The Professional Advisory February 2015 by Annex Business Media

The Professional Advisory

FOR DENTAL PROFESSIONALS

VOL. 68 February 2015

Nowhere to Go But Up!

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Contents

3 4

Nowhere to Go But Up! Ralph Crawford BA., DMD

New Year Tax Resolutions

David Chong Yen CPA, CA, CFP Louise Wong CPA, CA, TEP

6 8

A Real Patient’s View

From Our Book: The $6 Million Dentist

Leasing Opportunities in the Current Realty Market

Kirsten Lind Intro by David Lind

Selling a Dental Practice in Stages

David E. Rosenthal BA., LL.B.

Mark McNulty BA, CFP®, CM®

Biographies Ralph Crawford is an Honours Graduate from the University of Manitoba and has enjoyed a varied dental career. Prior to being editor of the Canadian Dental Association Journal from 1989 to 1997, he operated a Winnipeg private practice concurrently with being a clinical instructor at the University of Manitoba. He served as President of both the Manitoba Dental Association and Canadian Dental Association. David Chong Yen and his chartered accounting firm currently advise hundreds of dentists and healthcare professionals on tax, estate and financial planning, valuations and accounting. David obtained his Bachelor of Arts degree from the University of Toronto, attained his Chartered Accountant’s Designation while working at an international firm and has subsequently completed the CICA In-Depth Tax Courses. David Lind is the Principal and Broker of Record at Professional Practice Sales Ltd., which was established in Ontario in 1991 and is a leader in dental practice valuations and sales. Prior to joining PPS, David lead the healthcare business for CIT Financial Ltd. This gave him a strong understanding of the personal and professional needs of dentists as they entered and exited the profession. David Rosenthal is a senior lawyer whose law practice is devoted to business, corporate and healthcare law for dentists. David advises dentists on a broad range of legal matters, with particular emphasis and legal advice on purchases and sales of practices, corporate reorganizations and professional corporations. David also speaks frequently about such matters, including guest lectures at the faculties of dentistry.

Ian D. Toms B.Sc. (Hons)

Perceived Oversupply of Dental Offices Dr. Ron Weintraub

Mark McNulty is President of McNulty Group, a firm responsible for managing $250 million of Ontario dentists’ retirement savings. McNulty Group helps professional families transition from a life of successful practice to a stress-free retirement by using a holistic approach of practice and personal retirement planning. Mark is the author of The Transition Coach 2.0–A Canadian Dentist’s Guide to a Perfect Retirement, and The $6 Million Dentist: Successful Succession in 8 Modules. Ian D. Toms is a nationally recognized real property lease consultant with over 27 years experience. He is considered an authority on tenancy issues, lease features, facilities and technicalities, and the art of tenancy negotiation. Ian has drafted and negotiated thousands of lease arrangements for national retail and medical professional tenants in 16 states and 8 provinces, with a specific emphasis on the GTA. Ron Weintraub is the founder of Innovative Practice Solutions (IPS) and former owner and founder of Bayview Village Dental Associates and Downtown Dental Associates. He practiced dentistry from 1963-2004 and has consulted on behalf of major dental suppliers, manufacturing companies, as well as individual dental offices for over 20 years. In 2004, Ron gave up clinical practice in order to focus soley on Practice Management.

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“The Professional Advisory consists of a group of six independent professionals who provide services to the dental profession, each of whom specializes in a different field. 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.”

Notes from the editor:

Nowhere to Go But Up! Ralph Crawford BA., DMD crawford@dccnet.com

full page story in a recent sports section of the Vancouver Sun really caught my eye. Initially it wasn’t as much the title – Nowhere to Go but Up – that aroused my curiosity, but the accompanying photo followed by the five column story outline. It was all about wall climbing. And the opening sentence said it all: In this sport, there is only one opponent. The Wall. Knowing nothing about wall climbing, and certainly never having participated in it, I somewhat eagerly read the whole article with interest. As the title refers and the sub-headline states, the Sport is reaching new heights as the number of climbers grows rapidly, and then goes on to state that a few years ago climbing walls were a rarity but today everywhere you look there are signs of growth. But at the same time reference is made to the fact that climbing is one of our very first human activities. Don’t we pull ourselves up onto a chair or our mother’s leg before we start walking? Another aspect of wall climbing that caught my attention was the fact that while danger lurks around them a climber often has to rely on a perfect stranger to “spot” for them and as one expert climber states, A willingness to make friends is definitely a prerequisite of the sport. Sounds great for any sport! Is there now a possibility with all this insight into a sport of which I knew little that I will now take it upon myself at this late stage of life to start something new and challenging? Not likely. But there is certainly wisdom and a challenge for all of us in the direction that wall climbing and life itself can take us. There is Nowhere to Go But Up! This saying of wisdom is certainly not new and has been applied over the years to endless efforts of human endeavour – and is certainly applicable to the wisdom found within the pages of this current issue of Professional Advisory. David Chong Yen and Louise Wong

point out that with the new year upon us it’s time to consider financial and tax resolutions and they then outline ten resolutions that will take you nowhere but up. Mark McNulty continues to introduce his new book The $6 Million Dentist with the hope that it will be a useful tool for dentists at all stages to establish financial plans that again have nowhere to go but up. When dealing with Leasing Opportunities in the Current Realty Market Ian Toms outlines that if a tenant has realistic expectations and uses an approach geared to the current circumstances there is every opportunity to advance. Advance where? Nowhere but up of course! David Rosenthal wisely outlines that Selling a Dental Practice in Stages is becoming more popular and that a staged sale can be an excellent arrangement that leads both the Vendor and Purchaser in certain circumstances where? Onward and up of course. It is interesting how in his review, Perceived Oversupply of Dental Offices, Ron Weintraub first deals with the seven sources of the abundance of dentists and then outlines the six solutions that should eventually lead dental practices into an upward enterprising direction. And how enlightening it is when David Lind’s daughter Kirsten outlines A Real Patient’s View of her very personal unhappy experiences with oral health that eventually finds a valued solution when a dental office’s goodwill policy leads her upward into a whole new perception of oral health care. Yes, and with much satisfaction that it’s just not wall climbing, but also the multiple pages of sage advice within the Professional Advisory that helps point the dental profession Nowhere but Up!

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New Year Tax Resolutions David Chong Yen CPA, CA, CFP Louise Wong CPA, CA, TEP

ith a new year upon us, it’s a good time to consider your financial and tax resolutions. Here’s our list of New Year tax resolutions to help get your year off to a good start. 1. Create a budget: In order to manage your finances you need to develop a budget that you can stick to. Start with prior year`s income and remove taxes first. Taxes are easy to forget because they are usually due at the end of the year when all the money has already been spent. After taxes, write down your monthly recurring expenses such as mortgage payments, car payments, cell phone and internet. Estimate amounts for non-recurring expenses you know you will have such as gifts, meals and travel. Finally, ensure there is an emergency fund set aside to cover your personal expenses for 90 days. 2. Identify your debts and pay them off in the correct order: While you may not be able to achieve it in one year, being debt-free is a goal shared by many. Paying down debt the right way will help you minimize your taxes and pay off debts faster. In general, you should pay off high interest debt such as credit cards first or anything over 5.0% regardless if it is tax deductible or not , then non-deductible debt such as student or personal line of credits and lastly tax-deductible debt such as investment loans or your practice debt. 3. Plan to make a mortgage prepayment: Most mortgages allow you to make an annual lump sum prepayment without penalty. Even if you can`t make the prepayment this year, mark the next mortgage prepayment on your calendar so that you can budget to have savings ready for the next opportunity. 4. Mark your calendar for important tax dates: The key to avoiding interest and penalties is paying and filing your taxes

on time. There are more tax deadlines than just April 30th. Ask your accountant for a list of dates you should know and mark them in your calendar. 5. Pay your tax installments on time: Instalments are required when you receive income that does not have sufficient taxes withheld. This would include dividend, interest, capital gains, business and rental income among others. Instalments are usually based on the previous year`s tax bill. By budgeting for and paying your tax instalments on time, you will minimize the risk of a large unexpected tax bill at the end of the year. 6. Top up your Tax Free Savings Account (TFSA): January 1st is the first day you can contribute an additional $5,500 into your TFSA. All income earned inside a TFSA is tax-free. Even if you are a risk adverse investor, a TFSA will let you park your cash to earn tax-free interest and give you the flexibility to take it out when you need it. You won’t receive a tax deduction on contributions to a TFSA, but since there are no taxes on withdrawal, a TFSA can serve dual purpose as both an emergency fund and a tax-efficient savings account. If you have not contributed to a TFSA before, you can deposit up to $36,500 as of January 1, 2015 to earn tax-free investment income. 7. Top up your RRSPs: If you have the contribution room available, would like to reduce your tax bill and invest in your retirement, consider topping up your RRSPs. The deadline to contribute is March 2, 2015. A $10,000 RRSP deduction could

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mean a reduction in taxes of $4,953. If you are not a regular RRSP contributor and would like to contribute this year, you should factor this into your budget by setting aside funds to be contributed to your RRSP. It is easier to contribute each month to a RRSP versus contributing one large lump sum. 8. Top up your Registered Education Savings Plans (RESP): Consider an RESP to spread the burden of your children’s education costs into manageable amounts. You can contribute up to $50,000 to an RESP and receive a grant of up to $7,200 for the lifetime of your child. There is no annual limit; however you can only receive the annual $500 grant on the first $2,500 in contributions each year. Any additional contributions in the same year are not eligible for the grant. 9. Keep your tax records organized: Consider going paperless and scanning all relevant information monthly into a safe and secure folder on your hard drive. The folder can then be sent to your accountant electronically. You can even get a low income family member to assist with this and pay them a reasonable amount, thereby reducing your family’s overall tax bill. This makes organizing your records easier and tax friendly.

The key to avoiding interest and penalties is paying and filing your taxes on time. There are more tax deadlines than just April 30th.

10. Budget some time and money for fun: Creating an annual financial plan won’t be a priority if you don’t remember to budget some time and money for fun such as travelling. If you time your vacation with an eligible professional development course, seminar or convention, a portion of your trip could be tax deductible. The beginning of a new year gives you a fresh start to set and achieve new goals. If you implement the above resolutions, you can look back this time next year and see that achieving your financial goals can be painless. Please send comments to

This article was prepared by David Chong Yen, CPA, CA, CFP and Louise Wong, CPA, CA, TEP of DCY Professional Corporation Chartered Accountants who are tax specialists and have been advising dentists for decades. Additional information can be obtained by phone (416) 510-8888, fax (416) 510-2699, or e-mail david@dcy.ca / louise@dcy.ca. Visit our website at www.dcy.ca. This article is intended to present tax saving and planning ideas, and is not intended to replace professional advice.

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A Real Patient’s View Kirsten Lind Introduction by David Lind

ecently my 22 year old daughter returned home after graduating from university. She shared this story with me and I asked her to share it with you as I believe this real life story has valuable lessons for all of us connected to dentistry. This is certainly not directly related to my traditional subjects in dealing with the value drivers when buying and selling a dental practice. It is however, vitally important as the intangible she refers to is goodwill which as you’ll see has immeasurable value to her, and to most patients. Here is her story. When I started University in 2010, my oral health seemed like a small matter compared to other things I was facing. I was concerned with fitting in, partying, and spending late nights studying and drinking RedBull. Needless to say, my teeth were on the back burner, and suffered accordingly. After researching my health plan, my parents gave me the name of a dentist to visit close to campus, and after much procrastination, I booked an appointment. I never had really bad oral health as a kid, but I knew this appointment was not going to go well. The appointment was a series of hurtful proceedings, one after the next. First, the hygienist; she asked me the normal questions: “What is your current brushing schedule? Do you floss regularly? Do you drink a lot of sugary drinks?” She didn’t hide the fact that she thought little of me because of the state of my teeth, and I tried to answer the questions as directly as possible to avoid further humiliation. When the dentist came in, he spent about 30 seconds looking in my mouth, and nodded to the hygienist. He said very little and made no effort to make me feel comfortable. I left the office quickly after scheduling my next appointment, and went home with a knot in my stomach at the thought of returning later that month. I had not told the office that I was suffering from bulimia, but I was sure that was contributing to the degradation of enamel. I had not been comfortable enough before the appointment to bring it up, and I certainly wasn’t going to after the experience I had, even though I knew it might have an effect on the treatment plan. When I went back for my fillings, I tried to tell myself that I was not a bad person because I had neglected my teeth, and

that the professionals at the office didn’t think that either. Their attitudes however, proved me wrong. Once again the dentist and his assistant were demeaning in the comments they made about my teeth, and spoke to me as if I were a child. Leaving that appointment, I vowed not to go back to the dentist, I hated it, and felt it was an awful experience. A few years later, after much prodding from my mother, I decided to go visit the dentist again. Between my last appointment and this appointment, I had continued to neglect my teeth and felt exasperated with the whole dental profession in general (which is ironic, considering my parents’ line of work). This time, I was expecting similar treatment from the dentist and hygienist, knowing that I would be judged for the condition of my oral health. I had however, made a full recovery from my eating disorder, and so I thought maybe it wouldn’t be as bad. However, it was even worse than it had been on my last visit. My cleaning was unpleasant. The hygienist was displeased, even disgusted with the condition of my oral health, and made it known to me and to the dentist who designed my treatment plan. I needed three appointments to get all the work done. They were not impressed with me. Booking my appointment to come back for fillings, I had the same knot in my stomach that I’d had years ago, but I knew I needed the treatment and thus decided to endure the humiliation. I returned for the first appointment less than a week later, and was shaking by the time I sat down in the chair. Much to my surprise, the new dentist who carried out my treatment plan and the assistant had a different attitude than I was used to. Both were very pleasant. They asked me some questions about school, asked about my plans for the holidays, and both treated me like a person; not a rotten mouth. The

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dentist was very gentle, and explained to me that she wanted to make sure I was comfortable throughout the procedure. The assistant was so upbeat and pleasant, and helped to calm my nerves. They worked well together, and included me in their conversations, even though I could only make noises in response. For the first time in my dental office experience, I knew they werenâ&#x20AC;&#x2122;t judging me for the mistakes I had made with my teeth. They genuinely cared about my oral health, and wanted to make it better. After my three appointments, I had a whole new mouth, and a whole new perspective. It changed the way I felt about my teeth, and ultimately the way I felt about myself.

Leaving that appointment, I vowed not to go back to the dentist, I hated it, and felt it was an awful experience.

I have now graduated from university, and am a healthy and happy young woman. I feel like I have the chance to make a fresh start, and am not being held back by the poor choices I made in the past. I have a newfound confidence and a bright smile, which I owe to that dentist. I never thought I would say it, but I look forward to my next visit with her! Please send comments to

David Lind is a Principal and Broker of Record in Professional Practice Sales 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

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Selling a Dental Practice In Stages David E. Rosenthal BA., LL.B.

elling a dental practice in stages is becoming more popular in recent years. A staged sale occurs where the owner of a dental practice (Vendor) sells the practice to a dentist purchaser (Purchaser) in two or more stages over an extended period of time. This transaction is used where the Vendor is not prepared to sell his or her entire dental practice immediately, but wants to enter into a long term plan and a legally binding agreement with a Purchaser that clearly sets out the staged sale that will occur over time. A staged sale, which extends over a period of several years, is not the typical arrangement when selling a dental practice. The more usual route is the Vendor sells 100 per cent of his or her practice, selling shares of a dentistry professional corporation or by a sale of assets. Where the Vendor still wants to remain at the practice and continue practicing dentistry after the sale, he or she does so as an associate of the Purchaser. An associate agreement is entered into with the Purchaser as principal and the Vendor as the associate receiving 45 per cent of collected billings. While the norm is 40 per cent for associate remuneration, since the Vendor provides mentoring and assistance in the transition of the practice to the Purchaser, 45 per cent is typically the remuneration level. In a staged sale, the Purchaser is often already an associate of the Vendor and has worked with the Vendor at the dental practice for a number of years. The parties have worked well with each other and share the same practice philosophy and values. The Vendor wants an exit strategy but, for various reasons, wants to retain ownership of the practice and continue to practice dentistry as an owner. The associate wants to buy the practice and agrees to do so over time. Why? Having the Vendor remain as a partial owner of the practice is excellent support for the Purchaser. The Vendor may have far more experience in dentistry and has run the practice successfully for many years. That wealth of experience can be invaluable to the associate. Having an inhouse mentor on an ongoing basis is a wonderful resource to the associate. The arrangement often works as follows. The parties enter into a purchase and sale agreement whereby the Vendor sells

a portion of the shares of his or her dentistry professional corporation or, in the case of an asset sale, the Vendor sells an undivided interest in the dental practice assets. The percentage sold might be less than 50 per cent so that the Vendor still retains control of the practice. The Vendor and Purchaser become common shareholders in the case of a share sale or partners where assets are sold for a period of time until the staged sale is complete. A detailed shareholders agreement or partnership agreement is the primary document governing their ongoing relationship during the staged sale. The shareholders agreement or partnership agreement will provide that the Purchaser agrees to purchase the remaining portion of the dental practice from the Vendor at a future specified date or dates for a specific price. The price may be a fixed price or based on a formula that is sufficiently clear that the parties will easily be able to determine what the price will be for the next stage or stages of the sale. If the Vendor dies or becomes disabled, the agreement should provide that the staged sale date for the Vendorâ&#x20AC;&#x2122;s remaining interest in the practice will be accelerated upon such triggering events. To ensure the Purchaser can fund the buy-out in such events, the Purchaser is required to obtain life insurance and disability insurance policies on the Vendor, with the Purchaser as beneficiary. Similarly, the Vendor should obtain life insurance and disability insurance on the Purchaser. If the Purchaser dies or becomes permanently disabled before completing the final stage of the purchase, the Vendor should have the right to re-purchase the Purchaserâ&#x20AC;&#x2122;s interest in the practice at a specified price. Insurance issues in staged sales can be very complex and require careful tax planning. The parties need to retain an insurance advisor who has specialized expertise in advising dentists, who understands these issues and is able to provide

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appropriate advice to the parties. Insurance policies should be arranged early in the process to ensure that the parties qualify for such insurance and that appropriate buy-out funding is in place. A staged sale can be an excellent arrangement for both Vendor and Purchaser in certain circumstances. However, staged sales are complex and require careful planning and extensive legal agreements. The best advice is to retain professional advisors, including an insurance advisor, accountant and lawyer, who are all very familiar with these structures and who focus on advising dentists in transitioning and selling dental practices.

A detailed shareholders agreement or partnership agreement is the primary document governing their ongoing relationship during the staged sale.

Please send comments to

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 dentists. He can be reached at (416) 865-0736 or e-mail to david@drlaw.ca.

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From Our Book: The $6 Million Dentist Mark McNulty BA, CFP®, CIM®

he following is an excerpt from Module One of Mark McNulty’s new book, The $6 Million Dentist: Successful Succession in 8 Modules How Am I Doing Compared To My Colleagues? I can honestly say that some of the greatest financial minds I know are those of dentists. These dentists didn’t start out this way. In fact, they made a lot of mistakes. But they learned from those mistakes to go on to become what you and I would consider great financial success stories. This group has a great deal to teach us about what works and what doesn’t. In fact, they don’t just have a lot to teach us - they want to teach us. That’s why I wrote this book. You see, dentists don’t talk to each other about their finances. They may hint sometimes at their successes, but they rarely mention the financial mistakes they’ve made. This means dentists miss out on the opportunity to learn from one another. That’s too bad, because learning from someone else’s mistakes can be far less costly than learning from your own. I believe one of the problems in our society is that we are all expected to be fiscally intelligent. It is embarrassing to screw up, especially if you lose a lot of money. People want guarantees when it comes to financial decision making and predicting the future. The problem, often, is that those who provide that security don’t know what they’re talking about. As the British philosopher Bertrand Russell put it, “The whole problem with the world is that fools and fanatics are always so certain of themselves, and wise people so full of doubts.” I have had the benefit of learning from a financially savvy group of dentists during the past twenty years. I have also learned from dentists who did not achieve a high level of financial success. These experiences have had a great impact on my life, my business, and the families I work with at McNulty Group. My goal in writing this book is to share these experiences with you. I want to help you understand how we structured our clients’ lives so they could best achieve financial success and a sustainable retirement. I also want

to provide a venue for this elite group of dentists to share their experiences, in the hope their input will improve your life, your practice, and the lives of those around you. ONE CHANCE TO SELL - ONE CHANCE TO RETIRE - ONE CHANCE TO GET IT RIGHT. Who should read this book? Over the past twenty years, we have written four books on the topic of retirement planning for dentists and for business owners in general. When we published The Transition Coach – A Dentist’s Guide to Financial Independence in 2004, we learned how important a title can be. Many dentists we talked to about the book said, “I’m not transitioning yet”. However, planning for retirement does not begin when you are ready to sell your practice. This new book is written for the baby boomer dentist. However, I cannot tell you the number of dentists in their fifties we have heard from who have sincere regrets and say, “I would be so much better off now if I had started this type of planning years ago”. While we have written this book for the demographic that is the focus of our practice, our hope is that it will also be a useful tool for dentists at all stages. I know this is also a goal of those dentists who contributed their experiences and advice to the book. WE ARE LOOKING FOR FEEDBACK. The reason we have written this book in modules is that it provides us with the flexibility to add to current modules, and to add entirely new modules. We expect to do this as we experience new situations, and as things change. Any input you, the reader, can provide to that end would be greatly appreciated.

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You see, dentists don’t talk to each other about their finances. They may hint sometimes at their successes, but they rarely mention the financial mistakes they’ve made. The writing of this book is intended to respect your time. We tried to make our points concise. Since this will be an ongoing and evolving work, if there is any area you would like us to expand upon we would appreciate your feedback. Feedback can be sent to info@mcnultygroup.ca

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Leasing Opportunities in the Current Realty Market

Ian D. Toms B.Sc. (Hons)

o be successful in this current commercial real estate market, you have to believe that there is always an opportunity in adversity. Many prospective tenants can’t find an area to open a new practice which doesn’t have significant competition. Other prospective tenants can’t find suitable space, or available space with reasonable lease terms and conditions. Tenants must have realistic expectations. Tenants can’t approach this real estate market with the same perspective as was appropriate even five years ago. If a tenant has realistic expectations, and uses an approach geared to the current circumstances, this is actually an excellent market. You have to work with the system, not against it. First: less real estate is available for lease in many areas now than there has been for many years. This is good news. The low vacancy rate reflects a strong economy – the market for oral healthcare is strong. Second, with no space obviously available, once you are established, your market share is protected. Consider changing your approach to site selection by changing what type of real estate you are looking for. Consider buying and re-developing a property, or negotiating with an existing landlord for custom built space. Consider subleasing space within an existing tenancy, which could be a large retailer or a large physician’s clinic.

Second: the real estate industry has changed. It may appear that there are no spaces for lease, but this is often an illusion created by using the wrong search technique. First, many available locations are not listed through typical brokerage houses. In addition to MLS, tenants now have to contact landlords directly, and review on-line sources such as Space 4 Lease or Kijjii. Secondly, tenants looking for properties through brokers may be directed towards a subset of the total number of properties available, which subset pays a commission. You may not be shown properties that don’t pay a commission. Third, know that in 2015 you are an individual business in a world dominated by chains and fran-

chises, most of which have in house professional real estate professionals and negotiating leverage to deal with large landlords in this leasing environment. You need to hire appropriate professional representation to level the playing field. Third: there is more competition. It seems there is a new dental clinic on every corner. The upside is that there is a lot of dentistry being practiced, and therefore the average person’s oral healthcare IQ is significantly higher than it was 10 years ago. This means a bigger market for your services which is positive. On the other hand, know that landlords induce bidding between prospective tenants for their space. Develop and protect your patient population through superior clinical operations and orienting your clinic location correctly through internet presence, signage, parking and geographic location. Fourth: rental costs are much higher. The increased cost of both construction, realty tax, and the value of real property as an investment has increased rental rates dramatically. What was $30 per square foot 10 years ago is now $45 per square foot. But remember that practice volume has increased significantly over the same period of time. What’s really important here is that your ratio of production to rent is acceptable; you can afford to pay a high rental rate if your treatment production is high. Savvy tenants are leasing and building in smaller space, resulting in a lower effective rental rate. Take advantage of the strong economy! Fifth: lease negotiations and management take much longer to complete. Be patient. Large institutional landlords have the tenancy arrangements approved by several parties including the leasing manager, the asset manager, and their legal section. The wait for a signing authority to become

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13 available may take a period of several months. Secondly, creating a â&#x20AC;&#x153;dream locationâ&#x20AC;? for your new practice may take a period of years if the process is to buy and re-develop, or to have space custom built because of the number of required steps and parties involved.

Sixth: real estate negotiations and lease management take far more effort. The days of quickly negotiating a tenancy arrangement are over. Now, the administrative time to deal with tenancy documents far exceeds the actual negotiating time. Administration involves circulation by email to a team of highly trained and sophisticated legal, economic and real estate professionals. A lease document negotiation is a progressive process, not an instantaneous scheduled treatment. This progressive process may take several months to complete. Tenants who push and agitate just wear themselves out, which is exactly the negotiating leverage landlords are enjoying.

Tenants canâ&#x20AC;&#x2122;t approach this real estate market with the same perspective as was appropriate even five years ago.

My best advice is to: } Look forward to participating in the current market. } Hire an experienced, cost effective real estate professional to represent your interests. The benefit will far exceed the cost. } Be patient; your perfect location does exist but it may take a period of years before you take possession. } Be prepared to consider alternatives. If your current approach is not working, change your approach. } Have realistic expectations. Note that the successful established practices started where you are now. Please send comments to

Mr. Toms has been creating and preserving realty leasehold value since 1986 and can be reached at (705) 743-1220, by e-mail at ian@realtyleaseconsultant.com, or through his web site at: www.realtyleaseconsultant.com.

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Perceived Oversupply of Dental Offices Dr. Ron Weintraub

he challenge or validation of the concept of an oversupply of dental offices leads to asking if the problem is one of mal-distribution or concentration of dental resources. The number of the under-serviced could balance a discrepancy if we see the demographic as a potential opportunity. However, time suggests the answer is clearly that of oversupply rather than poor demographic distribution of dentists.

CONTRIBUTING SOURCES TO THE ABUNDANT SUPPLY OF DENTISTS In the past few years, we have seen an abundant supply of dentists, and we ask how has this phenomena evolved? The following sources have contributed to the dental population concentration: 1. Although our domestic dental schools are graduating at a consistent rate, we see increasing numbers of recent graduates. Many Canadian dentists graduating from American and other accredited foreign dental training facilities who return to Canada for their professional careers comprise a large component of this group. 2. Foreign trained dentists accepted into Canadian training enhancement programs qualify for licensure in a number of jurisdictions upon successful completion of the program. This process welcomes many highly skilled practitioners, thus adding to the ratio of the escalating numbers. 3. The number of offices has increased as a result of the growth of offices operating only 2-3 days allowing for owners to associate in other larger practices. Many urban cross street corners have six dental offices in close proximity. 4. Some dentists trained offshore who had successfully operated in their country of origin prefer to open or purchase an existing practice rather than to follow a more traditional route of associateship for a number of years.

5. Ownership of a dental practice has the capability of generating an acceptable ROI. Even though there is a significant benefit in current practice valuations, the investment return on the proceeds of the sale often does not equal the profitability of a viable practice. Mature practitioners are, therefore, not anxious to sell, and they continue to practice well beyond retirement age. 6. The rapid increase in population is another influence of the ratio of dentist to population. Canada, particularly in Ontario, is undergoing one of the largest immigration influxes in the democratic world. The benefits of immigration, however, are diminished by the fact that first generation immigrants sometimes require time to internalize the North American style of preventive and early intervention modalities that native-born Canadians have come to accept as the norm. New Canadians often are reluctant to embrace enrolling in recare programs used in almost all practices. This issue is somewhat compensated by the perception of home-grown Canadians for whom routine dental care is increasingly accepted as part of their healthcare priorities.Â 7. Finally, the factor that the majority of new job opportunities for the population does not offer access to dental benefits, consequently, influencing the ability of new hires to acquire dental services.

FINDING THE SOLUTION The easy part of discussing the overall problem is doing an examination and diagnosis of the issues from a number of prospectives. Diagnosing the pathology is straightforward, but the real difficulty is remediating the problem. Some suggestions are the following: Regulate the flow of new practitioners to conform to an agreed upon ratio of demands/supply. The difficulty of implementing this is the opposition from the right of the political

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spectrum who would say that governance is interfering with private enterprise and should just let the free market economy run its course. On the other hand, the left would accuse the profession of limiting access to dental services in order to prop up earnings artificially for dentists without benefit to the public. The truth probably lies somewhere in the middle; the regulatory suggestion is an equal opportunity offender. If one accepts the thesis that the supply of dental offices outstrips the current demand and that the table could tilt even more in the foreseeable future, practitioners should devise a plan to cope with this reality. It may include a number of adjustments to the patient interface. Educate the existing patient base to appreciate the role that preventive dentistry furthers their general, and specifically, oral health profiles. Increase the focus and concentration of the whole office apparatus to reflect more significantly perceived patient-needs. More explanation of the benefits of the proposed treatment and acknowledgment of the sophisticated modalities employed by most dental facilities help patients appreciate the officeâ&#x20AC;&#x2122;s focus and its benefits to their well-being; for example, the teamsâ&#x20AC;&#x2122; continuing education commitment. A treatment coordinator, a combination of the administrator and treatment coordinator, or a dentist best offers this type of presentation. Use the existing satisfied patient base as a primary source of increasing the inadequate new patient flow by having the administration professionally and subtly ask patients for referrals from their friends, coworkers, and family. Offer treatment hours that reflect the patient population needs, not necessarily those of the staff. Increase efficiency of existing operation to be able to continue offering quality dentistry to a potentially diminishing number of patients by considering amalgamating the physical facilities and sharing staff. This plan would help potentially marginal operations morph an entity via an efficient use of resources. It is our responsibility to help the general public make wise personal oral care decisions. People appreciate and sometimes make sacrifices to obtain healthcare that they value. Therefore, if we fine-tune our existing operations to address patient needs, we will benefit dental providers and the demographic we serve.

In the past few years, we have seen an abundant supply of dentists, and we ask how has this phenomena evolved?

Please send comments to

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. VOL. 68 February 2015 | The Professional Advisory

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Advisory TheProfessional Advisory FOR DENTAL PROFESSIONALS

The Professional Advisory

FOR DENTAL PROFFESSIONALS

VOL. 63 February 2014

Progressus â&#x20AC;&#x201C; a going forward, advance

Visit our website at www.professionaladvisory.ca to view current issue and complete archives.

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Left to right: David Rosenthal, BA., LL.B. Spiegel Rosenthal Professional Corporation Barristers and Solicitors Ron Weintraub, DDS Innovative Practice Solutions David Lind Principal, Broker of Record Professional Practice Sales Ltd. Ian D. Toms, B.Sc. (Hons) Broker of Record Mark McNulty, BA, CFP, CIM Director, Private Client Group McNulty Group, HollisWealth David Chong Yen, CPA, CA, CFP DCY Professional Corporation Chartered Accountants

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