Fall 2012 - Profitable Practice

Dental Edition
fall 2012
Profitable Practice
Good Facts
Make Bad Law
Estate Planning
Checklist
Investor Dentists
™
Selling Investment
Real Estate
Patience for Patients
Buying a
Second Practice
Practice Exit
Planning
Is Bigger
Always Better?
And Much More!
A helpful resource for you and your practice
Profitable Practice
fall 2012
1 |Editor’s Page
Dentists and Botox, Content
and Contributors
James Ruddy
2 |Real Estate
The When’s and Why’s of
Selling Investment Real Estate
Todd C. Slater
3 |Accounting
Want to Realize Top Dollar
for your Practice?
Andrea Chan
5 |Banking
How to Make Sure Your
Second Practice Is a Success
With Beau Olmstead
7 |Feature Interview
Dr. John Wilson and Dr. Jannah Wilson
Father–Daughter Dynamic Duo
Editor with John and Jannah Wilson
9 |Feature Interview
Feature Interview
with Larissa Voytek
15 |Marketing
Attracting New Patients Effectively –
with Patience.
Daniel Pisek
17 |Investor Dentists
Investor Dentists™ and
the Corporate Model
Dr. Dev Mangat
19 |Legal
Good Facts
Make Bad Law
Mariana Bracic
21 |Practice Valuation
Napkin Valuations –
Saving a Little Could Cost You a Lot!
Marnie Silver
23 |Practice Management
Is Bigger
Always Better?
Timothy A. Brown
25 |Selling a Business
Victimized by the
Proprietary Deal
John Warrillow
11 |Practice Management
Don’t Worry,
Be Happy!
Anita Jupp
13 |Insurance
Estate Planning Checklist for Dentists
Use This to Eliminate Your Tax Bill
Mark Halpern
27 |Locum Dentistry
One Year of Locums
with Two Locum Stories
Dr. Ron Brown
28 |Practice Management
Maniacs and
Morons
Dr. David Robertson
profitablepracticemagazine.com
editorial
ROI Corporation Brokerage
James Ruddy
EDITOR-in-chief
Karen Henderson
Managing Associate Editor
Natalia Decius
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designed to provide our readers with timely
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and stories in support of the dental profession across Canada.
profitablepracticemagazine.com
Botox and Dentists,
Content and Contributors
This edition of Profitable Practice welcomes
Karen Henderson as a Managing Associate
Editor. Karen brings a wealth of experience
and will be an invaluable resource for our
readers. Her review of a recent article in
Maclean’s magazine will be of interest to
our dental readers.
Should Dentists Get a Piece
of the Botox Pie?
Article Review by Karen Henderson
Macleans.ca recently published an article
entitled And the dentist says: brush, floss and
Botox (http://www2.macleans.ca/2012/09
/05/brush-floss-and-botox). The question:
Should dentists offer cosmetic Botox treatments? The client interviewed in the article
said she loved the convenience…one-stopshopping saves time and research since she
already knew and trusted her dentist.
B.C. agrees; the article describes a medical
specialty spa, which on top of general dentistry,
offers skin care, laser hair removal and facial
rejuvenation (including Botox and fillers).
The Royal College of Dental Surgeons of
Ontario compiled a panel of five experts
to review “what and who should be using
Botulinum toxin—if at all. No decision yet.
One Ontario dentist brings in a local
physician to examine patients and provide
Botox treatments.
And then there are the turf wars…should
dentists be encroaching into the territory
previously occupied by dermatologists and
plastic surgeons?
There is no shortage of opinions on dentists
and Botox. Some believe it’s unethical, others
feel it’s responsible for a dentist to refer a
patient to someone who is trained.
Ophthalmologist Jean Carruthers, the plastic
surgeon who brought Botox into Canada
and remains at the forefront of research
and development says Botox is an art that
requires talent and experience. “You’ve got
to be able to read the face. It’s not enough
to have a cookie cutter,” she says. “But if
dentists are willing to learn to do it properly,
then fair enough.” The Pacific Training
Institute for Facial Aesthetics in Vancouver
offers two-day intensive courses across
North America to medical personnel who
wish to learn the skill.
Finally, a survey undertaken by The Wealthy
Dentist (http://thewealthydentist.com/surveyresults/28_botox_results.htm) revealed:
“57% felt dentists are licensed medical
professionals, fully capable of safely offering
such simple services. The other 43% think
dentists ought to focus on healthy teeth and
gums, not Botox or Restylane.”
The word is out; what will you say if one
of your patients asks if you provide Botox
treatments as an added value service?
………………….
In this issue, we highlight the careers of a
father/daughter dynamic duo. Dr. Jannah
Wilson is a resident at an Ottawa hospital
who has done extensive international aid
medicine and credits her family for her early
career success. Her father, Dr. John Wilson,
is a dentist whose journey into dentistry
reveals much about himself and his family,
especially his relationship with his daughter.
Our second interview with Larissa Voytek,
the Program Director of the Dental Hygiene
Program at the Ontario Dental Education Institute, offers insight into training and preparing for a successful career as a dental hygienist.
Some authors who contributed to this
edition are:
Andrea Chan outlines an action plan for exiting your practice and obtaining top value for
it. Dan Pisek reveals why ‘patience’ is required
to attract new ‘patients’. Mariana Bracic
explains a legal conundrum in Good Facts
Make Bad Law. Beau Olmstead and others
counsel dentists wanting to buy a second
practice. Mark Halpern provides an estate
planning checklist for dentists to be used
to eliminate their tax bills. Todd C. Slater
explains the when’s and the why’s of selling
investment real estate. Timothy A. Brown
offers insight into a unique sector of dental
practice sales.
As always we welcome your comments and
suggestions for making our magazine better.
Profitable Practice
publisher
ROI Corporation Brokerage
is Licensed under
the Real Estate and
Business Brokers Act,
2002 (REBBA).
James Ruddy
James Ruddy is the Editor of
Profitable Practice Magazine
and can be reached at
[email protected]
1
Real Estate
The When’s and
Why’s of
Selling Investment
Real Estate
by Todd C. Slater
Hello everyone. I hope that you had a wonderful
summer and took some time off to really enjoy
it. I have found after speaking with many of you
that while you do enjoy vacations, unfortunately
you simply do not get enough of them because
of that four letter word…“work”.
In the last few articles, I have focused on the many benefits
of owning the location where you have your practice, as well
as owning investment properties. But two questions result When is it time to stop owning?
What is my exit strategy?
Naturally there are the double D’s of death and divorce. In
many situations either one could force you to sell your property but without these influences, why and of course when,
would you sell?
First, let’s address the question of
“WHEN?”
For many people, they want to time the market just right.
Buy low and sell high. As ideal as it sounds, it rarely works
out that way. The “Flip”, as this action is commonly referred
to, will sometimes yield a profit, but not nearly as much as
when you’ve held the property for a long period of time.
The desire for a quick property turnover is the method
of speculators.
As an investor, the “WHEN”, in most cases, should be
“NEVER”. As you pay down the mortgage of your investment property and the value goes up, you are increasing your
equity. If you do decide to sell, you will incur capital gains tax
that will significantly eat into your profits.
There is much more lucrative way of handling the property…
RE-FINANCE. Re-financing involves taking out some of
the equity (cash) from your investment property that, incidentally, is tax-free.Your tenant will continue to pay off this
new debt once again. Many professional investors use this
technique to provide them with their main source of income.
2
Now “WHY” would you sell? The common reason is money
and the need for it. Fortunately in the previous paragraph, we
discussed the best solution, re-financing. The re-finance
solution can repeat itself every 5 to 10 years. Based on the
mortgage pay down and the equity increase, you are in position
to have access to new money every so many years.
For those of you who do own your practice location, when it
comes time to sell, the buyer of your practice may purchase
the location as well. This may be of some benefit to you,
but then again, you may want to rent the location to your
purchaser with an option to buy. This will allow you to have
some ongoing passive income while avoiding the immediate
capital gains tax on both your practice and building.
In the end, the when’s and why’s of selling are strictly up to you.
Consider carefully the benefits of re-financing versus selling
and paying capital gains. Investment real estate has been and
always will be a strong avenue for investors, but the smartest
(and richest) investors buy and hold their properties long
term, creating generational wealth.
In the next issue, I will show you the breakdown of numbers
as they apply to owning versus renting.
Thank you for reading and I will talk to you soon!
Bottom Line:This article provides simple-to-follow advice for dentists
who own their practice location as part of their overall investment strategy.
Todd C. Slater
Todd C. Slater is the President of The Simple Investor
Real Estate Group Inc. Todd has been one of Canada’s
top realtors as well as host of Realty TV for 4 seasons.
With his innovative approach to managed real estate
investment properties, Todd educates and provides
investors with solutions and opportunities for
investment real estate. He can be reached at
[email protected] or
visit www.thesimpleinvestor.com
Accounting
Want to Realize Top Dollar
for Your Practice?
Put Some Teeth into Exit Planning
It’s a sellers’ market for Canada’s dentists.
Those who put their practices up for
sale generally entertain multiple bids and
realize a premium on the sale. But before
you decide to capitalize on your years of
hard work, you should know that careful
timing and planning are needed in order
to maximize financial returns. Following
are three ways to put some teeth into
your exit planning so you can realize top
value for your practice.
1. Develop a transition plan
A transition plan is a documented action plan setting
out the specific steps and tasks required to successfully
exit your practice. A plan typically includes:
Your financial and business goals
A valuation of your practice
The form of the transaction (e.g., sale of assets or
shares, phased or total transition, etc.)
Anticipated net sale proceeds
Tasks to properly structure the practice
Tasks to enhance the value of the practice
A timetable.
Developing this plan helps you think about your
goals and how to operate your business in order to
achieve them. The success of your transition will be a
direct result of the timing and execution of this plan.
Since two components - structuring the practice and
building its value - may require a number of years to
put into place, it’s essential to allow sufficient time to
properly address them.
2. Structure the practice
Essentially, there are two options for selling a dental
practice: a sale of assets or shares. While purchasers
prefer to buy assets because there are tax advantages
and fewer liability issues, most dentists prefer to sell
shares. This option allows you to claim the lifetime
capital gains exemption whereby you can shelter up to
$750,000 of the gain from the sale. This exemption can
also be multiplied when family members hold equity
shares and participate in the growth of the practice. So,
for example, if you own a practice in Ontario and de-
Profitable Practice
by Andrea Chan
3
cide to sell the assets of your practice, which is valued at $1 million, this could result in potential taxes owing of about $322,000.
However, if both you and your spouse are shareholders who
qualify for the $750,000 capital gains exemption and you sell
the shares of the practice, the entire sale could be tax-free.
Employees: Job descriptions, performance reviews, contracts
and payments for employees and independent contractors should
all be up-to-date to prevent problems for a potential purchaser.
In order for a sale to be eligible for the lifetime capital gains
exemption, a number of conditions must be met, including
the following.
Transition support: Consider ways to smooth the transition
Professional corporation: Only the sale of shares of a small
business corporation qualifies for the exemption.Therefore you
need to have a professional corporation (PC) in place or to
set one up at least 24 months before the sale of the dental
practice. This is essentially a small business corporation that is
subject to additional regulations established by the provincial
or territorial governing body of dentists. The PC must be
properly established and then the assets of the practice must
be transferred into it.
of the practice to a new owner and to retain the patient base –
perhaps retaining certain key employees, or having associate or
staff member assist in introducing patients to the new dentist.
Financial statements: Comprehensive, accurate, timely
records should be available for review by a prospective buyer.
These include the past three years of tax returns for the practice
as well as profit and loss statement for the current year.
Accounts receivable: No buyer wants to pay for delinquent
accounts receivable; therefore, it is important to implement a
strategy to collect any aging accounts receivable.
Asset use: Substantially all (the accepted standard is 90%) of a
PC’s assets must be used in an active business at the time of sale.
This may require moving non-active business assets out of
your professional corporation.
Systems: If your current systems are impeding the efficiency
Share ownership: Shares of the PC must be owned by you
Typically, you may involve a number of different advisors in
planning for the sale of your practice, such as wealth management
advisor, lawyer, insurance broker and practice broker. Be sure
that an accountant experienced with professional practices
is included as a key part of this team. This individual can
help to ensure that your business structure, practice value
enhancement strategy and your retirement, estate and tax
planning are all properly aligned to achieve your goals.
and any family members (spouse, parents, children) for a
minimum of 24 months prior to a sale. If you wish to access
the capital gains exemptions of other family members who
are not currently shareholders, this would therefore require
advance planning.
Active business: Also for a period of 24 months prior to a
sale, at least 50% of a professional corporation’s assets must be
used principally in an active business or to finance a connected
active business. Since it is a common practice to leave retained
earnings in a corporation in order to defer taxes, it is important
to address any accumulation of non-practice assets to ensure
the capital gains exemption is available.
CNIL balance: The cumulative investment loss balance on
your personal tax return is another factor that needs to be
considered if you wish to access the capital gains exemption.
This balance (the amount by which total investment expenses
exceed total investment income for tax years after 1987)
factors into the calculation of the amount of the capital gains
exemption available on the sale of shares. This amount might
need to be reduced so that it doesn’t restrict access to
the exemption.
3. Increase the value of the practice
When assessing a practice, the more value that prospective
purchasers find, the higher the sale price is likely to be.
Focusing on the following strategies can help to reduce liabilities, increase efficiency and enable you to realize higher returns.
Lease: If premises are leased it will be important to acquire
the consent of the landlord to assign the lease or to secure
agreement for a new lease, extension or renewal in order to
prevent any delay of a sale.
4
Liabilities: Ensure that taxes, debts, loans, leases and other
obligations are paid up to minimize potential liabilities.
and productivity of your practice, consider a hardware/
software update to enhance scheduling, production, billing,
collections or financial reporting.
Timing is also crucial. With the aging of the baby boom generation, today’s sellers’ market for dental practices may rapidly
evolve into a buyers’ market – so put your teeth into exit
planning today and enjoy a taste of your future.
Bottom Line:This article offers a ‘how-to’ plan to increase the value
of your practice and prepare your exit strategy when you decide to
sell your practice.
Andrea Chan , C A
[email protected] | 416-596-1711
Andrea Chan , CA is a partner of MNP LLP (www.MNP.ca)
who works with dentists and other professionals to
enhance the profitability of their practices and to
achieve personal financial wellbeing for themselves
and their families. Working with the MNP ExitSMART
team, Andrea also offers professionals a comprehensive succession program that accounts for every
aspect of the transition process.
Banking
And Then There Were Two…
How to Make Sure Your Second Practice is a Success
Admit it.You’ve been thinking about it.
How great it would be to open a second location.
To expand your footprint – and your brand –
to a new part of town. And, let’s face it, to boost
revenues and accelerate personal wealth creation
while you’re at it.
You know other dentists who have done it and things seem to
be working out for them. And your practice is already thriving.
It only makes sense to open up a second location. Right? It’s not
like you don’t know what it takes to build a successful practice.
You’ve already done it! How hard could it be?
“That’s one of the more common misconceptions we hear from
dentists,” says Beau Olmstead,Vice President, Commercial Financial
Services, Royal Bank of Canada. “They assume a second practice
will simply be an extension of their existing one. In reality, it’s like
starting an entirely separate business. It’s a distinct entity and needs
to be thought of and operated accordingly.”
Dr. Kevin Aminzadeh knows all about the challenges of establishing and operating multiple dental practices. After operating his
first practice, Eagle Creek Dental in Burnaby for 4 years, he took
the plunge and opened a second location, Solace Dental Centre,
across town. Thanks to a lot of thorough planning and hard work,
both locations are bustling. But Aminzadeh admits that right from
the beginning, even though he knew he would be doing similar
work in each location, he saw how important it would be to
approach Practice #2 as a separate business entity.
Profitable Practice
with Beau Olmstead
5
Perfecting your business systems
Aminzadeh says his single most important piece of advice for
other dentists is to get the business systems in their existing
practices working at maximum efficiency before they pursue
a second location. “I would say that until you have nearly
perfected all of the various systems in your first office, for
example, the way receivables are handled, how patients are
going to be greeted, the manner in which treatment plans are
going to be discussed with patients and so on, you probably
should not be attempting to expand,” he says. “If you don’t
ensure all these business systems are working efficiently, when
you add a second location, your errors will be magnified.
Your inefficiencies will be multiplied. It can quickly become
a very stressful, unrewarding exercise if you don’t have a solid
understanding of the business.”
To emphasize the point, Aminzadeh draws comparisons to
the way some of the world’s largest and most successful
franchises operate. “Before they became household names,
companies like McDonald’s and Starbucks perfected the
systems required to make and sell their products,” he says.
“Perfecting those processes allowed them to then duplicate
that formula in multiple locations. If you have the perfect
system, buying or building a second practice can be a
rewarding thing to do and can help you build equity.”
The importance of a critical eye
As vital as they are, however, great systems can’t compensate
for fundamental challenges such as a lack of patient demand.
“When you’re looking at buying or setting up a second
practice, you have to be very critical of every aspect,” says
Olmstead. “If you’re looking at a purchase, ask yourself why
it’s for sale. In the case of a build, you need to determine
why that market hasn’t been served thus far. Market demand
for dental care is not influenced by supply. Clients aren’t
magically spawned simply because you’ve opened a clinic.”
Once you’ve done your all-important market research,
Olmstead advises to shine the spotlight on yourself. “It’s also
critical that you’re looking at a second practice not from an
ego perspective, but from a business perspective,” he says.
“In other words, how does this enable you as a business
owner to utilize your surplus cash in the most efficient way?
And at the same time, you should also be asking yourself
if there are perhaps other types of investment options
that might be more aligned (in terms of returns, timing,
diversification, etc.) to your personal financial plan.”
If the answer is ‘really important’, that might represent a
potential deficiency when you pursue your second practice.
“To a great extent, maintaining consistency and quality in
two locations has a lot to do with the people you choose
for the various positions. They need to be conscientious and
empowered to do their jobs,” says Aminzadeh. “After all,
there’s only one of you and you can’t be in two places at the
same time.”
Among the other decisions you’ll have to make: Will you
have an associate dentist backfill your absence? Or leverage
their services as the core to one practice or both, allowing
you to focus on specific case work? Don’t make the mistake
of thinking associate support is a trivial matter - it introduces
many important short- and long-term considerations.
Getting the right financial partner in
your corner
Opening a second practice can also be a daunting undertaking from a financial perspective. As such, it makes good
business sense to get a strong financial partner on your team
– one who’s used to working with health care professionals
and who has a deep understanding of the complexities and
nuances of the dental industry. The right financial partner
will be able to provide you with the information, tools and
financial solutions you need to position yourself for success
in this exciting and potentially lucrative new chapter of
your career. And above all, working with a team of experts
can help mitigate many of the risks and provide you with
sound counsel as you expand your business and your
personal wealth.
Bottom Line:This article offers a plan of action to those dentists who
want to open a second practice.
The information contained in this article is for informational purposes only and is
not intended to provide specific leasing, financial, business, tax, legal, investment
or other advice to you, and should not be acted or relied upon in that regard without
seeking the advice of a professional. Your advisor can help to ensure that your own
circumstances have been properly considered and any action is taken on the latest
available information.
®/™Registered trademarks of Royal Bank of Canada. RBC and Royal Bank are registered
trademarks of Royal Bank of Canada.
Safeguarding quality and consistency
When you make the move from one to two locations, it’s
inevitable that you’re going to be somewhat less involved
in the running of the original practice. For that reason, you
need to ensure the mechanisms are in place to maintain the
quality and consistency of care that’s served you so well in the
past. Can your current practice afford to be leaned on in the
first year to 18 months? Can it afford to suffer from potential
cannibalization in terms of money, quality of service and
operational controls? How important is your personal administrative involvement in the operation of the current practice?
6
Beau Olmstead
Vice President, Commercial Financial Services
Royal Bank of Canada
Beau leads the Commercial Health Care segment at
RBC Royal Bank®. The Commercial Health Care team includes
commercial account managers who have extensive experience
helping health care professionals at every stage of their career.
Please contact Beau at [email protected] or
call him at 604-665-5157.
Feature Interview
When listening to Dr. John Wilson, you are
startled by the humble and self-effacing nature
of this popular Vancouver Island dentist. With
his patients he uses a “You’re the doctor, I’m
the technician” approach to his dental practice.
He doesn’t consider himself ‘special’ or ‘above
anyone else’; as a consequence, he has developed
sincere compassion for his many loyal patients.
He believes that this philosophy is sometimes
lacking in a small number of the younger
dentists of today who see their dental career
more from an investment perspective.
Dr. Wilson’s advice to young dentists is “become the best dentist
in the world” and all else will follow. He urges them to spend the
time necessary to master their dental craft, take the courses to
improve delivery and learn how to communicate effectively with
staff and patients. He encourages dentists to practice in small town
environments where he feels the rewards are greater, both professionally and personally. However, he qualifies this belief in saying
that the small town should be close enough to a ‘big city’ to allow
for the benefits a large cosmopolitan centre can offer.
Editor’s Note: From interviews with both
Drs. John and Jannah Wilson, it is obvious
that the old saying ‘the apple does not fall far
from the tree’ continues to have credibility.
Profitable Practice
Dr. John Wilson and Dr. Jannah Wilson
Father–Daughter Dynamic Duo
7
John possesses a ‘green’ side that is prevalent in many west
coast Canadians. He is currently planning to build a cob
house to improve his lifestyle and lessen his impact on his
natural surroundings. Modern cob houses still use ancient
building techniques and materials like bricks made of mud,
sand and straw and harnessing natural energy sources such
as passive solar heating. To these older wisdoms are added
the latest in today’s technological thinking; the result is an
environmentally friendly accommodation and living style.
While these homes might not appeal to all, they are
highly efficient, cost effective, sustainable and low
maintenance ‘green’.
Growing up in Gananoque, Ontario, the son of steel worker,
he had two choices: work in the steel mill or go to university.
He is thankful he was born and raised in Canada and praises
his parents for a ‘normal’ upbringing that allowed him freedom and choice. He has tried, with his wife Sylvia, to provide
a similar upbringing for his own children.
The possibility of following in her father’s pathway as a
dentist was never rejected.While her father never encouraged
any one career, including dentistry, he did ask Jannah to
think hard and long before becoming a doctor. The endless,
demanding hours that a career in medicine entails were his
central concern.
Ten years down the road, Jannah hopes to have worked as a
locum in hospital settings in at least three provinces. Educated
in French Immersion classes, she wants to perfect her fluency
in French and become truly bi-lingual. She loves the natural
setting and lifestyle of British Columbia and hopes to practice
in the northern regions of that picturesque province. As a
child growing up in Timmins, Ontario, she acquired a soft
spot for Ontario, especially its cottage country. For now,
Jannah looks forward to another year of perfecting her surgical
skills and procedures. Her perseverance and patience coupled
with her desire to problem-solve and volunteer as an international aid worker keeps her humble and balanced.
Dr. John Wilson credits his wife and family for his being
grounded, open and caring. Jannah concurs with her father.
The unconditional love provided by her mother, her interactions
with her siblings and the respect for others that her parents
instilled, usually derived from dinner table discussions, was
crucial to her development. Her sister’s early hearing struggles
taught her about human vulnerability. She laughingly
related that her ‘brat’ brother taught her that patience was
indeed a virtue.
Both John and Jannah fondly recall family dinner chats, when
everyone related the events of their day. It became a time of
sharing feelings, debating ideas and reflecting on everyday
issues both big and small.
One of John’s children, Jannah, is a surgical resident entering
her final year of residency. Like her father, she works hard
- very hard at her chosen profession. A typical week at the
Ottawa Hospital involves a minimum of sixty hours and
sometimes, the hours served are twice that amount. Jannah
loves the pace of hospital life. She enjoys thinking on her
feet, calling on her manual and mental skills to solve the
never-ending problems of providing quality medical care
for her patients.
Prior to medical school, Jannah worked in Methadone clinics
on the east side of Vancouver. She taught a Youth at Risk
programme for troubled teens. She considered and explored
careers in both sociology and law enforcement. She thought
about a career in physiotherapy and worked as a fitness
trainer at a rehab hospital.
8
What drives this energetic young professional? She freely
admits she is an adrenalin junky looking for a challenge
and the high she gets from her work on a day-to-day basis.
She learned perseverance (a word she uses often) from both
her sister and her father. Her sister overcame a hearing disorder from birth through sheer determination and hard work.
Jannah grew up looking up to and out for her older sister. Her
father asked his children to strive harder at whatever they did
and he himself lived the credo he encouraged in his children.
John and Jannah understand the need for a personal life and
vacation time. They are active and physically fit, enjoying
skiing, sailing and hiking. Jannah loves sports, travel and is
happy riding her motorcycle whenever possible. John, in his
spare time, is content to be busy planning and building a
cob house. Both live life to the fullest.
Bottom Line:This article relates the lifestyle and interests of two
health care professionals who just happen to be father and daughter.
Dr. John Wilson
Dr. John Wilson is a dentist who practices on
Vancouver Island and devotes time to living
‘green’ in his cob house. He can be reached
through the editor of this magazine.
Dr. Jannah Wilson
Dr. Jannah Wilson is a surgical resident in an
Ottawa hospital who does international aid work.
She can be reached through the editor of
this magazine.
Feature Interview
Feature
Interview
with
Larissa Voytek
She is a Director-at-Large on the Board of Directors and
Hamilton and District Ambassador with the Ontario
Dental Hygienists Association. She is also a member of
the Education Advisory Committee with the Canadian
Dental Hygiene Association and an item writer with
the National Dental Hygiene Certification Board.
Larissa is an advocate for dental hygiene education and
Private Career Colleges in Ontario. She has recently
joined the Board of Directors for the Ontario Association
of Career Colleges.
Larissa still actively works as a self-initiating dental
hygienist in private practice. She is focused on quality
education, compliance, effective communication and
relationship building.
Larissa sums up her focus as “… being committed to
enriching and building the profession I am involved in,
through offering life-long learning and creating opportunities and motivating people to strengthen themselves
and achieve their maximum potential.”
Larissa answered the following questions:
1.What led you to your present status
as a program director at ODEI?
When I graduated from DH, I knew that I wanted
to do something different. I connected in circles that
interested me. I was working in private practice when
the owner decided to start a dental hygiene school and
because he already knew my capabilities, I was offered
the program director position. It was a huge project
that completely consumed my life for three years but it
has been worth every ounce of effort to see the graduates
in their careers and to see the staff and faculty grow and
develop over those years.
2.What qualities do you look for in
your students that you hope to
encourage and promote in them
to enable them to be successful
dental hygienists?
The core DH qualities are empathy, critical thinking
abilities, passion and listening skills.
Beyond this, I love to see students who are aspiring
leaders or those who have diverse backgrounds. I believe
these individuals will be instrumental in the future of
the industry. DH is branching out into so many different directions; we need leaders to forge these initiatives
ahead as well as others with specialized skill sets in
subjects like organizational behaviour, social sciences,
business, marketing and politics.
Profitable Practice
Larissa Voytek is and has been the
program director of the Dental Hygiene
Program at the Ontario Dental Education
Institute (ODEI) since September 2004.
She has degrees in Science and Psychology
as well as a Dental Hygiene Diploma.
Her Masters of Science Degree in
Education specialized in Instructional
Design for Online Learning.
9
3.What are the major challenges dental
hygienists face today?
Dental hygienists continue to put forth a lot of effort in order
to differentiate themselves as dental hygiene professionals. The
public is often confused about who does what on the dental
team and many don’t realize the extensive skill set that dental
hygienists have and the level of responsibility they carry.
Education is also a challenge. There are few degree options for
dental hygienists in Canada and no Masters/PhD programs
in dental hygiene in Canada. Education brings respect and
recognition and in some ways the lack of options for dental
hygienists wanting to further their education in Canada is
limiting the profession as a whole.
Independent DH is also a challenge. Although we can now do
this, the public still needs to be educated about these options.
4.Since you graduated as a dental
hygienist, how has the perception
of dental hygienists changed with
the public in general and other
professionals in particular?
The public is becoming more aware that dental hygiene is its
own profession that contributes immensely to oral health in
the community.
Other health professionals are also starting to realize the same
thing and partnerships are opening up between dental hygienists
and other health care professionals. For example, there has been
some work done with medical radiation technologists and
respiratory therapists.
5.Were you surprised by the recent
Globe and Mail article that placed
dental hygienists fourth in overall
job satisfaction?
Absolutely not! Our graduate satisfaction surveys show over
and over that our alumni are satisfied with their profession.
It’s a unique profession that allows strong relationship building
and lots of opportunity to work with clients to help them
improve their own oral health.
7.What advice do you have for
prospective students contemplating
attending your institute in the future?
Make sure you have some support around you and that you
can balance and organize your life. Dental hygiene is an
intense program at any school. I would also advise them to
spend some time in their own dental office to make sure this
is actually what they want to do. Although it is a wonderful
profession with a lot of give-back, you are in very close contact
with people all day long and that just isn’t for everybody.
8.What are your final thoughts or advice
to dental hygienists about their career
path and the state of their profession?
Although there is some discussion that the job market is tight
right now, the provincial and national employment surveys
show that the unemployment rates in the profession are less
than the national unemployment rates. So, that means things
aren’t that bad. Dental hygienists who are job searching need
to do things to make them stand out and to build their skill
set in order to be more attractive to prospective employers.
This is how it is in almost every other job market out there,
but for decades dental hygienists were few and far between
and didn’t have to ‘go the extra mile’ to get a job.
Also, due to lengthening of curriculums, increased retirement and reduced enrollment in many programs, the job
market will open up with many new opportunities in about
3-6 years. Dental hygienists were ‘teeth cleaners’; they now
graduate seeing themselves as oral health care providers important influencers in the overall health of clients, change
agents and educators. They are graduating with a more entrepreneurial spirit and business skill orientation. The profession
is advocating for significant changes to the responsibilities
of dental hygienists including the ability to provide local
anesthetic and prescribe radiographs. Big changes have
already happened with self-initiation being granted, and
there are more big changes to come.
Bottom Line:This interview with a program director at ODEI
provides insights and information for dental hygienists working in
their field and those considering enrolling or already enrolled in
dental hygiene programs.
6.What do you do to unwind and alleviate
some of the pressures you experience in
your job?
Funny you should ask this, as I’m a huge advocate of balance
in life. This is one of the key things that I discuss with
students, particularly students who have difficulties in the
program. My passion is horseback riding which I find to be
so therapeutic. And I find that if I don’t ride for a period of
time, I become less and less productive on the job.
10
Larissa Voytek
Larissa Voytek, Program Director of the Dental
Hygiene Program and Director of Continuing
Education at the Ontario Dental Education Institute
of Canada. She is an educator, change agent and
leader in her profession. She can be contacted at
[email protected] or 905-304-9986.
Practice Management
Don’t Worry,
Be Happy!
by Anita Jupp
This is not a dress rehearsal for life, this is it, why
not enjoy going to work every day. Even after
working in dentistry for over 30 years, I still have
a passion for dentistry, I believe dentistry offers
opportunities for both dentists and their teams.
However, is everybody happy? The reality is that
in any business there are good days and frustrating
times. Stress is a concern in many practices for
many reasons.
Do you often go home stressed and frustrated?
Do you not want to go to work in the morning?
11
Consider the following:
QUESTIONS:
Step 1. Identify
1. Are you proud of your team’s customer service?
Identify the cause of frustration and stress for you. Make a
list, prioritize and monitor the results. The most important
thing is to not try to make all the changes at once. Often
when people try to change too much, the process becomes
overwhelming and very soon they give up and revert to their
old ways.
2.Do you know how many patients you lose a month
and why?
3.Are you pleased with your new patient numbers and
new patient retention?
Step 2. Change
5.Do you have a system that monitors/documents the
follow-up of pre-determinations and alerts you of the
treatments that are not completed?
Make a commitment to make the changes. It is important not
to throw your hands in the air and give up. When you give
up, so does your team. If you and your team work together,
change happens faster and positive results occur.
Step 3. Consistency
4.Are you pleased with your associates’ commitment to
your patients?
6.Does your team communicate with your patients in a
positive and encouraging way?
7.Do some team members over-lecture or ignore
your patients?
Inconsistency is the major cause why dentists do not reach
their new goals and make the necessary changes. When things
are going well, often the dental team relaxes a little too much
and soon the financial side of the practice dips. The result
is everyone goes back into high gear and dental practice
life becomes a roller coaster ride. To avoid this, plan weekly
meetings to monitor your changes and goals so that everyone
stays on course.
8. Are work contracts and up-to-date office policies in place?
4. The right team
13. Do you have systems to protect you from in office fraud?
All successful businesses need employees who truly enjoy
going to work, love what they do and are excellent at what
they do. In my experience, 60-70% of dentists are not happy
with some of their team members. How can you work with
someone when you wonder why you are paying them?
14. Does your team believe in your fees and the quality of
dentistry provided?
There are realistic, effective solutions for your practice - all
you need is the confidence to implement change.You decide,
answer the question below in the privacy of your office/
home to determine - do you need support and solutions to
improve your practice for you and your team?
Often dentists get information overload and do not know
where to start. It does not have to be difficult - prioritize,
communicate with your team and set goals that are attainable.
Be honest about what your concerns are. Do not bury your
head in the sand - that is an escape, NOT a solution.
9. Are you concerned with overhead and other expenses?
10.Could you be more productive without working
longer hours?
11.Does your team follow up with treatments, recalls,
overdue recalls, missed and no-show patients?
12. Do you collect 99% of what you produce?
15. Is there in-office conflict between some team members?
16. Is there a team member accountable for the schedule,
collections, follow-up treatments and who deals with
any insurance concerns?
17. Do you enjoy working with your team?
18. A
re you comfortable with the number of
hours you work?
19. Do you have a long range business and exit plan?
20. Are your team meetings positive, enthusiastic
and productive?
Bottom Line: Dentists should determine whether or not they need help
to maximize the profitability of their dental practices and lessen the
amount of stress and frustration they and their dental teams face daily.
Anita Jupp
Anita Jupp is a professional speaker and transition
specialist whose career has spanned over thirty
years. Anita is respected internationally as a
practice management expert. She can be reached
at 905-339-7843 or www.roicorp.com.
12
Insurance
Estate Planning
Checklist for Dentists
Use this to eliminate your tax bill
by Mark Halpern
Have you accumulated assets in your professional
corporation/holdco? Did you know that 32% of those
assets will be paid as taxes on the second death of you
and your spouse? Your estate will pay the government
$320,000 on every $1 million of investment holdings.
If you have accumulated capital gains from your
investments, real estate or practice, did you know that
23% of those gains will be paid as taxes on the second
death of you and your spouse? Your estate will pay the
government more than $1 million on $5 million of
investment growth.
To sum up, the bad news is that a ticking time bomb
called taxes is looming in your future. The good news is
that all of the taxes described above can be reduced to
zero with proper planning that you can begin right now.
Getting organized
This is usually the most difficult step in estate planning.
The following series of questions and considerations
will help identify your unique estate planning needs.
When completed, contact us for help or share the
information with your trusted advisors.
Distribution of assets
Prepare a balance sheet that includes all your assets,
liabilities and insurance policies. This will provide a
financial snapshot with the amount and type of assets
that make up your estate.
Get help from a qualified professional to determine
the tax liability of your estate. This can be quite
complicated, especially if you or immediate family
members are U.S. citizens or if you hold assets
outside of Canada.
Determine your family’s income needs. Will your
estate have enough income to meet your financial
obligations and desires at death? Will your beneficiaries have sufficient liquidity to service personal debt,
provide an income for dependents and allow for
necessary savings for education, retirement, etc.?
Do you want to provide benefits beyond the
next generation?
Will there be adequate liquidity to pay the expected
taxes and estate costs and still leave a legacy?
What is the impact of passing on certain assets,
such as a business or family cottage, to only some
of your children? Are there enough “other” assets
to ensure your estate is distributed equally or fairly?
Can your beneficiaries share certain assets?
Would this maintain family harmony?
Do you have the proper amount and types of
insurance to meet your specific needs, including
income replacement, estate preservation, estate
equalization and leave a legacy? Are you paying
for your insurance personally or using lower taxed
corporate or Holdco dollars? Did you know that
you can sell your personal life insurance to your corporation and get tax-free cash out of your company?
How do you want to distribute your assets among
family, friends and charitable organizations? Do you
own specific items like jewelry, art, antiques that you
wish to gift to family, friends, or others?
Have you considered making tax-efficient charitable
donations upon your death? Consider charitable
remainder trusts, private foundations, donor-advised
funds or a charitable gift of securities.
Profitable Practice
Did you know?
The majority of successful dentists we
meet are totally surprised when they
discover their ultimate tax liabilities.
You and your spouse may have been
fortunate enough to accumulate substantial savings in RRSPs and rolled those
RRSPs into a RRIF. Did you know
that 46% of your hard-earned retirement
savings will be taxed after you and your
spouse are deceased? In other words, your
estate will pay the government $460,000
per $1 million of retirement savings.
13
Do you want your executors, trustees or beneficiaries to
get professional help from specific advisors or do they
already have the necessary skill sets? Does your estate plan
provide executors and trustees with the necessary powers
to implement your estate plan effectively and efficiently?
Family considerations
Do you need to make special arrangements to protect the
inheritance of minor children until they attain responsible
ages or reach certain pre-determined milestones, such as
attaining a certain level of education? Is it your desire to
keep your spouse and children in the family home?
Should consideration be given to an estate freeze to minimize your tax liability and allow future growth to accrue
to your children or successors?
If your family carries on your business, will there be
enough liquidity to see them through the transition
period after your death?
Foreign considerations
Are you or your spouse a dual citizen or do you own any
assets outside Canada? If yes, have you considered potential
U.S. estate tax issues? Are there any plans to move out of
Canada in the future?
Are special arrangements required for infirm beneficiaries, including protecting their social assistance or other
government support on a long-term or permanent basis?
Do you have any other dependents such as physically,
mentally or financially dependent parents?
Do you have sufficient liquid assets to cover foreign
tax liabilities?
Are you concerned about a future marital breakdown
of your children or your surviving spouse? Could that
impact your estate? Should you protect beneficiaries with
poor financial judgment or skills, or those who might
otherwise have trouble managing money?
Do your executors/trustees/beneficiaries reside in Canada?
Do they plan to remain here? Have you addressed all
the legal and tax implications associated with foreign
jurisdictions?
Are arrangements necessary in a second marriage and/or
blended family situation for support of your spouse, while
ensuring your capital passes to your children from a
first marriage?
Ownership, beneficiary designations and
trusts
How do you own your assets? Did you know that if you
hold an asset joint tenants with right of survivorship
(“JTWROS”) the survivor will inherit it, as opposed to it
being distributed according to your will?
Is the payment of probate fees a concern? Have you inadvertently changed the ownership of your assets such that
your estate plan no longer works? Is there an opportunity
to save probate and other estate costs on certain assets that
don’t require probate - private company shares for example?
Does your jurisdiction have rules over type of planning?
Have the appropriate beneficiary designations been made
for registered plans (RRSPs, RRIFs, RPPs, DPSPs, TFSAs)
and insurance policies?
Do you have two wills in place to eliminate probate taxes?
Does your will make use of trusts to reduce taxes on
income and provide greater control over your estate with
protection from creditors, including situations such as a
marital breakdown?
Does your estate plan address the potential for double
taxation?
Address each part of the plan
When it comes to preparing an effective estate plan, there
are many issues and questions to consider. The whole is
greater than the sum of the parts, and each part of your
estate plan must be addressed to ensure that all components work effectively together to deliver the best results.
Get professional help from an experienced specialist like a
Certified Financial Planner or Trust and Estate Practitioner
and get started now while the sun is still shining.
Note: The tax rates used in this article are based on current
Ontario rates.
Bottom Line:This article contains a comprehensive look at all of the
main questions and issues a dentist should consider in the preparation
of an effective estate plan.
Mark Halpern
Mark Halpern is a Cer tified Financial Planner
(CFP) and Trust and Estate Practitioner (TEP).
He is the founder and president of
illnessPROTECTION.com and one of
Canada’s top life insurance advisors.
For your free, no-obligation consultation
contact Mark at 905-475-1313 or
email [email protected]
Business planning
Is a buy-sell agreement in place? Are there any other
shareholder agreements that govern the effective and
efficient wind-up or sale of your business? Are they
structured properly? Is the proper amount and type of
insurance in place to provide the business liquidity?
What if a key person becomes incapacitated - do you
have proper insurance to implement a contingency plan?
14
Get your free Estate Planning Toolkit at my website. It is comprised
of 3 parts:
1.Estate Planning Checklist – know in advance how to organize your
estate efficiently and eliminate taxes
2.Estate Directory - what if something happens to you? Will your
spouse and children find every important document easily? E.g.
wills, bank accounts, life insurance, etc.
3.Executor Duties Checklist – does your executor know what do?
Keep this document with your wills.
I encourage you to visit illnessPROTECTION.com and get started now.
Marketing
Attracting New Patients Effectively
– With Patience.
You probably know the numbers that make your
practice tick. You are also aware of the value of
a new patient in year one, year two and beyond.
And knowledgeable of the revenue and profitability of each individual treatment or service
being offered. However, perhaps you are not
aware of the extent that practice marketing can
be utilized to help realize these business goals.
In many conversations with dentists and practice office managers,
the discussion seems to revolve around the desire for immediate
results, and not “ bigger picture” thinking. This marketing planning
approach, or “visioning”, is something that a planned, professional
marketing approach can provide.
Be Pro Proactive Marketing
While your need for a new patient response is immediate, there
might not be a need for a new dental office relationship in any
local home on any given day. This is where a proactive and
planned approach to marketing comes into play.
We had a client meeting recently where the dentist was very
specific: he wanted a marketing campaign that would specifically
deliver new dental implant cases to his office. He paid little mind
Profitable Practice
by Daniel Pisek
15
to the fact that his competitive landscape was loaded with
high-end practices all wanting these same cases. The discussion
seemed to revolve around what the message for this specific
campaign needed to be, and how it would be executed.
However, the more difficult discussion was getting him to
see the benefit of taking a big picture approach to realizing a
bigger picture success.
Your marketing “engine” has five main elements you need
to manage and direct, while also ensuring they are integrated
and mesh well together to achieve better overall performance.
The five “gears” are as follows:
This is called “brand building”. Starbucks, Mercedes, Nike:
these are all brands you are aware of, yet they continue to do
“marketing” and get their message out there. While the need
to purchase might not be there today, when the successful
dentist is ready to shop and choose their next car, the right
marketing message can place Mercedes “top of mind” and
immediately on the short list.
2. Your internet presence: Your advertising is what sparks
interest or an idea to consider you. Your website and
social media presence is what reinforces your credibility
and provides a first taste of office atmosphere and
patient experience.
The key is to have the right message in your campaign - the
right message is the right mix of design and copy. The design
and copy needs to be all about the consumer. The overall
message needs to be about them and not about you. The right
message will connect with the target consumer and spark the
desire to learn more about you.
The other important element to getting the right message
out to your target audience is ensuring that you use the right
media to deliver your message. Is it direct mail, magazine,
outdoor advertising, transit, on the wall in the restroom of
your favorite restaurant? You have many options, and you
need to select the right one - the one which will connect
with your target with the most frequency and reach, and stick
with it for a while.
A great example of a successful marketing tool is our
community newsletter program, where the goal is to attract
families to our clients’ family dental practices. In our follow-up
with these newsletter clients, many of them say it took two
or three editions, but now clients in the local community
almost expect it on a quarterly basis.
Tune up your marketing “engine”
Proactive marketing is much like a professional series car race:
the race is not won or lost on the first lap. The race starts,
and the car is fundamentally sound. It has four tires, a sleek
frame, an engine that runs, and a driver who knows how
to get around the track in a hurry. The most successful race
teams are the ones that have the right approach, are consistent
with their approach, and also make the needed adjustments
along the way. We need to consider the competitive world of
dentistry as a car race. The race is fast and the competition is
fierce - and marketing is the engine that fuels your racing car
to fly. The better tuned your engine, the faster you will get
around the first lap, and the more competitive you will be for
the long run ahead.
Your brand / practice identity: Don’t kid yourself 1.
your practice name and your office logo are the first thing
to project your image of a progressive-minded practice.
3.Patient communication: Ask yourself this question:
“On a scale of one to ten, how aware are my patients
of the scope of treatment and services available at
my practice?”
4.External marketing: Do the people living around your
dental practice even know that you exist at all? Let alone
the great patient experience they can expect upon joining
your practice?
5.Your team: Are you making the most of your team
meetings? The better you communicate with your
business goals and marketing approach, the better your
group can support your efforts.
Just like you expect a professional accountant to help you
manage the big picture of your practice finances, you should
expect a professional marketing company to help you manage
the big picture of where you are going with your practice.
Regardless of the stage of your practice, developing a
marketing plan and a brand vision are key to long-term
growth. Many practices can make the mistake of focusing
too much on the details of a specific campaign or communication piece, without taking into account the long-term
brand and marketing plan. The key to success and growth?
Patience. Because the more committed you are to long-term
marketing, the more opportunities you’ll get to be “top
of mind” with potential patients. Choose patience –
for more patients.
Bottom Line:This article advocates a long-term marketing strategy
and promotes the message that… ‘patience’ is necessary to attract
new ‘patients’.
Daniel Pisek
Daniel Pisek is the president of Full Contact Marketing,
which specializes in health practice marketing.
He can be reached at 1-800-728-6651 ext.24 or
[email protected].
16
Investor DentistsTM
Investor Dentists™ and
the Corporate Model
In 2007, I read with interest an article written
by Timothy A. Brown (ROI Corporation Brokerage)
regarding the i-Dentist™*. It was cause for pause
and thought. Having worked with one of the
largest UK corporate bodies (Oasis Dental Care)
as Clinical Lead/Clinical Cluster Director, some
interesting parallels have developed.
At present, corporate dentistry has taken an increasing share of the
dental market.The largest player, Integrated Dental Holdings (IDH)
has been merging with another group ADP Dental Company (ADP)
acquired 500 practices, 2000 Dentists and for a 12% share of the
dental market.
It is very likely that UK associates looking for a job will now find
themselves in a practice operated by a corporate entity. The dental
market in the UK is now divided into four sectors:
Large corporate chains
Smaller corporates operating in one region
Independently owned groups of practices
Single site practices with either an individual
dentist or partners.
Profitable Practice
by Dr. Dev Mangat
17
For the reasons discussed above the demands for i-Dentist™
practices in Alberta continues to rise, most current investors
are actively seeking to add to their portfolios and a number
of new candidates are entering the market.
Although we predict that these numbers will continue to rise,
there are some possible restrictions:
1.With the current lending restrictions, some of the less
sophisticated i-Dentist™ models might have problems
raising the finance to fund their prospective practices.
2.Absentee ownership can be challenging, hence the need
for a good support system and management team. This is
often lacking with some of the newer entrants.
Clearly then, in the UK and now the US, the i-Dentist or
corporate model works. In Alberta, this movement is gaining
momentum also and some of the motives/incentives might
include the following:
™
1.Although there are guidelines set by the Alberta Dental
Association in terms of fees, there is no fee scale per se.
This contrasts sharply with the situation in some of the
other provinces and in particular Ontario/B.C.This presents
the opportunity of being able to charge for services on a
level commensurate with skill and experience, something
that has proved very alluring for clinicians in other provinces
looking for the opportunity to increase practice turnover.
2.A lot of the most recent dental graduates are not in a
position to invest heavily in practice acquisition as soon
as they qualify and furthermore a majority of these newer
graduates will be females where the work-life balance
is becoming more important. The opportunity for the
i-Dentist™ in this situation is to be able to recruit these
motivated young dentists at competitive rates of remuneration. The advantage for the new graduate is to have
the opportunity to be mentored.
3. i-Dentists™ are also able to utilize the experience of
former principals who can help with the above in a
“mentoring role” and maintain their practice credibility
as “lead dentists”.
3.Practice purchase selection is critical. The best opportunities
are often associated with good quality general dentistry
practices where the fee income is not reliant on one main
clinician. A productive, empowered hygiene team is also a
key to success.
Given the risk and debt averse demographic of the typical
“Alberta dentist”, the biggest challenge for these would-be
i-Dentists™ is taking on the debt load and coming to terms
with the notion of speculating to accumulate. Interestingly,
many of the same group of individuals have made forays into
real estate and stock market investments where the risk profiles
for these investments is considerably higher as has most
recently been witnessed with the demise of the same.
In comparison, dentistry is a business dentists know about.
With a well-executed business plan, sufficient due diligence
and a good quality appraisal, the risk factor diminishes considerably and the return on investment increases considerably.
For these reasons, any prospective i-Dentist™ needs guidance
from an experienced team that appreciates all the nuances.
It is wise to seek professional advice from an industry leader.
* i-Dentist™ is a trademark of ROI Corporation Brokerage.
Bottom Line:This articles tracks the growth of the corporate model of
dental care, especially in Alberta, and outlines the major issues that
an i-Dentist™ should know.
4.The more savvy i-Dentists™ recognize that they are not
charities and have implemented systems and processes that
needed to be in place to deliver profit. Indeed, most are
reporting increased earnings and as the number of practice
acquisition increases this becomes more streamlined, with
greater capacity for audit and accountability.
5.Suppliers offer bulk purchasing discounts to larger customers
and some of the i-Dentists™ are able to reduce practice
expenses considerably by using their own dental laboratories and dental supply chains. This also increases the net
income by reducing supply costs.
6.The fear about losing patients/staff is unsubstantiated.
Retention rates have been much higher than we first
anticipated, which obviously reduces concerns over
loss of income.
18
Dr. Dev Mangat
Dr. Dev Mangat was appointed in 2006 as
clinical lead and clinical cluster director for
Oasis Dental Care, a Corporate Body in England.
In 2009, he moved to Canada and is now an
associate for ROI Corporation Brokerage situated in Calgary. He regularly attends courses
worldwide and has a par ticular interest in
esthetic and restorative dentistry. He can be
reached at 403-607-1314 or at [email protected].
Legal
Good Facts Make Bad Law
A popular aphorism that first-year law school
students love to bandy about is “Good facts make
bad law”. In other words, unusually compelling
cases bring about a legal result that does not
necessarily make sense in the realm of statistically
normal situations. The tragic circumstances that
led to the (arguably excessive) requirement that
every small business in almost every province
have an Anti-Violence Program in place (including
an on-site risk assessment, a customized policy—
a template is not sufficient—and training of all staff)
is arguably a case in point.
The Compelling Facts
In 2004, Dr. Marc Daniel, an anaesthesiologist, met Ms. Lori Dupont,
a recovery room nurse, at the hospital at which they both worked:
Hôtel-Dieu Grace in Windsor, Ontario. Dr. Daniel became
obsessed with Ms. Dupont, pursuing her relentlessly, eventually
persuading her to go out with him and finally pressing her into
moving in together into her newly acquired house (much of
which he paid for).
Profitable Practice
by Mariana Bracic
19
Before and during this time, Dr. Daniel had been disciplined
by the hospital for having harassed three other nurses in the
hospital (including breaking one nurse’s finger). The hospital
launched an investigation into his workplace conduct. As a
result of the investigation, Dr. Daniel was required to sign
a Memorandum of Agreement requiring him to (1) go on
probation; (2) abide by the rules of the hospital’s Harassment
Policy; (3) obey the Code of Conduct; and (4) take anger
management therapy.
On February 27, 2005, Dr. Daniel injected himself with
anaesthetic. The hospital did not investigate this as the treating
doctors in the acute psychiatric ward believed Dr. Daniel’s
explanation that he was using drugs to deal with the pressures
of work. They did not believe Ms. Dupont and her mother
who argued that the suicidal attempt was a tactic designed to
control Ms.Dupont’s behaviour.They told the treating physicians
that they feared for the physical safety of Ms. Dupont and her
child. Ms. Dupont broke up with Dr. Daniel while he was
still in the psychiatric ward.
On March 10, Dr. Daniel was discharged from the hospital
and began to stalk Ms. Dupont at the hospital and at home.
Her parents interceded to protect her at home. On April 5,
Dr. Daniel placed nude photos of Ms. Dupont on her vehicle
in the hospital parking lot. He also confronted Ms. Dupont’s
father at his workplace and attempted to blackmail him.
Where was the hospital in all of this? you might reasonably
be wondering. The hospital did make some effort to deal
with Dr. Daniel after this incident. It cancelled Dr. Daniel’s
security card access, asked him to get therapy and to pick up
his mail elsewhere. It seems fair to say that as an employer the
hospital failed miserably. However, as an employment lawyer
who works on the employer side, I must say, in fairness to the
hospital, given the way that the law stood at the time, they
were likely advised and justifiably concerned about the
enormous potential liability of wrongfully terminating or
disciplining Dr. Daniel. The Courts have been clear that
sexual harassment does not necessarily justify termination
of the perpetrator and any experienced employment lawyer
advising the hospital would have felt they were wading
between Scylla and Charybdis.
The “Bad Law”?
Largely as a result of that tragedy, Ontario, and now most
of the other provinces have legislation intended to prevent
violence in the workplace. While no one would suggest that
the goal is not laudable, reasonable people may certainly
differ over whether the legislation is appropriate or effective
toward that end. In my view, it overreaches and is unnecessarily burdensome to a small-business employer. It does not
adequately recognize that what is required for an all-night
business in Vancouver’s Downtown Eastside is excessive for a
bakery in Guelph. While provincial governments would like
to persuade businesses that compliance is easy and inexpensive,
a review of the legislative requirements for compliance
completely belies that. The overwhelming majority of our
doctor clients across the country report that they do not feel
they can become compliant on their own. And they are usually
right: while it is not inexpensive to hire an expert firm, it is
even more expensive for doctors to do it themselves (given
the time required, the complexity, the steep learning curve,
and the foregone billings that would be involved). In sum, it
is an enormous regulatory burden for Canadian businesses,
without a demonstrable reduction in violence or harassment.
On the other hand, my partner, Dirk de Lint, who heads up
our firm’s Anti-Violence Program for our clients, is of the
view that the total beneficial effect on society is hard to assess
this early, and may well exceed the burden on employers. In my
partner’s opinion, while the regulatory burden is high, arguably,
there is a salutary educational effect in society generally
(because virtually everyone is an employee or an employer)
that may prove, over time, to outweigh the cost.
While I would like to believe that he is right, I am not quite
persuaded that the legislation could not have been drafted in
a less burdensome way. However, the fines for non-compliance
are extremely high (for example, up to $500,000 in Ontario
for a corporation).
The bottom line is whether you believe the legislation is well-drafted
or not, if you are not already compliant, do ensure that you comply
as soon as possible!
Ms. Dupont at this time sought a peace bond in the Courts.
Unfortunately, the final hearing was delayed tragically.
In June, the hospital, reinstated Dr. Daniel without consulting
the nurses, whom he resumed harassing. He kissed one nurse
on the cheek and offered to rub another’s naked back.
He intimidated Ms. Dupont by staring intensely at her and
even body-checking her in the hallway. The nurses feared that
he would “go postal”. The hospital viewed his conduct as
a symptom of mental illness requiring treatment rather
than discipline.
On November 12, Ms. Dupont and Dr. Daniel, almost
incredibly, were scheduled to work together on a skeleton
crew. When Dr. Daniel arrived, Ms. Dupont was already
in the recovery room. Dr. Daniel stabbed her in the chest
repeatedly. He left the hospital, called his wife to admit to the
murder and to say goodbye. He then injected himself with a
lethal dose of anaesthetic, dying three days later. Ms. Dupont
died of blood loss that morning.
20
Mariana Bracic
BA(Hons) JD | Founder, MBCLegal.ca
905-825-2268 | [email protected]
Mariana is proud of the dramatic benefits of her
completely unique, niche specialization (employment
law + doctors) to her clients’ wealth and happiness.
Practice Valuation
Napkin Valuations –
Saving A Little Could
Cost You A Lot!
“I was hoping you could do me a favour. Could
you eyeball a financial statement for me and let
me know what you think a rough value would
be?” Here is a question I get asked fairly often,
and my answer is usually. “Sure I could, but is that
really going to help you?” Taking a quick look at
a financial statement, or using a “rule of thumb”
to arrive at a business’ value can lead to a quick
answer but often, the answer isn’t reliable or close
to the company’s true value.
“Using a ‘rule of thumb’ to arrive
at a business’ value can lead to
a quick answer, but often, the
answer isn’t reliable or close to
the company’s true value.”
Profitable Practice
by Marnie Silver
21
Financial statements are always a good starting point, but
they are only one source of information for determining a
company’s value. There are often items buried or hidden on
a financial statement that need to be adjusted. These items
may not be noticeable until some probing is done and other
documentation reviewed. For example, in owner-managed
businesses there are often personal or discretionary expenses
included on the income statement, items such as automobiles,
travel, or entertainment. These items should be adjusted as
they have a significant impact on the company’s real value.
A company’s income statement shows net income of $80,000,
but after adjusting salaries to market rates of compensation,
and reversing automobile expenses of shareholders’ relatives
who do not work for the company, maintainable earnings are
actually $200,000. Calculating the value based on each of the
above income amounts yield very different results. If questions
aren’t asked, and additional information reviewed, the quick
answer will likely not be the right answer.
Similarly, there may be assets that are not reflected on the
balance sheet at all (patents or other intellectual property), or
assets that are significantly lower than their fair market value
(real estate). These assets may or may not be included on the
balance sheet, but definitely add value to the company and
need to be included in the company’s overall value.
Rules of thumb are usually based on some form of profit.
Common definitions of profit include: EBITDA (earnings
before interest, taxes, depreciation and amortization) or sellers
discretionary earnings (earnings before interest and taxes but
after a reasonable salary to owner). The problem is that rules
of thumb ignore many other aspects that drive value.
“If questions aren’t asked, and
additional information reviewed,
the quick answer will likely not
be the right answer”.
For example, two different restaurants both have sales of
$500,000, and reported income on their financial statement
of $50,000. Both owners each work similar hours doing
similar functions. The first restaurant pays rent of $3,000 per
month, while the second pays rent of $15,000 per month.
Applying the rule of thumb to net earnings would yield the
same value – but which business would you rather own?
And which would you perceive as having a greater value?
There are many reasons and situations that make a proper
business valuation a necessity. The most common reasons for
a formal valuation include estate and tax planning, shareholder
agreements or buyouts, divorce, divestiture and acquisition of
a business to name a few.
22
Taking a short-cut often ends up costing more in the long
run for a number of reasons –
The “quick & dirty” value determined is not representative
of the company’s real value. Decisions are made based on
the wrong value and regretted later.
The CRA or the courts do not accept a value without
proper supporting documentation. Attempts to support
the quick value after the fact cost more and cause
unnecessary grief for all parties involved.
“The “napkin shortcut” usually
ends up costing much more in terms
of time, money and aggravation.”
A number of years ago, I had a client who owned an auto
mechanic shop. His accountant did a quick valuation on the
back of a napkin so that he could complete a rollover and
transfer the common shares to his son. The number on the
napkin estimated the company’s value at $600,000. CRA
came back and assessed a value of over $10 million saying the
value was implied over 20 years of earnings in goodwill. A lot
of time, energy, and money were spent fighting with CRA,
and the client eventually settled on a value of $1.5 million.
A matter only settled after considerable (unnecessary) professional fees racked up, additional taxes and penalties were
triggered, a lot of time was wasted and endless grief had by
the client. Experience has proven time and time again, that the
“napkin shortcut” usually ends up costing much more in
terms of time, money, and aggravation; however, I have no
stories to tell about anyone regretting their investment in
a proper business valuation.
For estate/tax planning, the formal valuation is like an insurance
policy. Spend the time to do it properly up front, and if CRA
starts asking questions later, they are almost always answered
by the valuation report that was completed.
Bottom Line:This article points out the importance of a proper business
valuation report from the start to avoid problems down the road.
Marnie Silver
Marnie Silver, C A.CBV, leads the valuation
and litigation suppor t practice group at
SF Valuations, par t of SF Par tnership, a
leading, mid-market, public accounting firm.
SF Par tnership provides a wide range of
specialized services to professionals in practice.
Direct line: 416-646-8085
E-mail: [email protected].
Practice Management
Is Bigger Always Better?
Something to Consider When Selling a
“Million Dollar” Dental Practice
The North American dental industry continues
to expand, due in large part to the increase in
the average consumer’s dental IQ.Various sources
have predicted that total dental fees in Canada
for the year 2010 will exceed $13 billion.
With this trend towards ever-increasing billings, many solo
dental practices are now grossing in excess of $1 million per year.
What does this mean for the appraisal and the sale of such
a practice?
A profile of the typical dentist, who is interested in buying a
practice, reveals that they are:
Thirty to thirty-five years of age
Have three to five years of experience in full time
dental practice
Are comfortable, at this early stage of their career, in producing
thirty to fifty thousand per month in dental fees
On average, a full-time associate works twenty days per
month and …
Generates fees of $1,500 to $2,500 per day
Earns 40% of fees, or $600 to $1,000/day
Earns $100,000 to $200,000 per year,
(part-time associates earn $50,000 to $100,000 per year)
Profitable Practice
by Timothy A. Brown
23
When asked to define their ideal practice, the buyer
suggests that:
They desire to buy a practice with one or two full time
hygienists
They want a practice with total gross income in the
range of $750,000 to 1 million dollars
They are uncomfortable with practices that employ
associates - they ponder “Why won’t the associate
buy it – is there something wrong?”
They do not want the previous owner to remain in
most instances
Most do not desire to buy the real estate and the dental
practice at this early stage of the financial plan
They do not want to be in any form of partnership or
cost-sharing arrangement
A brief analysis of the past 100 appraisals I have prepared
reveals that over 20% were of dental practices with gross
incomes of $1 million or more. Most of these practices
employ associates, part time specialists or have partners.
Given the buyer’s criteria as set out
above, who will buy these dental
practices if they are put up for sale?
What price will these large,
sophisticated practices sell for?
Unfortunately, I predict a continuing trend toward buyers
offering lower and lower prices for these larger practices,
when compared to the smaller, more manageable solo
practice. In addition, I predict that the emerging trend for
Investor Dentists™ (also known as ‘hands-off ’ or ‘absentee
owners’) who are buying some of the larger practices, and
then staffing them with past owners or new associates,
will grow.
Today’s young buyers are very ambitious and confident.
Financial institutions are more than willing to lend them
100% of the purchase price. While this bolsters buyer confidence, it does so only to a point. When the practice is too
large, in terms of total income and the resulting investment
required, the practice may become less saleable and the debt
less manageable in the minds of today’s buyers.
The practice which has gross billings exceeding $1 million is
a ‘status symbol’ for some, yet it may be difficult to sell in the
current market. Much like the most expensive and grandiose
home in your neighbourhood - it’s admired by many, desired
by few!
Bottom Line: This article identifies current market trends in sales of
dental practices and the makeup of typical buyers and their motivations.
24
Timothy A. Brown
Timothy A. Brown, President & CEO, of
ROI Corporation Brokerage a company that
specializes in dental practice appraisals, brokerage,
consulting, locums placements, associate-ships
and practice financing across Canada.
Timothy can be reached at 905-278-4145 or
[email protected].
selling a business
Victimized by the
Proprietary Deal
The con man refers to his target as a “mark” –
easy prey to be exploited.
Private Equity (PE) guys are too polite to refer
to their victims in such pejorative terms, but, as I
learned this week from my friend Dewey Hammond,
a partner at Chattanooga-based Four Bridges Capital
Advisors, PE firms now have a saying for a business
owner who is an easy target:The Proprietary Deal.
When acquirers use the term “proprietary deal” they are referring
to buying a business directly from the owner without the
hassles of a “greedy” investment banker driving up the price
by soliciting – or threatening to solicit — competitive bids
for your company.
Falling victim to the proprietary deal is easy.You get approached
by a partner in a PE firm or a senior person from a big company
in your industry you know and respect. They shower you with
compliments about your business, invite you to a fancy lunch and
then ask if you’d consider selling. Once you agree to a conversation,
they convince you there is no need to involve an advisor to represent
you – why pay the money, they’ll say, to some guy or gal who has
done nothing to help you build your business – we’re friends
after all.
Profitable Practice
by John Warrillow
25
But becoming the mark in a proprietary deal is much
more expensive than having your wallet pick pocketed
by a street crook. Here are five reasons to avoid being
the target of a proprietary deal:
You’ll get a lower price
Obviously with nobody else bidding for your business – without
even the threat of a competitive offer — the price an acquirer
will pay is lower in a proprietary deal. Nothing drives up the
value of your company faster than the possibility of two or three
acquirers fighting over it.
Due diligence becomes protracted
Once you agree to negotiate with one buyer, they will
force you to sign an “exclusivity agreement” which allows
the buyer time to do their due diligence. When a buyer
knows they have a proprietary deal, diligence often gets
dragged out for months.
Shrinkage
Not only will due diligence become excruciating for you,
proprietary deals often get discounted with the buyer lowering their offer price after you’ve agreed to a set of deal
terms. The longer and more painful they make the due
diligence, the weaker you become to defend against a last
minute price drop.
Seller’s remorse
The last time I was in Marrakesh I bought a rug. The
street vendors must have seen me coming from a mile
away with my camera slung over one shoulder, map in
my hand and goofy NIKE sneakers on my feet. I was
convinced I was going to show them who was boss. By
the time our negotiation was finished, I had bargained
the price of the rug down by 50%. I walked away proud
of my negotiating savvy until, on the ferry back to Spain,
I learned one of my fellow travellers had got his rug for
80% off the asking price.
When you sell your business, you’ll ponder whether or not
you got a fair price for your life’s work. That’s natural but
if you fall victim to the proprietary deal, with no other
buyers bidding for your company, you’ll go to your grave
never knowing if you were taken.
Out of market terms
Four Bridges Capital partner Hammond explains some of
the less obvious dangers of the proprietary deal. “Another
buyer tactic in a proprietary deal is to keep the price
agreed to in the Letter of Intent the same but asking for
“out of market terms” on other economic issues that have
the net effect of lowering the sellers take from a deal”.
Hammond continues, “Buyers running a proprietary deal
can ask for an abnormally large escrow (a whack of cash
you need to give to a lawyer to hold for a year) or working capital requirement (the amount you need to leave in
your company when you hand over the keys). Other areas
where buyers can peck away at value include the structure
of earn-outs, consulting or employment contracts, or risk
issues like how indemnification works for various representations that the seller must warrant to the buyer.”
At first blush, negotiating on your own with one buyer
can look simpler. Life is short after all and you might
argue it’s better to make a quick sale to a friendly buyer
even if you leave a few bucks on the table. But the illusion
of the easy deal can quickly turn into what amounts to a
one-sided swindle.
Bottom Line:This article alerts business owners on how to avoid
becoming a victim of a ‘proprietary deal’.
John Warrillow
John Warrillow is the founder of
The Sellability Score. See his website
at www.SellabilityScore.com.
26
Locum Dentistry
One Year of Locums
Yes, I have been retired for one year (sold my
practice June 2011), and have completed almost
a year of locum work.
As a result, I have been able to travel, spend time
with my grandchildren and yet work at offices as
I can schedule match with varying offices’ requests.
I have helped: a principal dentist who travelled
to Australia; another who spent time snowboarding on a Friday/Saturday with his children; a new
mother work 2 days a week with her newborn
occupying her other 5 days for 6 weeks; and
finally, an estate until the practice was sold when
the principal dentist died in a tragic car accident.
Profitable Practice
by Dr. Ron Brown
27
Why do locums?
I am able to keep my mind and fingers in dentistry if you
will – I can help others with time off and relieve them of
their anxieties about loss of staff and/or patients when
they travel.
What are the expectations?
The offices I have worked in want their patients treated with
care and follow treatment protocols that they have established,
record treatment and treatment recommendations and most
importantly want the dental team used as a resource.
As a locum, I expect co-operation, value placed on our
collective time and efforts with fair remuneration and good
communication amongst all the parties.
My objectives:
As a locum, we are invited into a practice to help—do
not impose your ideology—work with the team and their
concepts. Do not compromise—if I am not comfortable
with a treatment idea – I let the team know and we can refer
or alter the treatment plan with the patient’s input.
Overall, my experience has been overwhelming support by
the offices I have attended. The team wishes you to do well
for their benefit and for their principal dentist who is not
in attendance. Staff have shared lunches with me, suggested
restaurants, and bed and breakfast sites (when I have travelled
more than an hour from home).
Two locum stories
by Dr. Ron Brown
An elderly lady (who did not speak English well) was sent on
her own for the extraction of a tooth. The team and I, with
sign language and broken English, managed to convey the
need of some radiographs to check her teeth, bones, and for
any sign of infection. We sent a letter to her family outlining
her proposed treatment, a prescription for antibiotics and fees
involved. After three visits (with a family member to interpret)
we had a pleased patient, with some extractions yes, but some
fillings placed, her perio under control and a partial denture.
I’m not sure who was more shocked—her 53 year old son or
myself—when she hugged me at the end of treatment.
An older Dutch lady in London was quite emotional on her
visit after hearing of the original dentist’s tragic accident.
After lots of TLC, we had her anaesthetized for her restorations.
We allowed time for her between fillings and she managed
very well. To everyone’s surprise (she only came to the office
with problems, despite the original dentist wishing to do
annual examinations) she booked for further restorations.
She arrived with home-made cookies for all and left with a
full smile—she hugged the assistant but did not hug strange
men so she passed on me!!!
Bottom Line:This article with two attached stories gives insight into
being a locum dentist after retirement from your practice.
The locum lifestyle is varied, challenging and yes…
very rewarding in many ways.
Dr. Ron Brown
Dr. Ron Brown retired from his practice in
May of 2011 and now works as a locum and
finds this a very rewarding experience.
He can be reached at 905-793-1472 or
at [email protected].
28
Practice Management
Maniacs
and Morons
I just heard the best analogy for dental
productivity that I have ever heard.
As dentists, we all reach a comfort zone
with our production which is the net
total of the way our office does hundreds
of little things. These include the front
desk, how the phone is answered, what
you and your staff say and do, the procedures you are able to do and on and on.
After all, the person who passed you at high speed that
you thought was a maniac, may be a professional race
driver and may be safer at that speed than the rest of us
are at the speed limit.
And we all feel that what we are doing is right. We feel
maxed out and could not possibly do more than we are
doing now and maintain quality.
Most of us could learn to drive better if we took a
driving course. These courses teach not only how to
drive fast, but also how to drive more safely through
greater awareness and control of your vehicle.
So the analogy is driving a car.
When we are driving and someone goes flying past us
at a high rate of speed, we think that he/she is a maniac,
out of control, shouldn’t be on the road, etc.
Let’s say our production is $3000 per day. When we
hear about someone producing $6000 a day we often
have the same kind of feelings. He/she must be some
kind of crazed maniac that is out of control and must
be doing poor quality work or over-charging or is
somehow taking advantage of his/her patients.
Now, how about the guy or gal driving along at
40 in a 60 zone? You think he/she must be some
kind of moron; what the heck is he/she doing??!!
And in the same way it is possible to do excellent high
quality dentistry at a high level of production. In fact,
the true irony of those criticizing the quality of someone
else’s dentistry because their production is high, must
not realize the only way to really hit big numbers is to
do less basic dentistry and more complex (and expensive) dentistry. So there is a very high likelihood the
higher producer is doing more complex work.
And yes, we could improve both our productivity and
our quality with the right training as well. Especially in
the area of case presentation. Anyone can be a high
producer if they are booked to do 4 bridges every day.
So don’t focus on the maniacs or morons out there;
focus on yourself. Are you really operating at your
max or do you have one or two higher gears that you
haven’t hit yet?
Vroom vroom.
Bottom Line:This article uses the analogy of driving a car to a
dentist’s productivity.
Profitable Practice
by Dr. David Rober tson
So we judge other drivers according to the speed we like
to go at and we judge other dentists in the same way.
When we produce $3000 a day, and hear of someone
doing $1500 we wonder what is wrong with him/her
because it is so obvious to you how to do $3000.
What we don’t realize is the guy or gal who is doing
$1500 a day thinks you are a maniac, and the guy or gal
doing $6000 wonders what the heck you are doing all day.
But the point is not what anyone thinks of anyone else.
Dr. David Rober tson
Dr. Dave Robertson is the sole owner of a large
practice with 10 associates. He has written several
practice management programs for dentists and
dental office managers. His office has also
developed office management software that totally
automates payroll, scheduling and repor ting.
He bases all his consulting on what works in
Canada to grow and manage a practice. He can be
reached at www.DentalManagementSecrets.com
or at 403-984-0115
29
2 2 Cit ies
Across Canada
2013
Profitable Practice is
hosting a national speaking tour
on financial fluency for your staff
and transitional planning for you.
The race to the exit gates
is about to begin,
put yourself in a position
ahead of your competitors.
www.CrossCanadaTour.com