Practice Development
Charles J. Arcoria, DDS, MBA
Demographics
Location
Leasing/Purchasing Options
Financing
Selection of Equipment/Supplies
Fee Schedules
Utilization of Dental Consultants
Background Information
FACT = Most dental practices struggle financially because
the practitioner does not FULLY understand the concepts of
marketing and promotional activities.
GOAL = Obtain optimum business by
ANTICIPATING, then meeting the needs of the patient.
Demographics
Financial/economic
Population
Trends
Competition
U.S. Census Bureau
Fact Finder
http://factfinder2.census.gov/faces/nav/jsf/pages/index.xhtml
The Policy Map
http://www.policymap.com/LandingPages/competitors.html?gclid=CMjj-9CjlKwCFUXu7QodgmwFmw
City-Data.com
http://www.city-data.com/
Demographics – Consumer Flow
Demographics Now
Scott McDonald
http://www.dentaldemographics.com/reports_marketing_demographic.asp
ADA Workforce Data
http://www.ada.org/1622.aspx
Perceived Competition
Demographics
Controllable Marketing Variables
>Price and costs
>Service
>People
>Place or location
Uncontrollable Marketing Variables
>Social & cultural
>Government & legal
>Technology
>Economic conditions
>Competition
Location
>What type of practice do you want?
>How much can you physically produce?
>Find reliable information & sources
>How much income is enough?
>Focus on wealth and/or income?
>Where do you really want to live?
>Set goals - financial, personal, professional
>Continually study economic trends
>Initially keep costs low - budget
Location – Study Economic trends
Site Selection
Location
Urban vs. Suburban vs. Rural
Office Building vs. Professional Building vs. Retail Center
Commercial Real Estate Brokers
Negotiate lease for you
Will slightly increase your rental rate
Can get you into spaces that you do not have access to
Are aware of new projects/developments before the public is
Referral Base
Important for Specialists; Know which General Dentists
currently refer to existing specialty practices
Leasing/Purchasing Options
Leasing vs. Building
Tax advantages of leasing vs. building
>Entire lease payment is written off each month
>Buildings are treated as real estate – financed over a long period of
time (usually 20 years)
>Buildings have a small payment per month, but the tax write-off is
spread out over the 20 year loan.
>Advantage regarding Building = No landlord
>Disadvantage regarding Building = Neighborhoods change over time
>Advantage regarding Leasing = Can move to better location quickly
>Leasing is more popular in Urban locations
Leasing/Purchasing Options
Site selection/space/leasing/improvements
>Design plans vs. Construction plans
>Design Plans are not acceptable by most City Inspection Departments
>Construction Plans have the complete Engineering Specifications on the blueprints
>Construction Costs
These usually average around $70 per square feet
Landlords want to approve the construction bid
>Leasehold improvement allowance
>Landlord will provide either cash or free rent, after the construction is finished
>Subjective location analysis
>Use your gut feelings about a generic location
Types of Financing
1.
2.
3.
4.
Conventional bank loan
SBA loan
Lease or signature loan
Unconventional financing
Financing
Conventional Bank Loan
1. “Bricks & Mortar” set-up
2. May have a healthcare division
3. Simple interest loans with fixed
terms
4. Will finance less than 100% of need
5. Significant paperwork to fill out
Financing
SBA Loan
1. Backed by U.S. Treasury – good for
the bank that you are filing with
2. Usually has a healthcare division
3. Simple interest loans with fixed
terms
4. Will finance up to 95% of need
5. Much paperwork to fill out
Financing
Lease or Signature loan
1. Finance Company – not a real bank
2. Responsible to their shareholders
3. Use lease financing terms that do
not calculate simple interest
4. Will finance up to 100% of need
5. Little paperwork to fill out
Unsecured Loan
Financing
Unconventional Financing
1. From a relative or a friend
2. Must pass IRS criteria – cannot be a
“no” interest loan
3. Interest rates are usually slightly
less than SBA loans
4. Must pay back all of loan, or it is
classified as a gift – taxable issues
Financing Costs – Spreadsheet Analysis
Financing Costs – Expense Items
Financing Costs – Loan Proceeds
LOAN PROCEEDS
Working capital
Dental equipment & computer software
Leasehold improvements
Sign, external fixtures
Furniture
Dental supplies
Security deposit, attorney, consultants
Office supplies
Landlord allowance - improvements
TOTAL LOAN
$45,000
$95,000
$75,000
$3,000
$8,000
$12,000
$7,000
$10,000
($5,000)
$250,000
Selection of Equipment/Supplies
>Use of equipment dealers vs. mail order
>Bids and budgets
>Service after the sale
Selection of Equipment/Supplies
>Equipment dealers vs. Independents
Comparing Bids ::: Service after the sale ::: Warranties on Equipment
Henry Schein Dental
Southwest Medical & Dental
Buy Dental Equipment.com
Independent Dental.com
Patterson Dental
J&B Dental
Burkhart Dental
Lone Star Dental
Fee Schedules
1.
2.
3.
4.
Obtaining Fee Schedules
Call offices in your area
Get schedules from insurance
companies
ADA surveys
Purchase schedules
Purchasing Fee Schedules
1. Udell Webb DDS
2. National Dental Advisory Service
3. Atlanta Dental Consultants – Tom
Limoli DDS
Utilization of Dental Consultants
Types of consultants
1. Practice Management: Improve
practice finances (mostly revenues)
2. Practice Brokers: Assist with buying
and selling practices; appraisals
3. Hands-On Practice Managers:
Actually work in a practice to
enhance finances or operations
Utilization of Dental Consultants
How are consultants paid or hired?
1. By the job – fixed fee
2. By the clock – hourly or daily rate
3. Percentage of revenues or sale
Utilization of Dental Consultants
Experience & Advice
1. ADA has directory of Dental
Practice Management Consultants
2. National Association of Healthcare
Consultants
3. ***Referral from colleague is the
most optimum
The End