midterm practice management

Assets

money and other valuables belonging to an individual or business

Liabilities

Amounts owed to creditors

Owner's Equity

the amount remaining after the value of all liabilities is subtracted from the value of all assets

Balance Sheet

A financial statement that reports assets, liabilities, and owner's equity on a specific date.

Snapshot of company's
financial position on a
given date

Total Assets

Total stockholder's equity must equal:

Income statement

A financial statement showing the revenue and expenses for a fiscal period.

monthly, quarterly, and yearly

Income statement often generated (3)

No

Does land depreciate

15 years

Depreciation lifespan of buildings

5 years

Depreciation lifespan for electronics

7 years

Depreciation lifespan for equipment and furniture

General Depreciation System (GDS)

Calculated by value divided by number of years of useful life

Modified Accelerated Cost
Recovery System (MACRS)

Calculations can be done by
using IRS tables. Accountant may use to save you money.

Cash flow projections

Statements of cash expected to flow into the business and cash expected to flow out over a particular period.

itemized (by month) for years one and two

aka pro-forma

Values

Principles and standards that are the center of our character.

Extremely stable and change slowly over time.

Guide our behavior.

Can be described in several words, usually bulleted

Legal agreement

A group practice requires a (2 words) for how each will contribute and share in all aspects of the the business

A general partnership, limited liability company or a corporation

A group practice can be set up as:

Solo Group Practice

Two or more solo practices share space, certain equipment or even staff ie, waiting room and receptionist or particularly expensive equipment.

Compensation is separate, however shared staff may be compensated from formula agreed upon by the group.

Expenses of shared resources are divided in several ways ie, as a percentage of space used, frequency of use, production derived from use of shared equipment.

Sole Proprietorship

Simplest business organization which will operate under owner's name ie, James C. Ortengren, DDS or may use "Doing Business As" ie, Cape Cottage Family Dentist.

Sole Proprietorship

All business profits "Flow Thru" to owner's personal tax form 1040.

Owner's business expenses should be separate from personal expenses.

Have to file quarterly estimated taxes.

Sole Proprietorship

Personal liability in event of lawsuit from business operations.

Higher rate of federal tax audit from IRS than other types of business entities.

Can not deduct certain monetary expenses such as; long term care premiums, medical reimbursement plans contributions and child care plan contributions.

General Partnerships

Two or more dentists share ownership under terms where expenses, profits, assets, liabilities and management are delineated and apportioned to each partner.

Easier to obtain bank credit when multiple partners are liable for the loan.

Personal liability still for each owner unless each partner is a corporation ie, Limited Liability Corporation.

Corporations

A legal entity filed with the secretary of state containing articles of incorporation and bylaws.

Transfers money or other practice assets in exchange for stock. Can be as little as a single stock holder.

Must obtain TIN number and file corporate tax return.

Dentist owner becomes an employee of the corporation.

Liability protection for the dentist owner is biggest advantage as liability is limited to assets owned by the (1 word) and not the personal assets of the dentist.

Two types, "C" and "S" differentiated mainly by tax issues

C Corporation

The most common type of corporation, which is a legal business entity that offers limited liability to all of its owners, who are called stockholders.

Usually "zero out" year end profits by funding bonuses or contributing to stock holder retirement plans to avoid corporate tax.

Selling causes capital gains to be taxed at corporate rate of 21% then again at the personal tax rate of 37%

S corporation

Known as "Pass-Through" or Subchapter "S" Corporations.

Year end profits by the corporation are reported on shareholder's personal tax return so no corporate tax obligation, thus the moniker "Pass- Through".

No Medicare or Social Security tax obligations on dividends paid to shareholder as long as dividends do not exceed income and the IRS considers it reasonable compensation.

Capital gain obligations when selling are taxed at only individual rate.

Limited Liability Companies, LLC ,commonly referred to as Professional Corporations, PC

Combination of general partnership and corporation.

Benefits of corporation in liability protection for owner against lawsuits.

Benefits of general partnership in tax rules.

Less legal administration and lower cost to start up.

Professional Limited Liability Corporation with an "S"Corporation Election

All the benefits of the PLLC plus the benefits of "pass-through" tax treatment on owner's profit.

For most dental practices this is considered the most advantageous business entity structure.

Full Demand

Customer is willing and happy to spend money on a product that they value and appreciate.

Negative Demand

The customer may
understand the benefits of the product but still does not want to spend money on it.

internal marketing

First impressions about staff 's level of caring and competence can only happen once.

Your team and everything they do.

External Marketing

• Website and logo development • Social network media • Media advertising • Community newsletters to establish your presence • Sponsoring community events ie, athletic team sponsor • Neighborhood newsletter for people new to your area • Community involvement , schools, health fairs, church and civic groups • Content marketing ie, Blog posts, FAQ , and articles all help to build meaningful relationships with your patients and potential patients
• Google My Business listing (GMB)

Relationship Marketing

"People buy from people or businesses they like".

Socially Responsible Marketing

Adhere to the principles of ethics in all marketing.
Follow the ADA Code of Professional Conduct.
Reject deceptive or misleading marketing practices.

80

__% of all online traffic is video content

statement of core values

The \_______ is the summary of beliefs and personal values the dentist holds regarding professional and personal philosophy on how they want to practice dentistry. This may speak to patient care, work environment and personal responsibilities.

Practice Mission

The \______________ is a set of statements that describe what the dentist wants the practice to do on a daily as well as long term basis. This also can be described as the Practice Philosophy, ie, Approach to Patient Care, Financing Dental Care, Personal and Staff Preparation and Education, and Community Responsibilities .

Strengths/Weakness and Opportunities/Threats (Brainstorming)

An assessment of the practice environment. Strengths/weaknesses are internal factors the dentist has control of while the Opportunities/Threats are external factors the dentist must respond to. May be thought of as a brainstorming technique as it does not identify a course of action, but points out areas that need to be addressed in a strategy.

Strategies

\_____ are the long term plans that implement the dentist's practice mission, ie, Plans on Third-Party payers, Credit and Collection Policies, Advertising ,Fees, Office hours,Continuing Education and other such policies.

Goals

\________ are what puts the strategy into action, while Objectives are specific constituencies of goals. For these goals and objectives to give the dentist any meaning they must be measurable over a specific time so the dentist can decide whether the practice has achieved that goal.

Methods

\_______ delineate how the dentist will meet their goals. These are the things he/she does to accomplish a purpose. Goals tell what you are trying to do while methods tell how you will do it.

Numbers

\________ what is used as a metric to determine whether or not a goal has been attained, however, what is really being measured is the effectiveness of the strategy used to meet the goal.

S.M.A.R.T. Goals

Specific, Measurable, Attainable, Relevant, Timely

Specific

Well defined goals, who, what, where, when and why

Measurable

Develop criteria for measuring progress toward goals

Achievable/Attainable

Ensure you and your team have the skills and resources
needed to reach the goal within realistic time frames.

Relevant

How doing something measurable and attainable will let you achieve
progress toward a goal.

Time-Based

Define a specific time frame to achieve your goal

Planning

the process of determining the core values, philosophy, mission, goals, whether short or long term, and the objectives for the practice. Core values describes what beliefs the dentist holds.

philosophy

The \________ is the guiding vision of what the dentist wants the practice to become. This is supported by goals that define the vision of the desired practice. Once these goals are developed a strategy is built to achieve those objectives. Strategies are long term plans to implement the dentist's mission.

Functions of the Dentist-Manager

1. Planning
2. Organization
3. Supervision /Control of Resources (Human, physical, financial, information).
4. Leading

Team Members usually not on payroll

• Accountant, CPA • Banker, Account Manager, Loan Officer • Attorney • Payroll company • Benefit Manager for staff

The Five "R"s of Management

Responsibility, Respect, Rapport, Recognition, and Renumeration.

Great Man Leadership Theory

• Also Known as "Born to Lead"
• Leadership is inherent can't be learned

• Born with necessary internal characteristics
(Charisma, Confidence, Intelligence, Social Skills).

Trait Theory of Leadership

leadership depends on the personal qualities or traits of the leader. Assume inheritance of traits.

Behavioral Leadership Theory

• Focus on actions and behaviors of leaders not innate internal qualities

• Can learn to become great leaders through teaching and observation

• Great leaders are "made not born"

Participative Leadership Theory

• Takes input of others into account
• Group members gain relevancy and become more committed to the decision-making process.

Transactional Leadership Theory

• Role of supervision, organization and group performance

• Based on system of rewards and punishment • System most used in businesses

Relationship or Transformational Leadership Theory

• Focus on connections and relationships between leaders and followers.

• Motivate and inspire to see higher good.

• Common feature of leaders with high
ethical and moral standards.

Components of Effective Leadership

Trust, willingness to understand change, humility, commitment, focus, compassion, Integrity, peacemaking and endurance are some of the basic components that build effective leadership.

Claims-made policy

-a liability policy that pays claims only during the period that the policy is active.

More flexible

Costs less

Requires "tail" coverage.

Claims-made policy

Policy pays when the suit happens, regardless of when the event occurred*
* depending on the occurrence, there is likely to be a "statute of limitations"

occurance policy

If you were covered when the event occurred, the policy will cover you regardless of when the suit happens*

No need for tail coverage.

Costs more.

Less flexible.

Term Life Insurance

Life insurance that pays a death benefit if the policyholder dies within a specific time period but has no remaining value at the end of this time.

Term Life Insurance

"Renting" insurance.

You're only covered while you are paying the policy.

Most economical

Must be renewed periodically

Many advise this type of life insurance, but the dentist must be dedicated to investing for retirement

Whole Life (Permanent Life)

"Owning" insurance.

Policy is paid-up after a designated amount has been paid.

Cannot be cancelled due to failing health and there is no need to be renewed.

Costs more

Offers tax-deductible possibilities for investment and a guaranteed income at retirement.

Short-Term Disability Insurance

Generally begins at or within 30 days.
Provides a salary for the insured; can be used to help with household as well as some office expenses.
Ends after approximately one year, sometimes two.

Long-term Disability Insurance

For cost reasons, usually starts after a longer period of disability has passed: 30-120 days
Length of benefit: 5-10 years or until 65?

Business Protection Insurance

Business protection insurance protects a company financially when its owners or employees are affected by illness or death. Liability and Asset protection.

Business Interruption Insurance

Insurance that protects companies during the period necessary to restore property damaged by an insured peril. Coverage pays for lost income and other expenses related to recovery.

Workers Compensation

Compensates staff for medical costs and wages for work-related injuries (regular medical insurance may not cover if the injury is job related)

Tax

Attempts to raise revenue.
In dentistry, are generally levied by governments; local, state, federal.

Fee

Attempts to recoup expenses
Generally levied by organizations or governmental departments
Some are hidden

160,200

Social Security (2023 income limit)

FICA

Federal Insurance Contributions Act

6.2%

Social security tax, by employee and employer each.

1.45%

Medicare tax, by employee and employer each.

FUTA

Federal Unemployment Tax Act - 6% on the first $7000 an employee earns, but you can deduct up to 5.4% if your state assesses SUTA.

SUTA

State Unemployment Tax Act

"USE" tax

if you buy equipment or taxable supplies online (and no state tax was charged) or from a state that does not charge sales tax, many states charge you to "USE" the product in your office - it is essentially a "sales tax"

due diligence

the attention reasonably expected from, and ordinarily exercised by, a person who seeks to satisfy a legal requirement or to discharge an obligation.

BEFORE

Do you want expensed deducted before or after % of production/collection

Claims made insurance

claim is filed during policy
period but policy has to be renewed
indefinitely so you will need to buy a "tail" at
retirement.

Occurrence insurance

injury occurs during policy
period, but claim can happen anytime after

three years

Drug Enforcement Administration (DEA)license - valid for

NPI (National Provider Identifier)

Registration is through the Centers forMedicare & Medicaid Services (Federalagency)

ADA Credentialing Service

this service helps you share your credentials with multiple dental plans quickly and easily.

Sole proprietorships and LLC's with no employees

Tax ID number (TIN) and sometimes referred to as an Employer Identification Number(EIN) - all entities require one except:

social security number.

Sole proprietors or LLC's with no employees may use their

Network/Contracted Provider

doctors, other health care providers, and hospitals that plan contracts with insurance to provide medical care to its members.

Current Dental Terminology -CDT

a reference manual published annually by ADA and contains the Code on Dental Procedures and Nomenclature

International Classification of Diseases

code set a that is based on a system maintained by the World Health Organization. Use of ICD-10 codes in the healthcare industry is mandated by HIPAA for reporting patient's diseases, conditions, and signs and symptoms

https://dental.nv.gov/uploadedFiles/dentalnvgov/content/Home/Features/ICD-10%20Dental%20Diagnosis%20Codes.pdf

Co-insurance

the percentage of the bill for services that the policy holder must pay

Coordination of Benefits

a group health insurance provision that specifies how the insurers will share the cost when more than one policy covers a claim

Maximum Allowable Benefit

Highest amount the insurance company will pay for a dental benefit for a specific period of time

Assignment of Benefits

Signing over of benefits by the beneficiary to another party

Deductible

Amount you must pay before you begin receiving any benefits from your insurance company

Co-Payment

a small fixed fee paid by the patient at the time of an office visit

Balance Billing

The practice of billing patients for any balance left after deductibles, coinsurance, and insurance payments have been made.

Annual Maximum

total amount plan will pay per year

Date of Service

The date on which a healthcare service was provided.