While I respect Dr. Joe Blaes as an editor- colleague, clinician, and friend, I regret the decision to reinstate the "Office of the Month" column.
Dr. Blaes states, "Building a new office or redoing an existing office can have a huge economic impact on your lives." Exactly!
Sorry, guys. It doesn't take a large, lavish, expensive dental office to produce clinical excellence and become a "profitable dentist"!
Ever hear of Drs. Ralph Reilly, Ralph Duffin, Omer Reed, or Johnny Savage? Well, they are four of the happiest, most profitable dentists on the planet, and a large, lavish, expensive dental office isn't their secret.
You can get videotapes by each by calling my office at (800) 337-8467, Ext. 5. But the point of this letter is not to sell videos. Rather, I want dentists to consider that debt-fre and highly profitable is another, more comfortable option for some.
William W. Oakes, DDS, FAES
Editor, The Profitable Dentist
New Albany, Ind.
Determining overhead percentage
Regarding Rick Willeford's article on practice overhead: How is your author determining overhead percentage? My accountant makes sure that my overhead is 100 percent at the end of the year. Does the doctor's salary — the lion's share — count?
Dr. Gary Lack
Thayer, Mo.
Response from Rick Willeford
Thanks for your question, Dr. Lack. In a sense, you are correct: Ultimately, in a C corporation, there should be no profit after the doctor is paid. However, "overhead" usually refers to all of the operating expenses of the practice other than the doctor. In fact, if you are not incorporated, the doctor's "pay" doesn't even get deducted as an expense. In that case, the net income left — after subtracting overhead from collections — is reported as the practice profit in your personal tax return on Schedule C.
To better monitor your overhead expenses, you can do several things. First, be sure your pay is not included with the staff's in one big "wages" expense category. At a minimum, show the doctor's pay as a separate expense category. It is even more preferable to add a new subtotal to your financial statements called something like "profit before doctor." This would be your collections minus all overhead expenses. So, when folks talk about their overhead being, say, 60 percent, they are not counting the doctor's pay.
Here's an interesting question that you did not ask: Where do you show wages paid to an associate? Opinions vary on this, but I would deduct them after calculating "profit before doctor." In other words, associate wages are definitely not part of staff wages, and they really are not part of traditional overhead. Instead, they should come out of "doctor's profit." It is as though you decided to share some of the profit, rather than do all the work yourself.
Rick Willeford, MBA, CPA, CFP
[email protected]
Serving patient needs
I'd like to add my support for the recent, excellent article by Dr. Ian Shuman. I know Dr. Shuman personally, and he's a wonderful young man and an excellent clinician.
Let's face it ... not everyone in the world needs or wants cosmetic dentistry. People actually are searching for dentists who do dentures, partials, endo, extractions, and all of the patient's other dental needs.
My practice is located in a blue-collar neighborhood. (Actually, it's probably a "no-collar" neighborhood.) But we built this highly profitable practice by serving the needs of each individual patient — i.e., "How can I help you?"
I'm sure your readers would appreciate more articles on the challenges facing most GPs.
William W. Oakes, DDS, FAES
New Albany, Ind.
Clinician's Choice Affinity impression material was listed in our December 2002 Buyer's Guide. The correct phone number is (800) 265-3444.
