The Dentist's Network #67


	Technology Redefines Roles Pre-Tax Acquisitions Facial/Dental Esthetics

Dr. Lorne Lavine
Dental Technology Consultants
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Technology Redefines Roles of Dentists

Most dentists who went through dental school in the 1980s and 1990s were reminded of the “golden age” of dentistry, back in the 1960s and 1970s. Though there is no doubt that this era was a time of prosperity for dental practices, the modern dental practice has evolved significantly from that time. Even then many dentists concentrated on restorative dentistry and cosmetics were starting to become a reality, and dentists today have developed many other skills that are necessary to run a successful office. The push towards technology in the dental practice has redefined the roles that dentists serve. Some of the new roles that have entered into dental practice include the following:

Systems Integrator
There are many different components to the high-tech dental practice. In many offices, these include computers, networks, practice management software, image management software, digital cameras, intraoral cameras, digital radiography, scanners and printers. In almost every case, dentists are adding these components in stages, which require a significant investment of time to find the parts that will all work together. Dentists can work with consultants and integrators to assist in this process, but the final responsibility still lies with the dentist to find compatible systems. A mistake can be very costly. Dentists can often spend $40,000–$50,000 to upgrade their offices only to discover that certain software programs don’t work properly together.

Community Service Activist
As the Internet becomes part of our everyday life, more and more dentists are beginning to realize the advantages of online communication with their colleagues. There are numerous online meeting places available to dentists that allow them to share information with colleagues and referring offices. Some of the more popular locations are the Internet Dental Forum and Dental Town. These forums serve many purposes. First and foremost, they allow for an exchange of information between dentists. If an office is considering a switch to a new impression material or composite, they can post a question on a board asking for opinions, often getting dozens of replies within 24 hours. Dentists can easily post digital images, such as x-rays and photos, and ask colleagues for assistance in diagnosis and treatment planning. Dentists should be aware, obviously, that not every person who posts on these boards is completely objective. Many of these boards are frequented by reps of the various companies and, unfortunately, some do not identify themselves as such. Dentists should be cautious about any information they receive and do the necessary research to get additional opinions and comments.

Web Site Author
Most dentists have come to realize the advantages of having a Web site. There are many reasons for dentists without a Web presence to consider this move. A Web site can act as the initial point of contact for a new patient who is looking for a dentist. Offices with Web sites are often considered to be progressive and up to date. Depending on the design of the Web site, it can allow for a fair amount of interaction from patients. Patients can check on the status of insurance payments, view their next appointment, request new appointments and get directions to the office as well as read about payment policies.

There are companies that will do most of the design work for you, but dentists should still be responsible for writing the “copy,” the words that will be used in different sections of the site. Most people are savvy enough to realize when a site has a canned look and isn’t customized for that particular office. To get an idea of how to properly design a site, do a search on Yahoo (www.yahoo.com) or Google (www.google.com) to see the sites of other offices. It won’t take long to discover what looks appealing and what does not.

The days of dentists confining themselves to their operatories and worrying only about crown preps and margins are fast disappearing. To be competitive, dentists need to learn the skills and incorporate the modern technology that will separate their practices from the dentist down the street. By investing in the proper equipment and training, offices will be well positioned to keep up with new technologies as they appear in the next few years.

Lorne Lavine, DMD is the Founder and President of Dental Technology Consultants. Dr. Lavine holds two prestigious certifications, the A+ Certified Technician designation and the Network+ Certified Professional. These designations demonstrate proficiency in computer repair, operating systems, network design and installation. Dental Technology Consultants provides dentists a full range of services relating to the implementation of technology.

Interested in having Dr. Lavine speak to your dental society or study club? Click here.
Dr. Lavine can be reached at drlavine@thedentistsnetwork.net.

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Bruce Bryen, CPA.
Managing Partner
The Snyder Group, LLC
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Dental Practice Acquisition: The Real Cost

Getting ready to buy the practice:
The buyer and seller of a dental practice typically have negotiated the price for its sale after getting input from their advisors and after incurring many hours of studying demographics, financial records, the state of art and the condition of the equipment, the practice’s fee schedules and other important areas of concern. Usually money has been spent for a practice valuation, fees have been paid to accountants and attorneys and payments have been made to consultants to determine projections and the ability to pay off the practice acquisition debt needed to purchase the practice.

How to structure the purchase price:
A good CPA with experience in the dental world may suggest a pre-tax approach for the acquisition of the practice. What does that mean? The sale price is a number that the buyer and the seller of the dental practice have agreed upon. The pre-tax approach to the payment and the allocation of payment can create enormous savings for the buyer and the seller. A payment that is made after reporting the income needed to pay the tax first and then have the money available to amortize the cost of the purchase becomes almost a doubling of the real cost of the acquisition because of the income tax effect. A good financial advisor with dental experience will suggest structuring the transition for the purchase of the dental practice in a way to minimize the tax effect for the buyer and the seller.

What concepts are used to create a pre-tax transition?
The basic concept used to create a pre-tax transition is determining how to write off a significant portion of the acquisition price. This is done by creating an expense, such as deferred or non-deferred compensation. If the dentist that is selling the practice can wait for some of the payment, an attractive, safe and good long-term method to use for a pre-tax approach is to design a sophisticated, qualified retirement plan for the dental practice, creating a liability for funding the plan and reducing the value of the dental practice so that few attributes of the acquisition are allocated to non-deductible items. This creates an expense to the practice and can reduce the tax effect for the buyer and seller by hundreds of thousands of dollars. If the seller cannot wait for the sale proceeds, other methods of creating an expense are available on a shorter term basis. The value of the practice has to be reduced by creating a liability so that any payment that is allocated to a non-deductible item or a deductible item that takes many years to amortize is substantially reduced.

What difference does it make how the practice is sold?
Money is the answer that describes the difference between a pre-tax method and an after-tax approach to a practice acquisition. A hypothetical example in terms of real dollars is the following: For the buyer of a dental practice using a transition price of $400,000 in a state that has an income tax (such as New Jersey), the effective tax rate including federal income tax, Social Security taxes, Medicare taxes and state income tax is probably close to 50%. Simply put, in this example of an after-tax purchase, someone would have to earn $800,000 and pay $400,000 in taxes to have the $400,000 available after the payment of the taxes to pay for the dental practice. The cost, including taxes, is probably double the purchase price. With a pre-tax approach, there would be little to no income tax to the buyer, if the acquisition is structured properly; the total price for the acquisition would be closer to the $400,000, rather than the $800,000 previously described. Imagine the number of buyers available at the net cost of $400,000 rather than $800,000!

Where do I go from here?
Contact an advisor with knowledge of structuring a dental practice acquisition who also knows the real cost of that purchase. Find someone who has done this before and who can explain the details to your satisfaction. The savings are enormous. The effective return becomes much higher to the buyer and the seller of the dental practice.

For further information about the real cost of a dental practice acquisition, the author of this article is willing to discuss the format, methods and the costs required to proceed to the settlement table with a lower out-of-pocket payment for the dental practice acquisition.

Bruce Bryen, CPA has successfully assisted dentists with their personal and financial matters for more than thirty years. As a partner in The Snyder Group, he delivers creative and prudent financial strategies to help dentists build and protect wealth at every stage of their careers. His extensive expertise includes financing, debt restructuring, retirement planning and tax advising to help dentists keep more of what they earn. Bruce is also experienced in providing litigation support services and has testified on numerous occasions as an expert witness.

If you would like additional help or are interested in having Bruce Bryen speak to your dental society or study club, he can be reached at bruce@thedentistsnetwork.net or at 1-800-988-5674.

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Louis Malcmacher
DDS MAGD
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The Next Big Thing In Dentistry

I am asked all of the time what the next big thing is going to be in dentistry. What new technology will change dental practice? We have already made huge advancements in a number of areas, such as restorative therapy, implants and esthetics. I believe the next great thing in dentistry is actually going to be found in the oral-systemic connection. Most dentists are familiar with this connection as how oral health affects systemic health, but I’m going to look at the oral-systemic connection from a completely different angle—the oral-systemic esthetic perspective.

We all can do a magnificent job of making teeth look great and giving people a healthy and beautiful smile. Esthetic dentistry has been an absolute boon over the last 30 years when it comes to such innovative techniques as teeth whitening and minimally invasive veneers like Lumineers. Now the teeth look good, so what about the peri-oral areas around the mouth? If the teeth look good but we ignore the rest of the face, then we have really limited what we have done in esthetic dentistry.

It is time to seriously give serious consideration to extending the oral-systemic connection to the esthetic realms of the face, with which dentists are more familiar than are any other healthcare practitioners. Dermal fillers, such as hyaluronic acid (Juvederm, Restylane) and calcium hydroxylapatite fillers (Radiesse), are commonly used to add volume to the face in the nasolabial folds, oral commissures and marionette lines. As we age, collagen is lost in these facial areas and these lines start to deepen. These dermal fillers are injected right under the skin to plump up these areas so that lines are much less noticeable. The face looks more youthful and esthetic and is the perfect complement to any esthetic dentistry.

I have been trained and have had experience with these dermal fillers for a while and this is a very easy procedure to perform. We as dentists give injections all the time; this is just learning how to give another kind of injection that is outside the mouth but in the same area of the face. We also have a distinct advantage over dermatologists, plastic surgeons, medical estheticians and nurses who commonly provide these procedures in that we can deliver profound anesthesia in these areas before accomplishing these filler procedures. I will never forget that during my training, my patients were completely comfortable during dermal filler and lip augmentation therapy because of my ability to deliver proper anesthesia to these areas. The patients treated by other health practitioners were quite uncomfortable; indeed, this is one of the biggest patient complaints about dermal fillers.

Many state boards are allowing general dentists to provide botulinum toxin and dermal fillers to patients. Is there a market for these services? In 2007, close to 3 billion dollars were spent on botulinum toxin and dermal filler therapy in the United States. Think about this: that was money spent on non-surgical elective esthetic procedures that could have been spent on esthetic dentistry, but the patient made a choice to pay someone else. Interestingly, these procedures become more popular in an uncertain economy because patients want to do something to look better that is more affordable than surgical esthetic options.

Like anything else you do, this requires some training, but the learning curve is incredibly short because you already know how to give comfortable injections. I often give training sessions in botulinum toxin and dermal fillers and dentists are amazed how easy these procedures are compared to everything else we do. Finding practice models is easy; start by asking family and friends (who will fight to have you practice on them). If you want further proof, ask women in your practice if they have had or would like dermal filler therapy. You will be overwhelmed by the positive response.

The next big thing in dentistry? It may come as we start expanding outside of the teeth and gums into the peri-oral tissues, which is within every dentist’s skill set. All you need is knowledge and practice. Then, you will be able to deliver these new services to your patients and truly complement your esthetic dental practice. By contacting me, you can find more information about botulinum toxin and dermal filler training.

Dr. Louis Malcmacher is a practicing general dentist in Bay Village, Ohio, an internationally known lecturer, dental consultant and author, and consultant to the Council on Dental Practice of the ADA. Interested in knowing more about how to truly enjoy dentistry? Click here.

Interested in having Dr. Malcmacher speak to your dental society or study club? Click here.

To reach Dr. Malcmacher, email him at DrMalcmacher@thedentistsnetwork.net or call 1.800.952.0521.

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