026/ref=sr_1_2?crid=26SF519HT8RPB&dchild=1&keywords=the+war+of+art+by+steven+pressfield&qid=1610297028&sprefix=the+war+of+%2Caps%2C189&sr=8-2  

The topic for today is Air Purification.During this podcast, we will take a deeper dive into Air Purification Systems.  It is our intent to make you more knowledgeable of the choices and technologies available so you can make the best decision for your practice.By now you have been back in your practice working hard every day to adapt to the new “normal”.  We are realizing that we are in this COVID-19 Pandemic for the long haul now and that our work practices today may persist for the foreseeable future…this may, in fact, be the “new normal”.As concern for the transmission of HIV, AIDS, and Hep B ushered in the OSHA Blood Borne Pathogens Standard in the early 1990s, it is possible we may see an “Airborne Pathogens Standard” emerge from the present COVID-19 Pandemic.  Especially since we understand better that infection with COVID-19 comes primarily from breathing air in indoor spaces where people with the coronavirus have been.   The greater the exposure, the greater the risk of becoming infected.After urging steps like handwashing,  mask-wearing, and social distancing, researchers say proper ventilation indoors should join the list of necessary measures. Health scientists and mechanical engineers have started issuing recommendations to schools and businesses for how often indoor air needs to be exchanged, as well as guidelines for the fans, filters, and other equipment needed to meet the goals.We are all concerned about the health of our patients and staff and desire to provide care in the safest worksplace and in the  safest manner possible.  Dentists maybe thinking about, or have already purchased devices such as air filters, UVC lights, and suction devices to help reduce dental aerosols as well as “clean”,  filter, and purify operatory air where aerosols are generated.  Products marketed today to sanitize and reduce dental aerosols may lack research to support efficacy claims.Before you move forward and pull the trigger on “air purification” technology lets spend some time reviewing the terms, vocubulary along some of the pertainant science.Today,  we are at a unique and unexpected intersection of infectious disease transmission, aerosols, filtration, HVAC (heating, ventilation, and air conditioning) and mechanical engineering.    Who would have every thought, as dentists, we would be so concerned with HVAC, room layout,  air purification, and filtration along with room air exchanges per hour.  We need to remember that the OSHA Gold Standard for High Risk, aerosol generating procedures is an Airborne Infection Isolation Room (AIIR) with proper ventilation. AIIRs are single-patient rooms with negative pressure that provide a minimum of 6 to 12  air exchanges per hour.  An AIIR ensures that the room air exhausts directly to unoccupied areas outside of the building,  or passes through a HEPA filter if recirculated.As we look to “hang our hat” on sound science and information we can begin with some facts as we understand them today.First, transmission…SARS-CoV-2, the virus that causes COVID-19,  is thought to spread primarily between people who are in close contact with one another (within 6 feet) through respiratory droplets produced when an infected person coughs, sneezes, or talks. Airborne transmission from person-to-person over long distances is unlikely. However, COVID-19 is a new disease, and we are still learning about how the virus spreads and the severity of the illness it causes. The virus has been shown to persist in aerosols for hours, and on some surfaces for days under laboratory conditions. SARS-CoV-2 can also be spread by people who are not showing symptoms.Second, how do droplets move…Droplets of all sizes are emitted when a person coughs, talks, or sneezes. How they travel depends on many factors. Some research has found that droplets can be carried by a moist gas cloud, which an MIT researcher has said can travel up to about 26 feet after a sneeze. Some of the droplets will fall as the cloud moves. Others ultimately evaporate, producing aerosols that can linger in the air and travel with airflow patterns.Scientists emphasize there is no distinct size cut-off between droplets and aerosols. Some disagree about size ranges for each. Researchers are working to better understand the infectiousness of various-sized droplets and aerosols, and how it may change over time.Here are some facts we know at present…- Small Aerosols: 3 microns or less, Can linger for hours- Small Droplets and Large Aerosols: 100 microns or smaller, Can linger in the air for 30 minutes or more- Large Droplet: 100 microns (diameter) or larger,  these heavier droplets fall to the ground within secondsHow about Risks to Dental Health Care Providers…The practice of dentistry involves the use of rotary dental and surgical instruments, such as handpieces or ultrasonic scalers and air-water syringes. These instruments create a visible spray that can contain particle droplets of water, saliva, blood, microorganisms, and other debris. Surgical masks protect mucous membranes of the mouth and nose from droplet spatter, but they do not provide complete protection against the inhalation of infectious agents. There are currently no data available to assess the risk of SARS-CoV-2 transmission during dental practice.From these facts, dental professionals concluded that air flow control can help prevent transmission of SARS-CoV-2.Current recommendatins fromThe CDC suggests dentists consider using a portable air filter that meets the high-efficiency particulate air standard while performing aerosol-generating procedures and immediately afterward.  The CDC states using a filter will reduce the particle count in the room, including droplets, as well as increase the room air exchanges provided by the existing building HVAC system alone.There are additional factors dentists need to consider when using air filters, however. These include the direction of the air flow in their operatories and the capacity of the filters.Ideally, air would flow from a vent behind the head of the patient, where aerosols are produced, down to a filter at the patient’s feet, with dentists and their staff on either side of the patient so they don’t come between the aerosol and the filter. That is easier said than done, however, because in some operatories, air may be flowing from a vent on the ceiling or from other sources, such as windows.Also, some practices may have portable filters dentists can place in different parts of the operatory, while others may have filters that are part of their ventilation system. Comparing the two is hard to do because both come with their own specifications.  While portable filters allow dentists to control their placement, their capacity may not be as large as the ones that are built into the ventilation system.Just how effective are these filters at trapping the coronavirus??Filters that meet the high-efficiency particulate air standard (HEPA filters) have a 95% chance of trapping particles that are 0.3 microns or greater.  The virus is 0.06 to 0.14 microns in size, but as long as it is traveling on a large enough particle in the aerosol, it would be caught by the filter.Another array of products dentists may be considering to help sanitize the air in their practices are ultraviolet lights with wavelengths between 200 and 280 nanometers, known as UVC lights. The CDC states dentists may consider using upper-room ultraviolet germicidal irradiation as an adjunct to higher ventilation and air cleaning rates.While UVC lights are germicidal, many factors can impact their effectiveness, including the amount of organic matter in the air, the intensity and wavelength of the light, the type of aerosol suspension generated by the procedure that is performed, the ambient temperature in the room, the microorganism to be killed, the distance between the light and target and the cleanliness of the light tube.Safety is another consideration. There are still questions regarding what is the safe UVC wavelength for human exposure.When it comes to suction devices, the ADA states that dentists should use high-velocity evacuation whenever possible.  When using suction devices, dentists should hold high-volume evacuators about 2-5 inches from the instrument being used in the procedure and place extra-oral vacuum aspirators 6-12 inches from the patient.Overall, research on dental aerosols is lacking. No studies have identified viruses in dental aerosols because researchers weren’t looking for them.Let’s shift to…THE ADDITION OF AIR PURIFICATION SYSTEMSToday, in addition to all of the above recommendations, dental providers that perform aerosol generating procedures should implement an air management plan utilizing a layered application of technology and behavior to minimize the risk of SARS-CoV-2 transmission.This layered approach could include:1. Enhancing your Current HVAC system by increasing outdoor air into the building, ventilating indoor air to outside spaces, keep humidity between 40-60 % (lower humidity may favor SARS-CoV-2 viability}, use the highest rated MERV filter compatible with the system, reprogram the system to avoid shut off during occupied hours and leave exhaust fans on in rest rooms.2. Installing Ultraviolet Light (UV) technology inside the HVAC ducts.  Consider Far UVC, which can inactivate the virus. without human health risks in occupied spaces.  In occupied spaces consider suspending UVGI lamps from ceilings or upper portion of walls to direct the radiation upward and outward and away from room occupants.  Ultraviolet germicidal irradiation (UVGI) has the potential to cause human health diseases, including skin cancer and eye disease.  UVGI cannot be used in an occupied space, except when installed in an upper-room fashion.3. Add Air Scrubbing to the HVAC system: Wet scrubbing uses a damp or wet medium to filter particles and contaminants out of the air.  Dry scrubbing utilizes the properties of positive and/or negatively charted ions to destroy certain molecules, disrupt the vitality of airborne organisms and viruses, and caus

The primary focus of risk management is the protection of resources from losses due to legal action and the activities associated with risk management are easily adapted to a dental practice. The focus of these activities is directed at identifying areas of legal vulnerability and taking steps directed at mitigating or eliminating these risks. Additionally, purchasing insurance to offset potential financial losses is essential to risk management. The current areas of legal vulnerability center around issues of (1) absence of consent to care, (2) negligence, and (3) breach of contract. Consent to care, to be valid, must be informed and granted voluntarily. To meet the test of "informed," the information given to the patient must be in understandable language and contain the risks, benefits, and alternatives to the recommended treatment. Otherwise, it may not provide much of a defense. In addition, the patient must be given an opportunity to have his or her questions answered. Obtaining consent in the treatment of minors requires the signature of those with legal capacity to grant consent. Being creative, however, does not always equate to optimal results. In other words, asset protection plans which are elaborate or suspect are likely to collapse under the scrutiny of a judge or jury. In the wake of litigation, you will be expected to describe specifics about how assets were transferred, and why. If the explanation is not sound and compelling, the court is likely to rule for the plaintiff, leading to disastrous consequences. The objective here is making it as difficult as legally possible for litigators, creditors, and others to win a judgement against you, or your business. Creating such protection litigants on notice that going to court will require an expensive lawsuit that could stretch on for months or years. When the Marriott Corporation split itself into two corporations in the early 1990s, their primary motivation was dividing cash rich assets from its lawsuit-prone operations. Now, as a dentist, you may not think you need to worry about this since your assets are nothing like those of a resort giant like Marriott. However, this lesson should be used by every dentist who wishes to build a veil around their assets and practice. All over the country, business owners are discovering the benefits of establishing multiple legal entities in an effort to alleviate the risk of civil litigation. Building an asset defense strategy is paramount, and must be done before you are facing unintended consequences. While most dentists will not be sued as often as global hotel chains, plaintiffs are winning million-dollar judgments against dentists. Cases range from allergic reactions to anesthesia, failure to diagnose ailments to procedures resulting in permanent nerve damage, and more. And lawsuits against dentists unrelated to dental care can be just as real (slip, trip, and fall lawsuits; wrongful termination lawsuits, sexual harassment, and discrimination claims). We live in a litigious society. Therefore, one would think that few dentists would be shortsighted enough to operate as sole proprietorship's or general partnerships, leaving themselves personally liable for a judgment. However, surveys tell us that as many as 50 percent of dentists in the United States were practicing without the benefit of legal structures, leaving them vulnerable to a host of non-medical liabilities. Whatever the actual number, any dentist practicing as sole proprietorship's is personally exposed to unlimited legal liability in their business operations. Being in business without legal protection is like riding a motorcycle without protective headgear – all it takes is one incident. What might not be obvious to the dentists who are operating under one all-inclusive legal identity — such as a professional corporation, or PC, a professional association, or a Professional limited liability company — could be just as risky. I knew one doctor who had more than $2 million in his professional corporation’s accounts receivable. Another dentist told me he held almost $1 million worth of real estate owned by his professional corporation. One lawsuit against these professional corporations could result in a total loss of the corporation’s assets. Many corporations have learned (the hard way) that combining business assets with business operations in one legal entity, they risk losing everything in a single lawsuit. The new rule of lawsuit protection is simple: Keep your business assets separate from your business operations. So, how does one achieve this measure of protection? Simple, cash-rich assets such as buildings and land should be kept in separate legal entities, such as limited partnerships or limited liability companies. Otherwise, one lawsuit against a dentist can drain his or her corporation entirely. Instead, professional corporations should own as few assets as possible so they do not become a target of litigation. There is no right or wrong way to diversify. There are many variables to consider: How many dentists participate in the practice? Are the building and land owned or leased? What is the value of the professional equipment? Following are some general principles dentists can use to protect themselves from lawsuits directed at either the practice or the dentist specifically. If you own land, buildings, or both, talk to your legal advisor about holding them in a distinct legal entity from your dental practice. If the same corporation owns property and operates the business, both are jeopardized by one lawsuit. Just as Marriott divided its assets into two corporations, you can limit what assets are exposed to a lawsuit by dividing your real property from your professional practice. My entity of choice for holding assets is a limited partnership, or LP. Your LP then leases the land, building, or dental equipment it owns to your professional practice corporation. Your professional practice corporation now owns no assets, but functions as your operating company: it employs your employees, pays expenses, bills insurance companies, and collects fees. Now, when a patient sues your professional corporation, it has no assets to be seized in the lawsuit. Depending on the value of the equipment in your practice, you might want to use the same principle in owning your office equipment. If everything from the lobby chairs to the CBCT machine is owned by your LLC and leased to the practice, then all of your business assets are insulated from lawsuits. With the fast rate at which dental equipment traditionally depreciates, however, smaller offices may find this unnecessary. Nevertheless, let’s say a dental office owns $400,000 in new equipment and falls victim to a judgment which forces a sale of the dental equipment. This event could effectively put this practice out of business. Let’s say the same dental practice is sued, but this time all of its assets are owned by a separate entity — perhaps the popular limited liability company. In this case, a plaintiff’s attorney would be unable to touch the business assets. Therefore, if the dental corporation is closed, the dentist is free to reopen under a different corporation and subsequently lease all the same equipment to the new practice, effectively never missing a beat. Our firm believes too many dentists operate their practices like a family business. Having helped many dentists set up their business and legal structures, this area “trips up” more dentists than any other. Suffice it to day, if dentists go to the trouble of having corporations, they need to run them like corporations. This means yearly meetings of corporate officers. It means minutes are recorded and filed at all meetings. And above all, it means spouses cannot go grocery shopping with the corporation’s checkbook. Courts can pierce the corporate veil all too easily when dentists get lazy with the details of their corporations. In case after case, dentists open themselves up for trouble when they mingle their family finances with their dental business. Also, remember that liability insurance is not perfect. Judgments may not be entirely covered by insurance policies because of payout caps or exclusions. For instance, one dentist found out a lawsuit filed against him fell under a policy exclusion. This oral surgeon was held personally responsible for more than $300,000 in a judgment. The lesson is clear: Although you may faithfully pay your malpractice premiums, nevertheless, you could have to pay a large judgment with your personal assets. Exhausted Protecting personal assets requires more than simply deeding assets to spouses. Today, courts consider these practices, in response to a lawsuit, to be a form of fraud. For this reason, a growing number of dentists title their homes, savings accounts, and investments to separate legal entities. Much like dividing land and buildings from a dental practice, some dentists wisely title their family assets to trusts, limited partnerships, or corporations. If your home is owned by a correctly drafted legal entity, it is much harder for a court to seize. Some forms of ownership, such as the LP, even can serve as a deterrent from lawsuits ever being filed against you. An LP includes wording that not only makes assets held in the partnership almost impossible to seize, but also may require the plaintiffs to pay the taxes on these items. In fact, many attorneys will retreat if they discover assets are owned by a limited partnership. The principles are simple First, divide your business assets from your business operations. Review carefully the nature of your business and professional activities. Can you logically divide the business or professional activity into two or more separate entities? For example, why does the dental practice have to include the laboratory? Why can’t the A/R be kept separate from the PC? Why must your PC also own your office? Dividing the ownership of your assets can literally save them when a lawsuit strikes. Second, keep your personal life separate from your professional life. If private and professional assets are mixed, both are made vulnerable in lawsuits. Third, structure yourself to withstand lit

You have been thinking, it might be time. You have enjoyed a wonderful career in dentistry, have grown and nurtured an exceptional practice with wonderful patients. You have invested heavily in CE, for your clinical and business skills along with staff development and training. You would like to share what you have learned with a young doctor and begin to consider transitioning your practice, but you still love what you do.You are not sure though. Should you consider an associate so you can work a few days less every week? The associate can work your old schedule, you say. But wait, do you have enough room in your office for two doctors to be treating patients at the same time, you have never done that. You think I can expand and add an operatory, maybe…possibly? Or, expand our hours, with a staggered schedule? What is the staff going to say?! How about another hygiene room too, our patients are waiting way too long to get into hygiene!Whoa, not so fast partner…Can I afford all of this?How much is my practice worth?Should I consider selling my building too, or lease it back to the new dentist?When will I be ready to completely retire?Will my staff be ready to accept a new doctor and all of these changes?I have so many questions I don’t know even know where to begin.Do any of these thoughts, questions or ideas sound familiar? If they do then you are in the right place. Our Team here at OmniStar Financial are experts in all of these areas and can find the answers you need to feel confident with your decision so you can take action. In this podcast, we will review some of these topics to get you thinking and planning for your future.We like to say…> “If you are starting to think about a practice transition, then you are already three years behind. Today’s not to early to start planning!”> OmniStar Financial GroupI am nearly 35 years into my career and am now receiving more calls and having more conversations with my classmates who are beginning to think about or have already begun the process of transitioning their practice. I thought this podcast would be a great asset to have so I can share some talking points and get everyone thinking about what their transition might look like or could involve.To begin with, there are as many ways to transition a practice as there are dentists and practices to transition. There is no one way, no “cookie-cutter” way, no best or ideal way to accomplish such a monumental task. There is, however, one way that works best for you and your practice. Our challenge is to find that path with you.Our process here at OmniStar is very personal, methodical and hands-on for every dentist. We first start by identifying the wishes, goals, and desires of the dentist we are consulting with. These are all very different and unique for each doctor and their practice. Some may want to sell their practice and turn over their keys immediately, others may think of slowing down gradually over the next 3- 5 years with an associate taking a greater and greater role in the practice.We spend time educating the doctor about the process, steps and timing of key events necessary to prepare a practice for a successful transition. It can be a daunting and stressful time for the dentist as the practice he or she grew and nurtured for decades now comes under close scrutiny by others, especially the potential buyer's adviser(s) who will undertake a detailed examination of all financial aspects of the practice. We believe providing facts and filling in all the details and steps necessary can take away a lot of the worry and anxiety.Preparing the doctor and practice is critical here. This begins by examining the accounting systems, services, and reports that are being generated on a monthly basis. Many practices which have been operating successfully for decades can become complacent with record-keeping along with their bookkeeping. When these systems and records are closely examined by independent consultants they can be found inadequate, falling short of industry best practices. Deficiencies, inadequacies along with inconsistencies are never a good thing for a potential buyer’s advisors to find.In many closely held dental practices, quasi-business expenses sneak into the practice financials over time. A quasi-business expense would be something that benefits the doctor and other family members that are employees too. These additions or omissions can distort the financial picture of the practice and are sure to be pointed out and questioned by the purchaser’s consultants. Things like expensive CE, automobiles, rent payments (charging too much, or not enough), retirement plan contributions to name just a few are some of the more common areas we see.Other areas in practices that get overlooked, or undermanaged, include the Accounts Receivables as well as the depreciation schedule and assets. We observe that accounts receivable can accumulate in a practice with the good intention of eventually collecting the monies owed. Excessive and very old receivables adversely distort the financial health of the practice. Exceeding old accounts should be examined and a determination made as to the likely collectability of the monies owed. Non-productive accounts should be written off, or turned over to a collection agency. This write-off should be documented in the patient's ledger and used in future financial decision making should the patient ever return for treatment.> “There is no better predictor of future patient behavior as past behavior.”> Dr. David DarabDepreciation schedules and old “mothballed" equipment can also accumulate over years and years. This distorts the Balance Sheet, especially the Asset section, and ultimately the calculations used to determine practice value. Almost as exciting as watching paint dry, perusing and updating the depreciation schedule should be undertaken to “clean up” your financials. Equipment that is no longer in service, or has already been disposed of should be removed from the schedule and the asset adjustment made.Quasi-business items like automobiles, photography equipment and artwork that are used exclusively by or for the benefit of the doctor owner should also be identified and accounted for.Remember, your associate or purchaser is buying a business, your business. You and your advisors should do everything possible to present an accurate picture of your financials, assets as well as cash flows. Regardless of what you think, have heard, or read in throw away journals, your cash flow is King, and represents a critical asset in practice valuation.Practices with well established and written business systems and protocols along with consistent and strong cash flows and profitability have greater value to a purchaser and bring premium sales price compared to one where systems, cash, and profits are lacking.Other assets that need evaluation and possible updating include the practice equipment, technology, software, and web presence.Consider the following questions…how would you answer them?Is the practice completely digital?What kinds of imaging systems are used?Is there a digital workflow?What about the Practice Management Software? Is it current?Are the billing systems efficient?Is it a Fee for service practice? Is the fee schedule used by the practice current?Has the fee schedule been analyzed and benchmarked?What is the insurance profile or mix?Does the practice have a website that is current?Is it SEO Optimized? Does it rank at the top of a web search? Does it have over 60 5-Star patient reviews?Yes, lots of questions, and at times more questions than we have answers, at least initially.How about a few more questions…What does your workweek look like? What days and hours do you work?Have you been slowing your schedule down a bit? Or Driving Strong until the end?Are you accepting new patients? Do you see children?What is the demographic profile of your patient population? Do you have a wide range of ages? Or has your practice matured with you and now it mostly mature adults?What is your wait time for a new patient visit?Is it possible you have become highly selective with your new patients because you are so busy and can?Well, if you are considering an associate you will soon have several more “mouths to feed”, literally; an associate dentist along with his assistant(s) and hygienist. These additional employees will place immediate strain on your cash flow and profitability, do you have sufficient new patients entering your practice to maintain this new higher cash flow?Maybe you need to change some of your processes and systems in order to attract more new patients.Developing some basic social media marketing on Facebook, Instagram and Twitter might be in order to help jump-start and leverage the energy around a new associate.Maybe you haven’t thought about all these details before and that’s ok! That’s why we are here, to illuminate these potential blind spots for you!We take a “deep dive” into all of these areas looking for deficiencies and make recommendations to bring them up to current standards of accounting and reporting as well as best practices. Although we are not accountants or CPA’s, OmniStar has excellent Accounting Firms in its stable of Consultants and Strategic Partners. This also includes attorneys, bankers, practice appraisers, web designer and any other specialist needed in the process of Practice Preparation, Valuation and Transition.Once the doctor's succession plan is sketched out the question next turns to the practice building and real estate. Should one sell the practice and building at the same time, or continue leasing the building to the new dentist. These are great questions requiring a detailed and systematic approach to Wealth Management. Our Team at OmniStar uses a multistep process beginning with an evaluation of the dentist’s assets including Investments, Real Estate, and Practice. This is followed by a detailed analysis of cash flow, insurance, Asset allocation, savings plan, tax strategies, pension plans, and risk tolerance. Following this evaluation and analysis, actionable strategies are detailed and then implemented. Monitoring and optimization of the strategies foll

We are focusing on one of the most sensitive subjects of the dental practice. That’s right, fees.  Do you routinely raise your fees? If you are like many dentists we encounter, the answer is no. Yet, keeping fees set at one rate for too long ultimately increases your overhead ratio and takes a bite out of profits. This is a controversial subject and one that is quite emotional for practice owners. Despite what many patients believe, dentists rarely feel comfortable about raising their fees. Patients also don’t realize how much overhead is required to operate a top-notch practice – and costs rise every year. Nevertheless, most practice owners are fearful of driving patients out the door if they raise their fees. This tendency to is seen every year, even in the face of a deteriorating bottom line. Now, I know this may be difficult to believe, but all is not lost.  Did you know that patients tend to focus on relationship, experience, and atmosphere, long before they focus on price?  Let’s dive in to this blind-spot and discover the right way to raise fees. We know this phenomenon among dentists is real – a fear that if they increase their fees, their patients will scram – inferring their services are too expensive. I also find it interesting that many dentists will frequently struggle financially despite having left their fees at the same level for several years. If you are thinking “this sounds familiar, you aren’t alone.  As a business owner, I recognize this emotionally driven decision – right or wrong it is a naturally occurring emotion.  But, let’s try to look at this without as much emotion and consider fee optimization as a business decision. Anything short of this is pushing you into the “Dental Practice Fee Catch-Up” game.Much like Vegas, you rarely win…Let me give you some frame of reference here.  30 or so years ago, a dentist could expect overhead to be in the range of 45 percent. Today, that average is closer to 75 percent. That means an average practice can expect a net return, or profit, to be 25 percent, or maybe less. Net income for dentists has been cut in half as a percentage of doing business. And believe me, that creates consternation among many practice owners and they are constantly looking for viable solutions? Digging a little deeper into this perceived conundrum, Dentists bought into the insurance programs in the early 1970s - agreeing to accept approved fees. If you are a participating provider, your fees are controlled by the insurance company while overhead continues to rise with inflation. Step back a minute and ask yourself a question – does it make sense for a dentist to treat patients from certain insurance plans while worrying about the associated costs? The short answer is no.  I am not saying you should not be conscious of costs, but many providers find themselves barely breaking even depending on their model and the insurance companies with which they are contracted.  So, what is the takeaway on this? Maybe it’s time for a PPO analysis and some serious discussion about what makes the most sense for your practice. Which insurances are best for you and, more importantly, which one’s are not. You know, keeping fees low in hopes of being more competitive and avoiding patient attrition is a subject that evokes fear in dentists.  Every year we see the emotional struggle among every kind of dentist, regardless of their business model.  This universal trend often leads to unintended consequences.  Think about it, new equipment, staff salary increases, cost of living, and insurance adjustments are just a few of the things tugging away at your bottom line. Oh, and don’t forget about what it can do to the value of your practice – potential buyers will be advised to negotiate this threat since they will likely lose a significant part of that loyal patient base when fees are adjusted to market rates. This is another blind spot – and it is often missed.  That’s right, the new owner is handcuffed from normalizing dental practice fees. If they increase their fees too quickly, they may face a legitimate mass exodus of patients.Just like going to the dentist, patients fear the worst but they know it must be done if they want a healthier smile and body. What they ultimately discover is their trip to the dentist was not nearly as painful as they expected.  Dentists face the same (self-inflicted) dilemma – they know fees need to go up, but they fear the pain of losing patients, and upsetting those who have been long-time supporters.  This analogy goes a step further – waiting only exacerbates the problem. The cost of services is a natural part of doing business. Every business, not just dentists, must evaluate costs and compare them to expense – hence the profit & loss statement.  But it goes beyond a simple P&L that might present a temporarily great picture.In other words, is the picture sustainable and will it provide everything you are trying to accomplish – professionally and personally.  Whether you are selling clothes or crowns, consumers expect fees to increase over time, and the success of your business depends on your willingness to make equitable and necessary adjustments. Moreover, small adjustments when delivered with exceptional service and dentistry are unlikely to cause any disruption. It also helps when your staff is on board – so be sure you help them with a plausible and honest explanation should patients ask about increased costs.  So, with that perspective, how can you overcome Your Fear of Raising Fees?Let me ask you a question.Did you increase your fees 2% to 3% every year for the last 5 years? If so, you were keeping up with the national dentistry market regarding fee schedules. If not, you fell behind by as much as 15% over those five years.First, let’s agree that cost of living rises every year.  Therefore, fees should be adjusted every 12 months. I know, you are probably thinking this logic doesn’t concur my current way of doing business, but hold on, work with me as we begin to illuminate this blind spot.  If for no other reason, cost of living goes up every year and that increases your cost of doing business.  If you haven’t done a fee analysis in the past 12 months, you owe it to yourself to have your fees carefully analyzed to get a better idea of where you stand.  Now, when to raise your fees is a personal decision - you can decide which time of year works best for you.  Our clients make adjustments at the beginning of each calendar year. So, if you chose to have your fees analyzed, here is what we believe must be included:Comparing your fees to those in your area – if you are the lowest, that is a sure sign you need to adjust.Comparing your financial goals with practice performance – this one is rarely included. Yet, our firm believes it must be part of the equation. After all, your future depends on the performance of your business. This process is not complicated but usually requires a trained eye and someone who has the ability to tie everything together in one report.  That’s the hard part, not to mention interpretation of the results. Nevertheless, if this can be accomplished, why are so many dentists afraid to do it? Well, we think it is based on two reasons.  The first, you must know your numbers.  Many dentists unwittingly assume that if money is in the bank, the practice is doing fine. Nothing could be further from the truth.If you don’t know the basics, everything else is intuitive – leading to a lot of wrong decisions.  For example, what does it really cost you to diagnose, prepare, and deliver a single crown? What is your overhead cost per hour? Is your chart of accounts designed for dentistry? Are you including personal autos, continuing education in Cancun, or paying $160,000 cash for a piece of equipment in overhead analysis?  It all matters and even the most subtle mistakes can lead to unforced errors. To properly figure overhead per hour, you need to amortize an item over its life and use that monthly figure. This figure could be in the $250 per hour range, or more.  Share it with your team. Why? Let’s look at an example: compare your overhead to produce a crown to your collection amount for that patient. Will you be surprised at what you find? If the result is below your minimum margin, why continue on this path?  If your team is unaware, how can they possibly appreciate your desire for more production when all they see is your new car in the parking lot? Of course, not that you have involved the team, this is your time to educate and coach those who are in the trenches with you.  Your vision and mission must be known by your support system and, they must believe it.Now, if you are aware of your numbers and believe they present an acceptable picture without any compromise, then proceed with our admiration. On the other hand, If you feel like you not reaching your goals and compensation is not commensurate with your skills, experience and sacrifice, do something about it now.The second reason, well, is mostly psychological – the human mind is adept at yielding to certain perceived pressures. Let’s talk about a few of the most commons reasons we hear:Dentists face the reality of “I hate going to the dentist” – a criticism that has been heard from the beginning.  Today, that complaint is not as widespread due to modern techniques and high-touch practices that provide spa-like experiences.  Nevertheless, dentists remain fearful of “not being liked” and “creating pain for the patient”.  So, here is the bottom line - unless you practice for free your fees are too high in the eyes of the patient.  In other words, patients will complain at any price. Unless, of course, they perceive value!Everyone wants a good deal (perception) and they don’t want to shop (convenience). The next most popular reason is fear of Losing Patients – nearly every dentist I meet worries about bringing in new patients and losing patients. This is logical for most business owners.  But people rarel

Successful treatment planning begins with meaningful patient conversation. Learn how to ask the right questions and watch your profits rise.

“Fake News” for Dentists: Section 179With the year-end approaching we will soon be turning our attention to holiday celebrations and festivities; Thanksgiving, Christmas, New Years and Section 179 Deductions!If you are a small business owner, especially a dentist, you will be visited by equipment sales professionals, especially at year-end, who tout the incredible tax savings one can accrue by using Section 179. With those two words, “tax deduction”, dentists become easy prey for the dental equipment sales rep, and many times make large capital purchases for their tax benefits alone.In this podcast, we are going to spend some time learning more about Section 179, and illuminate several Blindspots the sales rep is sure to leave out.Section 179 is a part of the Internal Revenue Tax Code which allows small businesses to take an accelerated tax write-off in the year of purchase for equipment which would otherwise be depreciated, or expensed over time. Most of the equipment in a dental practice qualifies, and under the right conditions, it can be a great tool to reduce your tax liability while improving and upgrading the technology in your practice. There are many pundits out there preaching the benefits of Section 179 as an incentive for Doctors to save on their taxes. Admittedly, there is a time and a place where we would agree; however, there are some Section 179 pitfalls practice owners need to be aware of and consider when making that determination.Let’s take some time to go down the “rabbit hole” and learn some rules to be aware of when considering Section 179.Rule 1: Only your Tax Professional knows best.There are so many nuances and details of Section 179 that it is essential for you to consult with your Tax Professional prior to pulling the trigger on this. Projections and planning for your current year as well as future years is critical. Many times it is in the future years where the potential problems with Section 179 become apparent. Only your Accountant knows for sure if electing the Section 179 Deduction is beneficial to you.Rule 2: Your equipment sales rep is NOT your Tax Professional.In all the excitement of the year-end sales frenzy, your equipment sales rep will most likely illustrate the maximum one-year “tax savings” for you with a quick spreadsheet calculation. I wish this were that easy, but it’s not. As my accountant likes to tell me repeatedly…”It depends, David!”“It depends, David”Maurice, my AccountantBuyer beware here…this calculation is an estimate only and should have the disclaimer, “for illustrative purposes only!”Without a comprehensive understanding of the doctor’s financial situation and tax bracket, an equipment sales rep does not have sufficient information to determine the amount of money a doctor will save. You as the doctor must consult with your tax advisor before making a large purchase.Remember Rule 1: Only your Tax Professional Knows Best!“Knowing the name of something doesn’t mean you understand it.”Richard FeynmanRule 3: Knowing the name of something doesn’t mean you understand it.It seems at year-end everyone is talking about “Section 179 Write-Off”, or “Section 179 Deduction”. At this time of year, this is the most common question our consulting firm is asked, “Can I use the 179 Write Off?”, or “How much more equipment can I buy to save taxes?” So, just because someone espouses this term does not mean they know or understand it! You can hear it called a “write-off”, a “deduction”, an “accelerated expensing”, or even an “accelerated depreciation”. So many terms, but so little time!So which is it? An expense? A deduction? A Write-off? A depreciation?How exactly does Section 179 reduce your taxes?If you don’t know, listen here.To understand how Section 179 reduces your taxes we must appreciate, in basic terms, how your financial statements work and how they are interrelated; the Balance Sheet, the Income Statement or P&L, and the Statement of Cash Flows.First, Capital Equipment purchases are classified as Assets and appear on your Balance Sheet, completely avoiding your Income Statement. The Income Statement shows your Revenue and all the expenses incurred to generate that revenue, not your assets.Capital Equipment is Expensed in the Income Statement through the process of Depreciation. Depreciation is a complex accounting topic best delegated to your Accountant. As the business owner, you should understand that the Depreciation expense accounts for the loss in economic value, over time, of an asset. This loss is the result of wear and tear, consumption, the effects of time, as well as obsolescence. This Depreciation expense is a NON-Cash expense, as no cash is exchanged here, i.e. no check is written. Think of it as an accounting entry or “adjustment”. Be aware there are several methods Accountants can use to depreciate assets. As a result, it is acceptable to calculate depreciation for taxes differently from how depreciation is recorded for accounting purposes.So, say you purchased that new Cone Beam Scanner for $100,000 and your accountant recommended a 5-year depreciation schedule to match your 5-year bank loan. Assuming the equipment will be fully depreciated to a book value of zero, your depreciation would be $20,000 per year.This $20,000 shows up on your Income Statement as a Depreciation Expense, thus reducing your Net Income by $20,000.Remember, your Net Income is linked to your Balance Sheet through the Retained Earnings section. This $20,000 depreciation expense effectively lowers your Retained Earnings by the same $20,000. Since most dental Corporations are Pass-Through Entities and not subject to taxation, your $100,000 Cone Beam Scanner, depreciated at $20,000 per year has effectively reduced your Taxable Income by $20,000 and at a 35% tax rate saves you $7000 in taxes each year.So what does Section 179 do? It allows you to take an accelerated depreciation and fully deduct the entire expense of the equipment in the year of purchase. Please note there are restrictions and limitations to all tax codes, consult your Tax Professional for all those details.In our Cone Beam example, depreciating the entire $100,000 purchase reduces your Net Income and effectively your Taxable Income by $100,000, saving up to $35,000 in taxes.Remember, and the key point here, your mileage may vary, as may your tax savings. Only your accountant knows for sure if Section 179 is beneficial to you. Remember Rule 1: Only your Tax Professional Knows Best.To further complicate Section 179 there is also something called Bonus Depreciation; kinda like a “cousin” to Section 179. Bonus Depreciation also allows for a 100% depreciation of qualified assets. Simply stated, Section 179 provides greater flexibility than just bonus depreciation alone. With Bonus Depreciation, you can create a tax loss, but with Section 179, you can only bring the taxable income down to $0. As you can quickly appreciate, the entire discussion of depreciation, Section 179 and Bonus Depreciation, along with the many other depreciation methods can get very technical and complex, well beyond my expertise. Certainly, well beyond the expertise of a Dental Equipment Sales Professional. While it is important for you to understand depreciation and how it affects your financial statements, I recommend that you save yourself some time and leave depreciation calculations to the accounting experts.“Depreciation Selections, Schedules and Calculations are NOT for do-it-yourselfer’s!”Dr. David DarabAt this juncture, I can’t resist reviewing for you, the effect a Capital Expenditure has on your financial statements…Let’s take a look!When you purchase a $100,000 ConeBeam machine with the financing you add $100,000 to your Cash Asset on your Balance sheet and create a $100,000 Loan Liability. Remember, your Balance Sheet must Balance; Assets must equal Liabilities plus Owner’s EquityWhen purchased, the $100,000 cash from the loan is converted into a $100,000 equipment asset on the balance sheet.Your monthly loan payment of about $1800 (4.5% over 5 years) breaks down into principal payment of approximately $1700 and an interest payment of about $100. The principle payment appears on your Statement of Cash Flow while your interest payment appears on your Income or Profit and Loss Statement as an Interest expense. We already mentioned the depreciation expense will appear on the Income Statement too.There you have it. If you need a refresher on the key financial statements please go back and listen to my podcast series on each one! It will get you up to speed on how to talk finance, the language of business. After listening to my series, rest assured, you will know more about business and financial statements than 98% of your colleagues, guaranteed!Rule 4: You should never be in a hurry to buy equipment!Section 179 is available to you year-round, not just in the closing days of the year. It is not a time-limited offer valid in December only!There is no special Tax Magic for Section 179 at year-end. Ideally, you should be carefully planning your major capital expenditures throughout the year, not rushing at the last closing moments of the year to get the equipment installed. The rush and panic are created because, in order to qualify for the Section 179 Deduction, the equipment must be purchased and put into service by December 31!So, please feel free to purchase your needed equipment throughout the year, not just in December, and still take advantage of Section 179 Depreciation while enjoying using your new technology.Rule 5: You get the maximum deduction with or without Section 179.It is important to realize that all Capital Equipment will be fully depreciated per the depreciation schedule chosen by your accountant. Section 179 does not allow for any additional depreciation. Section 179 just takes all the depreciation in one year, no more, no less. No special magic or secret sauce.Listen on for potential traps and blindspots though, it is never as simple as the salesperson makes it out to be.Rule 6: You Still Have to Pay for the Equipment!Write off, deduction, expensing all sound wonderful, but none of these verbs reduce the cost of your equipment. You must still pay

That’s from the Film, Logan Lucky, and yes...we are going become “one of those Facebook boys” and get to know “all the twitters” too!Welcome, you’re here at The Beacon, so glad you found us! Prepare to have your Blind Spots Illuminated!In this Podcast episode we are getting Social with an introduction and primer to Social Media Marketing for your Practice.To start… Social Media is hard to get right, but easy to get wrong.Everyday, users send 500 million tweets, make 4.5 million likes on Facebook, and upload 95 million photos and videos to Instagram. Social Media is a powerful influencer in today’s competitive Marketplace. Everyone is doing it, using it and viewing it; the largest to the smallest businesses, Governments and Politicians, superstar athletes and actors, your friends, neighbors, and patients too, and so do you! Your Practice Needs a voice here also, but where do you start? What do you do? The choices are so numerous you can be overcome with “analysis paralysis” and do nothing, or keep doing the same thing you’ve been doing with the same results.Let’s make this simple with a few Rules for you to follow…## Rule 1: Your Practice Social Media should be nothing like your Personal Social Media.I know what you are thinking now, “I’ve got this, this is easy!” I do my own posts on Facebook, can send “tweets” on Twitter and am great at composing and posting Instagram shots. I end up with lots of “likes” and “shares” too. You say to yourself, “I’ll just do the same for my office and Practice”, and you do. But let’s be honest here, have you ever thought, “I’m doing this Social Media stuff, but am just not seeing the results like I would like!”Let’s face it; you have overheard colleagues at dental meetings brag about how many Followers and Likes they have. When you get home, you go online and to check those numbers and confirm that you are way behind! Being the competitive dentist that you are you commit to growing your audience. You think, If a 1000 likes are great, 2000 must be better, so you post away; staff pics, staff lunches, your lunch, birthday parties, donuts, gifts, thank you cards, patient pictures, and Holiday Announcements to start. You post signs at the office, “Like us on Facebook,” “Follow us on Instagram and Twitter.” You sit back and wait for new patients to call, but nothing, zilch, nil, nada, zero. Your experiment just confirmed the next rule.## Rule 2: Awareness is NOT ActionThe hard fact is that creating Awareness will not result in Action. Your patients know they should floss every day, but they don’t. Heck, you know the same and do you? You also know Mt Everest is the highest mountain in the world, but do not plan on climbing it anytime soon.Seth Godin, today’s Marketing Mastermind says…“Action comes from tension, desire, and fear. Action is the hard part.”As a side note, I highly recommend Seth’s newest book, “This is Marketing” . I’ll post information on this book in the show notes, be sure to check them out.Just because you post frequently, and even if patients see your posts, they are still unlikely to take action that leads to an appointment in your office.Action results from:* Tension - the feeling of not wanting to miss out on something.* Desire - the urge for something different, something better.* Fear - one’s concern for the consequences or losses if action is not taken.So what should you do?## Rule 3: Don’t Buy a BoostLikes and Follows are Vanity Metrics. If you have dabbled with your Facebook page, you have probably noticed that your posts don’t seem to reach many of your followers. Your observations are correct! Only 1-5% of your Followers who “liked” your page will see your update, that is unless you pay for an ad, or boost your post. Sorry, it’s the way Facebook makes its money and is unlikely to change.Stated another way, if “likes” and “follows” are so valuable, how can they be so easily purchased? I googled “buy facebook likes” to prove this and here is what I found shopping online.I can buy 10,000 Facebook “followers” for $290, and the same number of “likes” for $460. With Twitter, 2,500 “followers” costs only $100 and 10,000 “likes” for $150. Instagram is even cheaper; 10,000 “followers” for $70 and the same number of “likes” for $70. If “likes” and “follows” can be purchased by the thousands, the real value of each one must be questioned.Paying to boost your post will rarely return a profit. How can that be? Let’s dig deeper and ask, what did you receive for your boost investment? Possibly a few more Likes, Shares and Follows? But Awareness is not Action (remember Rule 2). You need a positive ROI (return on investment). Alternatively, let’s ask what would happen if your favorite Social Media account was suddenly deleted, hacked, or blocked? Where all those Likes and Follows now? Can you find and reach them? If not, they are all gone, along with your investment! A dental practice runs on a constant flow of patients and cash. You need patients in the chair, not Likes, and Follows.The costs to grow your online community and audience through “likes,” “follows,” and “shares” is difficult to monetize for a small business like a dental practice. Big Brands like Porsche, Harley Davidson, and Yeti, to name just a few, have a different objective with Social Media. They want to build Brand recognition along with a community. The Brand becomes the object of their Marketing rather than its various products. Big Brands have lots of money and time; a dental practice does not; it needs patients in the chair, not Likes, and Follows.Your goal should be to move your followers to your website where you own the asset and control their experience. With compelling, unique, and exciting content on your website written for your customer, you can leverage the power of the internet to find those who want to hear your message and be served by you. Finding and mobilizing your audience to Action will take some Marketing Online using the tenets of Rule 4.## Rule 4: Follow your A, B, C, D StrategyMarketing online is organized around the concept of a purchase funnel. Different stages within the funnel describe the customer interactions. An essential purchase funnel includes the following steps;A. Acquisition - build Awareness and user interestB. Behavior - user engages with your businessC. Conversion - the user becomes a customerD. Data Analytics - what’s working and what’s notLet’s expand on each funnel step now:A. Acquisition tells how your users found you. Visitors can come from a wide range of channels such as organic search engines (SEO, Content Marketing), website referrals, paid search, and social networks (YouTube, Facebook, Twitter, Instagram).B. Behavior reveals what your visitors do on your website and what actions they took.C. Conversion is when a user completes an action that you have defined as valuable to your business. A Conversion is your goal. A Conversion could be clicking a paid advertisement, viewing a video, downloading a brochure or promotional coupon, providing contact information, signing up for a newsletter, or calling you.D. Data analytics is used to assess the results of your business goals. What’s working, what’s not and adjust. Every interaction of your users with your website and their digital devices can be tracked and studied with Google Analytics.So, let’s get Social! Here is where Social Media, through precisely targeted Paid Advertising Campaigns, can find and connect you and your audience with a Call To Action. A Call To Action can be signing up for a newsletter, downloading a brochure or discount coupon, completing a form, or calling you. The effectiveness of this strategy depends on the content contained on your website, your home base for all web activity. Designing and deploying effective campaigns which include measurable goals and event tracking will likely require the input of a web developer. Creating engaging content and copy along with images and graphics that generate Value for your customers is best delegated to a content or marketing manager too.It is important to ask yourself… Are you being “anti”Social by annoying your customers?Today’s savvy customers are Value-driven, if they “smell” a sales pitch they will bounce off your site immediately. You must first create trust with the content on your website. Posts that are annoying, outdated, “cookie-cutter,” too numerous, too infrequent, too inconsistent, or lacking great content will all cause your potential customer to flee. Informing, educating, and providing answers to questions will improve the chances your visitors will take Action (rule 2 above) and become a customer. Remember, moving your customers to Action requires; tension for change, a desire for something different, or a solution for their fears. An added benefit is that all of these tactics will significantly enhance your SEO and improve your Google Search Rankings.I like to say:> “The fastest way to lose a customer is to waste their time!”> David Darab, DDS, MS, MBAThere is no “I” in Marketing, Seth Godin says repeatedly. Create your Social Media Messages and Campaigns to solve your customers wants, needs, and desires. Marketing Online allows pivoting your message quickly, guided by metrics from Google Analytics. Google Analytics is a free website analytics service offered by Google that provides insights into how users find and use your website. With Google Analytics, you can track the ROI for your marketing campaigns. Dentists love data, and Google Analytics is full of data that shows how your campaigns are performing. Using tracking codes, tags and cookies on your Paid Advertising, Social Media Posts and Campaigns you can gather data from almost any platform or website enabling you to monitor and measure each stop on your viewers’ journey. If you are not familiar with Google Analytics, check it out now, I will have a link posted on the show notes for you too.Let’s now put this information to use and design a campaign. Dental Membership Plans are a popular topic for practices today. Your strategy is to promote your Dental Membership Plan to potential new patients. Your tactics will include paid advertising on Facebook, and Instagram combined with new content on yo

PODCAST EPISODE (EP10) Analyzing Your Financial Statements Welcome, you’re here at The Beacon, so glad you found us! Prepare to have your Blind Spots Illuminated! Over the last 3 episodes we studied and examined the key financial statements you should be receiving monthly; 1. the balance sheet 2. the income statement or P&L 3. and the Statement of Cash Flows Now, what the heck are you supposed to do with all that information! In this episode we will examine some basic financial statement analysis. Much of this analysis involves calculating ratios from the data contained in the financial reports. As I promised at the very beginning, the math here is very simple…Division, nothing more complex than that! The listener may find it easier to follow this analysis and ratios by printing out the show notes and using them as a reference. Ratios offer points of comparison , which can reveal more than the raw numbers alone. Ratios can help you determine if the numbers are favorable or unfavorable. Ratios themselves can be compared: 1. Over time 2. With projections, and 3. With Industry averages and benchmarks The Questions we are looking to answer are: 1. Can the business pay all of its bills? 2. Did the business make any money? and how much? 3. Can financial performance be improved? Remember our financial analysis provides a good picture of current financial health along with past performance. These numbers are more historical in nature rather than predictive. Although financials can help with planing and tactics, future performance of your practice depends on other critical factors beyond finance including: 1. The ability of Management to react to local economic conditions, market competition and changes. 2. The Experience and Capabilities of the doctors in the practice. 3. The practice’s current financial position. Recall the limitations of financial reports too; 1. Many of the dollar values are estimates at best. 2. The Balance Sheet does not show actual Net Worth. 3. Assets are valued at their Historical cost. Book values contained in these reports represent Original cost less accumulated depreciation. 4. Depreciation expense shown on the Income Statement is only an estimate of the amount of asset used, not the Value of the Asset. To begin our study, we will break down the Financial Ratios into 4 broad categories which can be used to analyze a companies performance; 1. profitability 2. leverage 3. liquidity 4. efficiency PROFITABILITY: a measure of a companies ability to generate sales and control expenses. This answers the question, Did the Practice make Money, and how much? GROSS PROFIT MARGIN PERCENTAGE: GROSS MARGIN = GROSS PROFIT / REVENUE (from the P&L) Recall, Gross Profit = Revenue - COGS or COS Gross Margin Shows the basic profitability of the product or service before expenses are considered. Or, how much the company must pay out in Direct Costs to make the product, or deliver the service. Trends are important here because they can indicate potential problems. Gross Profit trending down could mean that Market pressures and Competition are reducing Pricing Power, or the cost of material and labor are rising. Gross Margin can be an early indicator of favorable or unfavorable trends in the marketplace. OPERATING PROFIT MARGIN PERCENTAGE: OPERATING MARGIN = OPERATING PROFIT (EBIT) / REVENUE (P&L) Recall, Operating Profit = Gross Profit - Operating Expenses Operating Margin indicates how well a company is running its business from an operational standpoint. Or how well the managers are doing their job controlling expenses. Trends are important here too! Downward trend is a warning that COSTS and EXPENSES are rising faster than SALES. NET PROFIT MARGIN PERCENTAGE - the proverbial BOTTOM LINE (P&L) NET MARGIN = NET PROFIT / REVENUE Tells a company how much out of every sales dollar it gets to keep after EVERYTHING else has been paid for - payroll, vendors, lenders, and taxes. RETURN ON ASSETS: Tells you what percentage of every dollar invested in the business is returned to you as profit. ROA = NET PROFIT / TOTAL ASSETS (balance sheet) Remember, these ratios are more powerful when they are tracked over time to establish trend lines. LEVERAGE RATIOS: DEBT VS EQUITY FINANCING Let’s us quantify how a business is financed, or how a business uses debt. The Financial Analyst’s word for debt is LEVERAGE. One can compare this to a Mortgage. A mortgage allows you to purchase and live in a bigger home than you might otherwise be able to afford with your Cash savings alone. Also, the Interest payments on your mortgage debt is deductible from your taxable income making your home even more affordable. When you first take out a Mortgage, and say put down 20%, you are Highly Leveraged! You have more debt than equity. A business is similar in that it can invest in profit generating assets without drawing down its cash reserves and simultaneously deduct the interest payments on this debt from its taxable income. That’s a double win! You should note that BANKERS LOVE to look at your leverage when you apply for a loan, either business or personal. DEBT-to-EQUITY RATIO: DEBT-to-EQUITY RATIO = TOTAL LIABILITIES / SHAREHOLDER’s EQUITY Or, How much debt the company has for every dollar of shareholders equity. INTEREST COVERAGE: INTEREST COVERAGE = OPERATING PROFIT / ANNUAL INTEREST CHARGES Which is a measure of the company’s “interest exposure”, or how much interest it is paying relative to how much it’s making. Shows how easy it will be for a company to pay its interest. A high ratio means the company can take on more debt. LIQUIDITY RATIOS: Can we pay our bills? Can the company meet all its financial obligations, not just debt, but payroll, bank loans, payment to vendors, taxes, etc. Tracking this is critical for small businesses as they are the ones most in danger of running out of cash! This is an easy Ratio to Calculate and Track, it’s called the CURRENT RATIO CURRENT RATIO: measures Current Assets against Current Liabilities CURRENT RATIO = CURRENT ASSETS / CURRENT LIABILITIES We are looking for a Ratio greater than one (1), but a Current Ratio too high means the business is sitting on its CASH rather than investing it or distributing it to shareholders. Finally are the … EFFICIENCY RATIOS: Managing the Balance Sheet Here we will Learn to Manage your Assets and Liabilities; consisting of: Inventory Receivables Payables Property, Plant and Equipment INVENTORY We have 2 metrics here, INVENTORY DAYS and INVENTORY TURNS, both measure how efficiently a company uses its inventory, both are difficult to calculate in a dental office that uses a Modified Cash Basis of Accounting. The concepts are still very important. INVENTORY DAYS - Measures the number of days inventory stays in the system or on the shelfs. While, INVENTORY TURNS- Tells us how many times inventory is turned over and replaced in a year. Or the number of times inventory sold out , or could have sold out, and had to be reordered in a year. The take home point here is… THE LOWER THE INVENTORY DAYS and the HIGHER THE INVENTORY TURNS the BETTER YOUR CASH POSITION. again… Translated, we don’t want Inventory just sitting on shelves. We want it quickly being transformed into product and services and ultimately REVENUE! DENTISTS should take note here! Less inventory, not more is key. This flies in the face of quantity discounts that your vendors offer which works in the opposite direction; INCREASING INVENTORY DAYS and REDUCING INVENTORY TURNS, effectively REDUCING YOUR CASH POSITION! I like to remind dentists that they should image dollar bills, rather than supplies, sitting on their stockroom shelves. A practice should keep just enough inventory on hand for the treatment scheduled. Yes, that is easier said than done, but at least resist, just a little bit, the temptation to buy supplies in large quantities thinking you are saving a lot of money. Instead, you are spending your cash that could be sitting in your bank account, not on the shelfs of your office! This practice becomes even more costly if supplies expire or become outdated. Make sure your vendors will work with you to exchange outdated or soon to expire supplies. That discussion is best had prior to placing an order. RECEIVABLES DAYS SALES OUTSTANDING How fast customers pay their bills. DSO = (ENDING A/R) / (REVENUE/DAY) This metric can be, and should be calculated and tracked monthly! It is very important to monitor how efficiently your office systems can collect outstanding balances. Improving DAYS SALES OUTSTANDING is a FAST TRACT to IMPROVING YOUR CASH POSITION with NO CHANGE IN REVENUE OR COSTS. Again, Dentist’s should take note here and monitor and manage this metric very closely. PAYABLES How long it takes you to pay your invoices or bills. DAYS PAYABLE OUTSTANDING is the cousin to Days Sales Outstanding Days payable outstanding = Ending Accountants Payable / (COGS/day) This is not a metric we will calculate, and track, but important to understand that paying your bills promptly will help to maintain excellent credit. Here, the higher your Days Payable Outstanding the longer you get to keep your money and the better your cash position, but the less happy your vendors are likely to be. This again flies in the face of what many advisors recommend at year end, which is prepaying several months of expenses; ie, credit cards and rent. Accelerating these PAYMENTS REDUCES your CASH POSITION. this is worth repeating again….. If you are prepaying, or paying your invoices early, by all means ask for a prepayment discount from your vendor. PROPERTY, PLANT and EQUIPMENT TURNOVER PPE Turnover = revenue / PPE (balance Sheet) How many dollars of Revenue does each dollar of PPE (hard assets) generate. What is important here is the concept. One wants an increasing PPE Turnover. Translated, that means one wants higher revenue generated for the Hard Assets of the Practice. With this metric in mind consider your practice. Can you answer these questions favorably? * Will that new or bigger office enable you to generate more revenue? * Will that in office milling machine, or intra oral scanner generate greater

In this Podcast we continue our deconstruction, decoding and deciphering of the key financial statements. Last episode we dug into the Income Statement. I hope you found that insightful. If you haven’t heard it yet no worries, check it out when we finish here! This Episode is about the STATEMENT OF CASH FLOWS. The third and final Financial Report you should be reviewing monthly. To begin, let’s make sure your accountant is providing this report to you. I have found that the CASH FLOW STATEMENT is not always included in the monthly reports, but can be added simply by requesting it. And as you will learn here, this is an important report to review! In fact, it could be the most important report, since CASH is least subject to estimates and assumptions and critical to keep your business afloat. In each of the three financial statements we have studied, there is a measure, or indicator, of business performance; In the Balance Sheet we have Owner’s Equity, or Retained Earnings. In the Income Statement we have Net Profit, And in the Statement of Cash Flow we have Operating Cash! Remember Profit is NOT Cash! Profit is a PROMISE, and contains estimates, assumptions, and adjustments, not MONEY coming in! You need Cold Hard Cash to pay yourself and your employees, buy supplies along with investing in equipment! CASH is a Reality Check! PROFIT is VANITY! So you might be saying to yourself, “Who cares anyway, who watches CASH?” Well…Only the most successful investor of all time….WARREN #BUFFETT!! Warren Buffett , along with his business partner, Charlie Munger, know all too well that the INCOME STATEMENT and BALANCE SHEET can contain all sorts of estimates, assumptions and biases that can distort their information. CASH is different. With CASH you are indirectly examining the Bank Account of the Firm. CASH is the number least affected and influenced by the Art of Finance. CASH is a reality check. PROFITS do not equal CASH! PROFITS aren’t REAL MONEY. CASH IS! EXPENSES on the INCOME STATEMENT do not reflect the CASH going out. The CASH FLOW STATEMENT, by comparison, always tracts CASH in and CASH out during a time period. Remember all that equipment you bought at the end of the year using up your Section 179 deduction because the sales rep told you it was “deductible” and would save you taxes. Those payments don’t appear anywhere on the income statement. Rather they appear, slowly overtime, month by month, as a DEPRECIATION EXPENSE on the INCOME STATEMENT. The kicker is… those ITEMS are paid for with CASH long before they have been fully depreciated! This CASH outflow appears on the CASH FLOW STATEMENT. With this in mind, remember that while CASH is KING, CASH FLOW is the QUEEN! A business can generate PROFITS without CASH, on the flip side a business can also generate CASH without PROFIT. PROFIT without CASH, is how most small businesses go out of business in their first year. It’s why new restaurants have a hard time gaining traction…they simply run out of CASH and are forced to close. Their expenses outstrip all their cash, and it’s cash that’s required to keep the doors open. Alternatively, a business generating CASH but no PROFIT is not sustainable for the long term. Eventually the lack of profits will catch up and cause a non-profitable business to run out of CASH. Alas, all is not lost. Finding the right expertise can help. A firm running out of cash needs FINANCIAL Expertise, while an unprofitable firm needs Operational Expertise to help lower expenses and/or generate additional revenue. Bottom line is…. a healthy business requires both PROFIT and CASH to maintain financial health. Let’s Dive In and Dissect and Deconstruct a STATEMENT of CASH FLOW. This Financial Report is divided into 3 categories: CASH coming IN is (+), and CASH going OUT is (-). CASH used in OPERATING ACTIVITIES: Which is all cash related to the actual operations of the business. It Includes cash from customers, cash for salaries, vendors, rent, and taxes to name a few. CASH used in INVESTING ACTIVITIES: Which is all cash related to investments made by the company, such as the purchase of capital equipment. CASH used in FINANCING ACTIVITIES: Which is all cash related to borrowing and paying back of loans, as well as the purchase or sale of stock ,or payment of dividends to shareholders. One can see there is lots of useful information here! We won’t worry about how this report is generated. We will leave those details for your accountant. We will just look at the prepared report. The FIRST CATEGORY, OPERATING ACTIVITIES Is one of the most important numbers in all of the financial statements we have examined. It indicates the Health of a Business. A company with consistently healthy operating cash flow is probably profitable, and probably doing a good job turning their profits into cash. With healthy Operating Cash flow a company can finance more of its growth internally without borrowing. The SECOND CATEGORY, INVESTING ACTIVITY Shows how much the company is spending on assets to grow the business. The THIRD CATEGORY, FINANCING ACTIVITY Shows the borrowing and paying back of loans and dividend payments to shareholders. What does all of this mean? Understanding the POWER of CASH FLOW and how to manage it can strengthen your business in several ways; First, you must understand where the money is coming from and where it is going to. A strong operating cash flow means the business is generating cash. Paying down loans and investing in assets creates negative Investing cash flows which can be very favorable to the long term growth of a business. Selling stock and raising money from shareholders generates positive Financing cash flow which may be a great sign, or it could mean the company is selling stock or taking out debt as a means to stay afloat! Second, you can directly affect your cash by closely managing your Accounts Receivables, Inventory and Expenses. Learn to study the Aging of your receivables and calculate and tract your ACCOUNTS RECEIVABLES RATIO which is your Accounts Receivables / Average monthly production. Aim to have this ratio less than one, which means your Accounts Receivables should not exceed your average monthly production. Develop systems to speed the collection of your accounts receivables and you can immediately generate additional positive cash flow. Receivables are the same as giving your customers interest free loans on their balances! The longer it takes to collect your money, the less of it you will have. You should have very few accounts that exceed 90 days! Similiarly, work to reduce the stock piling of Inventory which uses up your CASH! The quantity discounts suppliers offer may not be saving you money in the long term since holding Inventory and Supplies on your shelfs cost CASH, especially if these supplies expire! I like to remind doctors when they look at all of their inventory and supplies they should be seeing dollars and cents that could be in the bank or in their pockets rather than sitting on their shelfs! Tighten up your Expenses too. Negotiate more favorable payment terms with your Vendors. Extend out your Accounts Payable, the money You owe your Suppliers. For you, extended payment terms is just like a free loan from your vendor and who doesn’t like FREE! Evaluate carefully the strategy of prepaying months of rent expense at the end of the year. I know that many doctors are told to do this. This quickly depletes your cash reserve. Tax planning is critical here so consultation with your Tax Professional is essential, but Taxes should not “Wag the Dog!”. Go ahead and take this cash as salary, pay your individual taxes and then use this additional cash to grow your personal Balance Sheet. Finally, we spoke earlier of a key metric used by Warren Buffett. This metric is “Owner’s Earnings” or “Free Cash Flow”. It is the difference between Operating Cash flow and net Capital Expenditures. Both of these values come from the Cash Flow Statement. Operating Cash Flow is the Total from the top section of the Statement. Net Capital Expenditures can be found as a line item in the Middle Section, the Investing Section, listed as Property, Plant and Equipment. Companies with healthy Free Cash Flow have many more options to grow, expand operations, invest in equipment, pay down debt and pay dividends to shareholders. In a dental practice, those shareholders are very likely to be the doctor-owners of the practice! In Summary , our key take away points are: Cash is NOT subject to the estimates and assumptions present in the Balance Sheet and Income Statement. Profit is NOT CASH. You can’t pay bills or payroll with profits! Healthy Positive CASH FLOW is essential for the long term sustainability and liquidity of a company. CASH flow can be improved by accelerating the collection of outstanding Account Receivables, minimizing the accumulation of excess inventory and closely monitoring the timing of Expenses. So that wraps things up for this Podcast.  Hopefully you have a better understanding of the mechanics of the STATEMENT OF CASH FLOWS. We hope that this information has created a few “Ah Ha” moments, or stimulated some additional questions you can direct to your advisers or accountants.  We welcome your inquiry here too at OmniStar Financial.  Our contact information can be found at our website OmniStarfinancial.com  .  You will also find a link to sign up for our newsletter.  Please share this podcast if you found it helpful, and leave a review on iTunes too.  We welcome your feed back and suggestions for future podcast sessions.  You can always find me, your host, david darab, at my twitter handle, @ddarab. Thank you so very much for tuning in and listening.  We are very grateful for your time and attention and so very pleased to have you in our audience. REFERENCES: Financial Intelligence, Revised Edition: A Manager’s Guide to Knowing What the Numbers Really Mean: Karen Berman, Joe Knight, John Case: 8601406238220: Amazon.com: Gateway Stark Naked Numbers: Uncover Your Financials, Unlock Your Cash, and Unleash Your Profits: Mr Jason Frederick Andrew: 9780648424000: Amazon.com: Books