Dentist

BUSINESS PLAN

The goal of this business is to provide high quality general dentistry with a moderate to high price using the highest technology possible. Prices will be justified by the advanced technology used and the lifestyle conveniences that the dental practice will offer. The dental practice will be positioned as a place one can get high quality dental work in an environment of convenience and technology.

*    EXECUTIVE SUMMARY

*    MARKETING PLAN

*    OPERATIONAL & ORGANIZATIONAL PLAN

*    FINANCIAL POLICY

*    FINANCIAL PLAN

*    FINANCIAL STATEM ENTS

*    POSSIBLE PITFALLS

*    POSITIVE POINTS

*    APPENDIX

EXECUTIVE SUMMARY

I  am preparing this business plan to discuss the dental practice that I am planning to purchase upon my graduation from dental school. Upon graduating, I will do an associateship with the potential for buyout, in a practice in Nebraska. This will allow me to spend one year determining if Nebraska is where I want to live long-term and will familiarize me with the practice that I could possibly buy. After the year is over, if I am pleased with what the practice has to offer, I will buy it. If I am not satisfied with its performance, I will have spent time researching other practices that are or will be going up for sale. After approximately a year of my building up the current client base, my father, who is also a dentist, is planning to move to Nebraska to work with me as an associate. He will sell his current home and practice and work for me until he decides to retire. This arrangement works in both my father's and my favor. This allows me to work with a dentist who has over 25 years of experience in the practice and business of dentistry. This gives my father an opportunity to make a comparable living to what he is currently making without the responsibilities of an entrepreneur. As he nears retirement (he is currently 52 years old), he will reduce his hours and patients.

In evaluating a location for a dental practice we are looking for an area of growth and culture, namely an affluent, western suburb of Omaha, Nebraska. We have chosen this general area for various reasons. The main reason being that we love all that this area has to offer in raising a family. Further we feel strongly about living in a location that you would also desire to spend your retirement in. The suburbs of Omaha are growing rapidly and do not have enough dentists to meet the needs of the people. I plan to buy a practice in a highly traveled, suburban area of Omaha that has the patient and facility capacity for two active dentists. In 1995, almost 20 percent of all private dental practices were two-dentist practices, so this should not be too difficult to find ("Key Dental Facts," p. 17). Working with the retiring dentist will allow me to learn his practice management style and to foster a relationship with the client base. This is very important, as with many businesses, the client list and work force is the most valuable asset of a dental practice. Also this affords me the opportunity to understand the management philosophy of the past dentist, so I will be able to make gradual changes that do not cause too much dissension from the staff. If a dental practice with capacity for two dentists cannot be found, I will buy a single practice office and expand it to suit two dentists. I will use savings accumulated during my year as an associate to pay for the down payment of the business loan and finance the business through a bank, the Small Business Administration, or through a broker.

My father should not have great difficulty selling his practice, as his is the largest practice in the area. Also, there are dental brokers that buy practices to sell them at a higher price. In the worst-case scenario, my father could sell his practice to one of these brokers.

Company Description Purpose of the Service

My goal is to provide high quality general dentistry with a moderate to high price using the highest technology possible. My prices will be justified by the advanced technology used and the lifestyle conveniences that the dental practice will offer. The dental practice will be positioned as a place one can get high quality dental work in an environment of convenience and tecluiology. Due to the increase in two-income families, many service- oriented professions are leaning toward differentiating themselves on the basis of convenience. This is what I intend to do when I have completely taken over this business from its previous owner and have hired an associate, namely my father. For instance, we plan to have two shifts, an early morning shift and an evening shift in which the practice will be fully functional from 7 A.M. to 7 P.M. or later on various days of the week. We also plan to work rotating weekends to offer Saturday service twice a month. We feel that the main beneficiaries to these services are professional, high-income individuals that do not feel that they can take time out from work to go to the dentist. We are also considering hiring part-time help to do filing and various other work during the day and to act as a sitter so that parents can leave their kids while they are receiving dental

Related Sendees and Spin-offs

Possible related services include:

•    Tooth Whitening

•    Smoking Abstainment Treatments

•    Practice Management Seminars

•    Dental School Instruction

•    Tempromanibular Joint Disorder Treatment

•    Implant sendees

•    Free screenings for children in severely/profoundly retarded care centers and schools

•    Having a yearly "Sealant Day" and "Dental Awareness Day" at local grade schools

•    Nursing home screenings

Stage of Development

Stanley M. Kramer, DDS, LLC is still in the idea stage as I will not have my dental license until August 2001 and my father has not actively looked for a purchaser for his practice. Between now and when I graduate, I plan to accept a position with a retiring dentist with a contract giving me first option to buy the practice.

Service Limitations

A restrictive covenant will be included in my contract with the former dentist. This non-competitive clause will ensure that the dentist does not sell me the practice and then set up a practice next door. It also ensures that I do not work with the dentist and then set up a practice down the street using the patient base I have seen while working with him. Further, we will not participate in any HMOs or Managed Care Insurance, as it is my belief that these cost dentists more than it makes them and reduces their treatment alternatives (see Appendix).

Government Approvals

In June 2001, after passing the Central Regional Dental Test required by the American Dental Association, I will receive a license to practice dentistry in the central region of the United States, which includes Nebraska. My father has already applied for and received his Nebraska license. The practice will apply for any applicable city, county, or township licenses that apply, a Drug Enforcement Agency permit to prescribe controlled substances, and any applicable licenses for such items as administration of general anesthesia or conscious sedation. Compliance with the Occupational Safety and Health Association (OSHA) standards set by the previous owner must be maintained.

Sendee Liability

I  will purchase malpractice insurance to protect myself against any malpractice suits raised. Even the best, most conscientious dentist can be sued; therefore, malpractice insurance is an essential part of dentistry. The type of malpractice or professional liability insurance I will buy is an occurrence policy. If the policy would expire before a claim arises, the insurance company will still defend the dentist and pay any settlement or court-awarded judgement that occurred while the policy was in force that does not exceed the limits of the policy. Disability insurance provides continuing income in the event that an injury or illness prevents me from practicing. Adequate amounts of disability income and medical expense insurance will be maintained to cover the costs of treatment and ongoing family expenses until re-entry into active practice is possible. The insurer will require proof that you are in good health, as no company will cover potentially disabling conditions present prior to the date coverage is issued. It is essential that I purchase as much non-term type disability insurance as possible while I am young and healthy-waiting until I am older could cause me to be uninsurable or cause my premiums to be astronomical. I will also carry business liability and property insurance and any other insurance we deem necessary after receiving counsel from my lawyer and insurance agent. Health insurance and workers' compensation will be provided for our employees and myself as part of their benefit package. We feel that this is mandatory to ensure that they do not leave the practice for one that does offer these benefits.

MARKETING PLAN

Current Market Size & Growth Potential

The dental profession is one with a very low failure rate and a high propensity for profit. These were two areas

I  examined before selecting a profession. According to the American Dental Association (ADA), dental offices are the third highest-ranking category of start-up business most likely to survive. The average income of a dentist is in the highest 8 percent of U.S. family income. As the growing population becomes better educated and more wealthy, people demand better dental care ("Starting Your Dental Practice," p. 4). Annual spending for dental services has risen from $13.3 to $45.8 billion, an increase of 244.4 percent, from 1980 to 1995 ("Key Dental Facts," p. 8). The advancements in cosmetic dentistry provide new venues of service for the general dentist to offer. Also, with the increase in non-capitation dental insurance, many people who could not previously afford dental work are now part of the patient pool. Of the total population over the age of 2, 40.5 percent are covered by private dental insurance. Sixty percent of those with dental insurance have an annual income of $35,000 or more and 51.4 percent have an education level of 13 or more years. Also, 45.4 percent of all American children ages 5-17 are covered by dental insurance ("Key Dental Facts," p. 9).

The average dentist to patient ratio is 1 to 1,600-1,700 ("Starting Your Dental Practice," 9). Nebraska as a state has a ratio of 1 to 2050 and an expected population growth of 11 percent by the year 2001. Further, 21 percent of the general dentists in Nebraska are over 55 years old and many are looking to sell their practices and retire. Nebraska is a very educated state with24.9 percent of its residents having a college degree and over 75 percent of its residents working in white-collar positions. The average household income in Nebraska was $34,938 in 1996 and is projected to increase by 10.8 percent by the year 2001 to $41,328 (ADA County Reports).

 

 

Cass Saunders Sarpy County County County County

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Customer Profile

•    Middle to high income

•    College educated

•    White collar

•    Married with children

•    All ages

•    Two-income families

Target Market

•    Current patients of the practice we purchase (2,500 to 3,000 patients)

•    Professionals that need the convenience factors we will offer

•    Stay-at-home mothers that need a place to keep their children while they receive dental work

•    All other dental patients who will pay a premium for convenience

Customer Benefits

Various customer benefits include:

•    Two highly skilled dentists to be treated by, one with over 25 years of experience and the other with the boundless energy and enthusiasm of a recent graduate

•    Extended hours on various nights of the week

•    Saturday hours two times a month

•    Childcare while receiving dental work

•    Use of advanced technology in treatment and patient education

•    Discounts for referrals

Market Penetration

Current patients of the practice purchased will receive letters of notification of the change in practice ownership and management. I will give my background and experience information and tell the patient that I hope to maintain their business. I will set up a "Meet the Doctor" picnic, where all patients will be invited. We will also offer free family consultations to discuss any concerns the patient might have. We will also advertise our benefits in the local papers and telephone books and send out direct-mail information advertising our practice. Current patients will be given referral cards that give both the current patient and patient referred a discount for services after the new patient has received a cleaning and consultation. Advertisements will be taken out in the local paper promoting discounts on whitening procedures. Once the patient comes in for whitening, I will sit down with the patient and discuss other ways to improve the aesthetics of their teeth. If they like the service that they are given, they may become patients or at least give good word-of-mouth advertisement. Other incentives will be given to attract new patients and maintain current ones.

Internal Marketing

The goal of Internal Marketing is to make current patients continue their patronage and to encourage them to refer our services. This can be done by first and foremost treating them with respect. This office will also give each patient the highest quality dental treatment possible, while offering competitive prices. Treatment is to be presented to patients by the doctor only. Treatment will be presented by encouraging the patient to ask questions and asking open-ended questions to prompt discussion. Visual aids will be used when necessary and intraoral pictures will also be utilized. A benefit for the patient will be given to help them see the need for treatment (i.e. "So that tooth doesn't fracture further and cause you more expense and pain, I recommend we start a crown on that tooth as soon as possible.").

To stimulate referrals from existing patients at the end of the dental appointment we stress to them their importance in our dental office and request that they refer family and friends to our office. In order to maintain a strong patient base and retain active patients, a patient should have either a restorative appointment and recall appointment or be in the recall system to call on a specific month for a specific procedure. Various other ways to promote our office to already active clients and induce them to refer our practice to others include:

•    Be on time and if you cannot, personally apologize to the patient for any inconveniences this has caused him or her

•    Greet patients by name (both dentist and staff)

•    Install a music system

•    Have multiple telephone lines

•    Call patients at home after significant treatment to ensure patient is doing well

•    Install a "good-bye" mirror so patients can check their appearance before leaving the office

•    Offer coffee or other beverages

•    Keep reading material current

•    Provide referral cards which offers both the referring current patient and the new patient a discount of certain services

•    Have personal information written on a notecard attached to chart to give dentist conversational topics

•    Send a special note for occasions such as weddings, graduations, birthdays, etc.

•    Decorate office internally and externally for holidays

•    Have toys for children to play with

•    Give patients magnets, toothbrushes, etc. with dental practice name and logo

•    Give a picnic, barbecue, or other outdoor event during the summer for your patients

External Marketing

External Marketing deals with promoting the dental practice to potential patients. This can take the form of referrals, free publicity, or advertising. Examples of each of these are:

•    Yellow page listing

•    Send a welcome letter to new residents in community

•    Run newspaper advertisements

•    Become involved with local Chamber of Commerce

•    Hold an open house event to show off new office, meet new staff, or celebrate the practice's anniversary

•    Participate in career days for area students

•    Get acquainted with community leaders

•    Join civic, religious, and community organizations

•    Patronize your patients' businesses

•    Offer to write a monthly column on dental health issues or a Question/Answer column

Industry Trends

For a detailed summary of industry trends, refer to the industry analysis included in the Appendix.

•    Decrease in dentists participating in managed care organizations

•    Increase in consolidation or networking of practices

•    Retirement of baby boomer dentists causing a future shortage in dentists

•    Increase in gross profits for dental practices

•    Globalization of the dental industry

•    Advancements in technology and invention of products that aid in treatment

OPERATIONAL & ORGANIZATIONAL PLAN

Philosophy of the Dental Practice

The philosophy of my dental practice will be to provide high quality general dentistry in a comfortable setting, with a moderate to high price using the highest technology possible. Prices will be justified by the advanced technology used and the lifestyle conveniences that the dental practice will offer. With use of an interactive, multi-media educational system, I will present my patients with multiple treatment alternatives and let them choose the alternative that best suits their lifestyle and budget. I will emphasize preventative dentistry and continually suggest cosmetic procedures. Any dental work that is too complex to be treated at my practice will be referred out to a specialist. I will foster a relationship with various specialists in the area, so they will refer patients in need of general dentistry to me as well. Further, I will not participate in any capitation insurance, as it is my feeling that these plans cost dentists more than it makes them.

The dental practice will be positioned as a place to get high quality dental work in an environment of convenience and technology. Due to the increase in two-income families, many service-oriented professions are leaning toward differentiating themselves on the basis of convenience. This is what I intend to do. For instance, I plan to have flexible, "people" hours on various days of the week so that not all patients have to leave work to have their dental work done. I also plan to work rotating weekends to offer Saturday service twice a month. I feel that the main beneficiaries to these services are professional, high-income individuals that do not feel that they can take time out from work to go to the dentist. We are also considering hiring part-time help to do filing and various other work during the day and to act as a sitter so that parents can leave their kids while they are receiving dental care.

The office will be run as a team, with each employee playing an integral part in the success or failure of the business. Employees will be given whatever tools and training is deemed necessary to carry out their assignments. An emphasis on process improvement will be instilled in each of the "teammates" by offering bonuses or special privileges. Teammates will be rewarded both monetarily and non-monetarily for jobs well done. Effective communication will be stressed in the office. This will cut down on misunderstandings and miscommunications among patients, employees, and doctor. Weekly meetings will be held to discuss the weekly agenda, and to give a report of last week's happenings. Teammates will be given the opportunity to add input at these meetings in the form of suggestions, comments, and complaints. Teammates will have defined tasks, but are to be open to doing whatever requests outside of their set guidelines need to be done to bring success to the practice. Finally, I plan to offer many perks to my employees to keep them satisfied and willing to give the practice 100 percent.

Job Description- Dentist

1.               The Dentist is responsible for all procedures that are covered by his license and not those of the hygienist and assistant.

2.The Dentist is responsible for all human resource aspects of the practice.

3.               The Dentist is responsible for the management aspects of the practice.

4.               The Dentist will form a relationship with both the clients and staff.

5.               All major purchases or decisions must receive final authorization from the doctor.

6.               The Dentist will sign all checks.

7.               The Dentist will be punctual to all appointments. Should the case arise where he cannot see the patient on time, he will personally apologize to the patient for any inconvenience.

8.               The Dentist will call all patients receiving significant treatment the night of the appointment to ensure that the patient is doing well.

9.               The Dentist will join civic and religious organizations to be of benefit to the community.

10.       The   Dentist will actively, yet with taste, market the practice.

11 .The Dentist will treat employees and patients in a fair and unbiased manner.

12.       The   Dentist will provide high quality dental work with an emphasis on technology and education for himself, his staff, and his customers.

13.       The   Dentist will work to make the practice an enjoyable environment in which to work

Job Description- Assistant

1.               Study and become familiar with Office Philosophy and agreements in the office.

2.               Be observant, and considerate, friendly and generally in good humor. Make patients feel at ease and welcome as a guest in your facility.

3.               Upon arriving in the morning, get prepared for the day prior to the morning meeting.

4.               Set up trays

5.               Check treatment room drawers, stock as needed.

6.               Go through charts and review the treatment patients are scheduled for today and treatment pending. At this time always check what type of anesthesia each patient will need. Be prepared to discuss charts at morning meeting.

7.               Greet patient in reception room and escort to proper treatment room.

8.               Seat patients, desensitize areas of treatment, take necessary study models, prepare Rx blanks, select shades for composites and PFMs, take impressions for temps, mark and adjust temps, remove cement from temps, orthodontic bands and crown and bridges; place matrix bands, and perform other procedures to prepare patient for doctor as instructed by the doctor.

9.               Be with the doctor to assist with all treatment.

10.       Give  patients POST treatment instructions as needed (orally and/or written).

11 .Complement the dentistry procedures performed by the doctor. Show the patients their case before and after the insertion in the mouth.

12.             Dismiss patient and escort them to the front desk with chart. If the business office is busy ask the patient to have a seat in the reception room. The business coordinator will be with them ASAP

13.                        Compliment    the behavior of a child to the child and the parent. This helps to child be more confident.

14.Spray and clean room after each patient; change headrest cover, light handles, etc. Follow all

sterilization procedures as mandated by OSHA.

15.             Prepare all instruments and handpieces for sterilization by autoclave or cold sterilization.

16.             Close all treatment rooms at the end of the day. Make sure all equipment is shut off

17.       Have a general knowledge of the business office and be familiar with business office verbal skills.

18.        Know       how to schedule appointments.

19.        Do    a bi-weekly inventory and order necessary items.

20.             Prepare and participate in weekly staff meeting.

21 .Study and become familiar with all OSHA requirements. Take all precautions as trained and have a completed HBV vaccination series. Wear protective equipment as required.

Duties to Perform As Needed

•    Take, develop, and mount x-rays

•    Record any x-rays taken in chart, type name and date on label

•    Prepare Rx blanks of Meds

•    Take diagnostic cast and pour in proper stone

•    Trim models and label

•    Keep lab cases labeled and organized

•    Clean cement from newly cemented PFM, FGC, temps, etc.

•    Place matrix bands and wedges

•    Make vacuforms

•    Make customtrays

•    Make temp crown

•    Remove and place orthodontic elastics

•    Calm apprehensive patients

•    Keep current with up-to-date dentistry

•    Check supplies and keep inventory cun'ent

•    Help business office when time permits

•    Empty the trash

•    Stock drawers

•    Run cleaner through the vacuum system each night.

•    Lubricate drills

•    All other reasonable requests by the doctor Daily Duties

1.Check level of water in autoclave and add, if needed

2.Run autoclave during day as needed

3.Oil and autoclave handpieces after each patient

4.Oil prophy handpieces daily

5.Check trash at the end of the day and empty if needed

6.General operatory cleaning

7.Take intraoral pictures as needed

8.Prepare charts for morning meeting

9.Check developer reservoir tanks and refill

10.             Prepare trays for procedures and assist doctor

Weekly Duties

1.Change solutions in ultrasonic cleaner

2.Autoclave lab burs

3.Clean autoclave per manufacturer's instructions for weekly maintenance

4.Restock all drawers and check inventory

Job Description- Dental Hygienist

1.Study and become familiar with Office Philosophy and Agreements in the office.

2.Organize yourself physically, mentally, and emotionally, always dress in a professional manner, leave your private and family concerns at home, and make a mental check of your day.

3.Be observant, considerate, friendly, and generally in good humor. Make patients feel at ease and

welcome as a guest in your facility.

4.Upon arriving in the morning, get prepared for the day prior to the morning meeting.

5.               Go through charts, review the treatment patients are scheduled for today and treatment pending. At this time always check what type of anesthesia each patient will need. Be prepared to discuss charts at morning meeting.

6.Greet patient in reception room and escort to proper treatment room.

7.Use correct verbal skills.

8.               Dismiss patient; escort to front desk with chart. If business coordinator is busy ask patient to have a seat in reception room. Business coordinator will be with ASAP.

9.               Spray and clean room after each patient, change headrest cover, light handles, etc. Follow all sterilization procedures as mandated by OSHA.

10.              Prepare all your instruments and handpieces for sterilization by autoclave or cold sterilization.

11 .Close your treatment room at the end of the day, making sure all equipment is shut off.

12.          Have       a general knowledge of the business office and be familiar with business office procedures.

13.          Know       how to schedule an appointment on the computer.

14.              Prepare and participate in weekly staff meetings.

15.             Take      all OSHA precautions as trained, have a completed HBV vaccination series. Wear protective equipment as required.

16.          The  dental hygienist may not perform any of the clinical duties without the dentist in the facility.

17.          Help to maintain and keep the recall system current.

Clinical Duties

1.Polish restoration.

2.Perform root planing and soft tipsier curettage.

3.Apply topical anesthetics and topical medicaments.

4.Record existing conditions through the use of radiographs.

5.               Perform intraoral dental laboratory tests, including but not limited to, oral cytology smears, pulp vitality test, and caries tests.

6.Apply pit and fissure sealant to teeth, as prescribed by the dentist.

7.Do intraoral irrigation and sulcular irrigation.

8.Remove overhanging margins without the use of rotary instruments.

9.Oral prophylaxis with slow speed handpiece.

10.          Give topical fluoride application.

11             .Complete all other reasonable requests from doctor.

Job Description- Receptionist/Office Manager

1.               Organize yourself physically, mentally, and emotionally; always dress in a professional manner; leave your private and family concerns at home, and make a mental check of your day.

2.Study and become familiar with office philosophy and agreements in the office.

3.               Be observant, considerate, friendly, and generally in good humor. Make patients feel at ease and welcome as guest in our facility.

Appointment Scheduling

1.Set appointment hours in accordance with appointment scheduling guidelines and daily goals.

2.See that the dental hygiene schedule is completely filled.

3.Follow up on all broken appointments.

4.Keep a short call list.

5.Fill broken and canceled appointments.

6.                Confirm patient's appointments at least 2 days prior to appointment date.

7.                Copy the daily schedule and post it in each treatment room.

8.                Greet all patients courteously when arriving and make sure the charts are in the proper place.

9.                Promptly indicate to the staff when the next patient has arrived.

10.See that the phone is answered before the third ring at all times.

11             .See that the desk is covered at all times.

12.Complete all other reasonable requests from doctor.

Financial Control

1.                Check records each day to approach any patients who owe a balance.

2.                Take responsibility for requesting and collecting money "over the counter" daily.

3.See that each record is posted and filed as it comes through. Be responsible for the accuracy of the day sheet and records.

4.                Print and submit insurance for patients when appropriate.

5.                Make financial arrangements with patients in accordance with the financial policy

6.                Follow up on all insurance not paid within 6 weeks. Maintain the insurance system.

7.                Send monthly statements.

8.Follow up on past due accounts; set arrangements for past due balances. Make collection calls and send accounts to collections with doctor's approval.

9.See that each payment received in the mail is posted to the accounts receivable system. Be responsible for the accuracy of the accounts receivable system.

10.See that the bank deposit slip matches the daysheet total.

11             .Make definite financial arrangements with all new patients and patients requiring extensive treatment in accordance with the financial policy of the office.

12.         Work        the delinquent payment record.

13.         Be    in charge of all correspondence regarding collections, insurance, etc.

14.                   Determine  approximate patient portion of insurance procedures.

15.                   Notify  patients of overpayments and send refunds.

Marketing

1.                Keep the new patient book current

2.                Prepare new patient letters for Dr. Kramer

3.                Tank referral sources, letters, etc.

Office Procedures

1.                Be responsible for the preventive maintenance system (recall system).

2.                Be responsible for preventive maintenance follow-up.

3.                Organize and maintain file systems for quick retrieval of information.

4.                See that all backlog paperwork is completed before closing the office on Friday.

5.                Maintain the supply system and inventory for business office items.

6.                Keep Dr. Kramer informed and current on all aspects of the office, patient status, recommendations, etc.

7.                Be responsible for own desk appearance.

8.                Put together new patients' records and charts. Coordinate patient flow.

9.                As changes occur in schedule, change schedules in the treatment rooms.

10.         Check      and straighten the reception area.

Job Description- Janitorial Staff

The janitorial staff is an outside agency that comes in one day per week and cleans the office. They are responsible for:

•    Vacuuming the entire office

•    Mopping floors

•    Cleaning the bathroom (sink and toilet)

•    Washing exterior and interior windows, mirrors, etc.

•    Emptying trash

•    Dusting shelves and countertops

•    Cleaning out operatory sinks and lab sinks

All other maintenance of the dental equipment is the responsibility of the office staff.

Infrastructure Members

Accountant: to prepare tax returns and advise on various practice financial decisions. $50 to $100/hour.

Lawyer: to help with start up legalities and incorporation, to act as representation in case of litigation and to advise on various business decisions. $75 to $150/hour depending on experience with dental practices.

Insurance Agent: for malpractice and liability insurance. Commissions only.

FINANCIAL POLICY

Third-Party Insurance Policies

This office does not and never will participate in capitation and/or reduced fee-for-service programs. Any phone calls, mail, or solicitors for such plans are to be turned away. Patients who have non-capitation insurance will be required to have an insurance card and the insurance company must be called and verified before they are considered for assignment of benefits. Once a patient has been verified, the following information needs to be retrieved from the insurance company: address to mail claims to; deductibles, if any, and what they apply to; excluded treatments (i.e. crowns are not covered); if the payments are usual and customary or fee schedule; and if prophys are limited per year. All this information can be provided to the patients as needed.

Assignment of benefits will be taken again, only if verification has been approved. Otherwise, the patient is considered "cash paying" until verification can be established.

Patients who receive treatment with insurance will be told up front (before treatment begins) as to their estimated portion of the bill. That portion is due on the date of service; no exceptions are to be given. Patients need to be aware that the amount they are paying is an estimated portion based on what their insurance has told us, and if insurance does not pay or pays less, they are responsible for the balance. We gladly process insurance forms for patients. Insurance claims are to be submitted each day as the charges are posted. Narratives and X- rays need to be mailed with larger claims and all crown and bridge cases. Periodontal charting should be sent with all periodontal cases.

Claims are to be filed in duplicate. One copy goes to the insurance company and one is filed by month and in ABC order. As claims are paid, the EOB (explanation of benefits) is to be attached to our copy and filed in a separate file under "paid claims" for that month. Claims not paid within 5 weeks must be called on and proper steps taken to expedite payment. Also, Visa and Mastercard will be accepted. For treatment plans of considerable amounts, we will help the patient file for financing through a bank.

Financial Arrangements

•    A 5 percent discount is given to patients whose treatment plan is over $250 and pay cash up front.

•    If a patient needs to come back 5 times to complete a $1,000 treatment plan, then payments would be $200 each visit.

•    Treatment plans under $250 are expected on the day of service.

•    Any other arrangements must be made directly through Dr. Kramer.

Appointment Philosophy and Procedures

The appointment book is the map of our day and is to be used in a specific manner. All procedures have been timed and a schedule of times is attached to the schedule book. Only in instances that Dr. Kramer or the hygienist request additional time are these guidelines to be changed.

1.Always try and fill the schedule to capacity and keep a short call list.

2.The schedule is also to be filled to our daily production goals.

3.Patients that cancel less than 24 hours in advance or no-show are to be warned the first time and charged a $25 fee the second time.

FINANCIAL PLAN

The practice will be set up as a Limited Liability Company (LLC). This will be done to receive the limited liability of a corporation with the option of selecting taxation as either a partnership or as a corporation. Upon counsel with my lawyer and accountant, I will decide which setup offers me the best result in regards to taxes.

I am looking at a practice worth approximately $250,000. One shortcut method to determine the selling price of a practice is to take the average of the last three years gross sales and divide it by two. To purchase the practice I will take out a $300,000 ten-year loan at a negotiable rate (I used 15 percent in my financials) that gives me the opportunity of renewal every three years and has no penalty for early repayment. I am estimating that $250,000 will go for the practice, $30,000 will be used for any start-up costs (such as updates to building or equipment), and the remaining $20,000 will be used to maintain positive cash flows at start-up and to be used in case of any unforeseen problems. I don't foresee any problems attaining a loan, as there are many brokerage companies that will fully finance your dental practice with no down payment if you can prove that there will be no significant decline in gross sales resulting from the purchase of the practice. Another financing possibility is that the current owner of the practice could seller-finance some or the entire sales price. This would allow 100 percent financing without titled collateral, but would preclude a higher than market rate. Similarly, a dental broker could finance the project with the same general benefits and drawbacks of the seller- finance option. Also, we could approach a bank for the loan, which will generally ask for a 20 percent down payment, titled collateral, and an aggressive amortization rate, but a lower interest rate than the other options.

In doing my financial statements, I have had to make many assumptions and use many numbers, averages, and percentages given by the American Dental Association (ADA). Some of the numbers seem either too high or too low, but I used them to maintain consistency. For instance, in the first five years of business, marketing and legal/professional costs will probably be higher than the national average. I think that insurance will be much higher than the amount attained by using the percentage given by the ADA. Also, the average patient charge per patient includes dentists who do all of their own hygiene work, dentists who accept capitation insurance, and dentists who do public health dentistry only. Therefore, the $183.56 national average as stated by the ADA seems very low.

The number of total employees the practice will have upon my purchase is dependent on the structure prior to my buyout. My first year in practice, I will need one full-time assistant and one full-time bookkeeper/receptionist. Until I feel I have a sufficient client base, I will do much of my hygiene work. One hygienist will work one or two days a week dependent upon need and on a percent of work completed basis. This will give the hygienist greater incentive to see more patients and to insure the recall system works efficiently. Building the patient base to have enough patients to allow for two dentists will take about a year and a half. Optimal full-time employment upon my father joining the practice is two full-time assistants, one

full-time bookkeeper/receptionist, and one hygienist with the same conditions. After the larger client base has been established, which will probably take about a year of working with my father, another hygienist will be added so that there will be a hygienist in the office four days a week and my father and I will not need to see any hygiene patients which will make our per patient charge increase. If need arises, one part-time office helper will be employed.

As we will be living in the central region of the United States, I have used the wage rates quoted in the Journal of the American Dental Association for dental employees in that region. Median hourly salary for a receptionist/bookkeeper is $11.65/hour. The average hourly wage for an experienced chairside assistant is $11.00. Finally, a hygienist in the central area will make around $200 a day. This sounds like a lot, but hygienists often rotate between practices as to support a broader client base.

My father and I will discuss a contract whereby he receives a certain percentage of his gross production, probably 40 percent the first year. With working the same hours per week that he currently does and seeing fewer patients, he will make a comparable salary to what he pays himself in Lincoln. Lincoln is a farming and industrial community that does not see the benefits of the highly profitable aesthetic dentistry. Although my father has the largest practice in the area, he does not make as much money as comparable practices in more educated areas due to the demand for restorative dentistry only. Working for Stanley allows his father,

Jeremiah, to make as much money as he wants, while only working the amount of hours that suits his lifestyle. Also, he will not have the risk or responsibility associated with running a business, but will have significant input, as he has so many years of practice experience. The money he will make by selling his practice can be invested to use in his retirement.

We will establish written bylaws that address issues such as how the relationship between my father and I will be handled. As my parents will probably help with a small portion of the down payment on the loan, both my mother and father will receive a percentage of profits based on their contribution. The other portion of ownership will be divided between my wife and myself. We will have guidelines on buying back and selling ownership shares. This is to ensure the business does not suffer from problems within the family.

My family is a very close one that is intent on building our futures together. We have held many discussions concerning the control and management of the practice and are in agreement to this point. Before my father actually decides to move and sell his practice, we will sit down and write up an agreement about practice management. We will have a lawyer that is familiar with dental practices and family businesses look it over and add suggestions. Me and my wife will have the final say in matters pertaining to the practice, as we will have a greater share of ownership. As I have not had as much experience managing a practice, my parents' input will be greatly appreciated and sought. A policy of mutual respect between the four of us and documented policies will make our working relationship as positive as our personal one.

My first year after buying the practice, I will be able to see about seven patients per day and will work five days a week. The average cost per patient visit is $183.56 for a normal solo practice. Using these numbers, I should have an average monthly gross income of $25,000 and first-year gross income of approximately $275,000 based on having four weeks' vacation. My client base should be somewhere around 2,000 to 2,500 (a small drop from initial patient base) active patients, and I expect to exceed the average growth rate of 32 new patients per month for new dentists. I should have patient capacity for my father within two years. My financial statements assume that Dr. Jeremiah Kramer will join the practice after two years. I have also included income statements that show the practice's standings if my father and my dream of working together does not become a reality. Note: the practice still garners a reasonable profit, but not nearly as significant as the one earned with both dentists practicing. An exit strategy has not yet been planned, as this business will be the main source of income for my father for many years. When my father decides to retire, I will either hire another associate or rent out his facility to another doctor or specialist.

Price List

Customers will be charged the going industry price for the geographic area of practice plus a premium for the

convenience-based value-added sendees. An example of a price list for services from the May 1996 issue of Dental Economics for the central region is as follows. We will use prices similar to these plus a premium for some treatments.

Initial oral exam, jdull—excluding		Inlay, porcelain. 1 surface	S.U4
radiographs	S27
Comprehensive oral exam, adult	38	Full-casl. high-noble inelal crown	511
Emergency oral exam	31	ftmvlain lustxl to high-noble
		metal crown	514
Panoramic 111 in	48	IV'tcelain fused to noble nvtal crown	491
lntraor.il X-rays, complete series—		Prefabricated stainless-steel crown.
including BWX	59	permanent	129
BWX—four films	28	Cast post and core, in addition
		to crown	159
Intraor.il. periapical. first film	11	Crown buildup, including an)' pins	110
lntraor.il. periapical, each
additional film	9	Replacement crown	45
Prophylaxis, adult		Labial veneer-laminate	232
Limited oral exam, problem-focused	25	Labial veneer (porcelain
		laminate i—lab	415
Initial oral exam. child	24	Complete tipper denture	694
Prophylaxis, child	30	Complete lower dentil re	696
lluoride. child-excluding prophylaxis	17	Upper denture reline, chairside	146
IVriodic oral exam, child	19	Lower denture reline, chairside	I4S
Pit and fissure sealant, per tcc»h	23	Extraction, single tooth	61

 

 

Periodic oral ex am. adult 20	tine root canal, exclusive of
	restoration	283
BWX—two films 19	Two root canals, exclusive of
	restoration	345
Amalgam restoration, 1 surface.	Three root canal*, exclusive
permanent 55	of restoration	438
Amalgam restoration. 2 surfaces.	Periodontal sailing with
permanent 72	gingival inflammation	80
Amalgam restoration. 3 surfaces.	Gingival curettage, per quadrant	119
permanent 89
Composite resin restoration. 1 surf ace.	Periodontal root planing.
anterior 65	per quadrant	111
Composite resin restoration. 1
surface, posterior 75	Tecth-whitening. ferarch	161
Inlay, metallic. 1 surftce 323	Infcction-conlrol fee	18

 

 

Periodic oral exam, adult BWX-two films

Amalgam restoration, 1 surface, permanent Amalgam restoration, 2 surfaces, permanent Amalgam restoration, 3 surfaces, permanent

20 One root canal, exclusive of restoration      283

19  Two root canals, exclusive of restoration    345

55 Three root canals, exclusive of restoration 438

72 Periodontal scaling with gingival inflammation 80

89 Gingival curettage, per quadrant 119

Composite resin restoration,    1    surface, anterior          65  Periodontal root planing, per    quadrant

Composite resin restoration,    1    surface, posterior      75    Teeth-whitening, per arch

Inlay, metallic, 1 surface           323    Infection-control fee

FINANCIAL STATEMENTS

•    Percentages given by "Building a Financial Foundation for your Practice," an article from ADA Dental Practice Library.

•    Sales estimate based on a 48-week year with benefits paid for 52 weeks.

•    Years 3-5 are shown both including and excluding Dr. Jeremiah Kramer, DDS.

This page left intentionally blank to accommodate tabular matter following.

Income Statement-Year 1, June 2002-May 2003

INCOME: Dr. Stanley Kramer Hvuienisi Gross Sales Cash Receipts (‘XKr) Accounts Receivable > 10*) Cost of Goods Sold Lab Fees i'W IX’tiUl Supplies i '/<-) GROSS INCOME:	Jun 22.917 6.720 29,637 26.673 2.961 -2.667 -1.778 25.1*1	Jul 22.917 6.720 29,637 26.673 2.961 -2.667 -1.778 25.1*1	Vug Sep 22.917 22,917 6.720 6.720 29.637 29.637 26,673 26.673 2.961 2.964 -2.667 -2.667 -1.778 -1.778 25.1*1 25.1*1	Ocl 22,917 6.720 29.637 t 26,673 2.964 -2.667 -1.778 25.1*1	Nov 22.917 6.720 29.637 26.673 2.961 -2.667 -1.778 25.1*1
EXPENSES: Advert ising (3%) Insurance 13%) Interest Expense (F) 1 A'g.il & FVofessional Services (Ft (JtTicc Supplies iffi \ Mortgage t’F) Taxes & Licenses (10% of salary) Utilities (2*1	889 889 3.750 833 1.778 2J00 417 593	889 889 3.750 833 1.778 2.500 417 593	889 889 889 889 3.750 3.750 833 833 1.778 1.778 2.5CO 2.500 417 417 593 593	889 889 3.750 833 1.778 2.500 417 593	889 889 3.750 833 1.778 2.5a) 417 593
Waps Professional (F) llygienist 1.25 of production) Salaried & Beit'Ills (21 **)	4.167 1.680 4.813	4.167 1.680 4.813	4.167 4.167 1.680 1.680 4.813 4.813	4.167 1.680 4.813	4.167 1.680 4.813
Oilier Expenses (I--) TOTAL EXPENSES: NET PROFIT (LOSS):	417 22.72? 2.4frft	417 22.725 2,4(.(.	417 417 22.725 22.725 2.4frfc 2.4(.r.	417 ; 22.725 2,4f.i.	417 22.725 2.4<.f.
INCOME:			Jun	Jul	Aug	Sep	Oct	Nov
Dr. Stanley Kramer			22,917	22,917	22,917	22,917	22,917	22,917
Hygienist			6,720	6,720	6,720	6,720	6,720	6,720
Gross Sales			29,637	29,637	29,637	29,637	29,637	29,637
Cash Receipts (90%)			26,673	26,673	26,673	26,673	26,673	26,673
Accounts Receivable (10%)			2,964	2,964	2,964	2,964	2,964	2,964
Cost of Goods Sold
Lab Fees (9%)			-2,667	-2,667	-2,667	-2,667	-2,667	-2,667
Dental Supplies (6%)			-1,778	-1,778	-1,778	-1,778	-1,778	-1,778
GROSS INCOME:			25,191	25,191	25,191	25,191	25,191	25,191
EXPENSES:
Advertising (3%)			889	889	889	889	889	889
Insurance (3%)			889	889	889	889	889	889
Interest Expense (F)			3,750	3,750	3,750	3,750	3,750	3,750
Legal & Professional Services (F)			833	833	833	833	833	833
Office Supplies (6%)			1,778	1,778	1,778	1,778	1,778	1,778

 

 

 

Stanley at 7 patients a day at an average of $183.56/patient

1 Hygienist at 7 patients a day for 2 days a week averaging $ 120/patient                                                           $80,640

1 Assistant 40 hours/week at $11.00/hour for 52 weeks       22,880

1                                                                                                                                                       Receptionist/bookkeeper 40 hours/week at $11.65/hour at 52 weeks     24,232

Weekly wage of Assistant and Receptionist before benefits                                                                   47,112

l>cc	Jan	Ich	Mar	\pr	May	Total
22.917	22.917	22.917	22,917	22.917	22.917	275X10
6.730	6.730	6.7X1	6.730	6.730	6.730	80.640
29.637	29.637	29.637	29.637	29.637	29.637	355.640
26.673	26.673	26.673	26.673	26.673	26.673	320J076
2.964	2.964	2.964	2.964	2.964	2.964	35.564
-2.667	-2.667	-2.G57	-2.667	-2.667	-2.667	-32X08
-1.778	-1.778	-1.778	-1.778	-I.77S	-1.778	-21.338
25.191	25.191	25.191	25.191	25.191	25.191	■UI2.294
889	889	889	889	889	889	10.669
889	889	889	889	889	889	10.669
3.750	3.750	3.750	3.750	3.750	3.750	45X00
833	833	833	833	833	833	10.000
1.778	1.778	1,778	1.778	1.778	1.778	21J38
2.500	2.500	2,500	2,500	2.500	2.5CO	30.000
417	417	417	417	417	417	5XOO
593	593	593	593	593	593	7.113
4.167	4,167	4.167	4.167	4.167	4.167	50.000
1.680	1.680	1,680	1.680	1.680	1.680	33.160
4,813	4.81 J	4.813	4,813	4,813	4.813	57.750
417	417	417	417	417	417	5X00
22.725	22 725	22.725	22	>>	22.725	272.71*)
2.466	2.466	2.4M>	2.466	2466	2.466	2V5*4
Dec	Jan	Feb		Mar	Apr	May	Total
22,917	22,917 22,917			22,917	22,917 22,917		275,000
6,720	6,720 6,720			6,720	6,720	6,720	80,640
29,637	29,637 29,637			29,637	29,637 29,637		355,640
26,673	26,673 26,673			26,673	26,673	i 26,673	320,076
2,964	2,964 2,964			2,964	2,964	2,964	35,564
-2,667	-2,667 -		2,667	-2,667	-2,667	-2,667	-32,008
-1,778	-1,778 -		1,778	-1,778	-1,778	-1,778	-21,338
25,191	25,191 25,191			25,191	25,191	25,191	302,294

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Statement of Cash Flows-Year 1, June 2002-May 2003

 

Cash Inflows

Beginning Cash Balance Loan for Start-up costs Cash Receipts Total Cash Inflows Cash Disbursements Start-up costs Lab Fees (9%)

Dental Supplies (6%) Advertising (3%) Insurance (3%)

20.0                      19,503 19,005 18,508 18,010    17,513

30.000

26.673              26,673 26,673 26,673 26,673    26,673

76.673         46,176 45,678 45,181     44,683  44,186

 

 

I Hi	.Ian	IVh	Mar	\pr	Ma>
17.015	16.518	16.020	15.523	15.025	14.52S
26.675	26.67.?	26.673	26.673	26.673	26.673
43.WSS	43.191	42.693	42.1%	4I.69X	41.2*11

 

2.667 1.778	2.667 1.778	2.667 2.667 1.778 1.778	2.667 1.778	2,667 1.778
889	889	889 889	889	889
889	889	889 889	889	889
3.750	3.750	3.750 3.750	3.750	3.750
833	833	833 833	833	833
1.778	1.778	1.778 1.778	1.778	1.778
2-5CO	2.500	2.500 2.500	2.500	2.500
417	417	417 417	417	417
593	593	593 593	593	593
4.167	4.167	4.167 4.167	4.167	4.167
1.680	1.680	1.680 1.680	1.6811	1.680
4.813	4.813	4.813 4.813	4.813	4.813
417	417	417 417	417	417
27.17(1	27.170	27.17(1 27.17(1	27.170	27.170
16-MS	16.(12(1	15523 15.025	I452X	I4.ii.!(l
Dec	Jan	Feb	Mar	Apr	May
17,015	16,518 16,020		15,523	15,025	14,528
26,673	26,673 26,673		26,673	26,673	26,673
43,688	43,191 42,693		42,196	41,698	41,201
2,667	2,667	2,667	2,667	2,667	2,667
1,778	1,778	1,778	1,778	1,778	1,778
889	889	889	889	889	889
889	889	889	889	889	889
3,750	3,750	3,750	3,750	3,750	3,750
833	833	833	833	833	833
1,778	1,778	1,778	1,778	1,778	1,778
2,500	2,500	2,500	2,500	2,500	2,500
417	417	417	417	417	417
593	593	593	593	593	593
4,167	4,167	4,167	4,167	4,167	4,167

 

Dec Jan  Feb  Mar

1,680        1,680    1,680      1,680

4,813        4,813    4,813      4,813

417  417   417   417

27,170 27,170 27,170 27,170 27,170 27,170 16,518 16,020 15,523 15,025 14,528 14,030

Balance Sheet- Year 1-5

•Y*cts:	Year I	Year 2	Year 3	Year 4	Y ear 5
Cash	14.030	27.228	53494	39.471	55.598
Accounts Receivable	35.564	4H.872	75.908	79432	91.902
ltuildinu' and 1-k.juipinoul	250.000	250.000	250.000	250.000	250.000
Total \svctN	>v.5'i4	526. Hill	37*402	3*8.»«3	397.500

 

 

 

Year 1 Assets:

Cash

Accounts Receivable Building and Equipment Total Assets

Liabilities and Owners Equity:

Note Payable Owners Equity Retained Earnings

Total Liabilities

Difference

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Year 2       Year 3    Year 4   Year 5

14,030        27,228         53,494 39,471    55,598

35,564        48,872         75,908 79,432    91,902

250.0  250,000       250,000 250,000  250,000

299.594        326,100 379,402  368,903 397,500

270.0  240,000       210,000 180,000  150,000

29.594                 56,505     102,174   65,409    108,029

0                   29,594         56,505   102,174  65,409

0                 0        10,723         21,321 74,062

299.594           326,100 379,402 368,903 397,500

0                 0        0         0        0

to accommodate tabular matter following.

Income Statement-Year 2, June 2003-May 2004