The ongoing struggle with overhead

I have always struggled to keep the overhead in my practice under control, and I believe this is common in all dental practices.

I have always struggled to keep the overhead in my practice under control, and I believe this is common in all dental practices. Some practices do it better than others, but all of us know it is a major factor in controlling the practice's bottom line. In my experience, only two things will change overhead percentage in a dental practice — increased production and collections or a decrease in expenses. I think that most of us would agree that employees make up the largest category of overhead expense.

One part of overhead expenses that we seemingly have no control over is state and federal taxes. Congress is considering two bills that contain provisions that could considerably affect the taxes on your small business. One is the “Cap and Trade” legislation that will create many hidden taxes on individuals and small businesses. The Waxman–Markey Bill — H.R. 2454 — has set aggressive emissions reduction targets for 2050 to control carbon dioxide levels.

Under this bill, your overhead will suffer from a national energy tax, the cost to reduce heating and cooling, the costs of implementing other yet to be announced “green” regulations, and the cost of U.S. manufacturing jobs going to countries with lax environmental standards (more of your patients will lose jobs). But this bill does nothing to reduce the use of coal to produce electricity, which is the source of most greenhouse gas emissions. Now is the time to become familiar with how this bill will affect your practice overhead.

The other bill is the House Democrats' Health Plan, which currently calls for (among other things in a 1,200–page bill) an 8% payroll tax: on employers who cannot afford to offer health insurance to their employees, on employers who do the right thing and offer health coverage to their employees but that coverage is deemed “insufficient” by the government, and on employers who are not paying at least 72.5% of an employee's premium (65% for family coverage). I think this 8% payroll tax increase might have an effect on your dental practice overhead, and I suggest you become familiar with the impact of this bill before it is passed by both houses of Congress.

However, there may be a new way to control your production, collections, and overhead. For the last eight years, I have been watching the progress of a new type of company that will help you manage your practice on a weekly basis. It will provide you with much–needed continuing education on a regular basis.

I urge you to read the article, “The Emergence of the Dental Practice Management Company” by Thomas A. Climo, PhD, which begins on page 60. This is an extremely important look at a fairly new way of practicing dentistry and its impact on earnings from your practice. Dr. Climo is a former professor of accounting and finance at the University of Kent in Canterbury, England. His analysis of a solo general practitioner versus being a member of a dental practice management company is astounding and very revealing.

This is a method of practice that has certainly come of age. I have watched some of these practices in Missouri, and they are doing well … even in these economic times. If you are interested in more information about these companies, contact the Dental Group Practice Association in Ohio. Dr. Edward Meckler is the executive director and can be reached toll–free at (877) 500–3492, or visit the association's Web site at www.dgpaonline.org.

Another key to overhead expense is equipment and supplies. Be sure to read the article on “New Products to See at the ADA Meeting,” which begins on page 18. I have reviewed and picked 28 products that are worth your time to look at when they are launched at the 2009 ADA meeting in Hawaii. They are organized alphabetically by product, and the booth numbers are included along with e–mail contacts.

The National Museum of Dentistry celebrated its 13th anniversary on June 5. Dr. Irwin and Lucia Smigel joined Museum Board of Visitors Chair Michael Sudzina, Executive Director Rosemary Fetter, and Immediate Past Board Chair Dr. Roger Levin to cut the ribbon on the new Smile Experience exhibit.

As a feature of the evening's program, Dr. Irwin Smigel, — known as the father of esthetic dentistry — was honored. A plaque bearing his likeness was unveiled and will be affixed to one of the soaring pillars in the museum's atrium. Dr. Smigel has been at the forefront of major developments in dentistry and is the founder and current president of the American Society for Dental Aesthetics. Congratulations, Irwin!

Joe Blaes, DDS, Editor — e–mail: joeb@pennwell.com
Toll–free phone number: (866) 274–4500

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