Consider Dr. Worry Later. He is 47 years old and proudly paid off his student loans, his spouse’s student loans, and just wrote the last check on his dental practice. Did I mention he only had $32,000 saved for retirement? Oh, he can start saving now . . . right? My math suggests that, if he left the “good debt” alone and stretched his poorly leveraged debt out, he would have had far for more for retirement in the long run doing it my way.

What about Dr. Interest Hater? She has six loans on different short terms, varying rates, with numerous hurdles & clauses that cause headaches just trying to understand them all. She was drowning in a monthly payment of nearly $18,000. Suggesting a re-finance to allow her some breathing room, she went pale when $135k more in interest would be paid. Ouch! Again, my magical calculator suggests that the same debt, fully amortized with a fixed rate for 15 years (no sneaky pre-payment penalties or balloons) would yield 1.1 million in retirement wealth at a 10% return plus $200k for the kid’s college fund. By the way, the interest on this debt would be tax deductible. (Yes, a 10% return over the long haul is reasonable if you have a fee-only, actively managed, conservative approach – but that’s another article entirely.)

Dentists often join our firm at a young age and come to us with little debt in their practice or personal life, when asked why; the answer is always the same: “I hate debt so I paid it all off because I finally could!” Unfortunately, this comment was preceded by a monologue of all their retirement concerns and why they haven’t saved any money. I get it. You’ve worked really hard and studied dentistry for years and finally don’t have to lay awake at night with the nightmare of dental school debt hovering in your dreams. This debt aversion is not just an anomaly that solely affects dentists-everyone dislikes debt.

First, you must make a distinction between bad debt like high interest credit cards and good debt like low interest student loans or debt from business re-investment. A professional, with high income capability, must take a more balanced approach through proper leveraging because of their special retirement circumstances and needs. Let’s face it; dentistry is one of the most capital-intensive professions out there when you consider the “all-in costs” of equipment, student loans, real estate, and lost income from extra years of schooling to become a dentist, etc. Because of this, it had better be structured in a way that allows you to save some money while you pay it back since you’ll be behind the eight-ball right off the bat. In addition, dentists generally have a shorter working career and exist in a cash-based business model. Waiting to save until after you pay off debt is not a winning proposition – trust me. I see this all the time and not through glasses streaked with emotion.

From a structure standpoint, a dentist needs to properly leverage their debt to take advantage of an old adage: “the time value of money”. Since most money doubles about every eight years it is in the market, the quicker you get it in, the better off you are. This is why you hear that saving “the first million” is the hardest . . . after you have built that nest-egg; you should have the second million after 8 years, though the first million may have taken 10-15 years to attain. As you can see, making up for lost time – when you consider the time value of money – can be a costly endeavor.

Let’s consider an example of something I witness time and time again regarding debt structuring, proper leveraging, and what it costs you. Assume a dentist has variety of practice loans with anywhere from 1 to 7 years left on the terms. There is a total balance of $500,000 and a monthly payment of $10,000 (therefore, there is $120,000 that is paid on these loans in a given year). If the dentist were to refinance this debt to a new $4,000/month payment over a longer repayment schedule, there is essentially $6,000/month in additional income each month that would be available to him/her. If that $6,000 per month difference was invested for 20 years, the dentist would have approximately $3.7 million (assuming a 9% rate of return). However, if they had employed the “debt first” philosophy and paid everything off before starting to save, they could invest $120,000 per year after the 7 years of payments have been paid. This would leave the “debt first” dentist with approximately $2.7 million after 20 years. There is a $1.0 million difference between both options-therefore, you could be making a million dollar mistake from not properly leveraging the existing practice debt! Based on most dentists’ needs, that just delayed their retirement another 3-6 years.

But what happens to all that extra interest that you will be paying on that additional loan by extending the loan out over a longer term? This question is asked a lot and is no doubt valid, but in the previous example, the extra interest on the longer loan is around $350,000 – still leaving the properly leveraged dentist $650,000 ahead of the “debt first” dentist (or 24% more money). Also, remember that additional $350,000 in interest is deductible anyway, so you can at least write it off through your practice. You might consider the “real number” after taxes. In other words, $350,000 deducted from corporate taxes is actually a “real cost” to the dentist of about $200,000.

I’m not suggesting that you leverage yourself up to your eyeballs. I’ve seen the outcomes of this as well. A dentist reads this article, extends his/her debt, and doesn’t save anything is a realistic and tempting scenario. After all, we all have a mental wish list of how to spend an extra $6k per month. Going this route is worse than the “debt first” mentality because now you’re not investing and you’re paying more interest over time. This happens with home equity loans all the time. Folks re-finance again and again, pulling equity out of a home to buy stuff and their upside-down before you know it – with nothing to show for it but a new 60″ TV and a bunch of fading vacation memories. You must be much disciplined to employ this strategy.

This example gets back to a central tenet: emotions cloud judgment. Debt is very emotionally charged and can feel like weights holding you down, but as I’ve shared with you, the emotional side of debt can force you into a million-dollar mistake. I’m an analytical guy, so I like to look at the number side of everything and the best part is that numbers don’t lie. Having someone on your team to help you realize these potential mistakes before they are made is the difference between you walking the beach – and wondering where it went wrong.

Brogan Baxter, MBA is Chief Analyst and Partner at Four Quadrants Advisory, Inc., a national business advisor and private fee-only investment advisor – exclusive to the dental community. Brogan can be reached at bbaxter@4quadrant.com. Hear more from Brogan’s clients in his dental video library at www.4quadrant.com

Dentistry is part art, part science, but all about people. In dental school, the “people” part of the equation was overlooked, and it takes a number of years in practice to realize it’s importance. Dentistry is a service business, and communication is paramount to its success. Communication, by definition, is “the exchange of ideas, messages, or information.” It is not tangible. In fact, communication is one of the most dynamic elements of the human condition. Effective communication begins with listening and opens the door to understanding.

You’ve heard many times before, we come into this world with two ears and one mouth and we should use them in that same proportion. In conversation, this simply means that you should listen twice as much as you talk if you want to get a reputation for being an enjoyable person with whom to converse.

The art of a good telephone conversation centers very much on your ability to ask questions and to listen attentively to the answers. You can lace the conversation with your insights, ideas, and opinions, but you perfect the art and skill of conversation by perfecting the art and skill of asking good, well-worded questions that direct the conversation and give other people an opportunity to express themselves. Ask open-ended questions that cannot be answered with a simple “yes” or “no.” Open-ended questions encourage your patients to expand on thoughts and comments. And one question will lead to another. You can ask open-ended questions almost endlessly, drawing out of the caller everything that he or she has to say.

In order to be an excellent conversationalist, you must resist the urge to dominate the discussion. The very best conversationalists seem to be low-key, easy-going, cheerful, and genuinely interested in the other person. They seem to be quite content to listen when other people are talking and they make their own contributions short and to the point.

In fact, good conversation has an easy ebb and flow, like the tide coming in and going out. Whether it is between two people or among several, the conversation should shift back and forth, with each person getting an opportunity to talk. Conversation in this sense is like a ball that is tossed from person to person, with no one holding on to it for very long. Listening is the most important of all skills for successful conversation. Many people are very poor listeners. Since everyone enjoys talking, it takes a real effort to practice the fundamentals of excellent listening and to make them a habit.

There are the four major rules for active listening in a conversation. They are powerful, practical and proven techniques to increase your influence with other people dramatically. The first key to effective listening is for you to listen attentively, without interruptions. When you pay close attention to another person, you convey to that person that you very much value what he or she has to say. Individuals you are speaking to find this very flattering, and they will respond warmly to your attentiveness.

The major reason why most people are poor listeners is that they are busy preparing a reply while the other person is still speaking. In fact, they are not even listening closely to what the other person is saying. We act very much like boxers waiting for the other person to let their guard down so they can jump in with a quick verbal punch and take over the conversation. In addition to listening without interrupting, you should give the speaker a few verbal cues every now and then to indicate you are listening. Be active rather than passive. Indicate that you are totally engaged in the conversation. Say things like; “Oh”; “Hmm”; or “I see”. The second key to effective listening is to pause before replying. A short pause, of three to five seconds, is a very classy thing to do in a conversation. When you pause, you accomplish three goals simultaneously.

First, you avoid running the risk of interrupting if the other person is just catching his or her breath before continuing. Second, you show the other person that you are giving careful consideration to his or her words by not jumping in with your own comments at the earliest opportunity. The third benefit of pausing is that you will actually hear the other person better. His or her words will soak into a deeper level of your mind and you will understand what he or she is saying with greater clarity. By pausing, you mark yourself as a brilliant conversationalist.

The third key to effective listening is to question for clarification. Never assume that you understand what the person is saying or trying to say. Instead, ask, “Let me see if I understand you correctly. Can you explain that again?” This is the most powerful question I’ve ever learned for controlling a conversation. It is almost impossible not to answer. When you ask, “Can you explain that again?” the other person cannot stop himself or herself from answering more extensively. You can then follow up with other open-ended questions and keep the conversation rolling along. The fourth key to effective listening is to paraphrase the speaker’s words in your own words. Start like this; “Let me see if I’ve got this right. What you’re saying is . . .”

By paraphrasing the speaker’s words, you demonstrate in no uncertain terms that you are genuinely paying attention and making every effort to understand his or her thoughts or feelings. And the great thing is, when you practice effective listening, other people will begin to find you fascinating. They will want to be around you. They will feel relaxed and happy when they are in contact with you.

The reason why listening is such a powerful tool in developing the art and skill of conversation, especially on the telephone, is because listening builds trust. The more you listen to another person, the more he or she trusts you and believes in you.

Listening also builds self-esteem. When you listen attentively to another person, his or her self-esteem will naturally increase. Finally, listening builds self-discipline in the listener. Because your mind can process words at 500-600 words per minute, and we can only talk at about 150 words per minute, it takes a real effort to keep your attention focused on another person’s words. If you do not practice self-discipline in conversation, your mind will wander in a hundred different directions. The more you work at paying close attention to what the other person is saying, the more self-disciplined you will become. In other words, by learning to listen well, you actually develop your own character, your own personality, and become more like-able.

These are my best pointers to help you listen better on the telephone.

Stay focused. Prevent yourself from being distracted by other staff members or external noises and concentrate on what your caller is saying.

Detect emotions. Listen to the emotion in your caller’s voice. Does it match or endorse the words they are using?

Ask questions. Ask questions to gain more information on points you need to clarify.

Don’t interrupt. You listen more effectively when you’re not talking, so refrain from interrupting your caller. Let them finish what they are saying; interruptions may break their train of thought.

Don’t pre-empt. Avoid pre-empting what your caller is going to say, chances are you will be wrong and miss some of the content of their conversation.

Paraphrase key facts. Paraphrase and reflect back to check you have heard the key facts and content of the caller’s conversation correctly. It also lets the caller know you have understood them. Statements such as “What I’m hearing is…” and “Sounds like you are saying…” are great ways to reflect back and paraphrase.

Pen and paper handy. Have a pen and paper on hand and get into the habit of making short quick references to any questions you want to ask or points you wish to raise or comment on. When your caller has finished speaking refer back to your notes and take action. If you are thinking of answers and responses while the caller is speaking, you are not listening.

Say it again. If you are having difficulty listening, make the necessary adjustments. You might say, “I’m afraid I missed that last point. Please repeat that for me.”

Watch the stereotypes. Avoid stereotyping individuals by making assumptions about how you expect them to act and what you expect them to say. This will bias your listening.

Be aware of the barriers to listening

• We think we’re right and the other person is wrong
• We feel we have to provide help right away
• We prefer to talk rather than listen
• We are waiting for gaps or pauses to jump in with our response

Larry M. Guzzardo who has co-authored two books, “Powerful Practice” and “Getting Things Done” conducts in-office practice management consultations exclusively for dentists to enhance trust, create organization, increase profits, and to develop patient relationships that last. Larry has presented numerous workshops including, “Winning Patient Acceptance,” “Business Communication Systems,” and “The Leadership Challenge.” Larry can be reached at 800-782-5770 or Larry@larrymguzzardo.com if you have further questions.

Fraud takes place in dental offices far more frequently than most dentists realize – published statistics suggest that the chance of a dentist being defrauded in his or her career exceeds 60%, with an average loss of over $100,000.

The other emotion commonly reported is a desire to act – when a dentist suspects embezzlement, there is a strong urge to deal with the problem (which in the dentist’s mind normally involves confronting the suspect) immediately.

Unfortunately, this completely understandable urge to take action, combined with a dentist’s inexperience (and often the inexperience of his or her advisors in dealing with this problem) in matters relating to fraud, often result in the dentist making missteps that often can worsen their position, instead of improving it. Possible outcomes of an incorrect approach include destruction of evidence, wrongful dismissal lawsuits, denied insurance claims and an inability to prosecute.

The following actions and considerations are based on long experience in advising dentists who know or suspect that they are being defrauded:

1. Stealth is paramount. This is so for several reasons – normally at this point fraud is SUSPECTED but not CONFIRMED. It is not unheard of for a dentist to wrongly believe that he or she is a victim.

On the one hand, if there is no fraud, it is far better that staff members are unaware that the dentist had a “crisis in confidence” in them. However, if fraud is happening and the thief thinks that you are on to them; their normal inclination is to take steps to destroy evidence. For example, erasing data from your computer’s hard and destroying all backups. We were not involved but did observe a situation where an employee, sensing that the dentist was about to uncover her fraud, burned down the entire office to make reconstruction of her crimes almost impossible.

If a theft is taking place, the best outcome for the dentist will be achieved by preserving evidence, conducting a quiet (stealthy) investigation and confronting the thief only when fully prepared.

There are several things that must be done in order to preserve stealth:

• The dentist must continue to act normally and avoid behaving unusually

• Investigation must be done in a way that does not disclose the dentist’s suspicions. The easiest way to tip your hand is to have a couple of people in business suits (who look a lot like accountants) come into the practice and start poring over records or to start having a unusually large number of non-patient phone calls for the dentist

• The dentist must be extremely guarded about discussing suspicions with colleagues, staff members etc. We were involved in a situation where a relative of the suspect worked at the vendor of the dental software used by the dentist, so great care had to be taken in communication with the software company.

2. Obtain professional advice. Some dentists approach fraud investigation as a do-it-yourself project. Given that the dentist typically does not know what to look for (and often needs the assistance of staff to access computer information in any case), self-guided fraud investigation is likely to accomplish little other than tipping off the fraudster.

Who can help you? At this point, knowing where to turn is vital. What is needed is expertise in investigative techniques, fraud methodologies specific to dentistry, evidence preservation and knowledge of dental software. At this juncture many dentists consult their CPA, their Attorney, law enforcement agencies or their dental software vendor. All of these people can offer some help; however each of them typically lacks an element necessary to properly guide the dentist forward. For example, while your Attorney may have a good understanding of civil and criminal proceedings against thieves, typically a lawyer’s understanding of embezzlement techniques used in a dental office is superficial at best.

As much dental fraud takes place “off the books”, what many CPA’s can accomplish is also limited.

Police forces normally lack the resources to properly investigate this type of white collar crime and generally will only pursue dental fraud once a loss report has been given to them.

When engaged, an experienced fraud investigator should take charge of the process and coordinate the work of the other actors involved (Attorney, software vendor, law enforcement agencies etc).

3. Preserve evidence. Your computer’s hard drive contains a cornucopia of information that will be needed to confirm the fraud, quantify losses, prepare an insurance claim, proceed with prosecution etc. However this information is volatile and can be deliberately erased or overwritten by the normal activities of your dental software. It is absolutely vital that the computer-based evidence be preserved. Normally this is accomplished by performing a backup that is not “rotated” like most backup media. In certain cases, we also perform a procedure known as “ghosting” a hard drive – this makes an exact copy of an entire hard drive including working or “temporary” files that are not normally captured by a backup but may contain important information. We also typically move a complete copy of your dental software onto one of our servers so that we can both preserve and study it.

Dental software vendors make continual improvements to their software. A common recommendation of vendors, if contacted with concerns about theft, is to upgrade your software to the latest version. Our suggestion is that this is probably not a good idea in most cases. Forensic investigation often involves retracing the steps of the perpetrator; this is made complicated if the software has changed. Also, such a step will undoubtedly be resisted by, and raise the suspicions of the thief.

4. Do not place “bait” (e.g. put an extra $20 in the cash to see if it goes missing). This action is likely to provide a false sense of security. Employees who target their dentists often perpetrate sophisticated frauds involving tens or hundreds of thousands of dollars. If you were doing this and the dentist offered a (fairly transparent) chance to demonstrate your honesty by returning the $20, wouldn’t you give it back? This seems like a fantastic bargain. Also, if the money does disappear we don’t necessarily know who took it.

5. Do not change financial protocols. Looking to make changes without being able to explain the rationale will certainly be seen through by a thief.

6. Do not report the incident to police (until you have sufficient evidence to confirm fraud). Making a police report before you have gathered all the evidence serves no purpose and may limit your options in dealing with a thief.

7. Do not confront the suspect. There will be a time when this is appropriate – out success rate in obtaining confessions from thieves is 100%, but it requires careful preparations before the confrontation.

8. Do not contact insurance companies. If a theft involves obtaining extra funds from insurance companies (e.g. upcoding of treatment), the insurance company may have recourse against the dentist for amounts misappropriated. Some insurance companies will provide agreement not to hold the dentist vicariously liable in situations where the dentist had no involvement in the theft, but this amnesty needs to be set up correctly, with an intermediary approaching the insurance company on behalf of an unnamed client.

9. Whatever you do, don’t fire anyone until evidence has been gathered – the amount the employee may steal from you in the few weeks that it will take to complete an investigation pales in comparison to the cost of a wrongful dismissal lawsuit.

David Harris B. Comm MBA CMA FICB CD TEP and William Hiltz MBA CET can be reached at (888) 398-2327, Skype ID prosperident, and fraud@prosperident.com

Prosperident is North America’s only company specializing in the prevention, investigation and remediation of frauds against dentists. The authors have been involved in many fraud investigations, have acted as expert witnesses in court cases and are regularly consulted by law enforcement agencies on the topic of dental fraud. They have also spoken at regional, national and international dental conferences on the subject of fraud against dentists.

Suppose your landlord had mortgaged the building before signing your lease. Now suppose your landlord has financial problems. And that the lender forecloses on the building you occupy. What happens to your lease?

a) Nothing

b) Your lease becomes void and you’re evicted!

c) You may stay in place for the rest of your lease, as long as you pay rent

Unfortunately for you, your practice, and maybe your professional reputation, the correct answer is (b). But how can this be? Wasn’t your lease binding? Yes, your lease was binding. But it was still in second place, or “subordinate”, to the lender’s mortgage. The same would be true for every other tenant that signed a lease after the lender recorded its mortgage.

Could you have protected yourself from this? Yes. You could have obtained a “non-disturbance” agreement” from the lender when you signed your lease. In fact, you should have obtained this as a condition to signing your lease. In a non-disturbance agreement the lender promises that if it forecloses on the building, you may stay so long as you keep paying rent.

The lender will typically ask for two promises in return: 1) you agree that your lease is indeed subordinate, or in second place, to the lender, and 2) upon foreclosure, you will treat the lender as your new landlord. (The lawyers call this second promise an “attornment”, since lawyers rarely use plain English when they can dredge up some crusty old medieval English word no one ever heard of except in law school.)

All of these promises often get rolled up into one document that real estate professionals and lenders call an SNDA: a subordination, non-disturbance, and attornment agreement. All you have to remember is that you want the non-disturbance promise and that you’ll have to subordinate and attorn to get it.

Back to our example. If you had signed an SNDA with the lender when you signed your lease, the answer to the above quiz would change from (b) to (c). That yields a much better result for you and your practice.

What if you had signed your lease before the landlord mortgaged the building? Then you would be in first place; the lender in second. If that lender foreclosed its mortgage, your lease would be unaffected because it has priority over the foreclosing lender.

But the lender always thinks of this when it considers mortgage loans. The lender would want you to subordinate your lease to the mortgage. The lender knows that savvy tenants like you might subordinate, but only if the lender gives you a non-disturbance promise in return.

You need not subordinate, of course, even if the lender offers not to disturb you. In fact, there is no reason why you should, because you are not getting anything in return. So if you are in first position, and the landlord’s lender comes along to ask you for an SNDA, you have all the leverage. Use it to your advantage.

But check your lease first. You may have already agreed in your lease that if such a lender comes along, you promised to subordinate! There goes your leverage. So consider this when negotiating your next lease even if the building is not currently mortgaged.

In summary, here is a path to protect you and your practice:

• Before you sign a lease, ask for current title work. This not only confirms who the true landlord is, it also tells you whether a mortgage is already in place. If it is, negotiate an SNDA with that lender before you sign the lease.

• If you have already signed a lease and you don’t know if a lender is in the picture, order title work to find out. Negotiate an SNDA from any lender with a superior mortgage.

• Check your current lease for language about subordination, non-disturbance, attornment and the like. Did you already promise to subordinate? Is that promise conditioned on receiving a non-disturbance promise in return? Who has the leverage if you need to negotiate (or if the lender forecloses)?

In sum, you should care about an SNDA. Experienced real estate counsel can help you understand your current status. Use that counsel to develop a strategy to protect you and your practice.

Jeffrey S. Ammon can be reached at 616.831.1703 and ammonj@millerjohnson.com and is an attorney with Miller Johnson, devoting a significant portion of his practice to the commercial real estate and construction industries. Mr. Ammon is currently on the Board of Associated Builders and Contractors-West Michigan Chapter and is active in local real estate and other construction trade associations, including the local chapters of CAR, CFMA, ASA and AIA. He currently serves as Chair of the Michigan Chamber of Commerce. He counsels owners, tenants, developers, contractors, subcontractors and design professionals on real estate development, buying, selling and leasing, as well as construction contracts, liens and a range of related business and real estate subjects.

1. Structure, structure, structure. I know it sounds simple but saving is a lot tougher when there is no W-2 income. For those sole proprietors that missed this lecture in dental school, let’s re-visit the basic principals of corporate structure. Let me start by acknowledging a few advantages some might point out with sole props. Most small businesses default to the sole prop because it’s easy, cheap, and simple. There are some nice tax deductible fringe benefits of a sole prop related to medical premiums, dependent day care, and such but let’s focus on what I call the “big kahuna goal” – your ability to save a lot for retirement and retire when you want. Tell me what trumps that?

A dentist in an incorporated business technically has security from seizure of his personal assets. Only corporate assets may be attached to satisfy a lawsuit. I said “technically” because this security – called the “corporate veil”- is being “pierced” more and more often, so don’t opt for a corporate set-up just because you think it offers 100% protection for your personal assets. We’ll focus on the benefit of structure that incorporating brings rather than security. There are some sticky points when it comes to sole props allowing the owner, in this case a dentist, to easily save money for retirement. When you incorporate, you can take income two ways: one as W-2 salary income, since you are the President and also an employee. The second way is through ‘distribution income’ or also called ‘dividend income’ by some. Just like a big corporation might pay a dividend per share of a company, you can also pay yourself a dividend, or “distribution” as additional income from the corporation on top of your salary.

One of the big challenges many dentists have is where to set that salary income vs. the distributions. Often, distribution income is too heavily weighted in an attempt to save a 2.7% in Medicare tax – which is not deducted from distribution income. The problem with this, from a retirement planning perspective, is that weakened W-2 income often inhibits great retirement and tax savings that result from a well-crafted 401k. When a W-2 employee takes income, the corporation takes out taxes (fed, state, local, Medicare) and social security contributions. Because a sole prop is not taking w-2 income, they have a great big ball of cash that handed to them and they’re expected to place in all in the appropriate buckets – take home income, payables, taxes, etc. No tax withheld = big tax surprises. It never fails, autumn falls upon us and dentists get the call about “good news, bad news” from their CPA. The good news is your production is up. The bad news is you didn’t adjust your tax with-holdings and you owe an additional $30,000. Ouch. Pay the small expense to get incorporated and benefit from great structure AND the ability to super-charge your qualified plan and profit share – hopefully a non-commissioned 401k with a fee-only advisor that doesn’t charge commission.

2. Cash-Hoarding. Sole-proprietor dentists begin to “hoard cash” – like storing acorns for a foreboding winter. That might sound like a good thing but it’s not. Because of the tax surprises the dentist wants to avoid, they begin to hoard cash in their business accounts. They don’t know what to expect in the fall so they choose to over-compensate. The irony is that this is not good cash management since large reserves are trapped in the business checking account and can’t reap the value of being invested and managed properly. Not ideal cash management. Once you understand what a consistent amount to have on hand for payables over 45-60 days, keep no more and no less. A business line of credit really helps here but I find most dentists don’t have one or have too little credit on the line. A little technique we use is to communicate with the CPA when monthly monitoring suggests two things: overhead is the same or better AND productivity is up. That means more tax will be paid and an adjustment should be made NOW to withholdings and/or income.

For example, “Dr. S-Corporation” pays quarterly taxes and has a good idea of his tax situation and income structure because of the reliability of W-2 income versus random distributions. “Dr. Sole Prop” has her business account, personal account, and tax accounts blurred and often they are all fed from the same account. The tax situation is much more unclear because taxes are not actively withheld on an ongoing basis. As a result, she sits on a huge amount of cash just in case the tax situation turns sour. The end result is that there could have been significant cash-flow capitalized on throughout the year but fear of a tax surprise prevents that. The domino effect that results is a major frustration at home that occurs when a spouse sees money is in account but they cannot take income. Though there may be tax surprises with an s-corp., it is drastically limited by actively saving throughout the year and easily being able to decipher how much is yours versus what is going to the IRS.

3. No 401k in place. Not just any 401k but one that is NOT commissioned-based, one that has a generous matching contribution and profit share component, and one that is not expensive to administer. Sole props generally don’t have a 401k in place and opt for a Simple IRA. Simple IRA has lower limits to maximize contributions. A 401k in 2010 allowed for $16,500 for under 50 yrs old (50 and over is $22,000). Simple IRA limits are $11,500 and $14,000 respectively. Additionally, a Simple IRA can only match up to 3% max. With a proper 401k, we insert a 6% match to contribution – plus a profit share analyzed each year.

These limit differences can be seen on an example of Dr. Joe who makes the max income limit for retirement plans ($245,000). If Joe had a simple, he can only contribute $21,350 in max match and deferrals. With a 401k (excluding a profit share), the number jumps to $36,700. That is an additional $15,350/yr that is tax deductible—this would lower the taxes another $6,140 (assuming 40% tax bracket). A lot of folks are advised that a 401k is messier to run and requires a little more expense to manage, although that expense is deductible through the business. A Simple IRA can be done “in-house and is easier to pass the government-required test; however, with an affordable TPA (third party administrator), the plan is easily managed by them with little headache for the dentist.

So you made the changes and, oh so quietly, the income falls into the correct bucket each month, savings becomes automated and the staff loves a 6% match. Your commission-free 401k is maxed now, you save tax as a result, and you escalate contributions to a non-qualified brokerage account in addition to balance your tax burden in retirement. Then, you set up the monthly draft for the kid’s college UTMA (NOT 529 accounts, but that is another blog altogether). You’ll look back at the end of the year and just might be astonished at how much you saved – and it was easy. Won’t work for you? Take the Wealth Workup and find out for yourself.

Let’s take a closer look at who these generations are, and what they want and need in a manager.

* Generation Z (GenZ) and Nexters are those born after 2000. For the purpose of this article, we will include all these groups in the Millennial category. And we can’t forget “Cuspers”, people who were born on the “cusp” of one generation or the other. Cuspers may feel a stronger connection with one generation over another, but often display behaviors of both.

So… what’s a “Generational Manager” to do?

If we were to sit all four generations around a table and discuss generational issues relating to famous people, historical events, TV/raido shows, inventions, work beliefs – just to name a few – we would undoubtedly end up with very diverse opinions and a very lively discussion! Not surprising considering the varying events, experiences, values, work beliefs and learning styles each have grown up with.

There are a myriad of issues to consider when managing, and communicating with, employees of different generations. We’ll look here at a few of the most important in terms of ‘bridging the gap’ between them, and helping each group contribute to, and be a part of, the long-term success of your practice.

Showing appreciation across the generations

Communicating appreciation to team members of different generations will require different modalities. Each generation has its own idea for what rewards should look like.

If you have employees in different generations and want to acknowledge each for a job well done, here is how you might do so.

Traditionalists: Appreciate the “reward for service.” They look for a reward after 10, 20, 30 years of service. This is the “gold watch” generation.

Baby Boomers: Reward by actual cash bonuses and titles. Remember, they are the competitive generation!

GenX: Reward with flex time, vacation days, and continuous training. Remember, they are resume builders.

Millennials: Reward with cross training and flexible schedules, as well as continual feedback. If they can work virtually, even better!

Overall, celebrate successes regularly, vary the motivational rewards by giving a cash rewards, a day off with pay and staff training.

Feedback – who wants, and needs, what?

Traditionalists: Grew up believing “no news is good news”.

Baby Boomers: Appreciate face-to-face feedback in a formal setting.

GenX: Appreciate feedback that is instant, direct, regular. They also want to have their good work reinforced.

Millennials: Appreciate continual feedback. To them, “no news is bad news”, and they want this feedback immediately, whether it’s positive or negative. If, like many dentists, you are a Traditionalist, you will struggle giving instant and continual feedback. Conversely, if you have a younger boss you may find you get more feedback than you anticipated or needed.

While giving or getting feedback may not come naturally to the Traditionalist or Boomer manager, it is essential for you to build on this skill if you intend to minimize turnover in your practice.

The crucial issue of “fun at work”

Understanding how the generations feel about “fun at work” is also vital to your success.

Traditionalists: Not sure one can have fun at work. It’s an end to a means.

Boomers: It’s all about a productive day. Compete and win! Invented “Casual Friday”.

GenX: Fun at work is a social gathering; it’s about being with my co-worker ‘family’.

Millennials: Working from home is the best. Constantly evaluation if their job is “fun”. If not, be prepared for them to jump ship.

So how to you tackle the question of “fun at work”? A staff retreat that combines work and play is a great way to start, and a team morale builder. Working together to understand and acknowledge generational differences can propel you forward by leaps and bounds. It gives you the chance to:

• Get to know your employees
• Find out what motivates them
• Look at what makes you uncomfortable communicating with them
• Learn how to broaden your skills

Look at feedback systems that support all generations, remembering that feedback goes both ways; both up and down, especially with the Xers. One-size-fits-all may not be the best approach in today’s work environment.

Consider these generational “case studies”. What would you do?

Case Study #1: You have two team members, both good workers, who don’t like each other. One is in her late 40s (a Boomer), the other in her early 20s (a Millennial). Their animosity toward each other causes friction in your office. What do you do?

Case Study #2: To you, punctuality has always been a demonstration of respect within the workplace. But there doesn’t seem to be a person under 30 in your office who shows up consistently on time. What do you do?

Case Study #3: One of your employees is 30 years your junior. She is a bright and well-trained, and while she can be warm and friendly, she also possesses a “take-no-prisoners” attitude when addressing certain issues. This has produced considerable friction within the practice, sometimes even with patients. The one time you approached her she said, basically, “They’re wrong, I’m right.” What do you do?

Working effectively with multiple generations is not an option – it’s a necessity

Whether you like it or not, Millennials are the up-and-coming generation at work, and there are a lot of them! Combined, GenX and Millennials outnumber Boomers and Traditionalists, and their effect and influence is not something organizations can afford to avoid or ignore.

Priority number one in every organization should be to help all employees avoid confusing perception with reality. Create opportunities – workshops, informal get-togethers, mentoring – for members of each generation, in which they get the opportunity to share their views and perspectives.

The cost of not doing so can be significant in terms of:

• Turnover rates
• Tangible costs (recruitment, hiring, training, retention)
• Intangible costs (morale)
• Grievances and complaints
• Perceptions of fairness and equality

As an employer, and the leader of your team, do not allow tradition and convenience to trump the opportunity to change and improve productivity. Decide as a group which norms will work best for your multi-generational team, and put those policies and procedures in place now.

Fran Pangakis is a certified training and development professional with extensive skills in facilitation, communications, training, coaching and professional development. One area of expertise is working with leaders and their teams by using performance management assessments to unlock talent by tapping into Emotional Intelligence factors and behavioral traits. She is a certified consultant with the human resource and personnel policy firm Bent Ericksen & Associates and can be reached at PangakisF@aol.com and www.pangakisconsulting.com

The retirement planners of the previous generation often used the analogy of the reliable “three legged stool” when speaking about retirement savings. A couple days ago in the news there was an article about how retirement planning is a whole new world when compared with the reliable three-legged stool that propped up the World War II generation. The author suggested that many older Americans “relied on Social Security, pension plans, and personal savings – like three legs to a stool. These folks would stop working and have guaranteed income.” I think of my Dad. He had the same job for 35 years with one of those “big, all-American” car companies that was used to taking good care of their own. Pension plans could be counted on then. Times have changed and it’s even tougher for the dentist to build a great retirement in many ways.

The risk to save more has shifted to individuals at a time when we are living longer. Dentists that find they have not saved enough each year must deal with a complicated new strategy that combines catching up on savings and crafting a transition that fits into the financial plan seamlessly. Let’s look at each leg of this fabled stool individually to understand why it can’t support the weight of an America that is bulging at the waist – woefully un-prepared for a healthy dental retirement.

1. Social security will mean less each year. In 2016, the Social Security Administration will begin paying more in benefits than they collect in taxes. Were you aware that without changes, the Social Security Trust Fund will be exhausted by 2037 and there will be enough money to pay only about 76 cents for each dollar of scheduled benefits? Even more shocking recent news reports state that the Social Security Administration has already started the bleeding. They will pay more in benefits than they collected in taxes in 2010 – six years ahead of the government’s 2016 prediction.

2. Pension Plans will be extinct. A hard-scrabble, blue-collar America could always rely on a private or government backed classic Pension Plan to give them ease after decades of hard labor. We all know private plans have failed left and right, and many more companies have just discontinued their plans without much warning – or drastically cut the plans they promised. To add insult to injury, the Pension Benefit Guaranty Corporation – the government backup for failed plans – is massively underfunded by billions and billions of dollars. Now, even state and local government plans are at risk of collapse. In fact, a recent study conducted by Joshua Rauh of Northwestern University basically said 45 out of 50 state pension plans were at risk of failing in the next 10 to 20 years. So much for that safety net.

3. Savings rates are terrible – but improving. My previous blog about the Financial Revolution in Dentistry spoke of how Americans are – and will continue – to save more money each year. The ADA 2010 Survey on Retirement and Investments in dentistry reveals some interesting data that supports my opinion that savings is weak. Members can judge for themselves at http://www.ada.org/goto/surveyresearch. The survey claims:

• dentists 35-44 save 16.3% of net income (about 9.8% of gross income at a 40% tax rate)

• dentists 45-54 save 20.8% of net income (about 12.5% of gross income at a 40% tax rate)

There are two significant problems with this. First, the ADA sent the survey to 11,998 dentists in April 2010. By the end of the month 704 responded – a 6.6% response rate. Why didn’t the other 11,294 dentists comment? Because they are too busy trying to figure out how to save more for retirement and don’t have time for surveys or were too embarrassed to respond. It’s my opinion that respondents are likely those that are saving a respectable amount for retirement and are proud to share it. Second, many dentists believe they save more than they actually do. There is a little bit of having one’s “head in the sand” here.

It’s my opinion that the survey doesn’t accurately reflect the realistic dental landscape – income needed at retirement is understated and the large majority of dentists save far less than 17.3% of net income, as the survey suggests is typical.

Average gross income for the general practitioner dentist in 2010 was $258,520 – $271,730 for those over 40. The survey data on this demographic suggests we should see savings of 17.3% of net, or $28,205 per year, when you back out 40% for taxes, etc. If you answered “True” to the pop quiz, you win an endless supply of this blog. Don’t get too excited, you’ll wake the neighbors.

Regardless of whether you are saving a little more or a little less, the ADA data suggests that all dentists are in the same boat. The average income expected by the dentist at retirement is 49% of current income – or $127,000 expected per year – according to those surveyed. What a shame a dentist has to cut income at retirement in half and think that is normal or it has to be that way.

Why is it that a dentist thinks they have to accept “average”retirement savings when they haven’t been average their entire life: the best grades, the highest achievers, the most education, the higher-than average income and lifestyle . . . then settle for half their current income in retirement. Really? In order to meet income requirements in retirement that we believe our clients deserve, a dentist should save 30 to 34% of what goes home – 1/3 of net income each year. If you think that is unrealistic, don’t take my word for it, listen to those dentists in this Video Library saving that much on a regular basis.

Laura Carstensen studies the longevity of people’s lives at Stanford University and says:,

“As humans, we decide how we are supposed to act by watching the crowd. For retirement, many look at what their parents have done and don’t realize that everything has changed. People need a new infrastructure that helps them know what to do and makes it automatic and invisible and a little bit at a time”.

The recession has shaken dentists up and made the reality of retirement planning even more difficult. The “three-legged stool” doesn’t exist any more. Dentists will flock back into the market in an effort to make up for losses incurred in recent years and will likely take unnecessary risk – with high expense – as a result. This approach needs to be balanced with a greater emphasis on increasing savings. Like a line of falling dominoes, that savings will result from better business profit, improved cash-flow, and a more cautious approach to managing assets. As Laura Carstensen put it, the savings should be “. . . automatic and invisible” but doesn’t have to be impossible.

If you are a dentist that is ready to get serious about your retirement, put us to the test and take our Three Week Wealth Workup to find your own potential.

What was happening? Insurance claims were not being filed in a timely manner. Information requests from the insurance company were not being answered. Inaccurate patient data was causing claims to come back rejected. In both cases the administrative team member stated that they were doing the best that they could. Unfortunately their performance was keeping claims from being paid which greatly impacted the practice’s bottom line.

How do you keep this from happening in your practice? Let’s evaluate three basic necessities for proper insurance revenue management: time, tools, and tracking.

Do you have one administrative team member that seems to do everything? It’s almost certain that this person has too many job duties to perform. Insurance management can easily take up 1-2 hours per day. Why so much time? Verification of benefits and eligibility, gathering supporting claim data (such as radiographs and periodontal charting), and insurance payment entries can easily fill this time period. A solo doctor with 1-2 hygienists on staff can generate enough claims to maintain a part-time person. Your solo administrative member is also answering phones, checking people out, sending statements, running the recall program …. whew! You can see it all adds up. Consider adding a part-time accounts receivable and insurance position to properly manage billing and cash flow.

Have you provided the tools for this position to be as effective as possible? Claims and supporting documentation should be sent electronically. The learning curve for these programs is relatively small and the payoff is huge. Claim turnaround time is greatly reduced and the team member knows immediately if a claim is rejected because of lack of correct data or missing information. Offices still submitting paper claims are delaying payment by 3 weeks or more. Make the switch to electronic claims and attachment and make sure that your team member receives training from the companies.

Finally keep up with tracking the receivables in your practice. Ask your administrative team member to run an accounts aging report on a biweekly basis and present it to you for evaluation. You want to make sure that delinquent accounts are being actively ‘worked’ to obtain payment. The insurance aging report should be run weekly to identify which claims are overdue. As the doctor, you should ask to see these reports even if they look like Greek to you! The message that you are sending is that you are interested in the process which prevents your team member from letting it slip through the cracks. I find that when an employee knows you are tracking these numbers they do not neglect or delay their revenue efforts.

Good managers are often vigilant with practice metrics and so should you be. Track your insurance and receivables balances to avoid reduced cash flow surprises and to be able to reinvest in yourself and your practice.

By Teresa Duncan, MS, FADIA, FAADOM

With over 20 years of health-care experience, Teresa addresses topics such as Insurance Coding, Fraud & Embezzlement and Revenue Management. She is a Fellow and Educator for both the Association of Dental Implant Auxiliaries and the American Association of Dental Office Managers. You can visit Teresa’s blog at http://www.thedentalimplantblog.com or her website at http//:www.odysseymgmt.com. She can also be reached by email at teresa@odysseymgmt.com.

Instead of comparing gross production and overhead percentages while chatting in the tee-box or at the local dental meeting, dentists will quietly focus on improving their savings per year and reduce their investment risk and expense as a result. Great overhead doesn’t mean you save enough money (but that is another blog altogether.) Early retirement can be a reality for today’s emerging dentist that is embracing this new philosophy and riding the wave of an American sentiment that is turning back towards a more predictable path to wealth. If you are a dentist that is 55 yrs old or older, you likely had dreams of a retirement just around the corner; however, recent statistics suggest that, for many, this dream is an apparition – not quite real and always evasive.

The American Dental Association’s 2010 Survey on Retirement and Investment was just released and reveals some compelling data that supports my theory that there will be a shift in thinking with regards to personal financial well-being in dentistry. For example, the survey reveals that dentists under 35 yrs old said they plan retire by 59.4 yrs old. (Table 1, page 3). Then, dentists between 55 and 64 yrs. old were asked the same question. They responded that they would retire at 66.7 yrs. old!

What happens in a dental career that pushes the desired retirement target date for dentists away by nearly 8 years?

The older dentist might read this and scoff that the “young dentist” that was surveyed was un-realistic and unaware of the realities of retirement demands. Maybe dentists discover how much they love dentistry and decided to work later in their career. Both would be fair to consider. They are not correct to assume, however, that today’s younger dentist can’t accomplish the dream of financial independence at a very young age. There is a revolution under-way with many dentists choosing to focus on saving more and pulling that retirement date back towards them a bit. What happened in that twenty-year span that slowly pushed a retirement date away like some looming glacier in retreat?

In the 2010 ADA survey, “dentists were asked if the economic downturn delayed their retirement.” 39% said yes. In order to make up the erosion of capital, many dentists will delay retirement 5-7 years. There is a lesson in learning to respect our history. In 2003, the ADA asked the same question after the stock market bottomed out in August of 2002. At that time, “43% of dentists said their retirement would be significantly delayed” as a result of this downturn in the first part of this 21^st century. I wonder if any of the dentists surveyed in 2003 where the same in 2010? Imagine delaying your retirement 7 years only to find the same stock market downturn hits you up side the head once again. If I’m a dentist that is starting my career or just hitting my stride, I’m starting to respect the blessing of a cash-based business and embracing a smarter strategy to save more and reduce risk along the way.

Our culture reflects my theory and the American citizen is beginning to increase what they save each year. The Department of Commerce, Bureau on economic analysis data reveals that Americans were saving as little as 1.8% of disposable income in the third quarter of 2007. You can view the data graphically at http://www.bea.gov/briefrm/saving.htm. Do you remember October, 2008? I don’t blame you for wanting to forget it. The bottom dropped out of the stock market that month and, in many cases, retirement portfolios, kid’s college savings accounts, and brokerage investments across the nation lost nearly a third of their value. What most people don’t know is that the reaction was profound.

Savings rate jumped to nearly 5.5% in late 2008 and kept climbing to over 7% by mid-2009 – staying relatively high. America is beginning to value savings and a return to improving efficiency in their personal finance and their businesses.

Corporate America has been quietly hoarding cash as well and reflects much of the data we find on individual savings rates. After all, savings for retirement is predictable and pragmatic. No one can take that away from you. Strong savings insulates many from the failure to achieve market gains consistently. Strong savings allows for a more conservative and predictable financial plan. A dentist, across a variety of business models, has the realistic potential to save and invest 25% of their gross income and we see glimpses of that every day. There will be a revolution of sorts in the approach towards retirement for dentists in the next decade and I challenge you to get back to basics and re-consider your own well-worn path.

#1 Assuming Perio is Taken Care Of

Having a sharp hygiene team is a beautiful thing. But assuming everything is being taken care of is a big mistake. Be sure you know that a complete perio exam is taking place at every hygiene visit AND the data is being recorded. This is a huge area of liability for you and it’s your hygienists responsibility to collect and analyze this information. One way to find out where you stand is to do an audit of your charts. Randomly pull 20 charts of adults seen in the last 6-12 months. How many have a complete perio exam recorded in the last year? Chances are very good that if the percentage is low, so is the amount of perio treatment.

#2 Starting Perio Treatment Too Late

My interpretation of the AAP’s Perio Classification system is that Beginning (slight) periodontal disease is 4mm pockets with bleeding and slight bone loss and 1-2mm CAL. This is a huge distinction for many dental teams. Often, these are the “difficult prophies” or the patients that have 3 month prophy intervals. I see it time and time again- teams waiting until pockets are 5-6mm deep before beginning treatment while valuable the patient loses valuable bone that could have been saved.

#3 Too Little Time for Hygiene Visits

I’ve mentioned this before and I’ll say it again. Every time I have ever coached a team to increase their hygiene time, their production has increased as a result. Now that wasn’t they only thing they did. They put in place systems to deliver a higher level of service and enroll more treatment. Critical steps that drive production are left out of the hygiene exam when time is short. When you choose to allow 60 minutes for adult recare and perio maintenance, it’s important to outline exactly what will take place during that time. If you are going from 40min hygiene visits to 60min, what are you going to add?

#4- Not expecting enrollment of restorative in hygiene.

If you are carrying all the load for keeping your book full of comprehensive, productive treatment…STOP! Empower your team to help you! Set up the expectation and then clearly communicate your treatment philosophy. Your team needs to know when you recommend a crown versus an onlay, for instance. Schedule time to sit down with your team and outline your specific treatment recommendations. Have them create a mock treatment plan and then work through what they got right and what you would do differently. This one step will automatically increase the amount of treatment scheduled out of hygiene.

My article in Dentistry Today, “Dynamite Diagnosis . . Empowered Performance“ gives you a step-by- step guide to conducting a Case Review meeting. Click here to find the article link on our website.

#5- Not offering patients the option of at-home or in-office fluoride therapy.

I see thousands of dollars walk out the door of dental offices every month when I hear that they are not offering adult fluoride. The truth is, there are very few patients in your practice who WOULDN’T benefit from the application of fluoride varnish and/or a fluoride appliance for home use. Think about it. What percent of your patients have crowns, bridges, onlays, abfraction, recession, interproximal fillings, sensitivity? Educating patients about the value of fluoride therapy and it’s protective benefits will get them on board and guess what? They’ll pay for it!

For a practice that has 1500 active re-care patients, not doing adult fluoride therapy is costing them at least $100K per year in lost revenue!!

Action Steps:

• Print and read my Dentistry Today article
• Do a Case Review meeting-get it on the schedule today!
• Set a goal for how much restorative you’d like to see enrolled in hygiene
• Meet with your team to discuss adding a fluoride therapy protocol
• Put the protocol into action

Do you have specific questions about how to put these action steps into play? That’s exactly how we work with our Mastermind members. We help them create specific strategies to boost hygiene productivity! To learn more about the Hygiene Mastermind, click here.

Wait- Here are a few action steps to help you get started NOW:

• Do a chart audit-look for current periodontal charts
• Communicate to your hygiene team that you’d like them to do a complete periodontal exam on every adult patient
• Give your hygiene team the time they need to complete a comprehensive hygiene exam
• Be proactive and get the information you need to really believe that starting periodontal therapy early is the right thing to do

Owner of Inspired Hygiene, Rachel helps dentists tap into hygiene’s profit potential. Rachel’s articles have been published in numerous industry journals including The Profitable Dentist, Dental Practice Report, Dentistry Today, RDH, and Modern Hygiene. Inspired Hygiene’s programs include in-office coaching, a free weekly e-zine, the High Performance Hygiene Mastermind group and the new High Performance Perio webinar series. To contact Rachel, email her at Rachel@InspiredHygiene.com or call 877-237-7230.