Practice Development Charles J. Arcoria, DDS, MBA

Demographics

Location

Leasing/Purchasing Options

Financing

Selection of Equipment/Supplies

Fee Schedules

Utilization of Dental Consultants

Background Information

FACT = Most dental practices struggle financially because the practitioner does not FULLY understand the concepts of

marketing and promotional activities.

GOAL = Obtain optimum business by ANTICIPATING, then meeting the needs of the patient.

Demographics

Financial/economic

Population

Trends

Competition

U.S. Census BureauFact Finder

http://factfinder2.census.gov/faces/nav/jsf/pages/index.xhtml

The Policy Map

http://www.policymap.com/LandingPages/competitors.html?gclid=CMjj-9CjlKwCFUXu7QodgmwFmw

City-Data.com

http://www.city-data.com/

Demographics – Consumer Flow

Demographics Now

Scott McDonald

http://www.dentaldemographics.com/reports_marketing_demographic.asp

ADA Workforce Data

http://www.ada.org/1622.aspx

Perceived Competition

DemographicsControllable Marketing Variables

>Price and costs

>Service

>People

>Place or location

Uncontrollable Marketing Variables

>Social & cultural

>Government & legal

>Technology

>Economic conditions

>Competition

Location

>What type of practice do you want?

>How much can you physically produce?

>Find reliable information & sources

>How much income is enough?

>Focus on wealth and/or income?

>Where do you really want to live?

>Set goals - financial, personal, professional

>Continually study economic trends

>Initially keep costs low - budget

Location – Study Economic trends

Site SelectionLocation

Urban vs. Suburban vs. Rural

Office Building vs. Professional Building vs. Retail Center

Commercial Real Estate Brokers Negotiate lease for you

Will slightly increase your rental rate

Can get you into spaces that you do not have access to

Are aware of new projects/developments before the public is

Referral Base Important for Specialists; Know which General Dentists

currently refer to existing specialty practices

Leasing/Purchasing Options

Tax advantages of leasing vs. building>Entire lease payment is written off each month

>Buildings are treated as real estate – financed over a long period of time (usually 20 years)

>Buildings have a small payment per month, but the tax write-off is spread out over the 20 year loan.

>Advantage regarding Building = No landlord

>Disadvantage regarding Building = Neighborhoods change over time

>Advantage regarding Leasing = Can move to better location quickly

>Leasing is more popular in Urban locations

Leasing vs. Building

Leasing/Purchasing OptionsSite selection/space/leasing/improvements

>Design plans vs. Construction plans>Design Plans are not acceptable by most City Inspection Departments

>Construction Plans have the complete Engineering Specifications on the blueprints

>Construction CostsThese usually average around $70 per square feet

Landlords want to approve the construction bid

>Leasehold improvement allowance>Landlord will provide either cash or free rent, after the construction is finished

>Subjective location analysis>Use your gut feelings about a generic location

Types of Financing

1. Conventional bank loan

2. SBA loan

3. Lease or signature loan

4. Unconventional financing

Financing

1. “Bricks & Mortar” set-up

2. May have a healthcare division

3. Simple interest loans with fixed terms

4. Will finance less than 100% of need

5. Significant paperwork to fill out

Conventional Bank Loan

Financing

1. Backed by U.S. Treasury – good for the bank that you are filing with

2. Usually has a healthcare division

3. Simple interest loans with fixed terms

4. Will finance up to 95% of need

5. Much paperwork to fill out

SBA Loan

Financing

1. Finance Company – not a real bank

2. Responsible to their shareholders

3. Use lease financing terms that do not calculate simple interest

4. Will finance up to 100% of need

5. Little paperwork to fill out

Lease or Signature loan

Unsecured Loan

Financing

1. From a relative or a friend

2. Must pass IRS criteria – cannot be a “no” interest loan

3. Interest rates are usually slightly less than SBA loans

4. Must pay back all of loan, or it is classified as a gift – taxable issues

Unconventional Financing

Financing Costs – Spreadsheet Analysis

Financing Costs – Expense Items

Financing Costs – Loan Proceeds

LOAN PROCEEDS Working capital $45,000 Dental equipment & computer software $95,000 Leasehold improvements $75,000 Sign, external fixtures $3,000 Furniture $8,000 Dental supplies $12,000 Security deposit, attorney, consultants $7,000 Office supplies $10,000 Landlord allowance - improvements ($5,000)

TOTAL LOAN $250,000

Selection of Equipment/Supplies

>Use of equipment dealers vs. mail order

>Bids and budgets

>Service after the sale

Selection of Equipment/Supplies

>Equipment dealers vs. IndependentsComparing Bids ::: Service after the sale ::: Warranties on Equipment

Henry Schein Dental

Southwest Medical & Dental

Buy Dental Equipment.com

Independent Dental.com

Patterson Dental

J&B Dental

Burkhart Dental

Lone Star Dental

Fee SchedulesObtaining Fee Schedules

1. Call offices in your area

2. Get schedules from insurance companies

3. ADA surveys

4. Purchase schedules

1. Udell Webb DDS

2. National Dental Advisory Service

3. Atlanta Dental Consultants – Tom Limoli DDS

Purchasing Fee Schedules

Utilization of Dental Consultants

1. Practice Management: Improve practice finances (mostly revenues)

2. Practice Brokers: Assist with buying and selling practices; appraisals

3. Hands-On Practice Managers: Actually work in a practice to enhance finances or operations

Types of consultants

Utilization of Dental Consultants

1. By the job – fixed fee

2. By the clock – hourly or daily rate

3. Percentage of revenues or sale

How are consultants paid or hired?

Utilization of Dental Consultants

1. ADA has directory of Dental Practice Management Consultants

2. National Association of Healthcare Consultants

3. ***Referral from colleague is the most optimum

Experience & Advice

The End