OmniStar Beacon

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 overestimate the probability of positive outcomes but underestimate the potential for negative ones. 80% of us are prone to this cognitive illusion.This is the power of positive thinking, but not the best heuristic for the best outcomes.Mental Accounting BiasMental accounting explains how we tend to assign subjective value to our money, usually in ways that violate basic economic principles.Although money has consistent, objective value, the way we go about spending it is often subject to different rules, depending on how we earned the money, how we intend to use it, and how it makes us feel.   In reality, money is fungible and one dollar is worth as much as the next, whatever its source or purpose.  This bias affects how we rationalize our spending and investment decisions.Here is an example…Imagine you’re walking down the street, and you happen to find a $100 bill lying on the sidewalk. Ordinarily, you’re a pretty frugal person, and you’ve been trying to save some money to put towards buying a car in the future. Today, however, you take your newfound $100 and put it towards an expensive dinner. You tell yourself that this money isn’t “car money” — this is a one-off, special occasion, so why not treat yourself to a nice evening out?You have just fallen victim to Mental Accounting Bias.Outcome BiasThe tendency to judge a decision by its eventual outcome, rather than the quality of the decision when it was made. This behavioral tendency leads us to de-emphasize the events preceding an investment outcome, whilst overemphasizing the outcome.> “The fact that something worked doesn’t mean it was the result of a correct decision, and the fact that something failed doesn’t mean the decision was wrong. This is at least as true in investing as it is in sports.”> Howard Marks –  Inspiration from the World of Sports Memo  (2015)In business, making a good and sound decision does not guarantee a good outcome.  Recency BiasWhen people weigh recent events and observations more heavily than those in the past.With this bias, we tend to base our thinking disproportionately on whatever comes most easily to mind. In an investment context, this can be dangerous because we are likely to lean more heavily on our experience of recent investment performance when considering future returns.Older people can display marked recency bias, with a focus on positive memories. This has potentially significant implications for the important investment decisions they make as they approach retirement.> “We look at the most recent evidence, take it too seriously, and expect that things will continue in that way.”> Dan Ariely –  Predictably Irrational  (2010)Regret AversionThe tendency to avoid making decisions that we fear we could later regret.Risk CompensationThis suggests that we adjust our behavior according to our perception of the risk level, becoming less careful when we feel safer and more cautious when the perceived risk level increases.Status Quo BiasEvident when people resist change and prefer things to stay the same or stick with previous decisions.Sunk Cost EffectThe tendency to throw good money after bad. Can lead us to continue investing into a project based on our earlier decisions, rather than on its current objective merits or despite new evidence suggesting that the decision was probably wrong.I think of this as, “What’s past is past!”The IKEA EffectThis bias explains the tendency for people to place a disproportionately high value on objects that they partially created themselves, regardless of the quality of the end result.This is especially prevalent in clinical dentistry.and finally…Dunning–Kruger effectIs a cognitive bias in which people with low ability at a task overestimate their ability. It is related to the cognitive bias of illusory superiority and comes from the inability of people to recognize their lack of ability.[image:3C24884B-4665-43AB-A892-1FAD5A5B4821-9378-000098BBC7F6B8B6/Dunning-Kruger.jpg]Even with this partial list, you can get a feel for how many Cognitive Biases there are and how influenced by them we can be, distorting our ability to make sound and accurate decisions.Have you encountered any of these yourself??  I know I have and learn volumes about myself researching for this podcast.Now that we have some awareness of our Cognitive Biases let’s look at some strategies to overcome them.  I’ll outline 5 actions for you to consider…#1  Separate the Problem from the DecisionMake sure you thoroughly understand the Problem first which requires you to make a decision.  Separate the problem from your decision-making, rarely does a decision have to be made immediately or simultaneously.#2  Reflect on past decisionsIf you’ve been in a similar situation before, you can reflect on the outcomes of those previous decisions to learn how to overcome your biases.  Learn from your previous decisions, both good and bad.  What went well…if so why?  What went poorly…if so what would you avoid or do differently?#3  Include external viewpointsThere is some evidence that we make better decisions when we consult with other people who are more objective, such as advisors, coaches, mentors, and trusted friends and colleagues.  Therefore, before making a decision, talk to other people to consider different viewpoints and have your own views challenged. Importantly, other people might spot your own cognitive Biases, Blind Spots, as we say here at OmniStar!#4. Challenge your viewpointsWhen making a decision, try to see the weaknesses and “poke holes” in your thinking regardless of how small, unlikely, or inconsequential these weaknesses might seem. You can be more confident in your decision if it withstands serious, critical scrutiny.  This “Devil’s Advocate” role and voice are crucial to point out flaws in your thinking.  If this alternative view proves stronger, time to rethink your decision.#5  Delay decisions, do not act when under pressureA final way to protect yourself from relying on your cognitive biases is to avoid making any decisions under time pressure.  Rarely does a significant decision have to be made immediately.  If decisions can be delayed,  many times the problem that initiated the need for action may resolve, better alternatives may present themself, or additional information can be obtained which aids in the decision process.A Take-Home MessageWe often rely on cognitive heuristics and biases when making decisions.Heuristics can be useful in certain circumstances; however, heuristics and biases can result in poor decision-making and reinforce unhealthy behavior.When we are not aware of them, they create Blind Spots which can lead to unpredictable and adverse outcomes.  There are many different types of cognitive biases, and all of us are victims of one or more.However, being aware of our biases and how they affect our behavior is the first step toward resisting them.So that wraps things up for this Podcast.  We hope this information has created a few "Ah-Ha" moments to help you better understand some of your biases.  Once you are aware you can take corrective action and achieve better outcomes.   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.Remember our Team here at OmniStar DSO stands ready to help you and your practice with any Blind Spots and questions.We see what you are incapable of… that's what we do.Thank you so very much for tuning in and listening.  We are very grateful for your time and attention and so delighted to have you in our audience.https://www.amazon.com/Thinking-Fast-Slow-Daniel-Kahneman/dp/0374533555 

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 us back, a reminder is put on the schedule to call them within a three-day window if they have not called us.Every month, our Scheduling Coordinator assembles a report that tracks every appointment category for each doctor.  The doctors monitor and track this report for any changes. I hope these Axioms, guidelines, and guardrails will help assist you in engineering your "Perfect" schedule.  After all, it's like Yogi Berra once said…."You've got to be very careful if you don't know where you are going because you might not get there."While working towards your Perfect schedule, you will have numerous "near misses."  Remember, don't panic!Avoid the temptation to throw your guidelines out the window and fill the schedule with Sand and Pebbles.  It is very easy to do.  Be patient.  Resist being swayed.  At least until 24 hours before an open appointment.In our practice, we have the "24 Hour Rule".  Everyone knows it and quotes it!  We keep to the guidelines until the day prior when the "24 Hour Rule" kicks in.  Scheduling is easy here.  Our motto is "book 'em Danno!" for those of us that remember Hawaii 5-0!!  Said another way; schedule patients who can come in today or tomorrow; some work is better than no work.  You can never recapture the lost time once your day is done.  Those empty slots and lost appointments are gone forever!Remember the old dental adage…”Consider yourself unemployed for the time that your chairs are empty!"' Nuff Said.Excellent…Time to wrap this up with a quick summary…Our Axioms are…Axiom 1: Being Busy is NOT the same a being Productive.Axiom 2: Prioritize your Schedule for Productivity.Axiom 3: Rocks, Pebbles, and Sand.Axiom 4: Block Opportunity and Emergency Time into your schedule every day.Axiom 5: Keep Score.I know that if my schedule is kept full, I will meet or exceed my production goals every time with the correct mix of appointment types.Try it… you'll like it!

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 cause airborne particles to aggregate, fall, and/or be caught in filters.  Though the absolute benefit of air scrubbing for decreasing SARS-CoV-2 transmission in a dental office is unclear, it may still be beneficial to improve the general air quality and reduce the recirculation of contaminants.  The ions created through air scrubbing are dispersed. throughout all the air in the workspace extending to areas where UVGI or even some fogged disinfectants may not reach.4. Finally are HEPA filters:  No direct research exists to verify if a HEPA air purifier reduces the transmission of COVID-19.  SARS-CoV-2 is generally carried in respiratory droplets, which are much larger than other particles known to be captured by HEPA filters.  HEPA filters can be used  as an adjunct to the HVAC system to enhance room air exchanges.  Portable units can be placed in an operatory where aerosol-generating procedures are performed.  We are at an interesting cross road here, now calling on such diverse professionals as infectious disease experts, mechanical engineers along with HVAC contractors.  When doing my research for this podcast I found a wealth of essential information along with the answers to many of my questions, which I anticipate are also your questions, from the documents and specs outlined by ASHRAE, the American Society of Heating, Refigeration, and Air-Conditioning Engineers.  Let’s check it out:Question: WHAT FILTERS ARE RECOMMENDED FOR HVAC SYSTEMS?Answer: Our current recommendation is to use a filter with a Minimum Efficiency Reporting Value (MERV) of 13, but a MERV 14 (or better) filter Is preferred.  Of course, the ultimate choice needs to take the capabilities of the HVAC systems into consideration.  Generally, increasing filter efficiency leads to increased pressure drop which can lead to reduced air flow through the HVAC system, more energy use for the fan to compensate for the increased resistance or both.  If a MERV 13 filter cannot be accommodated in the system, then use the highest MERV rating you can.Question: WHAT IS THE SIZE OF THE SARS-COV-2 VIRUS, AND CAN IT BE CAPTURED BY VENTILATION FILTERS?Answer:  Research has shown that the particle size of the SARS-CoV-2 virus is around 0.1 µm (micrometer).  However, the virus does not travel through the air by itself.  Since it is human generated, the virus is trapped in respiratory droplets and droplet nuclei (dried respiratory droplets) that are predominantly 1 µm in size and larger.ASHRAE currently recommends using a minimum MERV 13 filter, which is at least 85% efficient at capturing particles in 1 µm to 3 µm size range. A MERV 14 filter is at least 90% efficient at capturing those same particles.  Thus, the recommended filters are significantly more efficient at capturing the particles of concern that a typical MERV 8 filter which is only around 20% efficient in the 1 µm to 3 µm size range.  Filters with MERV ratings higher than 14 would capture an even higher percentage of the particles of concern.  High-efficiency particulate air (HEPA) filters are even more efficient at filtering human-generated infectious aerosols. By definition, a HEPA filter must be at least 99.97% efficient at capturing particles 0.3 µm in size. This 0.3 µm particle approximates the most penetrating particle size (MPPS) through the filter.  HEPA filters are even more efficient at capturing particles larger AND smaller than the MPPS. Thus, HEPA filters are more that 99.97% efficient at capturing airborne viral particles associated with SARS-CoV-2.Question: IS ULTRAVIOLET ENERGY (UV-C, ULTRAVIOLET GERMICIDAL IRRADIATION, GERMICIDAL ULTRAVIOLET) EFFECTIVE AGAINST THE SARS-COV-2 VIRUS?Answer: Ultraviolet energy (ultraviolet germicidal irradiation or germicidal ultraviolet) could be a powerful tool in the fight against COVID-19. ASHRAE’s position on UVC is expressed in the   UVC air and surface disinfection is used in many different settings – residential, commercial, schools, as well as healthcare. Germicidal light (particularly 254 nm UVC produced by low-pressure mercury vapor lamps, which operate near the most effective wavelength of ~265 nm) has not, to our knowledge, been tested on SARS-CoV-2, but it has been tested on an airborne coronavirus (Walker 2007). The sensitivity of that coronavirus to 254 nm was high enough that it seems like a good candidate for UV disinfection.Another way to install UV is in an “upper-air” configuration. Specially designed fixtures mounted on the wall create an irradiated zone above the occupant and disinfect the air in the space as air circulates naturally, mechanically, or by means of the HVAC system. This sort of system has been approved for use in the control of tuberculosis by CDC for nearly 20 years and there is a NIOSH guideline  on how to design them.Finally, mobile UV systems are frequently used for terminal cleaning and surface disinfection in healthcare and other spaces. Systems such as these are typically used in unoccupied spaces due to concerns of occupant exposure.  All three system types may be relevant, depending on the building type and individual spaces within the building.The design and sizing of effective ultraviolet disinfection systems can be a complex process because of the need to determine the dose delivered to a moving air stream or to an irradiated region of a room. In-duct systems are further complicated by the air handling unit and ductwork configuration and reflections from surfaces that can help achieve higher irradiance levels. Upper-air systems require adequate air mixing to work properly while paying close attention to reflective surfaces that could result in room occupants being overexposed to the UV energy.  Reputable manufacturers and system designers can assist by doing the necessary calculations and designing systems specific to individual spaces.So, we have covered a lot of ground here, but are still left with the question…What am I to do?What’s the take home actionable point?We know the threat of COVID-19 is significant and it can be transferred via the airborne route through coughing, sneezing, and secretions as well as through aerosols generated during our treatments.For patients diagnosed with or suspected of COVID-19 infection, the gold standard is a negative pressure isolation room.However, in our present practice, negative pressure rooms are probably not available or practical.  From the above discussion, science, and technology it appears a multi tiered approach may prove the most practical.Consider the following strategies to enhance the air purfication in your office;1. Enhance your current HVAC system by running it more frequently, start earlier to allow more time for airflow and filtering before your normal office hours begin.2. Choose HVAC filters that can remove a large portion of airborne particles, such as a MERV 13.  If such a filter is incompatible, choose the most efficient filter.3. Increase the HVAC system’s supply of outdoor air, to as much as the system can handle, in order to reduce reliance on recirculated air.  4. Consider centrally placed HVAC air treatment.  Options here could include UVC germicial irradiation or ionic air scrubbing.  Consultation with your HVAC contractor can help recomment the best options for your facility and system.5. Provide air filtration in operatories where aerosols are generated.  Using portable air purifiers with high-efficiency particulate air, or HEPA, filters.  Vendors today also integrate UVC chambers, ion generators with HEPA filtration for a powerful viracidal combination.  6. Recirculate room air to achieve the equivalent of 6 to 12 air exchanges per hour.  This can be difficult to achieve with your existing HVAC system.  The addition of a portable air purifier can greatly improve your room air exchanges.  Remember that larger spaces may need multiple units to achieve the recommended air exchanges.7. Finally,  some offices may choose residential and construction-grade air purifiers in patient care areas.  Caution must be advised since units can create turbulent outflow in treatment rooms risking spreading aerosols.Each office facility may use a different combination and method to reach their goal.One prescriptive method does not exist, so no single strategy can be recommended.  We will end with a statement from the ADA…“When we look at dental aerosols, at this point, there’s nothing that we can nail down and say that this virus or salivary organisms spread through dental aerosols, but again, absence of evidence is not evidence of absence, and therefore, use precautionary prevention protocols,”REFERENCES:https://www.osha.gov/laws-regs/regulations/standardnumber/1910/1910.134)https://www.cdc.gov/coronavirus/2019-ncov/community/office-buildings.htmlhttps://www.cdc.gov/niosh/docs/2009-105/default.htmlhttps://www.cdc.gov/coronavirus/2019-ncov/hcp/dental-settings.html)https://www.epa.gov/indoor-air-quality-iaq/what-merv-rating-1https://www.ashrae.org/https://www.osha.gov/SLTC/covid-19/dentistry.htmlhttps://www.osha.gov/SLTC/covid-19/healthcare-workers.html)(https://www.cdc.gov/infectioncontrol/guidelines/environmental/background/air.htmlhttps://www.wsj.com/articles/key-to-preventing-covid-19-indoors-ventilation-11598953607?st=f297vi6xszkva69&reflink=article_email_sharehttps://success.ada.org/en/practice-management/patients/infectious-diseases-2019-novel-coronavirus?utm_source=adaorg&utm_medium=adanews&utm_content=covid-19-virus&utm_campaign=covid-19) .https://www.grainger.com/know-how/equipment-information/kh-what-is-merv-rating-air-filter-rating-charthttps://www.epa.gov/indoor-air-quality-iaq/what-merv-rating-1WSJ research; Linsey Marr, Virginia Tech University; Lydia Bourouiba, Massachusetts Institute of TechnologyCaitlin McCabe, Alberto Cevantes, Josh Ulick/THE WALL STREET JOURNALpd_infectiousaerosols_2020.pdfAir_Management_For_The_OMS_during_the_COVID-19_Pandemic (1).pdfAir_Management_Strategies.pdf

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 litigation before a lawsuit occurs. Any steps to rearrange your assets after a potential lawsuit occurs can be ruled fraudulent by the courts. Using asset protection principles before a problem arises, however, is seen as smart and strategic. The same measures taken after a lawsuit-prone incident occurs can be ruled evasive and fraudulent. As you restructure your assets, make sure your lawyer is fully versed in modern asset-protection principles. Equity stripping Although the idea of borrowing money from a bank when you don’t need it may seem counterproductive, when used for the purposes of “equity stripping” it not only makes sense but could be the wisest financial move you’ll ever make. It works like this: You take out a bank loan and secure it with property of your business that is shown on the balance sheet (such as equipment, real estate, a vehicle, or even receivables and inventory). Should creditors or a litigant attempt to seize the encumbered assets, they would first have to pay off the bank loan, likely rendering the entire exercise without financial gain. Despite the simplicity and rock-solid effectiveness of this strategy, rarely do we hear of financial advisors talking about this with a client. The reality is that your success and stature as the owner of a prosperous dental practice make you a target for a wide spectrum of potential misfortune. From creditors, judgments, divorce, tax audits, partnerships gone wrong—there are many forces that can quickly erode or drastically reduce your business and personal assets. Few professionals have as much to gain from asset protection as private-practicing dentists – operating with the reality of business and malpractice liabilities. There has never been a better time to consider your set of circumstances and make necessary changes to protect yourself, your practice, and your family. Sit down with your wealth management professional or financial advisor to evaluate your liabilities and insurance policies. What assets might you have overlooked, or might have grown in attractiveness to potential litigants? The quickest and most cost-effective approach to gaining blanket coverage is to take out a large umbrella policy to safeguard assets. Placing your assets in someone else’s name, such as your spouse or adult child, usually places them beyond the reach of any legal action directed at you or your business. Sole Proprietorship in Dentistry (DBA) A sole proprietorship means doing business as yourself – you and the company are the same entity for legal purposes. While it’s rare for private practices, it can be more common for associates working as independent contractors. Select CPAs may recommend a sole proprietorship for your dental practice because • You report income and losses on a 1040, not a corporate tax return. • If you start your dental practice from scratch, you can take advantage of the losses on your 1040 in the early years, likely before your business starts making and reporting a profit. Other legal and accounting professionals may advise against a sole proprietorship because • If you’re sued for medical malpractice, your personal assets can be taken. • It makes the web of personal and professional finances very difficult to separate. • Your personal credit is at risk. • As an associate, your profits are subject to self-employment tax; you will pay payroll taxes as an employee and an employer. • You will pay more in Social Security and Medicare taxes. Professional Corporation (PC) A Professional Corporation (“P.C.”) is simply a corporation for licensed professionals, like doctors or lawyers. This structure can be appealing to a single dentist because • Financials clear – your income is separate from the practice’s income and profits. • The corporation can provide health insurance to you as its employee and deduct the cost as a business expense. • Caps on self-employment taxes. Because of its corporation status, however, PCs • Require more paperwork. • Require formal annual meetings. • Pay franchise taxes. A Professional Limited Liability Company (PLLC) A group of licensed professionals that want to form an LLC must form a PLLC which ensures that all managers of the entity must be of the same licensed profession. PLLCs are often recommended for dentists opening/starting a new practice: • PLLCs offer the tax and liability advantages of a corporation • They are generally considered to have less of an administrative burden, meaning less paperwork. Drawbacks of a PLLC include: • A dentist’s Medicare and self-employment tax liability is capped based upon the profitability of the practice, not personal income, so the tax burden will likely be higher. Making the S-Election for Dentists? An S-Corp is often referred to as an entity. However, Sub-Chapter S is actually a federal election and doesn’t affect how the state sees your business. It does, however effect the taxation for you and your practice. Electing an S-Corp may be advisable • Because only the income paid to employees is subject to employment taxes. Other distributions made to owners are not considered wages and aren’t taxed as such. • If you’ve selected to form a PLLC. Because of the self-employment tax savings mentioned above, it can be a good match for a PLLC, which has less burdensome administrative requirements making for a ‘best of both worlds’ match.

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 follow as results are tracked and progress towards one's goals are achieved.As this analysis is completed new goals are identified and the process repeats itself in a constant cycle. With each iteration of this cycle, practice efficiency is improved, results are obtained and new goals identified which allow for continuous improvement.In almost every practice we consult with, blindspots are encountered and processes identified that can be improved through face-to-face team training and coaching which OmniStar provides to the doctor and staff. Remember it is never too soon to start “getting your house in order” when considering a practice transition. It is much better to be prepared early, than risk not being prepared when an unexpected opportunity knocks at your door. You want to be prepared to accurately answer the multitude of questions that will be forthcoming from both the acquiring or associate dentist as well as their advisor. (s)This brings up a very important point to remember; you do not always have precise control of the timing of your transition. Opportunities may appear earlier or later than planned or anticipated. Remembering this and being flexible can still enable the transition and transaction to work for the benefit of all parties. OmniStar can use its financial modeling to examine multiple “what if” scenarios to help you decide what path to follow.And finally…With all sales, especially that of practice, the Tax Man Cometh. Structuring the transaction so the tax consequences are minimized for both the buyer and seller is paramount for all!Remember too, throughout this process...> “It’s not the deal, but the people in the deal that makes a difference.”> Dr. David DarabWe are approaching the end of this Podcast now, hopefully, I have been able to shine some light on a few blindspots in your practice and outline an action plan to get you and your practice in top shape and ready for any opportunity that presents.From my perspective your practice is supported by 3 Foundational Systems that must always be monitored, analyzed and optimized to maintain a successful and growing practice:1. Finance- all things relating to and dealing with money; financial statements, accounting, banking, fee schedules, financial policy for patients along with insurance plans and networks.2. Property, Building, and Equipment- all physical assets you can put your hands on; building, location, dental equipment and supplies, computer workstations and servers, technology and imaging systems.3. Business, Software, and Human Capital- all things personnel and patients interact with; practice management software, EMR, insurance billing and collections, web site and patient portal, online reviews, practice systems, policies and Standard Operating Procedures.Keeping all three of these areas optimized is necessary to achieve operational efficiency and the highest level of profitability. Remember, If you need help here, or in any other way with your practice please reach-out to us here at OmniStar.There you have it! I hope that this information has created a few “Ah-Ha” moments, or stimulated some additional questions you can direct to your advisers. Hopefully, you now have a better understanding of the many puzzle pieces that must come together for a successful practice transition. We welcome your questions here at OmniStar Financial. Our Team is highly experienced and will help find answers to your questions. We welcome the chance to help you optimize and grow your practice and your profitability. Our contact information can be found on our website [OmniStarfinancial.com](http://omnistarfinancial.com). You will also find a link there to sign up for our newsletter.Be sure to check our show notes too.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 episodes. 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 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 rarely take time to price shop for dental services and most people don’t want to change. Remember, this takes effort. Instead, most patients make their choice based on dentists who accept their insurance plan, a personal recommendation, or the convenience of location.Best of all, they will stay with their provider if they perceive value and enjoy a comfortable, caring environment.Let’s break this down.  What we find to be most important to patients is comfort, knowledge, experience, environment and relationship.  All of these patient requirements come at a cost.  Suffice it to say, you can’t be the cheapest dentist in town if you expect to provide what the patient wants – a choice must be made here. Our final point - we live in a world of likes.  Dentists are not immune to this craving of acceptance.  Think about it, you work in a profession where it’s not unusual to hear a patient tell the dentist “I hate coming to see you.” Instead of trying to buy approval by ignoring fee adjustments, focus on delivering a superior experience, one that changes the patient’s perception of the dentist.  Think about it, if you can master the art of exceeding their expectations and delivering your expertise in a stress-free environment, why would they leave?  Whatever you do, don’t undervalue your services based on a misconception that patients will somehow like you more – it just ain’t so…The fact is, more emotions are tied up in fee structures than most would like to admit, yet it’s a function of the business process.  At this point, I hope you are at least considering this “business decision” and asking the question, what Should You Charge?Every practice is different so using a standardized fee model should be avoided.  If you need help with determining how best to reach the right set of fees for your practice, our experts can get you in the right direction.  Specific questions must be answered regardless of your location or practice model. Your next question may be What are other offices charging? – in general, we recommend starting with your usual and customary fees in the 80th percentile, adjusted for your market. Now, this is where experience can help you avoid unforced errors.  For example, our team carefully reviews many resources to develop our fee schedules for each practice.  Then, code by code, we assess how your fees compare to similar practices in your market. But we don’t stop there – we compare this to your current fees and provide expert guidance on properly aligning your fees to your goals – personally and professionally. Another factor in determining fees is the amount each procedure costs you? – Materials, staff salaries, time spent; you must understand the margin associated for each procedure. Let’s say there is a lab you prefer to use for crowns, but they charge a premium. You may think they’re worth it and you are likely right, but your fee should reflect that premium expense.What is your time worth? – Dentists are notorious for undervaluing their time. You need to know what your time is worth by the hour. If you’re top in your field in full-mouth restorative dentistry and spend typically 3-4 hours or more with a single patient, what do you have to charge to make a single filling worth your time?And finally, we come back to Insurance – if you are in-network, assessing how this affects your revenue is a critical part of getting adjusting your fees.  Moving your usual and customary fees higher is solid first step in persuading insurance companies to raise reimbursements and without a regular fee evaluation, you are not likely to see the difference between your standard fee and the allowed amount. Watching this difference is the perfect key performance indicator to show how much it costs to be in-network.  Keep in mind, insured patients are not affected with fee adjustments and your uninsured patients, on the other hand, will help close the gap created by negotiated reimbursements with the insurance companies.    If you are thoroughly perplexed and find yourself wondering “should I be in-network or fee for service”, don’t worry.  We frequently asked to perform analysis that provides clear direction in a very unclear environment.  Depending on your practice model and goals, getting in or out of the PPO game is a strategic move that many dentists fail to make. In the end, your fee schedules can have lasting results – good and bad.  You want to land on a fee that accurately reflects costs and profit margin and is consistent with your market.

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 for it.After all the high fives and celebrating over your massive Section 179 year-end deduction that just saved you lots of money on your taxes, you are left with the reality of paying on your banknote for the next 5 years or so.In future years, you have now completely lost the depreciation expense and deduction on your income statement, since you took all of your depreciation in the year of purchase by electing Section 179. Many call this the Section 179 “tax trap” that “catches” you in future years. You are now left with the reality of higher net income, higher personal taxes along with loan repayments for your equipment purchase. This potential “double whammy” repeats during the period of your loan repayments.This is a huge blind spot and potential pitfall when Section 179 is elected.Follow me here…You load up on equipment, pay with debt and expense it all through Section 179. You are happy to owe so little in taxes, the equipment rep is happy, and your CPA looks like a genius.But…, and there is always a “but”…In future years you now have less cash because you are now paying on your debt service, and without any deductions, remember you elected Section179, you now have a higher taxable income and the corresponding tax bill that further reduces your cash!Rule 7: If you fail to plan, you plan to fail.With all the year-end excitement and frenzy is sounds like a great idea to be able to write everything off, but doing so may not result in all the tax savings claimed. In deciding whether to elect Section 179 or Bonus Depreciation, doctors need to think about what future earnings are expected. One might want to save some deductions to offset future income when earnings and taxes could be higher.As with any tax decision, you cannot look at the current year with blinders on. Before making a decision to take the Section179 deduction, it’s important that you and your accountant discuss not only this year’s tax implications but also the impact it will have on future years as well. Ask your accountant if the refund I get this year is at the expense of next year. Don’t fall for the Section 179 Tax Trap! You have just been warned.Rule 8: Never buy a tax deductionYour goal to pay as much tax as you can! Yes, let me repeat that paying taxes is ok, in fact paying more taxes is even better. Paying more taxes means you must have more income as well. We here at OmniStar believe that maximizing and growing your income is the key to growing your wealth and becoming financially independent. Minimizing taxes is not a strategy that will grow your wealth or help you become financially independent.Spending your cash to buy a tax deduction never creates wealth. Your deduction reduces your taxable income by the amount of your expense. This is identical to buying something on sale. If your marginal tax rate is 35%, then you get everything the practice buys at 35% off. The kicker is, any many forget, you still have to pay for the 65%. Said another way, would you spend $1000 to save $350? Understand that simple question along with the answer and you are well on your way to creating wealth.So, time to sum things up here.We have learned that Section 179 has no special powers or magic, it simply allows you to fully depreciate your capital equipment in the year of purchase. As with all Internal Revenue Tax Code, there are rules, limitations, and restrictions that apply. Listeners are urged to consult a qualified Tax Professional for guidance here. Your sales rep is not equipped to provide you such guidance. Planning for future years is critical so the timing of your depreciation expense aligns with your future income growth. Such planning can help you avoid the Section 179 tax trap where Fantom Income, and its associated tax bill, is created when your depreciation expense was used up in the prior year by electing Section 179. This is a double whammy with higher taxes along with debt service on your equipment loans, creating negative cash flow.Also, avoid the year-end rush and frenzy, budget and buy your capital equipment and start using it anytime during the year; Section 179 is available to you year-round.Remember, Section 179 only accelerates depreciation, it does not allow any additional write-offs, deductions or depreciation.And finally, never buy a tax deduction. If you need the equipment to better your patient care, then, by all means, purchase it, but buying it solely for its tax deduction is a wealth destroying strategy.We hope that this information has created a few “Ah-Ha” moments, or stimulated some additional questions you can direct to your advisers. Hopefully, you now have a better understanding of what Section 179 is, and more importantly, what it is not!We welcome your questions here at OmniStar Financial. Our Team is experienced and will help find answers to your questions regarding Capital Equipment Budgeting. We welcome the chance to help you grow your practice and improve your profitability. Our contact information can be found on our website [OmniStarfinancial.com]. You will also find a link there to sign up for our newsletter.Be sure to check our show notes too.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 episodes. 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.And now for the required Legal Disclaimer:David Darab, DDS, MS, MBA REFERENCES:Section 179 Information for Businesses | Section179.Orghttps://www.section179.org 2019 Section 179 Tax Deduction Calculator | Section179.Orghttps://www.section179.org/section_179_calculator/   

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 your website, a downloadable flyer and a sign-up form. Your content/marketing manager or your web developer will need to help create the ads along with the flyer and sign-up form, adding the necessary tracking codes and tags too. The ads can contain a variety of call-to-action buttons; sign-up, subscribe, learn more, or download.After all that is done, it’s time to sit back and analyze the results with Google analytics. Which call-to-action created the most conversions, or completion of the requested Action? How many leads were captured or brochures downloaded by the website? How many views of the new web pages were there? How much time did visitors spend on your site? With this data in hand, you can consider increasing the budget for those tactics that converted and adjusting those that fell short.And now, a bonus strategy; Remarketing. Remarketing shows ads only to individuals who have previously visited one of your digital assets. Remarketing allows you to design a digital strategy where your message is always in front of your most interested viewers when they browse other websites or use their favorite social media sites (Facebook, Instagram, Twitter). The beauty here is that it requires no effort on the part of your viewers, website cookies provide the horsepower. In a time when everyone is busy and easily distracted, Remarketing is a great way to keep your message front of your viewers.To wrap this up let’s start with a quote from George S. Patton:> “If everyone is thinking the same, then someone isn’t thinking!”> George S. PattonSocial Media is just that; about being Social. If you desire to make it into “Revenue” Media, then you will need to add some new strategies and tactics to the mix. The possibilities and options here are too numerous to count. Social Media is a busy and chaotic space, and everyone wants your attention. To cut through all the noise and find those want to hear your message, you must have laser focus on your audience. It all starts by answering two questions:1. Who’s it for?2. What’s it for?Seems simple, but it’s not, or everyone would be doing it. Creating Value in all that you do is critical. It’s an exchange. You provide something your customer values, and in return, they will give you the Action you desire. Time and effort are necessary to achieve the results you want. Social Media Marketing is not a “set it and forget it” strategy. Finally, in all things business, understand your ROI; what did you receive in exchange for your investment? Done well, you can convert your viewer’s “clicks” into new patients in your chair.Go ahead and give it a try!Remember to always analyze your results and change your tactics if needed. That’s the beauty of Marketing Online.We hope that this information has created a few “Ah Ha” moments, or stimulated some additional questions you can direct to your advisers. Hopefully, you feel less intimidated with Social Media Advertising and Marketing Online.We welcome your inquiry here too at OmniStar Financial. Our Team here is experienced with implementing these Strategies and Tactics in Dental Practices. We welcome the chance to help you grow your practice. Our contact information can be found at our website https://www.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 episodes. 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.David Darab, DDS, MS, MBA Google Analyticshttps://support.google.com/analytics/answer/1008015?hl=en This is Marketing, Seth Godinhttps://www.amazon.com/dp/0525540830?aaxitk=KK65HxpGLWkeP1MBXWVHxQ&pd_rd_i=0525540830&pf_rd_p=44fc3e0f-4b9e-4ed8-b33b-363a7257163d&hsa_cr_id=6679663100601&sb-ci-n=asinImage&sb-ci-v=https%3A%2F%2Fimages-na.ssl-images-amazon.com%2Fimages%2FI%2F51UYILvuvtL.jpg&sb-ci-a=0525540830

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 revenue? greater efficiency? greater productivity? * Will that Cone Beam CT scanner generate more revenue? These are questions a financially knowledgable business owner would have the answers too, or at least consider prior to making a significant capital investment! Consider this the next time you are preparing to make a capital purchase. Please note, Tax Savings are not considered here! One can also calculate TOTAL ASSET TURNOVER Total Asset Turnover = Revenue / Total Assets Here again we want a high Total Asset Turnover Ratio. We can achieve this through a combination of the following: * efficiently using fixed assets * reducing inventory (inventory days and inventory turns) * reducing receivables (DSO) * increasing sales (through volume or pricing) That list is critical and worth repeating. The astute financial manager would concentrate efforts on using fixed assets efficiently, reducing inventory and reducing receivables as well as increasing sales. WHAT RATIOS ARE MOST IMPORTANT TO YOU! Built into your income statement are ratios for each line item by percent of revenue as well as dollars. These percent of revenue are easier to track over time to establish trend lines. This internal standard is the best way to monitor your progress and management of expenses. Making sense of your expenses begins with accurate accounting which requires an organized chart of accounts. This does not always exist, as many dental offices just use the standard chart of accounts that comes with quickbooks. One of the very first tasks we at OmniStar do when consulting with an office is to better organize and categorize the chart of accounts so financial reports will be easier to understand , more meaningful and more insightful to you, the user. One final Ratio to Consider is Return on Assets, which can be broken down into two ratios we have already examined: * Net Profit Margin and Asset Turnover. (Net Income/Revenue) X (Revenue/Assets) = Net Income/ Assets = ROA Simply stated ROA equals Net Profit Margin X Asset Turnover! This is Key Point because it contains the secret formula to driving greater Return on Assets, a Pivotal Business Metric. One can increase your ROA with 2 tactics: Increase Net Profit Margin by: Raising fees or Delivering services more efficiently, and/or Increasing asset turnover by: reducing average inventory (inventory days and inventory turns) reducing receivables (DSO) reducing the purchase of additional assets Market forces and competition may prevent you from improving Net Profit Margin. Working on your Balance Sheet Levers of Inventory, Receivables, and Assets could be your best move to improving your financial results. SUMMARY In summary we have examined some basic metrics used to analyze your Financial Statements. These metrics are almost all ratios which allow comparisons and benchmarking to other businesses and practices as well as establishing trends within your own practice. Time spent in the Analysis of your financial reports should answers the questions; 1. can we pay our bills 2. are we making money 3. how can we improve performance. One should note that there is NO metric for OVERHEAD, a KPI (Key Performance Indicator) that dentists like to track, compare and brag about with their colleagues. OVERHEAD is an imprecise term, whose definition changes depending on who is doing the analysis. Questions like, are doctors salaries included? what about doctor perks? CE? Automobiles? Retirement Plan Contributions for Staff? and Doctors? This is a perfect example of how financial metrics can be distorted. Eliminating many of these may give the false impression that your overhead is low, which may not, in fact be true. Operating Margin may be the best estimate of overhead, as it includes Indirect Costs as well as General, Office and Administrative Expenses. Also note that TAXES are not emphasized in this analysis. Taxes are not a key lever for improved business performance. Most dental practices are pass through entities, whereby the partners or owners pay all the taxes, not the business. Tracking and analyzing this financial data requires some work, time and effort. This is the work a business owner must commit to in order to achieve a successful and growing practice. If you are not interested, or do not have the time or knowledge to monitor these critical financial metrics, then by all means please enlist the help of a consultant or accountant who can and will. Remember, what Warren Buffett said: “The more you learn, the more you earn!” Please do not just ignore these reports, because poor financial and cash management will always become apparent at some point in time. We would call this a BLINDSPOT. The Fact that Financial Reports are not understood by many doesn’t make it any less of a problem for them or their practice. I will share how I review my financial reports next…. Be reassured that after just a few months experience this process can proceed rather quickly. Any large changes noticed may require a deeper dive by me or with the help of our accountant. First, I Check the date on the reports. They are typically a month or two behind due to the time it takes the accountant and book keeper to reconcile our statements. Next, I will check our bank account balance, I know this is current. I then start with the Statement of Cash Flows. What is my Operating Cash flow? Investing Cash flow? and Financing Cash Flow? How does this month and YTD Compare? Does the Ending Cash approximate my Bank Balance? Next I look at the Income Statement I examine Total Income percentages and compare the current month to last year, and the current YTD with the last YTD. I then look at each line item focusing on supply costs, employee wages, and other operating expenses. I note any significant percent changes, up or down, and then try to explain them. If I can’t I will call my accountant for a deeper dive. I expect some fluctuations with time, which are normal and could be due to a large order or a large infrequent expense. I then look at Gross Margin and Operating Margin comparing the current month to last year, and current YTD with last YTD. Finally I hit the Balance Sheet and again compare the current YTD with the last YTD. You can begin to see a pattern here; tracking and comparing current financials with last years financials. With this technique you begin to establish your own internal standards. This is an excellent way to monitor your practice financials and make any necessary adjustments to improve your financial performance. I am especially interested in the Equity Section of the Balance Sheet, as this is where all of our YTD profit accumulates! My partner and I take a modest salary draw monthly, and then as Equity Accumulates we will distribute some of the Profits as a bonus to ourselves throughout the year. I like to keep at least 2 months of payroll in the bank as cash. I sleep much better at night knowing our cash reserves are good. and Finally, we are done for now! Until next month! So that wraps things up for this Podcast.  Hopefully you have a better understanding of some basic Financial Statement Analysis and Metrics. You don’t have to know how to build a car in order to drive it, but you do need to know how to operate it, read the dashboard, adjust the knobs and dials, watch for the indicator lights, and keep the car on the road and out of the ditch. The same is true for the Financial Reports of your practice, one of your most valuable, cash generating and wealth creating assets. Don’t ignore what’s it’s telling you! Your practice talks to you in numbers, those numbers are on your financial reports. 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.  Hopefully, you feel less intimidated with Financial Reports now so that you can spend time familiarizing yourself with this information. You can always replay our Podcasts for review. Check our show notes for some excellent references. We welcome your inquiry here too at OmniStar Financial.  We are experts in Dental Practice Financial Analysis and Insight. 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. David Darab, DDS, MS, MBA REFERENCES: Financial Intelligence by Karen Berman and Joe Knight Stark Naked Numbers by Jason Andrew

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

THE 3 PROFITS of the INCOME STATEMENT…do you know them? Yes, understanding Financial Statements is an essential business skill. In this Podcast we continue our deconstruction, decoding and deciphering of the key financial statements. Last episode we dug into the Balance Sheet. I hope you found that episode insightful. If you haven’t heard it yet no worries, check it out when we finish here! This Episode is about the INCOME STATEMENT. The Income Statement goes by many other names and aliases, Profit and Loss Statement, the P&L, Revenue Statement, Statement of Financial Performance, Earnings Statement or Statement of Earnings, Operating Statement, or Statement of Operations…geeezzzz, enough already, if one name wasn’t hard enough to remember. I’ll stick with calling it an Income Statement, but my lenders and banker’s always ask me for our P&L. Of all the financial statements this is the one you are probably most aware of and check because is contains one number everyone wants to know…. THE BOTTOM LINE or NET PROFIT. This number is the easiest to locate, because it’s at the bottom line of the Income Statement. You probably dash there when the reports arrive, eager to see how the practice did. Hopefully you don’t find a number bracketed by parentheses signifying a loss. What’s up with that? That doesn’t make any sense, how can one have negative money? You know there is money in the bank account because you just checked! You say to yourself I never understood those dagnabnett accounting reports and financial statements any way and carry on with business as usual. If there is a BOTTOM LINE, there must be a TOP LINE…correct you are! And a MIDDLE too! So let’s starting deconstructing the INCOME STATEMENT! An Income Statement contains three sections: TOP LINE: shows you your total REVENUE or SALES SIDE BAR here, when business folks talk of TOP LINE GROW, that’s secret code for sales growth, plain and simple. MIDDLE SECTION: reveals your COSTS and EXPENSES broken down by category. BOTTOM LINE: shows your NET PROFIT or LOSS; which is REVENUE - EXPENSES. It’s that simple, and as we learned in the Balance Sheet Podcast, it’s the NET PROFIT that connects the INCOME STATEMENT to the BALANCE SHEET since it is added to the RETAINED EARNINGS section of the BALANCE SHEET. An income statement is much like a report card. It is always calculated over a given time period, typically one month. Understanding this, we can better see that the income statement affects the balance sheet much like how an individual grade affects your GPA. The RETAINED EARNINGS section of the balance sheet accumulates all of the profits or losses in the business. This is a critically important point to highlight and understand for it is how the BALANCE SHEET and INCOME STATEMENT are connected. So, back to the most important feature of the INCOME Statement, the calculation of PROFIT! Your MISSION, should you choose to accept it, is to Learn what all the line items on the income statement are, and how to manage them. With this knowledge you will know how to improve and contribute to the profitability of your firm. The income statement measures how profitable your products or services are when everything is added up! Remember, the bottom line Profit number is always an estimate, since estimates and assumptions sneak into some of the line items of the income statement. Just as important is the fact that PROFITS are NOT CASH! You can’t spend PROFIT, you can only spend CASH. We will look in greater detail at CASH in the next podcast on the STATEMENT of CASH FLOWS. Overtime, in a well run and managed firm, PROFITS will turn into CASH! Let’s deconstruct our INCOME STATEMENT a little further. We will start at the top line of the income statement - REVENUE or SALES. A critical element here is when is REVENUE RECOGNIZED or RECORDED. For listeners that are using a Modified Cash Basis Accounting System, then this is easy…your REVENUE is the total Payment from all sources, typically patients and insurance and is RECOGNIZED only when payments are received! For other firms and publicly traded companies that are required to follow GAAP accounting rules, REVENUE RECOGNITION can be more challenging. Let’s keep it simple for our purposes and say that a company can record a sale, or recognize revenue, only when it delivers a product or service to a customer. This is an area where accountants have great discretion and latitude, and where estimates and distortions can sneak in. For Revenue to be recognized it must have been EARNED, either a product shipped, or service work performed. The next section of the INCOME STATEMENT, the Middle Section details all your COSTS and EXPENSES. EXPENSES are divided into 2 distinct categories: Cost of Good Sold (COGS), or Cost of Services (COS) and Operating Expenses, also referred to as Sales, General, and Administrative Expenses (S,G&A), or just G & A for General and Administrative. The COGS or COS includes all the costs directly involved in producing a product or delivering a service. Typically this includes the wages of employees making a product or delivering a service and the materials or supplies used. This distinction between COGS/COS and OPERATION EXPENSES also serves as a dividing line on the income statement. You may hear executives and managers talking about ABOVE THE LINE and BELOW THE LINE. Well, this is where the line is! ABOVE THE LINE there are only 2 items, REVENUE and COGS or COS this is the GROSS MARGIN you hear “Mr. Wonderful” asking about on Shark Tank, or Marcus Lemonis preaching about on The Profit. BELOW THE LINE, we will learn next, are OPERATING EXPENSES, INTEREST, and TAXES. Why is this distinction important? Well, the items ABOVE THE LINE tend to vary more in the short term so attract more attention from managers. So, if an EXPENSE is NOT a COGS or COS then it is an OPERATING EXPENSE and appears BELOW THE LINE. These OPERATING EXPENSES are NOT directly related to making a product or delivering a service. OPERATING EXPENSES are often referred to as OVERHEAD and includes such items as rent, utilities, telephone, internet, advertising, marketing, IT, etc. Buried in OPERATING EXPENSES is DEPRECIATION and AMORTIZATION. This is an area of great confusion so let’s take a closer look at this. The first point to remember is that DEPRECIATION is treated like an EXPENSE, so can dramatically affect the PROFIT on an INCOME STATEMENT. Plain and simple, DEPRECIATION is the “expensing” of a physical asset over its useful life. AMORTIZATION is the same as DEPRECIATION but applies to INTANGIBLE ASSETS like GOODWILL. There is considerable latitude and methods for how one can depreciate ASSETS, consultation with your ACCOUNTANT is critical here. Remember too that even for the same firm, DEPRECIATION can be calculated differently for TAX accounting vs. GAAP accounting. I won’t bore you with the details here, just appreciate that DEPRECIATION can be calculated in many different ways! DEPRECIATION is the best example of what we call a NON-CASH Expense! So, what’s up with that? This is one of the most confusing and misunderstood areas of your financial statements, but critical for you to understand. The key to unlocking this confusing concept is to remember that the CASH for the asset has already been paid out! The vehicle or piece of CAPITAL EQUIPMENT was paid for at the time it was acquired, but the total expense was not recorded in that month. Instead, the expense is divided, or allocated, over its useful life….a little at a time, month by month! That’s DEPRECIATION. Again, it is important to understand there are many ways to calculate the depreciation expense. The method chosen can have a profound impact on your PROFITS reported on the INCOME STATEMENT. KEY POINT HERE! Good financial managers will match the use of an asset, or its depreciation, with the revenue it is bringing in. If the depreciation exceeds its revenue then this asset is creating a loss, if revenue exceeds its depreciation , the asset is returning a profit, a goal we should be striving for. Next, let’s look at the 3 profits; Gross Profit, Operating Profit and Net Profit. GROSS PROFIT is REVENUE minus COGS or COS , and is a key number. It tells us about the profitability of your product or service. If profitability is not achieved here it is unlikely that your business will survive long. GROSS PROFIT must be enough to cover OPERATING EXPENSES, TAXES, FINANCING and of course NET PROFIT. So what is a healthy Gross Profit? How much is enough? This will vary considerably by industry and from one company to another even in the same industry. Having metrics and reports that allow you to follow year-to-year trends will help you identify whether your profit is heading up or headed down. If Gross Profit is decreasing one needs to ask why. Are your COGS or COS rising? Is Revenue decreasing due to lower fees, discounts, or lower insurance fee schedules? Understanding why helps managers determine where to focus their attention. OPERATING PROFIT is GROSS PROFIT minus OPERATING EXPENSES, including DEPRECIATION and AMORTIZATION. This is also know by the odd acronym EBIT (pronounced EE-Bit). This stands for EARNINGS before INTEREST and TAXES. Why are interest and taxes not included you may ask? OPERATING PROFIT is the PROFIT a firm makes from running the business. Taxes don’t contribute to how well you run your business. And interest expense depends on how the firm is financed, i.e., with debt or equity which is termed its CAPITAL STRUCTURE. EBIT is a closely watched metric since it is a good gauze of how well a firm is being managed. Another metric is EBITDA (EE-bid-dah), which is Earning before interest, Taxes, Depreciation and amortization. This is thought to be a better measure of a firm’s operating efficiency since it ignores NON-CASH Charges like depreciation and amortization altogether. We have just reviewed the bias and distortions that can be introduced calculating depreciation, so with EBITDA it is ignored. Finally we have arrived at the BOTTOM LINE, or NET PROFIT, which is what’s left over after everything is subtracted, COGS/COS, operating expense, non-cash expenses, interest, and taxes. This is the same number used to calculate EPS, earnings per share, and the PRICE/EARNINGS ratio used on WALL STREET. Finally, if the INCOME STATEMENT calculates our PROFIT, then it is logical to ask how can we MAXIMIZE OUR PROFIT? That’s a great question. My friend, Jason Andrews in his new book, STARK NAKED NUMBERS, provides us a great and quick analysis of this topic. Quick side bar here, Jason is a Chartered Accountant, who like me, is passionate about business owners extracting value from their financial statement data. You can find his book on Amazon and I will include a link in the show notes for you. I receive no royalties from this endorsement. Please check out his fresh perspective on accounting and finance. Jason identifies several financial levers which one can use to increase profitability; the SALES LEVER; either increase sales volume or increase price, and the COST LEVER; reduce DIRECT and/or INDIRECT COSTS. It is surprising the impact on profitability a 10% change in these levers has on NET PROFIT…listed from greatest impact to least impact and the % change are; Sales Lever, Increase price 10% increases net profit 53%. Direct Cost, decrease 10% increase net profit 37%. Operating Cost, decrease 10% increase net profit 26%. Sales Lever, Increase Sales 10% only increases net profit 16%. So the fastest and easiest way to increase your BOTTOM LINE is to INCREASE YOUR PRICES/FEES. Creating more business, or increasing sales, has the least effect. Let’s wrap this PodCast up with some useful take away points. Only When REVENUE from Services exceeds EXPENSES can profit be achieved. Buying gadgets, gizmos, latest and greatest equipment, a new office, the list can go on and on are all irrelevant, EXCEPT if the gadgets, gizmos, latest and greatest equipment and new office creates GREATER REVENUE, or LOWER EXPENSES. This is also called VALUE CREATION when the PRICE a customer is willing to pay is greater than the COST to make the product or deliver the service. VALUE, like PROFIT, can only be achieved when products are sold and services delivered. The #1 GOAL of any BUSINESS is to CONTINUOUSLY CREATE VALUE for their CUSTOMERS! The hardest part is the CONTINUOUS and CONSTANT need to always be CREATING VALUE! ACCELERATING DEPRECIATION, as in SECTION 179 depreciation we are all familiar with, creates a LARGE DEPRECIATION EXPENSE that reduces your PROFITS, NET INCOME and RETAINED EARNINGS. This is a TAX STRATEGY plain and simple and points out the difference between TAX ACCOUNTING and MANAGERIAL ACCOUNTING. Planning for this DEPRECIATION should be done every time capital equipment is acquired, NOT AT THE VERY END OF THE YEAR at the encouragement of highly motivated SALES PERSONAL. OVERHEAD PERCENTAGE is a metric that dentists can not stop talking about and comparing! As you see from the above discussion, there is no OVERHEAD LINE ITEM on an INCOME STATEMENT. OPERATION EXPENSES come close but what items do you include or exclude? There are as many variations in calculations as there are people calculating it. For me it is a non-precise metric that can be distorted. A better metric to monitor and tract overtime is GROSS PROFIT and OPERATING EXPENSES as a PERCENT OF GROSS PROFIT. Whatever metric for overhead you choose, it becomes more powerful when tracked and compared overtime. PROFITS are not CASH. A profitable firm can run out of cash and a cash rich firm can non-profitable. So that wraps things up for this Podcast.  Hopefully you have a better understanding of the mechanics of the INCOME STATEMENT. 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

“If you don’t know your numbers you don’t know your business !!” Marcus Lemonis, from the popular TV series The Profit. Welcome, you’re here at The Beacon, so glad you found us! Prepare to have your Blind Spots Illuminated! Hello and welcome to our series on “Cracking the Code”, or alternatively, “Deciphering Your Practice’s Financial Statements”. We will spend the next 3 Podcasts reviewing, deconstructing and dissecting the 3 financial statements you should be reviewing at least monthly; the balance sheet, the income statement (P&L) and the statement of cash flows. If you are like most doctors, financial statements are that “Stack of Stuff” your accountant sends you every month, but you tend to ignore! You may take a peek at a few areas you understand, Income, revenue, expenses, and of course profit, it all looks ok so not wanting to throw it out you add it to the constantly growing stack of stuff you know is important and will get to one day, but that one day never seems to come!! You secretly may be intimidated by these reports, but are too busy, proud or embarrassed to ask for help understanding them. I believe this is why so many dentists simply delegate this task to their accountant/CPA. That’s a dangerous handoff. You, as the business owner, should have a basic understanding of these reports, expert knowledge is not required. Just enough knowledge so you can speak the language of business and ask questions to your accountant, CPA or financial advisors regarding what’s in these reports. In this manner, you and your team together can improve your business and financial results. No matter where you work in your organization, you’ll do your job better if you understand basic financial concepts. You’ll be a more effective contributor to your company’s efforts to make money and grow the business. You, as the doctor, are in the very best position to understand what resources and assets must be acquired to deliver exceptional care. Ensuring an excellent financial return on those assets just makes good business sense. If you are not receiving an above market return on your business investments then it is a better idea to take that cash out as a salary and invest it differently. I have a promise for you before we start… I PROMISE, I will never mention debits and/or credits, no general ledger or trial balances. Those terms may conjure up fear and dread from your undergrad accounting class! The math is here is easy too; addition, subtraction and if we get fancy we might use division to calculate a ratio. But Why again is this important? “Accounting, accounting, accounting. Know your numbers.” -Tilman J. Fertitta, CEO of Landry’s Inc. and host of The Billion Dollar Buyer. Warren Buffett says, “Accounting is the language of Business.” If you can’t speak the language how do you know how your business is doing? It appears that “knowing your numbers” is a recurring theme! Consider the following questions… Do you know the difference between profit and cash? Do you have enough cash to make payroll? How profitable are the services you provide? I will address all of these. In addition, I’ll help you… Make sense of the three key financial statements. Gauge your company’s financial health. Weigh costs and benefits before committing resources. Understand why the Profit shown on your P&L never equals the cash in your bank account? The Secret Stash is that cash is hiding in your Balance Sheet. You won’t become an expert, but you will have a better understanding of the language and financial reporting framework. Remember, your banker and lending institutions are very interested in these financial reports along with the financial strength of your practice. If they are interested, you should be too! Consider this also important if you are preparing for a practice transition; adding an associate or selling your practice. Strengthening your financial position can result in the best valuation for your practice, and who doesn’t want that!! The fact is that Finance and Accounting, like other business disciplines, are as much of an art as they are a science. There are many estimates and assumptions contained within your financial statements. Accounting and finance are not reality, they are a reflection of reality. One does not always know how precisely to allocate costs, nor does one know exactly how long a piece of equipment will last, hence how rapidly to depreciate it. Is a Cost considered a Capital Expenditure, or an operating expense? This choice has an immediate effect on the bottom line and your profitability. Before we dive in a little background is important You should appreciate how these reports are generated by your accountant. Every financial transaction in your practice, ie; purchase invoice, canceled check and bank statement is analyzed, categorized and entered into your ledger. In most practices, the common point of data entry is your PMS along with Quickbooks. Inside of Quickbooks are numerous categories termed a “Chart of Accounts”. It is from your chart of accounts that your financial reports will be generated. It is critical that your Chart of Accounts are properly organized and categorized! The default mode in Quickbooks is rarely adequate. The old saying..Garbage in Garbage out, holds very true here! In most practices, our very first step is to reorganize and recategorize the Chart of Accounts so we can get the financial data we are looking for. Without this, your financial statements will be utterly useless to you other than for tax purposes. Please call us here at OmniStar if you have questions about this. It is important to recognize your accountant’s perspective and responsibilities when financial statements are prepared. The financial crisis combined with the Enron and WorldCom accounting scandals ushered in a new era of rules to ensure the accuracy of financial reports, these standards are called GAAP, for Generally Accepted Accounting Principles. GAAP was designed to stop billion-dollar corporations from deceiving and defrauding investors and shareholders. Prior to GAAP, “Creative accounting” and “cooking the books” was not uncommon. The fall of Enron, WorldCom resulted from “cooked books” and caused the complete and immediate demise of one of the worlds largest accounting firms, Author Anderson, who was the auditor of these firms. GAAP sets the accounting standards and rules for reporting financial results, very similar to our standard of care in clinical practice. GAAP has 2 benefits; GAAP ensures consistency over time. GAAP enables comparison between practices and firms. GAAP has rules your accountants must follow, some of these rules are: -assets are priced at their historical cost, ie what you paid for it, not what it MAYBE worth today. -Conservatism, accountants will only record a number they know is accurate, accountants do not estimate nor guess at costs nor values. -Consistency. once a company has established an accounting method it must continue with that each year. Publicly traded firms along with larger organizations are required to have their Financial Statements Audited by an independent accountant called an auditor. For our practices, that degree of scrutiny is not required. Our accountants prepare a “Compilation of Financial Statements," the report clearly states the statements were not audited if you read the cover letter carefully. You should also be aware of what accounting system your practice is using to assemble your financial reports. The two different accounting systems are; Accrual and Cash. Accrual Accounting is required by GAAP thus required in publicly traded firms as well as larger firms and practices with more complex economic transactions. The object of accrual-basis accounting is to match revenue and expenses in the period that they are earned and incurred. The cash flow from these transactions occurs at a different time. This system provides more accuracy when reporting the financial position and performance of a firm. In the Cash Basis of Accounting revenues and expenses are recognized only when “cash” is received by or paid out by the practice. Most small to medium practices, like the ones listening here, are well served with a Modified Cash-Basis Accounting system. In this system, the only non-cash economic events recorded on the books is the purchase of equipment and the depreciation expense of that equipment. Patient receivables would not be reported on the financial statements, since they are not cash, but would be recorded internally for collection purposes within your PMS. A Modified Cash-Basis Accounting systems provide the necessary information to comply with the IRS and file taxes. In addition, bankers and lenders will accept these reports for loan applications. Remember we talked about Accounting having estimates and approximations. Some of these biggest distortions can occur on the balance sheet. So let’s dig in. A balance sheet, also called a “statement of financial position”, represents a Scorecard of the financial health of your business at a single point in time. The BALANCE SHEET starts with the FUNDAMENTAL ACCOUNTING EQUATION; ASSETS = LIABILITIES + OWNER’S EQUITY OR WHAT YOU OWN = WHAT YOU OWE + OWNER’S EQUITY Consider the BALANCE SHEET like a sheet of paper divided in the middle. On the left side are Assets and on the right side are Liabilities at the top and Owner’s Equity at the bottom. The summation of the left side (Assets) must equal the summation of the right side (Liabilities + Owner’s Equity). Thus, the Balance Sheet Balances. Lets start with Assets ASSETS are WHAT YOU OWN; cash, receivables, inventory, prepaid expenses, Property, Plant and Equipment, Land, and Goodwill. ASSETS are considered CURRENT or NON-CURRENT - These are listed in decreasing order of liquidity with the most liquid “cash like” assets at the top and the least liquid like land and Goodwill at the bottom. CURRENT ASSETS are those that will be utilized within a year. cash Accounts receivables remember, in a Modified Cash Basis of Accounting Receivables are not cash, so not reported on the Balance Sheet. The PMS will have these amounts and aging. prepaid expenses inventory SIDE NOTE HERE: all of your inventory costs money and is created at the expense of CASH. One quick Pearl is to decrease your inventory to increase your CASH! When you look in your supply area, instead of seeing box and boxes of stuff, imaging dollar bills…it’s the same thing!!! Would you rather have your dollars, or would you prefer to give them to your suppliers? The buy 10 and get one free is a tactic used by suppliers to get you to buy more, which uses your cash. I propose you have much better uses for your cash then it sitting on your shelves! The worlds largest firms use “just in time” inventory control, so should you! NON-CURRENT or LONG TERM ASSETS are those that will NOT be turned into cash within the next year. Property, Plant and Equipment is listed at historical COST, NOT MARKET VALUE Less ACCUMULATE DEPRECIATION This is one section where the Art of Finance appears. For example- Increase the depreciation of an asset from 3 to 6 years results in a 50% smaller charge on the Income Statement, Less Accumulated Depreciation on the Balance Sheet, a higher figure for PPE, and thus more Assets. By the Fundamental Equation of Accounting, more assets translate into more Retained Earnings! ANOTHER ACCOUNTING RULE: * DEPRECIATION IS ALWAYS A NON-CASH EXPENSE! Goodwill Now to the Top Right side of the Balance Sheet, LIABILITIES LIABILITIES are WHAT YOU OWE; accounts payable, accrued expenses, payroll, bank loans, notes and lines of credit. These are also considered CURRENT, or NON-CURRENT CURRENT: those payable within the next year accounts payable - what you owe your vendors. current portion of LT debt accrued expenses- payroll and taxes - your employees don’t send you an invoice, they just expect to be paid, as does Uncle Sam with taxes. deferred revenue NON-CURRENT or LONG TERM Assets are those due in over a year. loans, debt, lines of credit And finally, the bottom right side of the Balance Sheet, OWNER’s EQUITY OWNER’s EQUITY: STOCK- monies contributed by investors or owners. RETAINED EARNINGS or ACCUMULATED EARNINGS are the accumulation of PROFIT or LOSSES left in the business. for our world of dental practices this is where bonuses and dividends accumulate. the practice entity would not retain these profits but rather pass them onto the owners as either salary or dividends depending on the legal structure of the practice thus avoiding double taxation at both the corporate and personal levels. SIDE NOTE HERE: Consider profitability like your “Grade” in a course, you work hard in a class over a time period, a semester, and at the end of the semester you get a grade. Equity is more like your “GPA”, it reflects your cumulative performance, but only at one point in time. So, that’s the Anatomy of a Balance Sheet dissected section by section. How does it work?? Why is it important?? Well as the name implies: THE BALANCE SHEET MUST BALANCE FIRST…..A BALANCE SHEET RULE: AT LEAST 2 THINGS MUST CHANGE ON A BALANCE SHEET…This is called Double Entry Accounting! Let’s try some transactions and see how this works and how easy it is! By doing these exercises you will begin to think and talk the language of business and finance and understand the “double edge” sword to each and every financial transaction! Our goal in any business is to GROW your EQUITY or RETAINED EARNINGS We purchase a new Digital Pano at $30,000 with bank financing. So, we add an asset on the left side of +$30,000, so something must change on the right side, either a liability or Owner’s Equity. In this case, we add +30,000 of liability, the bank loan, and the Balance Sheet Balances. Say we paid $5000 of cash and financed $25,000. The asset still goes up to $30,000, asset cash goes down $5000 and the liability is now only $25,000 Tada…the balance sheet balances yet again. You all Getting it??!! Let’s Buy $4000 supplies with cash. An asset, Supplies goes up by $4000 and another asset, Cash goes down by $4000…the Balance Sheet Balances. No change in Liability or Equity How about Buy $4000 supplies with credit. An asset, supplies, goes up by $4000 and a liability, accounts payable, goes up by $4000…the Balance Sheet Balances. You will learn when we review the Income Statement, or P&L, that your profitability or “Bottom Line” is connected to the Balance sheet through the Owner’s Equity Section. All profitability increases owners equity. That’s really important so let’s say it again… ALL PROFITABILITY INCREASES the OWNERS EQUITY portion of the balance sheet!!! This concept is critical and links your Income Statement / P&L to your Balance Sheet! So as we just learned 2 things, at least, must change on a balance sheet if Owner’s Equity Increases. Either an asset increases or a liability decreases, or a combination of those. Herein lies the answer to the nagging issue of why my practice is profitable but lacks cash! Look closely at all of your asset categories, your cash may have disappeared there; buying supplies, equipment or technology, or paying down liabilities, bank loans, and debt. This works in reverse too…accelerate the depreciation of your equipment (ie section 179) which reduces the VALUE of that ASSET, and correspondingly reduces your Owners Equity side of the balance sheet too. Finally, the “profit” you have achieved is equity and not cash, remember that…Profit does not equal cash! We will talk about that when we dissect the Income Statement. SUMMARY: reviewed basic accounting principles GAAP Accrual vs Cash Basis of Accounting Fundamental Accounting Equation, ASSETS = LIABILITIES + OWNER’s EQUITY 2 Things on the Balance Sheet must change with every transaction Income Statement and Balance Sheet are connected through the OWNERs EQUITY Portion. So that wraps things up for this Podcast.  Hopefully, you have a better understanding of the mechanics of the balance sheet. We hope that this information has created a few “Ah Ha” moments, or stimulated some additional questions you can direct to your advisers.  We welcome your inquiry here too at OmniStar Financial.  Our contact information can be found on 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 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. REFERENCES: https://www.amazon.com/Financial-Intelligence-Revised-Managers-Knowing/dp/1422144119/ref=sr_1_4?keywords=financial+statements&qid=1553527149&s=gateway&sr=8-4 https://www.amazon.com/gp/product/0648424006/ref=ppx_yo_dt_b_asin_title_o03_s00?ie=UTF8&psc=1

Today there is a new Strategy framework that is growing in popularity called Blue Ocean Strategy. I wish to introduce some of its Ideas here. This is an improved alternative to the intense industry competition and rivalry of Red Oceans. Blue Ocean Strategies emphasize Creating Not Competing, Creating New Market Space and Not Competing in the existing space. Again, Create don’t Compete. Value Innovation is the Cornerstone of Blue Ocean Strategy. Value innovation reduces Cost by Eliminating and Reducing factors not needed or desired by customers, while simultaneously raising customer value by creating elements the industry has never offered. This combines what previously had been considered impossible; lowering cost and improving value. In the old strategy framework, great value could be created only by adding more features with more cost. If one desired to be the low-cost provider, features had to be removed so costs could be cut. Consider what follows to be a Primer on Blue Ocean Strategy. The listener is directed to 2 books that outlines well this Framework, the first is Blue Ocean Strategy and the newest edition, Blue Ocean Shift. I would rank these book as essential reading, you will not be disappointed, I promise! The Blue Ocean website has volumes of information and examples too. We have already introduced Value Innovation as the Cornerstone of Blue Ocean Strategy. Value Innovation lowers cost by eliminating and reducing non-essential factors while simultaneously raising and creating new ones the industry has not offered. This is best visualized by drawing a Strategy Canvas, one of the first steps in the Blue Ocean Journey. A strategy canvas shows : 1. the strategic profile of an industry by depicting the current competing factors and possible future factors. For example in dentistry competing factors could include, price, convenience, location, office environment, services offered, availability of appts, payment options, technology, insurance plans accepted, cosmetic dentistry, future factors might include a treatment guarantee, treatment outcome data, along with Comprehensive Multidisciplinary Team Treatment 2. Next, the strategic profile of current and potential competitors are charted, helping to identify which of the competing factors they invest in. Potential Competitors could include Corporate or Large Group Practice, Single Family Dental Practice along with a High Touch Esthetic and Cosmetic Practice. If you perform specialty procedures then other specialists could be competitors. 3. Finally, A To-Be Strategy Canvas is created which shows which key resources you will focus on to create a value curve that diverges from your competitor's offerings. A compelling tagline is then created that distills this strategy into words that can capture people’s imagination. Another revealing exercise is the 4 Actions Framework, the hallmarks here are Eliminate, Reduce, Raise and Create. *Eliminate- for these factors taken for granted, that create no value should be eliminated- I don’t have a good example of these, maybe you can think of one do! *Reduce- here, one seeks to reduce pain points which the industry ignores- multiple forms to fill out, wait times for appts. *Raise- means just that, raising or improving above industry stand- payment options, insurance plans, comprehensive services, expanded hours, the predictability of tx, *Create- creating factors never offered before- treatment guarantee/warranty, treatment outcome data, Multidisciplinary Team Tx that freely shares patient information, a mobile portal, virtual consults. The Four Actions Framework eliminates factors that do not add value for buyers, reduces factors that have been overdesigned, raises factors that are highly valued by buyers and creates new factors that had previously never been considered or offered. The Blue Ocean Framework will also cause you to look at yourself, your practice and your markets differently. Other ideas to consider and questions to ponder, the answers to which are important to unlocking the greatest value for your patient/customers. 1. Why don’t patients choose you or your practice? If they leave did they trade up or trade down and why? 2. Who are your customers? Who are your stakeholders? We immediately think of the patient, but one must think much differently. For many patients it is their employer who has purchased their insurance, could also be a parent or grandparent helping a family member. The front office staff of your specialist offices can function as both customers, receiving referrals, as well as a source or supplier of new patients for your practice. 3. What if you shifted your focus from just the patient to some of these other groups? Could unique value radically different from that presently offered be created? Think of the possibilities! 4. Do you Provide a Total Solution for your patient/customer? The simplest way to do this is to think about what happens to your patient before, during and after your service. The more of a one-stop, bundled service you can provide, the greater the convince and hence the greater the value to your customer. Maybe you should provide the products you recommend in your office and eliminate your patient having to shop for them. Compliance will more than likely do up! 5. Solve your customer's major pain points. Understand what they are! Every pain point is an opportunity to unlock hidden value and create new demand. These pain points are the reasons why customers are dissatisfied and buyers refuse to participate. In the blue ocean shift process, pain points are blatant opportunities to change the playing field fast. 6. Think across time trends. What trends have a high probability of impacting your practice, are irreversible and are evolving in a clear trajectory? Certainly, Corporate Dentistry is one trend, digital dentistry is another. How will these trends impact you? Given this, how can you open up unprecedented customer utility? 3 Factors of Good Strategy include 1. FOCUS 2. DIVERGENCE- value curves stand apart 3. COMPELLING TAG LINE- clear and truthful message Finally, avoid Red Oceans which includes; 1. Conventional thinking. 2. Focusing on being the best. 3. Focusing on the same buyer group. 4. Defining the scope of service offerings similarly. 5. And Focusing on current competitive threats. https://www.blueoceanstrategy.com/ https://www.isc.hbs.edu/about-michael-porter/Pages/default.aspx

This Podcast is a continuation of the previous Podcast on the announcement of Aspen Dental opening locations in 2 Walgreens located in Florida. Please turn-in to that episode for those details. Briefly, in that episode, I reviewed data provided by the ADA which illustrated the changes occurring in dentistry, both in regard to 1) utilization, and 2) practice ownership. I also shared some distinct differences between dentistry and medicine, as it is proposed that as Medicine goes so goes Dentistry. Medicine is 5 times the size of dentistry, both in the number of providers as well as total expenditures. To equate them is an oversimplification of market forces. My takeaway points from that episode were the following: 1. The Utilization of dental care is changing. 2. The delivery setting of care is also changing as is the payment method. 3. Seniors are going to become an important driver of the dental care economy. 4. Cost, no teeth, fear, inconvenient location or time, trouble finding a dentist, as well as no perceived need are the greatest barriers. 5. Corporate dentistry as identified under-severed market segments and has created offerings to meet these needs. 6. 63% of adults do not see a dentist, that is a huge market of potential patients. 7. Your job is to make the “non-dental patient” into a patient in your practice. If we can do that there is plenty of care we call can deliver. 8. You can start by addressing the barriers in point #5; cost, fear, convenience, time, no teeth, no perceived value. 9. There is no canned, boiler-plate solution, each practice is different, with different markets and challenges. Finally, I disagreed with the following statement by the ADA: ... a lot more finance, data, marketing, and managerial expertise is going to be needed to run a successful dental practice. Will dental schools attempt to cram a mini–MBA into an already stretched dental school curriculum? Will dentists increasingly pursue training to improve managerial and organizational leadership skills? Or will we increasingly see the separation of clinical and management functions, with fewer dentists engaged in the business side, leaving that to people with MBA degrees? The ADA is convinced it will be primarily the latter. I will use this podcast episode to expand on this. A few years ago I was told by a friend and faculty member of a dental school, that his students didn't need to know anything about business because they are all going into corporate dentistry. This perspective was repeated again recently at a local dental society meeting I attended. Students should not feel they are ill-prepared to enter professional practice before they even start practice, or that their choices are limited. This, my friends, colleagues and listeners, we can not allow this to happen. Let's not make this into a self-fulling prophecy by ignoring the need for basic business skills in dental practice. Basic Business skills, well taught, will enable a greater standard of care to be delivered to each and every patient we serve. I am a dentist and oral surgeon who went back to school after nearly 25 years in practice to complete my MBA, so I can speak to this with some degree of expertise. Dentists are well capable of learning basic managerial and organizational skills needed to run their practices, an MBA is not required! It is dangerous for any organization to be overly influenced by a group think mentality. Effective organizations have a Devil's Advocate to guard against such. The Devil’s Advocate task is to bring forth alternative ideas even if they are unpopular, unliked, or in opposition to the powers that be. It is important that they are heard and considered. Dentists completely relinquishing all ownership and business functions to a Management Organization, ie, DSO is a rather extreme solution, especially when solutions exist that others practitioners have figured out. That’s why there are Business Coaches, Consultants, and Advisers as well as resources at the ADA to help educate practitioners about business practices. A Net Present Value Analysis reveals that over a 30-year dental career the difference in earnings between an owner dentist vs an employee dentist can be several million dollars. Do not freely and readily give up your greatest asset, your license! DSO's along with other Corporate Entities have done their financial analysis homework and know this, that is why they are capable of offering young dentists lucrative financial arrangements. They do this because they can! They know dentistry can be highly profitable so they can offer exceptional financial incentives. Remember, they haven't spent 8 years or longer in school to acquire the education and skills needed to gain a dental license, but you did!! Be aware of how financially valuable your license is, and never forget it! It is the greatest financial asset you have! It is also the greatest barrier to market entry! Without a license one is incapable of diagnosing, treating and then billing for services. An executive can not bill even one cent of revenue, yet can end up with even more financial incentives than the dentist working chair-side in the clinic. This just doesn’t seem right…just saying! A recent article in Healthcare Finance reports that the salaries of hospital executives nearly doubled, while physicians saw more modest increases. Between 2005 and 2015, average CEO compensation jumped from $1.6 million to $3.1 Million, an increase of 93 percent. Healthcare professionals saw 10 to 20% increases on average. Is this a good trend?? You be the judge and draw your own conclusion. I only hope this doesn’t for-tell similar disparities for dentists and dental practices as well. Comparing ourselves to medicine, the very best hospitals have Physicians as their CEO's, not Business Executives. Two of the nations best hospital systems, The Mayo Clinic, and The Cleveland Clinic have highly skilled Physician CEO's. And in fact, have been physician lead since their inception over a century ago! I believe there is a lesson there for all of us. Those that know best for the patient should be in charge. I love the quote by Dr. Toby Cosgrove, the past Cleveland Clinic CEO, who wisely and accurately states: "... it's easier to teach a doctor about business than it is to teach an MBA about medicine…” He couldn’t be more right!! An effective CEO or Practice owner does not need to know all the answers, nor should he!! The critical skill for an effective CEO is to be observant, ask the difficult questions and surround himself with a highly knowledgeable C-Suite of executives or consultants who can find those answers. Dentist leaders are uniquely qualified to bridge the gap between business and clinical practice. Because only they can see both sides, they can help their practices and organizations take outstanding care of their patients, while deploying resources and assets wisely. Remember our Tag Line to this podcast...... "It's not what you don't know that will hurt you, it's what you know for sure that just ain't so that will!” attributed to Will Rogers I am also reminded of the old saying, “he who pays the piper picks the tune!” He who controls the assets has the final say, always! You should be aware that there are other organization structures in addition to DSO's that enable one to maintain ownership and control while providing an experienced business team. The solo practitioner can create strategic alliances with a highly trusted team of coaches, consultants and advisers to provide the critical business knowledge necessary to guide your practice. Beyond the solo practice is a group practice. As the number of providers and locations increase a dedicated and professional administrative team can be better supported as well as afforded. Growing one's practice through a merger or acquisition of smaller, solo practices is a great tactic. These practices typically are owned by senior practitioners who have, over time, allowed their practices to contract by working fewer and fewer days. Acquiring these practices is a great win-win for both sides as the acquiring practice achieves growth at a very reasonable cost, and the selling practice has achieved a transition plan. Another alternative to DSO's is IPA's, no not the beer! IPA is an Independent Practice Association. In this structure, each practice in the Association remains independent. Practitioners join together within a legal structure that creates a management layer above all the practices. This management team, who represents a sizable number of practices, can better negotiate vendor contracts, insurance contracts, HR management, IT support as well as numerous other business functions. This entity may become more common in the future. Finally, one can seek out numerous educational opportunities to become more business savvy. Online classes, seminars, and books are just a few. The ADA has lots of practice management resources as well as webinars to provide excellent business and practice management education. The ADA Kellogg Executive Management Program in addition to the ADA Executive Program in Dental Practice Management is two more comprehensive programs offered to members. Please be sure to check them out. Consider the American Association for Physician Leadership too! It is how I began my formal business and leadership training. Dentists are welcome! The online courses are exceptional and highly relevant to practice. So to summarize our Take Home Points to Ponder are: 1. The delivery of dental care is changing. 2. Corporate along with Retail settings will continue to evolve. 3. The news of the demise of private practice, I believe is premature. 4. A dental license is your most valuable financial asset, it is extremely hard to obtain, only about 195,000 exist in the US. 5. Dentists know what is best for their patient, as such should be the ones in charge. 6. Dentists are well capable of managing their practices. 7. Consultants, Group practices as well as IPA's can help offload complex management functions. 8. Business knowledge, at a basic level, is readily attainable by everyone. Finally, If you are unsure how to accomplish any of these tasks, or don't know where to find such a team please reach out to us here at OmniStar Financial for guidance, we are experts in this! So that wraps things up for this Podcast. We hope that this information has created an “Ah Ha” moment, or stimulated some additional questions you can direct to your advisers. We welcome your inquiry here too at OmniStar Financial. Our contact information can be found on 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 feedback and suggestions for future podcast sessions. Thank you so very much for tuning in and listening. We are very grateful for your time and attention. references: https://doi.org/10.1016/j.adaj.2017.06.017 Practice Ownership is Declining, Sept 2017 JADA. https://success.ada.org/en/practice-management/dental-practice-success/spring-2014/shifts-in-utilization https://www.cms.gov/research-statistics-data-and-systems/statistics-trends-and-reports/nationalhealthexpenddata/downloads/highlights.pdf https://www.aegisdentalnetwork.com/news/2018/12/17/new-aspe-dental-office-opens-in-collaboration-with-walgreens https://www.ada.org/en/science-research/health-policy-institute/publications/infographics https://www.physicianleaders.org/ https://www.ada.org/en/publications/ada-news/2015-archive/may/2015-ada-kellogg-executive-management-program-registration-opens https://pmcertificate.success.ada.org/ https://www.healthcarefinancenews.com/news/salaries-hospital-executives-nearly-doubled-while-physicians-see-more-modest-increases?mkt_tok=eyJpIjoiTlRrNE1HTmxZbUkyWlRBMiIsInQiOiI2V3RPcE1FK1hDc2hSVkdBNkgyVVp1MkJHUHMwVkU0ZDlzRlcybGFyQWNWbEtSblhHZEttQUxvaXFaRXgyazZwTXRkTkd6YndscXlqUGhnU1R2TXorWnlkQnFlSVM2dnBDd1lvemdRVzVxcFprbWc1TFwvV25TamZXaE84S0o4UkQifQ==

Welcome and Happy New Year! The big news in dentistry is the announcement of Aspen Dental-branded Offices opening in 2 Walgreens located in Florida. This collaboration, brings together Walgreens, a leader in understanding the intersection of retail and health care, and Aspen Dental, a brand that has made dental care affordable and accessible to millions of patients for more than 20 years.” The announcement of the Aspen/Walgreens partnership will serve as an example for the experts to repeat the rhetoric that the solo dental practitioner is a lone wolf and dying breed and that the dentistry of the future will be delivered through a DSO corporate structure with an employee dentist, rather than an owner dentist. It has already been predicted that since physician practices have followed this trend, dentistry will too. I wish to use this podcast episode as an opportunity to dig little deeper and maybe go down some rabbit holes to say, like Mark Twain said, “The news of my death has been greatly exaggerated!” I believe there is an exciting future for dentists and dentistry. Yes, the future will look different from the present, but a dentist with an entrepreneurial mindset directed at continuously creating value for the patient will always be welcome in the market. The data presented here is gleaned from the ADA Health Policy Institute analysis of Distribution of Dentists, along with CMS, the Center for Medicare and Medicaid Service. There are 2 distinct areas which are important here; Utilization by the consumer, and Practice Ownership. The ADA research shows that dental care utilization patterns are changing dramatically in the United States. Over the past decade, important trends were identified. One, the pattern of dental care utilization was very different for adults compared to children. The percent of adults with a dental visit in the last 12 months decreased from a peak of 41 percent in 2003 to 37 percent in 2010. For children, this increased from 42 percent in 2000 to 46 percent in 2003 and roughly held steady through 2010. Stated alternatively, in 2010 63% of adults did not go to the dentist, compared to 54% of children who did not seek routine dental care. Two, trends were different based on income. Utilization declined for middle-income adults from 38 percent in 2003 to 34 percent in 2010, and for higher income adults from 54 percent in 2003 to 51 percent in 2010. Again, that means for middle-income adults, 66% did not seek care, while 49% of higher income adults did not seek care. The main driver of the decline in utilization among adults and the increase in utilization among children is shifting dental benefits. Basically, more and more children are covered by some form of dental benefits (mainly Medicaid), while more and more adults are finding themselves uninsured for dental care. The Landmark Healthcare Legislation, the Patient Protection and Affordable Care Act, will expand dental benefits for children. Pediatric dental benefits are one of 10 essential health benefits mandated by the law. The ADA's analysis estimates that up to 8.7 million children will gain extensive dental benefits because of health reform. About one-third of these children will gain Medicaid coverage, and two-thirds will receive private dental coverage. For adults, however, nothing in the Act will reverse the current decline in dental benefits coverage and utilization. The third trend is the aging of the population. Dental care use among those 65 and older is holding steady. On a per-patient basis, this age group also spends the most on dental care—$796 in 2010, a large portion of it out of pocket. Per-patient spending levels for seniors also are on the rise. Given that there will be a lot more people in this age group as the U.S. population ages, seniors are going to become an important driver of the dental care economy. That’s very important so let’s say it again….. SENIORS ARE GOING TO BECOME AN IMPORTANT DRIVER OF THE DENTAL CARE ECONOMY! Digging a little deeper, for seniors the biggest barriers to care are: Cost, no teeth, fear, inconvenient location or time, trouble finding a dentist, as well as no perceived need are the greatest barriers. Let's change gears and look at Practice ownership, which has shown similar changes. Overall, 80% of dentists in private practice are owners, according to the data. This is considerably higher than the rate among physicians which is now less than half. But the more interesting aspect is the trends over time. Practice ownership rates in dentistry are declining slowly and steadily. They are declining for almost every age group. Male dentists are seeing declining ownership rates, although for female dentists there has been no change. These data indicate that the decline in practice ownership rates in dentistry is not being driven solely by the “de-aging” and “feminization” of the dentist workforce. Older male dentists are also less likely to own a practice. Among physicians, the decline in practice ownership is much more pronounced from 61% to 47%. The greatest changes for dentistry are in the younger age group ( https://www.cms.gov/research-statistics-data-and-systems/statistics-trends-and-reports/nationalhealthexpenddata/downloads/highlights.pdf> https://www.aegisdentalnetwork.com/news/2018/12/17/new-aspe-dental-office-opens-in-collaboration-with-walgreens> https://www.ada.org/en/science-research/health-policy-institute/publications/infographics> https://www.physicianleaders.org/>

Expenses or Profit, Which is will you choose? The answer should be easy! As with all things financial, one must dig beneath the surface of your financial statements for the facts as well as to evaluate the impact of these recommendations on your year-end. Many times practice advisors are accountants whose emphasis is on minimizing taxes and finding deductions, not finance. In the corporate world, there is a considerable difference between a CFO, Chief Financial Officer, and a CPA. Accountants and CPA’s emphasize the historical, transactional and tax implications of an entity, while a CFO’s aim is to manage assets to grow profits, share price and dividends for stockholders. Please know, there is Nothing wrong or incorrect with this, both are critically necessary for accurate decision making, but it is important to understand their perspective so one can be aware of possible bias and blindspot. The blindspot is that all of these tactics are directed at the Income Statement, increasing expenses and reducing net income. Most of you listening to this PodCast have entities organized as either a sole proprietorships, PLLC, PA or Professional corporations, hence all the taxation flows or passes through to the owners, the entity pays no tax! The net effect of accelerating expenses and depreciation is to reduce your income , plain and simple! With a lower income comes a lower tax bill!! PERIOD!!

The Section 179 deduction is a small business tax incentive that allows practices to immediately deduct up to the full purchase price of equipment – with limitations – without having to depreciate the full deduction over the useful life of the asset usually 5 to 7 year. The claim that it’s an automatic benefit to all customers is an inaccurate and misleading statement, without first knowing what the anticipated financial and tax impact would be to the doctor. This episode explores Section 179 greater detail reviewing a potential "tax trap" in later years. https://www.section179.org/ Disclaimer: This podcast is for information only. Please always consult your legal, tax and financial professionals for advice regarding your particular situation.

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