Monday, September 17, 2018


The bottom line in any business, dental practices included, is profit

Profit is not the dirty word some would have you believe it is. Remember: one cannot give from empty pockets to help others, and the business that produces no profit soon closes its doors. There are two ways to increase profitability: produce more and spend less.

Control of expenses (spending less by adherence to a well-planned budget) is one of the most underutilized, yet valuable, tools to increase profit in any business. Those dollars earned and collected but not spent go directly to the bottom line.

The discipline of writing and sticking to an annual budget is like a GPS, a guide to the financial health of your practice. The first year a budget is written and executed is the most difficult. With experience, you’ll get more accurate in your predictions.

Steps to creating a budget:
  • In September or October, project totals for this year's production and collections.
  • Review the year-to-date Income and Expense (Profit and Loss) statement line by line, deciding by percentages translated into dollars what the increase or decrease (savings) in each line item will be for next year.
  • Make decisions such as:
    • Fee increase?
    • More staff to be hired?
    • Capital investments to be made? New computer system? New dental equipment? Office refurbishment?
  • Set goals for increases in both production and collections, perhaps an 8% to 10% increase in production and a 3% to 4% increase in collections (the ideal collection rate is 97% of net production) for next year. (Note: the budget is predicated on collections; after all, one cannot spend production).
  • Forecast the annual net collection goal for next year. Collections must cover overhead, plus the doctor's compensation, including retirement funding, plus debt service, plus net profit/doctor's bonus/ROI.
  • Put the annual budget in final written form, thereby recording and committing to a projection of production, collections, and expenses.
  • Divide the newly projected totals of each expense line by 12 months to determine a monthly allowance for each.
  • Beginning in January of next year, analyze each month’s I&E/P&L statement, justifying overages or savings in each of the seven categories of expense: Personnel, Occupancy, Administrative, Clinical Supplies, Lab, Equipment/Furnishings/Contingency/Emergency Fund, and Marketing.
  • Make adjustments in projected expenditures no more often than quarterly, changing the next quarter totals to meet new expectations based on information from the current or previous quarters.
  • Share sufficient information with staff members so they can help plan, produce, collect, save, and understand why fee increases are necessary.
One way to share financial information with your team is to calculate the daily cost of each of the seven categories listed above. For example, if annual staff compensation, including wages and benefits, was $288,000 last year with 190 work days in the year, the personnel cost was $1,516/day. Add to this the daily cost for the other six categories of expense, and it's not unusual to find that overhead expenses run several thousand dollars per day, not including any compensation for the dentist(s).

Knowledge of the total daily costs for running the practice helps staff members understand the necessity of production goals, the 97% or better collection rate, and fee increases.

Monday, September 10, 2018


The American Dental Association Health Policy Institute (ADAHPI) researches and publishes reports and infographics concerning viability, education, manpower, gender, age, third-party payers, and many other factors that affect the dental profession and its practitioners. ADAHPI statistics allow dentists to keep tabs on the profession with its many changes, such as growth, decline, or shifts in demographics.
Some examples:
  • Dental Service organizations have made significant inroads into the private practice arena, particularly with younger dentists. ADAHPI statistics for 2016, the last full year for which figures are available:
    • 17.4% of dentists 21-34 years of age are affiliated with a DSO.
    • 11% of dentists 35-49 years of age are affiliated with a DSO.
    • 4.2% of dentists 50-64 of age are affiliated with a DSO.
    • 3.2% of dentists over 65 years of age are affiliated with a DSO.
    • Overall, 8% of U.S. dentists have chosen to practice with a DSO.

  • Statistics from the 2016-17 school year show:
    • AGD program residents were 51.5% female and 48.5% male.
    • GPR enrollment was 53.7% female and 46.3% male.
    • AGD Dental Anesthesia residents were 61.8% male and 38.2% female.
    • AGD Oral Medicine enrollment showed 73.1% female and 26.9% male.
    • AGD Orofacial Pain residents were 56.8% female and 43.2% male.
    • (These figures indicate that the choice of advanced degrees in dentistry is slowly moving from majority-male to majority-female.

  • Early in 2018, ADAHPI released figures showing dentists' participation in Medicaid and CHIP (Children's Health Insurance Program) dental services for children:
    • Overall, 39% of U.S. dentists participate in child dental services programs under Medicaid and CHIP, with Iowa having the highest participation rate at 85.5% and with Maine having the lowest at 15.4%.
    • 43% of female dentists accept patients enrolled in one of these two programs, compared to 37% of male dentists.

  • An analysis of dental benefits for children in the U.S. shows:
    • 51.3% have private insurance benefits
    • 38.5% receive dental care under Medicaid or CHIP
    • 10.3% have no dental care benefits
For more information, please visit the ADAHPI website.

Monday, September 3, 2018



During my 36 years of consulting, clients who know my penchant for a wide variety of literature have occasionally asked me what I would recommend for their reading time. Today, I have a great one to recommend to you all: Capital Gaines—Smart Things I Learned Doing Stupid Stuff, by Chip Gaines. Gaines stars with his wife, Joanna, in the hit show Fixer Upper on HGTV.

You might be wondering why I would recommend a book by a construction and real estate professional who's made it big starring in a reality TV show with his interior-designer wife. Let me assure you, Chip is an all-around smart guy, a practical, unpretentious bootstraps kind of entrepreneur who can teach you new concepts for running the business side of your practice. Almost all of his wise advice, presented in a heartfelt, humorous style, is applicable to the practice of dentistry, and is an invaluable resource for entrepreneurial dentists.

Capital Gaines is the fascinating story of how the Gaineses built their Magnolia retail empire in Waco, Texas. Their show on HGTV has allowed them to demonstrate how a pair of beginners in the world of business can dream big and succeed, in spite of the occasional misstep. And, as I say, much of Chip's wisdom applies to the dental practice.

From the cover:
In this semi-humble account of a man on a mission, Chip Gaines is living proof of how one's fearless dedication and love for both business and family can redefine modern success. With his unrelenting spirit as both a coach and a trailblazer, a few off-the-wall strategies to get things done, and the boldness to go all-in time and time again, Chip Gaines serves as a fitting poster child for entrepreneurs and risk takers the world over.
And now, a few pearls from Chip:
  • I refuse to let my life be driven by fear of what others might do or what might happen to me...fear will literally ruin every single facet of your life; it cripples everything.

  • This is a really important point to understand: when you aren’t trying to avoid failure, fear loses its foothold. The courage to take a chance is half the battle. The other half? Viewing failure as a teacher and not an enemy.

  • At Magnolia, at least 75 percent of our workforce are millennials...I expect our team to dive in headfirst...we decided we wanted to establish a culture that challenges and stretches our employees past what they think they can do straight into their "discomfort zone."

  • But even more important is the fact that each one of our employees really bought in to the spirit of our organization. They carried—and carry!—our vision in their hearts as fiercely as Jo and I do. Our people enjoy the process...
So allow yourself a few hours to sit down and read this non-dental book. Chip's adventures, mistakes, and successes in building his business and raising his family, as well as his words, attitude, philosophy, and rules to live by will inspire and encourage you in both your dental practice and in your personal life.

Monday, August 27, 2018


The Code on Dental Procedures and Nomenclature (CDT Code) was established by the U.S. government in 2000 and has become the standard terminology used on dental claim forms submitted to third-party payers. The American Dental Association was assigned the responsibility of maintaining and modifying the CDT when necessary, following federal guidelines and ADA policies.

The Code Maintenance Committee (CMC) was established by the ADA to address additions, deletions, and revisions to the Code. The CMC meets annually, usually in March, to vote on modifications to the CDT which become effective on January 1 of the following year. The CMC annual meeting is held at the ADA headquarters in Chicago as an open forum with all interested parties welcome to attend.

The CMC is composed of representatives from various dental community sectors, including dental specialties and third-party payers. By their individual votes, the CMC members approve or reject additions, deletions, or revisions. The ADA has five votes; the Academy of General Dentistry, the American Dental Education Association, and each specialty organization have one vote apiece; and each payer organization has one vote.

Suggestions for additions, deletions, or revisions of specific codes must be submitted by the fall, usually a date in November, for CMC evaluation at its annual meeting the following March. If approved, the new or modified code is included in the official CDT released and effective on January 1 of the following year. For example, November 1, 2018 is the deadline for submitting suggestions for the CDT 2020. Suggestions can be submitted through the ADA CDT website.

For questions or concerns about dental coding or dental benefits, email or call 1-800-621-8099.

Monday, August 20, 2018


Did you know help is available to unscramble the "legalese" of managed care organization provider contracts? As participation in managed care networks has increased, the American Dental Association has created several resources to help dentists get answers to questions about dental benefit plans and provider network contracts. The third-party payer complex can be bewildering, and the ADA strongly recommends that dentists seek complete understanding of all conditions and requirements before signing any contracts.

ADA resources include:
Further, specific information on problems or questions related to dental benefits, such as coding on claims, is available to ADA members at the ADA Center for Dental Benefits, Coding and Quality by email at or by telephone at 1-800-621-8099.