The
41 Professional
Advisory For Dental Professionals
IN THIS ISSUE TAX PITFALLS TO AVOID
SAVE 30-40% ON HEALTH CARE COSTS (AND GROW YOUR PRACTICE AT THE SAME TIME!)
David Chong Yen CFP, CA
SUCCESSFUL DENTAL PRACTICE TRANSITIONS
Dr. Ian Wexler
David Lind
CERTIFICATES OF AUTHORIZATION AND FAMILY MEMBERS David E. Rosenthal BA., LL.B.
STOP LOSING MONEY! Mark McNulty BA, CFP, CIM
“STAY OR LEAVE” ANALYSIS: EFFECTIVE PREMISES LOCATION MANAGEMENT Ian Toms B.Sc. (Hons)
BRANDING AND MARKETING A DENTAL PRACTICE Dr. Ron Weintraub
plus WHO AND WHAT DO YOU BELIEVE? NOTES FROM THE EDITOR
VOL. 41 : SEPTEMBER, 2009
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The Professional Advisory consists of a group of seven independent professionals who provide services to the dental profession, each of who specializes in a different eld. They have gathered to keep each other informed of the latest developments relating to the profession, and to produce this publication which is designed to provide expert information and advice solely for dentists and their advisors.
Who And What Do You Believe? RALPH CRAWFORD BA., DMD I suppose it’s my era, but in spite of radio, television and the internet, I still depend a great deal on the early morning newspaper for what’s happening around the world. I say it’s my era because how well I remember as a young lad in September of 1939 - long before television and the computer - going up and down the street of my Winnipeg newspaper route yelling “Eerrrxtra, Eerrxtra” to sell the special newspaper edition announcing Canada’s entry into World War II. And to this day the habit and routine is to skim the newspaper headlines along with my first cup of morning coffee. But who and what do you believe and how do you decide. A series of headlines in recent weeks really got my attention. Determination, and then some, required for a successful career - all about overcoming adversity. Recession is over, Bank of Canada says - sure, we’d all like to believe that. You can’t always get what you want - age and experience in buying motorcycle insurance (not that I own a motorcycle). And this advertisement headline really jumped out at readers, How Canadians can turn a turbulent stock market into massive profits. Added to this were five different advertisements in an automobile section that touted in large print, 0% Financing (as if you were getting something for nothing!). Again, who and what do you believe? Who and what do you believe? Whether it’s a newspaper headline, a magazine, a refereed journal, a speech from a podium or our own Professional Advisory, it ultimately boils down to knowledge, experience, integrity and motive. And surely well-
deserved gain and profit are considered acceptable motives. To this end our authors in this issue - and every issue - of Professional Advisory rely on their experience and integrity as they invite you to read their headlines and delve into their articles for a wealth of knowledge in which you can surely put trust and belief. David Rosenthal’s Certificates of Authorization and Family Members brings dentists up-to-date on an important professional corporation issue. Mark McNulty addresses five rules of financial management that will help to Stop Losing Money! And if you are considering an effective premises location, Ian Toms has excellent advice in his “Stay or Leave” Analysis. Moving on eventually comes to all of us and David Lind presents actual examples of how the real drivers of value work in a Successful Dental Practice Transition. There’s no doubt an uncertain economy presents problems attracting patients and letting them know what your office has to offer. Ron Weintraub’s Branding and Marketing a Dental Practice has the answers. Who doesn’t want to save money? Readers can believe without hesitation that saving money is entirely possible when David Chong Yen outlines certain Tax Pitfalls to Avoid when dealing with Canada Revenue Agency and again, “gained” money is what it’s all about as Ian Wexler lays out the features of a Health Spending Account and how you can Save 30-40% on Health Care Costs. Who and what do you believe? Essentially truth and trust is based on knowledge, experience and integrity. Or as aptly quoted by French poet and philosopher, Madame de Staël (1766-1817), Search for the truth is the noblest occupation of man; its publication is a duty. And may we always keep this in mind each and every day as we scan the headlines of publications - any publication. PA
crawford@dccnet.com
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Tax Pitfalls To Avoid DAVID CHONG YEN CFP, CA www. dcy.ca
are selling shares and because they believe the shares are a good investment, they subsequently buy them back right after the sale. They do this in order to trigger a capital loss while still owning the shares. The tax department has created a trap known as the superficial loss rules. This set of rules denies the loss except where the dentist or taxpayer waits more than thirty days before buying back the shares and does not purchase any additional shares 30 days prior to the sale. Another way of getting around this trap is by selling the shares and having the dentist’s adult children or parents buy back the shares immediately after he/she has sold them.
I wish to share some common tax pitfalls and ways to avoid them: 1. Often times the dentist and his/her family member may buy or lease a car in the name of the Professional Corporation (PC) and have the PC pay for all car expenses including gas, repairs, maintenance, etc. The tax department has a trap known as the standby charge and operating cost benefit. In essence, this trap will hurt the dentist and/or their family member as 24 per cent of the original cost of the car or 2/3 of the annual lease cost will be added to the individual’s income as if he or she received a salary equivalent to 24 per cent of the cost of the car or 2/3 of the annual lease cost. Although it is possible to have this addition to income reduced in certain situations, generally it would not make sense to have the PC own or lease the car unless the dentist or the family member uses the car at least 90 per cent of the time for business. Consider charging a tax free allowance to the PC as 4. Some dentists or their family members have follows: The PC will pay 52 cents/km (first 5000 businesses which continuously generate losses. Their km per year) and 46 cents/km for each additional rationale is that these losses will reduce their income business km driven. The recipient will get this from other sources. The tax department could trap amount tax free and the company will get a tax write this scenario by applying a test known as reasonable off for the amount paid. Note: business mileage expectation of profit (REOP). REOP basically excludes driving from one’s home to their dental questions whether or not one can generate a loss on a office, and vice/versa. If one drives indirectly, say from continuous basis and whether this loss is reasonable. one’s home to their accountant’s office and then to the If it is deemed to be unreasonable then the loss dental office, then this is considered business mileage. may be denied. Simply stated, where one has a side 2. A dentist may choose to pay his/her spouse or business which generates losses year after year, there family member unreasonably large amounts on the is a greater likelihood that this loss will be challenged premise that if the tax department disallows the by the tax department and hence greater chances of unreasonable portion then the only consequence will the taxpayer being audited. be a reduction in expenses and the spouse or family member will be taxed on the reduced amount. The tax By knowing the various tax traps, one can better department traps such scenarios by reducing the tax navigate around them with some peace of mind. PA deduction taken by the dentist to that amount which David Chong Yen, CFP, CA, of DCY Professional Corporation Chartered they deem appropriate or reasonable, while still taxing Accountants, has completed the CICA In-Depth Tax Courses and has been the recipient/family member on the higher amount. advising dentists for decades. Additional information can be obtained by phone (416) 510-8888, fax (416) 510-2699, or e-mail david@dcy.ca. Hence, this could result in double taxation. www.dcy.ca. This article is intended to present tax saving and planning 3. Given the recent stock market collapse, many dentists ideas and is not intended to replace professional advice.
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Successful Dental Practice Transitions DAVID LIND www. ppsales.com
Over the last several months I have been speaking at various Study Clubs and Dental Societies on the topic of Successful Dental Practice Transitions. This article condenses my presentation into a quick read of the current dental practice sales market and what you can do to be successful as a buyer or a seller. The Drivers of Dental Practice Value You can probably quickly come up with statistics relating to your gross production, number of operatories, size of your office or the number of team members you have. All of that is important but these elements are minor contributors to value. You really should know how many active patients you have and what your adjusted net income is. The two main drivers of dental practice values are Patients and Profit. The absence of either of these factors makes your practice very difficult to sell. Some of the other factors that contribute to value are location, productivity, hygiene department, assignment, competition, overhead, and reproducibility of results. Equipment and leasehold improvements are also factors buyers consider. They are in a different category though because they are easy to change. If a buyer doesn’t like your old equipment or dated decorating they can easily call their dental supply company or contractor and have them changed. Who do they call to order more patients? The following actual examples illustrate how the real drivers of value work: Practice 1 • $1,300,000 Gross • 1000 Patients • 15% Lab • $200K Hygiene • Professional Bldg - Midtown Toronto • $816,000 Gross Cash Flow
• Non-assignment • 3ops-$90K Assets • Value-$680,000 / 52% of Gross Practice 2 • $1,100,000 Gross • 2800 Patients • 6.4% Lab • $330K Hygiene • Professional Bldg - Mississauga • $645,000 Gross Cash Flow • Non-assignment • 6 ops-$390K Assets • Value-$1,390,000 / 125% of Gross As the examples show, the biggest contributor to practice value is the patient count followed closely by profit. In Practice 1, the value is held back by the low patient count relative to the gross production even though the cash flow is strong. What would the outcome be if a buyer followed one of most misused rules of thumb and paid 80-90 per cent of gross for this practice? In Practice 2, the value is enhanced by low productivity relative to the patient count coupled with stable, repeatable earnings. Imagine how much the vendor of Practice 2 might have left on the table if they didn’t know the true value of what they had. In valuing dental practices all of the factors must be considered and the numbers analyzed against each other to produce a meaningful report. Nothing is more important than Patients and Profit. Considerations for Sellers It is best to begin planning for the sale of your practice well in advance. Ten years ahead is not too early but most people don’t plan that far ahead. If possible, planning should begin at least five years before you sell. You should analyze the productivity of both the hygiene and dental departments. Both should be optimized prior to a sale. Your premises lease is a key element in creating value. A buyer will not want to buy your practice if the tenancy is not secure for at least seven years. Further, the banks and finance companies will not finance the purchase of your practice without a good long term lease. Patient charts should be purged so that you have a
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limited number of inactive charts mixed in with your active charts. A professional valuation will give you insight into these and many other factors of your practice and can be an excellent start to making the necessary adjustments to ensure your practice is positioned in the best possible way. Considerations for Buyers First and foremost, don’t do this alone. Accountants, lawyers, consultants, bankers, and brokers, have all been through this many times. Employ them to help you make the right decision. Remember that Patients and Profit make value so you should have complete confidence in the numbers you are reviewing in these two important areas. Review the valuation with your trusted advisors, and make sure you have a good understanding of the contained information. You should also take time to do your own chart audit. It is also important for patient retention that there are similarities between you and the vendor. For instance,
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if the vendor only uses amalgam for posterior restorations and you only use composite, this would be a problem. Invest enough time to become educated on the market and understand what you want and what you don’t want. It may be very difficult to find the perfect practice so be prepared to compromise on the “nice to haves” while making sure you don’t forgo the “need to haves”. When you find the right practice, act swiftly. Please feel free to contact me if you would like me to come to your Study Club or Dental Society meeting to do the full presentation on Successful Dental Practice Transitions. PA David Lind is a Partner in Professional Practice Sales (Ontario) Ltd. (www.ppsales.com), which specializes in the valuation and sale of dental practices. He can be reached at (905) 472-6000 or 1-888-777-8825 or e-mail at: david.lind@ppsales.com
Certificates of Authorization and Family Members DAVID ROSENTHAL BA., LL.B. It’s that time of year again. Yes the summer is ending, but more importantly August 31 is the deadline to renew the certificate of authorization (Certificate) for all dental professional corporations (PC). A PC has the right to carry on the business of dentistry and operate a dental practice only after the Royal College of Dental Surgeons of Ontario (College) has granted a Certificate. That right continues until the Certificate is revoked or expires. The Certificate expires on August 31 in each year, regardless of when during the year the Certificate was issued. A PC which obtained its Certificate on August 1 must still renew that Certificate by August 31. There are currently over 3,000 PCs in Ontario. That means roughly 40 per cent of all dentists have
PCs. Both principals and associates may use a PC and there are many advantages to doing so. As these are mostly tax driven advantages, speak with your accountant or other tax advisors to determine whether a PC is appropriate in your circumstances. If a PC carries on dentistry without the Certificate, this may result in the dentist shareholder/director of the PC facing the College Discipline Committee for allegations of professional misconduct. Therefore it is critical that you renew your PC’s Certificate. The College does not have discretion in extending the time period. If a PC does not renew its Certificate, the College will send the PC a reminder/default notice. After 60 days the Certificate will be revoked. If you missed the August 31 deadline, it is still not too late to renew your Certificate, provided you renew before the revocation date. As I and my colleague, Barry Spiegel, Q.C. (now retired from the practice of law), discussed in previous articles of The Professional Advisory, the laws were changed several years ago to permit family members of a dentist to be non-voting shareholders of
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the dentist’s PC. A “family member” is defined to mean a dentist’s spouse, child or parent. A “spouse” is defined as someone to whom the dentist is married or with whom the dentist is living in a conjugal relationship. However, note that only the dentist’s parents but not in-laws or grandchildren qualify as family members. Section 85.9 of Schedule 2 of the Ontario Regulated Heath Professions Act (RHPA) requires a PC to notify the College Registrar of a change in the shareholders of the PC. This requires the PC to file a notice of change of shareholders together with a statutory declaration with the College when family members were added to the PC. The RHPA was recently amended to add the words “who are members of the College” at the end of that section. What does that mean in practice? Effective June 4, 2009, the College no longer requires notification of the addition or change to non-voting family member shareholders of a PC. Notice is still required where dentists are added or cease to be PC
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shareholders (whether voting or non-voting shares). For the annual renewal of the PC Certificate, family members are no longer listed in the non-voting shareholder section. However, when a PC applies for its initial Certificate of Authorization (not the annual renewal Certificate), the application still needs to list all non-voting shareholders of a PC, including family members. This may seem puzzling, as the next time the PC renews its Certificate, the family members will not be listed in the renewal application. Perhaps future amendments to the RHPA will eliminate the need to even list family members in the initial application for a Certificate of Authorization. In the meantime, make sure your PC renews its annual Certificate in a timely fashion. David Rosenthal is a senior lawyer with Spiegel Rosenthal Professional Corporation whose practice is devoted to corporate, commercial and business law, with special emphasis on advising and consulting for the dental profession. He can be reached at (416) 865-0736; or fax to (416) 203-8592; or e-mail to david@drlaw.ca. PA
Stop Losing Money! MARK McNULTY BA, CFP, CIM www. mcnultycentre.com
I recently met with Dr. Y and his wife (both 49) at their home outside a major urban centre. Dr. Y has one of the most lucrative practices I have ever come across, and I have seen a lot of practices. The strange thing however, is that Dr. and Mrs. Y have a below average “retirement nest egg”. Our average client is spending $10,000 per month, after-tax, indexed for inflation in retirement. How can a family with a net income of over $1,000,000 per year not be able to afford the lifestyle of our average client? It’s simple. Dr. Y neglected the truism that is preached by my partner and father, Barry McNulty. “Make your money in your practice and once you make it, don’t lose it!” Unfortunately, Dr. Y became involved in several different money making/tax savings “schemes”.
One such “scheme” involved a multi-corporation structure tied to a tax shelter investment. The proposed scenario was that Dr. Y would be able to take out a significant amount of money from his practice without paying any income tax. In reality, Dr. Y contributed $250,000 per year for the past four years - a total of $1,000,000 in contributions. The value is now only $463,000. In other words, the prospect of this great strategy cost Dr. Y and his wife $537,000! If Dr. Y had simply banked his money for the past four years, he and his family would be $537,000 ahead - after-tax! Financial management, in my experience, is best kept simple. Sound financial management is plain hard work. It requires you to set targets, implement strategies to manage towards the targets, and track your progress. It isn’t one complicated strategy or “scheme”. Most dentists would do well to adopt the following beliefs when it comes to managing your finances: 1. Concentrate on producing financial growth within your practice, not afterwards. 2. Use all legal means to save or defer income taxes.
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3. Spend less than you make. 4. Determine a financial strategy - we call it Your Number™ - and take the long road to achieve it. 5. Track your progress -“What gets monitored gets improved”. 1. Your Practice Either you plan to live on what your practice will produce or you plan your practice so it will produce what you need for current and future needs. Either way, the wealth your practice creates should dictate how you live (financially). 2. Income Tax You should always have an up-to-date opinion on professional incorporation, hygiene incorporation, RRSPs versus Individual Pension Plans, how to get money out of your corporation now and at retirement, etc. Do not enter into any income tax strategy without an exit plan. 3. Spend less than you make I realize this is self-evident but it is worth repeating. We can only control so many things in financial management. Our exposure to equities is one, our income tax is another, but in the end it comes down to what it costs to maintain our lifestyles - how much we spend on a monthly basis. Keeping this number low almost guarantees financial success. 4. Your Number™ Your Number™ is a financial management system that
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runs your capital to optimize your after-tax cash flow in retirement. In other words, your pools of capital (RRSPs, practice, non-registered investments etc.) are not focused on an arbitrary return objective. The strategy is designed to create an optimized after-tax cash flow for life. Currently, the average for our clients is $10,000 per month, after-tax indexed for inflation. 5. What gets monitored gets improved Too many dentists only see their whole financial picture once a year when they get their financial statements and income tax returns. It is our opinion that this is not enough. A quarterly program should be set up to determine when you are on and when you are off track. This improves our ability to adapt to challenges and to take advantage of opportunities more quickly. Targeting these five rules of sound financial management will help you avoid the schemes in which Dr. Y became involved. Instead of just telling you to “keep it simple”, these five rules show you how. When you are approached with a “too good to be true” story, check whether it falls within the five rules. PA
Mr. Mark McNulty BA, CFP, CIM, is a financial advisor with Raymond James Ltd., Independent Financial Services - Member CIPF. This article is for information only. Its opinions are those of the author, not necessarily those of Raymond James Ltd. He may be contacted at 905-470-6222 ext 209 or mark.mcnulty@raymondjames.ca.
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Save 30-40% on Health Care Costs (And Grow Your Practice At the Same Time!) DR. IAN WEXLER www.protect-ins.com
you are not subjected to traditional medical or financial underwriting. Types of HSAs There are two different Health Spending Accounts available - one for incorporated individuals or employees of a corporation (Health and Welfare Trusts - HWT) and one for self-employed individuals (Personal Health Savings Plan - PHSP). Here are the differences: 1. Health and Welfare Trust (HWT) • Incorporated businesses • No annual maximums • Funds roll over indefinitely • Two or more employees 2. Private Health Services Plan (PHSP) • Non-incorporated/sole proprietor: • Annual maximums based on family size o $1,500 / sole proprietor o $1,500 / dependent over 18 years old o $750 / dependent under 18 years old • Two year forfeiture of funds from date of deposit
How would you, your dependent family members, your staff, and even a number of your patients like to completely deduct medical AND dental expenses not covered by OHIP or a group healthcare plan? Today, all of this can happen by starting a Health Spending Account or HSA. A HSA is a uniquely designed “bank account” established exclusively for healthcare spending and is designed to comply with Canada Revenue Agency guidelines of the Income Tax Act 339 and 85 R2. Setting up an HSA allows the funding of health expenditures by using pre-tax dollars, thereby greatly reducing the “bottom line cost!” This can translate into a savings of 30%- 40% per year for medical and health related services, which is far beyond the savings you would receive from a medical tax credit. In addition: • Contributions are recognized as a 100% business deduction in the year in which they are contributed; • Unspent contributions are not lost at year-end - Eligible expenses through a Health Savings Account Audiologist Services Prescription Glasses Physicians and Surgeons they carry forward for spending the following year; Contact Lenses Naturopathic Services Physiotherapist Services • It can be layered on top of traditional health benefit Fertility Drugs Chiropodist Services Psychologist Services Denturist Services Massage Therapists Dental Hygienist group plans to cover services not covered by the plan; Diabetic Pumps Pharmacist Services Cosmetic Surgery • Providing HSA information to your patients Orthodontic Care Dieticians Overseas Medical Services who have their own business can result in a higher Respiratory Therapists Medical Radiation Treatments Elderly Parent Care level of accepting dental care when cost is an issue. Laser Eye Surgery Nursing Services Medical Lab Services Anti-Aging Treatment Dental Surgeon Assistive Devices An HSA will: Hair Removal Treatments Hair Replacement Surgery Occupational Therapist • Supplement their existing dental benefit plans; • Make dental care “more affordable by allowing General Q & A the deduction of dental care fees 100%!” This 1. What are some other HSA Benefits? includes everything from implants and crown/ • Employee appreciation o Instead of typical bonuses and raises, this is a tangible bridge, to endodontics and orthodontics…and benefit that can be carried over into future years and is even whitening and other cosmetic procedures! portable. • This is not an insurance product and therefore
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• Dependents are covered. This includes children HSAs work, there is a complete Q & A section, and AND any other family members (parent, you can even set up a program on-line. At Protect, grandparent, uncle, sister or anyone else dependent we even have two HSA specialists, Ashley Paris and on you for support) Andrew Duckman, who would be pleased to answer • High level of flexibility and control in terms of any questions you have. Their emails are aparis@ covered services/procedures protect-ins.com and aduckman@protect-ins.com. • The entire process is easy and simple to implement 5. How do I make my patients aware of Health (no annual paperwork logjam at tax time) Spending Accounts? 2. How does a HSA plan actually work? Depending on how and where you set up your HSA, Your practice or professional corporation makes you may wish to find out what additional services a contribution on behalf of an employee(s) into a are provided in order to educate your patient. At Health Spending Account to be used on medical Protect, we provide our dentist clients as well as or other qualifying expenses incurred. It is a non- other professional clients with customized brochures taxable benefit for the employee and a 100% for the patients of their practices, explaining how business deduction for the company. Contributions they can benefit from HSAs in obtaining services at are determined at the start of the program for each that office. employee enrolled. 6. Why haven’t I heard about HSAs before? 3. What are the costs associated with opening a HSA? Although they have been around for a while, HSAs This will vary depending on how you implement the have not been widely advertised or promoted. They plan. Some administration companies charge a large appear to be getting more press and more and more “upfront fee” to set up the program, while others individuals are finding out about them. At the end charge a 10% administration fee on all contributions of the day, everyone who qualifies to set up an HSA plus applicable taxes with no set-up fee. should have one! PA 4. How do I get additional questions answered and Dr. Ian Wexler is Canada’s leading authority on insurance issues for how do I set up an HSA? You may wish to speak to your accountant, insurance dentists. He is the President of Protect Insurance Agencies Inc. in Toronto advisor, or check various websites to learn more. My which provides specialized expertise in life, disability, critical illness, long term care, annuities, and other insurance products and services to firm Protect Insurance has set up a dedicated website professionals, executives, and business owners across Ontario. He can be for HSAs… http://protect.benecaid.com At this reached for questions or other enquiries at (416) 391-3764 or drwex@ site, you can read comprehensive details about how protect-ins.com
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“Stay or Leave” Analysis: Effective Premises Location Management IAN D. TOMS B.Sc. (Hons) www. iantoms.com
Knowledge is power. When you understand how your premises realty attributes compare to alternate opportunities, you can effectively manage your position. For example, would an alternate location with improved signage, immediate free parking and a lower rental rate improve your practice performance? In order to make an informed decision, you need to know what the alternate opportunities are, and to match your realty with the type of practice you want. Properly priced appropriate space enables you to achieve your vision of practice performance. Now is the time to understand how your premises compare to alternate opportunities for two reasons. First, as discussed in my article The Changing Realty Leasing Market* your rent may no longer be the “good deal” it once was. The Toronto Real Estate Board reported that during this past May the average net rent for commercial space was down 22 per cent from the same month last year (2008), which was up 9 per cent from the previous year (2007). Therefore we are back to pre-2007 rates. Further, as each month passes, the total amount of space leased in the Toronto market remains significantly less compared to the same period last year. Secondly, it’s time to geographically position your practice to address changing demographics, increased competition and the demands of educated patients. You must understand the opportunities afforded by each alternative realty type discussed in a previous article The View from Here*. In order to facilitate the decision making process you need objective data collected and organized in a clear
and appropriate manner to provide an easily interpreted snapshot comparing your premises attributes to the alternative opportunities. The first step is to understand your realty type by considering your monthly occupancy cost, and how your realty type is affecting your practice in a positive, neutral, or negative way. Primary characteristics to consider include how the space is measured, the rental payment amount, and operational concerns such as, size, signage and parking. Then you need to collect and understand comparable characteristics of alternate realty opportunities. The relocation cost needs to be factored in as part of the occupancy cost. Note that relocation cost is often significantly offset by free rent, tenant improvement allowance, and landlord work - making relocation costs surprisingly affordable if amortized over a reasonable period of time. Prepare this data by converting each attribute to a common standard. For example, you need to convert rent expressed on a per useable square foot per annum basis as opposed to the various forms it is initially presented by the landlord. Tabulate the converted data in a convenient and simple form. Now you can easily compare and project how the characteristics of each of the alternate locations would affect your practice, and decide whether relocating will provide you with the best overall alternative. This process is called a “Stay or Leave” analysis. The “Stay or Leave” analysis is a powerful tool and a fundamental step in site selection projects (which site provides the biggest “bang for the buck”) and lease term renewal projects (leverage position with current landlord). The analysis will also provide direction when deciding whether to continue leasing or to purchase and relocate to your own premises. Consider the detail presented in the following Stay or Leave chart example. The existing premises is located in professional office space, with no signage, pay parking, and leased storage space. The base rent proposed
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in the renewal term is $12.50 per square foot for each year of the five year renewal term. Utilities are included in the additional rent. The parameters are compared to alternate space in three retail developments and one medical office building. All of the retail space is typical, located on street level, with good signage, significant free parking, and free storage space. The medical office space is similar to the current location. Relocation cost is estimated at $15.00 per square foot, amortized over 10 years with no interest considered for the purpose of this analysis. The tenant in this example could in fact save $28,560 over the next 10 years by moving into larger, visible, and immediately accessible street level space! Alternately,
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a move into slightly smaller space, also with significant visibility and free parking would save $112,080 or $82,440 depending on the space selected. Bear in mind that the shape of the space determines whether all of the space is useable so the absolute size may not be as important as it seems. My strong advice is to consider your alternatives! *For additional referenced articles please visit the Resources section of www.iantoms.com. PA Mr. Toms has been creating and preserving realty leasehold value for tenants and landlords since 1986 and can be reached at (705) 7431220, by e-mail at iantoms@pipcom.com, or through his web site at: www.iantoms.com.
Building and Marketing a Dental Practice successful dental office, but promoting it is even more important in an uncertain economy. Some dentists don’t realize that they are experiencing a delay in the negative effect on the business aspect of the practice in the economic downturn. As a result of the anxiety DR. RON WEINTRAUB of patients who have lost their jobs to get treatment www.innovativepracticesolutions.ca completed before dental benefits expire, the decline in The need to promote our practice in a professional patient base is artificially camouflaged. The desirability manner has always been an important aspect of a of developing a plan to promote dental practices
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has become apparent in the present economic downturn. HOW DOES ADVERTISING WORK FOR A DENTAL OFFICE? Advertising often conjures up a negative connotation in the minds of many traditionalist dentists including myself. Understanding the differences between conventional advertising and branding or marketing helps us develop strategies to present our practice in a positive light. Conventional advertising is the medium used to get the message out of who we are, where we are, what our hours are, and what we do. The Royal College of Dental Surgeons has developed a code of conduct that prohibits practitioners from holding themselves as having special skills as if they were specialists. In developing advertising plans, therefore, it is incumbent upon us to uphold these restraints as they are designed for the protection of the public and our profession. One of the advertising tools dentists frequently use is creative signage with good external exposure, where available. Effective signage can be a useful tool if tactfully done in an eye-catching way. Oftentimes, signage includes a stylized logo. The wisdom of using sophisticated logos welcoming a range of generations of children and older patients cannot be overlooked instead of the plethora of stylized molars currently identifying dental offices. This type of logo might trivialize a complex, sophisticated healthcare facility and give an unintended message. Advertising, however, plays only a small part in our effort to invite patients who are looking for a new office with whom to affiliate. HOW DO WE BRAND OUR OFFICES? Attracting patients particularly in an uncertain economy requires letting patients know exactly what we offer and how we differ from other dental offices. We can do that by giving our office a specific brand by distinguishing and articulating a clear message why this practice is different from other practices. In fact, by branding our office, we are putting the perception of our focus in the minds of the patient. Prospective patients can then identify with the clear message it sends. To accomplish effective branding, we need to write down the specific principles by which we run our dental practice. Similar to other businesses that have mission and vision statements, dentists’ branding needs to include our specific focus and values. The most important component of branding is that
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we internally examine all aspects of the practice. Taking inventory of our existing operation with a view to gaining a heightened awareness of its defining attributes sometimes reveals surprising information. Concurrent with defining that which embraces the essence of the practice, we often discover what the existing patient base is receiving. The branding phenomenon is coming on so strongly that we have welcomed a certified branding/marketing specialist to work with us on these matters. Once the brand is articulated, each team member’s responsibility is “to live the message” at each meeting with existing patients and in general communications. We need to take available opportunities to train staff to represent and reinforce our brand upon patient arrival and departure and during the patient’s chair time. Branding our office alone will not draw a large pool of patients immediately. It takes time to get the message of the practice to the targeted potential patient population. Once we have developed the core message, now is the time to advertise. HOW DO WE MARKET OUR OFFICE? Marketing is the active process of disseminating the message that, in fact, brands the office and its core philosophy. For best results, we need to identify the segment of patients to whom the core message most resonates and direct the marketing endeavors toward them. External advertising is only one small component of marketing thus explaining why strictly advertising has limited success. Therefore, effective advertising is dependent on creating a specific brand, targeting our potential patient pool, and strategically investing our advertising dollars to maximize its effect. Although branding does not bring instant success to our office, it brings new patients who seek a dental practice that shows leadership and confidence in the procedures and services we render. PA Ron Weintraub is a founding partner with the Bayview Village & Downtown Dental Associates and brings over thirty-five years of knowledge and experience in the practice of general dentistry to the Professional Advisory. Large companies such as Patterson Dental, Ash Temple Ltd, Henry Schein Arcona, & the former Canadian Dental Co. have benefited from his insight. As owner of Innovative Practice Solutions, Ron advises dentists on practice enhancement, practice purchases, sales, location evaluations, associate buy-ins, and business mergers. Dr. Weintraub can be contacted at (905) 470-6222 Ext. 221 or drronips@rogers.com.
The views expressed in any article are those of the author alone. They should not be acted upon without the advice of your “professional advisors”.