Patient Record Audit: Suggestions for Buyers
By Megan Urban
– Randomly select patient records and review for complete documentation, full mouth diagnosis, necessary x-rays, and regular maintenance.
– Review the most recent three to five new patient records for charted existing and diagnosed “ideal” treatment, perio charting, appropriate x-rays, and confirm if the patients have their next scheduled appointments.
-Review the three most recent endodontic patient records to confirm if buildups and crowns were treatment planned and scheduled, or if treatment has already been completed.
-Review the three most recent prophy and SRP patient records to confirm the accuracy of treatment is captured in hygiene notes, proper documentation, and x-rays.
-Review the schedule for the upcoming weeks/months for all providers including hygiene. See how far out the hygiene scheduled is booked. In a strong hygiene program with a good recall and scheduling system in place, hygiene should be booked out five to six months.
-Review the schedule for the previous week to verify how many no-show or late-cancel appointments occurred. How were the no-show and late-cancel appointments documented? How are they tracked? Were the patients charged a fee?
-Run the Active Patient Count Report to confirm the number of active patients.
-Print the Detailed Treatment Plans Report (or Unscheduled Treatment Plans Report) and research several accounts to verify if treatment is truly needed, or if it was done and the treatment on the report is actually a second or third option. Is there sufficient dentistry left for you to do?
-Look at the Accounts Receivable Aging Report to determine if the amounts owing are from insurance or from the guarantor/responsible party. Are patients accustomed to paying their estimated portion at the time of service?
-Look at the Credit Balance Report (or Unassigned Credit Report). Credit balances can result from prepaid treatment, unposted treatment, incorrect insurance adjustments, or may be due to the patient or insurance company as refunds.
-Look at the Outstanding Claims Report for claims over thirty, sixty, and ninety days. Are the staff members responsible for the accounts receivable on top of outstanding claims? Look at the account notes for claims on the over ninety-day list to see why these claims haven’t been paid. Were they submitted with the correct codes, narratives, and necessary attachments?
-Look at the Month End/Day Sheet Reports for the past several months to see the production to collection ratio.
Read MoreInterview Questions for Every Dental Practice Role
By Megan Urban, Practice Transition Advisor
Businesses across the country are struggling with staffing issues and the dental world is NO exception. During the pre-pandemic years finding great staff was a challenge, but since the pandemic began finding and retaining great staff has become a tumultuous experience. What follows are some interview questions that have helped dentists and their practice managers sift through their potential candidates – when you can get candidates. And the increased competition for workers has made this an employee-driven vs. employer-driven market. You’ve got to know your budget and get clear on what additional perks or benefits you may be able to offer in this now highly-competitive hiring process.
General Questions for Every Role – Dentists, Hygienists, Office Managers, Dental Assistants, Front Office, and Sterile Techs
1. What are you looking for in a team and an office?
2. What does self-motivation mean to you?
3. What in particular motivates you?
4. How do you organize your day?
5. In a perfect world, how many hours per day and per week would you like to work?
6. How do you deal with conflict in the workplace? Describe a specific situation and how you dealt with it. Would you do anything differently now that you have had time to reflect?
7. How would the previous dentist who employed you describe you if I were to call him/her? What about the other team members, what would they say? Would they say you were on time every day? Easy to get along with? Fun? Great with the patients?
8. What do you think are your greatest strengths? And what are your greatest challenges?
9. Describe a situation when a patient was upset and describe what you did to rectify the situation or help.
10. What are three things you liked most about your last two positions/offices? What are three things you would have changed and why?
11. Describe a great day at the office.
12. What work situations, tasks, or duties cause you stress?
13. Where would you like to see yourself in two years. Where would you like to see yourself in five years?
14. If you weren’t in the dentistry field, what would you be doing? What are you most passionate about?
15. What qualities in a person do you think are important for this position?
16. How would you set the pay scale for this position? What qualifying events or skills would warrant a different pay scale or increase in compensation?
17. What do you think a bonus should be based on?
18. What benefits are most meaningful to you?
19. What have you learned during the pandemic? How did it affect your short and long-term goals?
20. Did you work remotely? Was that easy or difficult for you? How do you feel about being back in an office, working with a team, and having interaction with patients all day?
Additional Questions for Specific Roles:
Hygiene
1. Describe your normal routine with new patients.
2. What protocol do you follow with perio?
3. What are your thoughts about Arestin, rinses, etcetera.?
4. How do you talk with patients about perio disease? What if they have been undertreated and you are now proposing perio treatment?
5. What is your favorite part of being a hygienist?
6. What have you done in the past to build and grow the hygiene department in an office?
7. How do you discuss unfinished treatment and recall? Provide an example.
8. What do you do if you have a broken appointment? In other offices have you been expected to work your own recall and try to fill your schedule?
9. Are you comfortable working when the dentist is out of the office? (If it’s legal in your area?).
Dental Assistant
1. Have you been involved with placing dental supply orders? Explain your process.
2. What have you normally done during downtime?
3. How do you talk with patients about unfinished treatment and recall? Provide an example.
4. What are your most/least favorite procedures?
5. Describe the perfect dentist to assist and why?
Office/Practice Manager
1. How would you describe your management style?
2. What are your thoughts about micro-managing?
3. What steps do you take when you realize that you have made a hiring mistake?
4. Do you enjoy being at the front desk or in an office behind the scenes?
5. What do you bring to a team to keep them motivated and smiling?
6. In your previous office did you have full responsibility for the accounts receivable? What was your average production to collection ratio?
7. In your previous offices, how would staff describe you?
Front Office
1. How do you welcome new patients to the practice?
2. What have your past responsibilities been? Which did you enjoy most?
3. How do you talk with patients about treatment costs? Provide an exact example of presenting treatment and negotiating a financial arrangement.
4. How do you discuss unfinished treatment and recall?
5. How do you describe a perfect schedule and how do you create it?
6. How do you fill any last-minute appointments?
7. Do you enjoy recall and scheduling?
8. How much experience have you had setting up insurance, submitting claims, and following up with insurance companies for payment?
Dentist
1. What does a perfect schedule look like to you?
2. What is your perio protocol?
3. How do you encourage patients to finish incomplete treatment?
4. How do you ask for referrals from existing patients?
5. What do you do at a new patient appointment?
6. What types of procedures do you most enjoy?
7. Are you comfortable being the only dentist working in the office?
8. What is your typical production per day?
9. How would your current/past dental assistant describe you? How would an owner doctor or office manager describe you?
10. What are your goals for each patient and each day?
11. Is this office located outside any current non-compete you may have?
12. Will you be able to legally bring any patients with you?
Goodwill in Dental Practice Value
By As many of you know, in the purchase of dental practices, typically the biggest contributor in determining the purchase price is “Goodwill”. However, are you aware of the aspects that make up Goodwill? Of course, it includes the patients and the reputation of both the business and the selling dentist. But it’s also based on patient retention, which is the practice’s hygiene program or recall.
Savvy buyers and practice owners understand that the repeat or retained patients are critical to the ongoing success of the practice. It is also important to lenders that are working with buyers. If the selling dentist has a bulk of patients coming in for large cases and the collections are high, that is commendable; however, a new buyer will be concerned that the patients have completed all treatment leaving them nothing to do and eliminates the chance for the buyer to meet and retain the patients.
All dentists focus on getting enough new patients, as they should, but what happened to all the new patients that were treated over the years? As a buyer, recall is consistently an area of opportunity. Even if the practice’s recall isn’t where it has the potential to be, consider what can be done. Take a look at this example:
Let’s say that the practice averaged 15 new patients per month for 10 years and these patients were seen on an average of twice per year in hygiene or recall, you would need approximately 514 days of hygiene if an average of 7 patients per hygienist per day were seen. Some practices may see more patients in hygiene, but some may be scaling and root planing appointments after which these perio patients may be coming every 3 to 4 months. Dentists may work around 180 to 195 days per year so they would need approximately 2.75 hygienists. That means if the practice retains at least 85% of those patients, it will need more and more hygiene days each year. Is this happening in the practice that you are considering buying?
I have analyzed hundreds of practices and found that the average potential for increased collections from goodwill or patient retention is $30,000 to $150,000, depending on the size of the practice. I know it’s usually a high priority in any practice but needs a little tweaking that can bring big increases. And this doesn’t include potential increased collections from diagnosed treatment from all those periodic exams!
Savvy buyers need to know that every practice has areas of opportunity and here is one for you to capture.
Read MoreSettling Liens Prior to Listing Your Practice
By Jen Bennett, Omni Practice Group
In preparation for listing your practice, there are several steps to consider, but one important step that is often overlooked is settling any outstanding liens against your practice. As you know, “A lien is a claim or legal right against assets that are typically used as collateral to satisfy a debt. A creditor or a legal judgment could establish a lien. A lien serves to guarantee an underlying obligation, such as the repayment of a loan.”
All liens tied to your dental practice must be settled prior to, or at closing. In some cases, the seller can use the proceeds of the sale to pay off outstanding debts such as equipment loans or business loans, which would be settled during the escrow process.
Sellers are often unaware of liens still showing as active. By performing a UCC (Uniform Commercial Code) search liens can be identified. These debts may have already been settled, but the lien holder either failed to file the lien release or filed it incorrectly. For these reasons, I highly recommend performing your own UCC search prior to listing your practice for sale. A “UCC search is a process through which business owners contact the secretary of state for the state in which their business is located and request all the UCC information (related to your practice). In some states, you won’t have to contact your secretary of state’s office at all – instead, you can use an online database for UCC lookup.” For Washington State, visit the Department of Licensing website https://fortress.wa.gov/dol/ucc/ to conduct your own search.
If you find any active liens that have already been settled, simply contact the debtor directly and request that they file a UCC-3 Termination Statement, which is essentially proof of debt termination. And don’t forget to ask for a copy of the UCC-3 so you have documentation to provide to your escrow officer. This is a simple task but can slow down the closing process if not addressed in advance.
Read MoreDental Practice Buyer FAQ
by Megan Urban, Practice Transition Specialist
Where / How do I start?
Where do you want to live? Not that you can’t change your mind and sell, move, or buy again. But it’s typically best to determine where you want to live, such as in close proximity to family members, or near an airport, or close to beaches and surfing, or near ski resorts. Are you a city dweller? Are you a nature enthusiast?
Next, contact a reputable transition consultant/broker to discuss the general process and to get answers to your questions. This broker will also recommend dental lenders, dental CPAs, and dental attorneys.
What is your confidence level with all procedures? For example, if you do not yet place surgical implants, you will want a practice that doesn’t place implants. However, if placing implants in a particular practice keeps their production numbers high, it might make sense to consider the practice and keep the seller on for these procedures until you can take them on.
If you are currently working, be sure to print out a production by procedure report so your advisors can see what experience you have.
Can I afford a practice?
We can recommend several dental specific lenders to assist you and they expect you to have student debt. They will ask you for your tax returns and debt details such as student loans, cars loans, home mortgage, etc. Then once you find a practice that you like, the bank will analyze the cashflow of the practice and work with you to determine if or how much they can lend on that specific opportunity.
Do I need to utilize a dental-specific lender, attorney, and CPA?
Sometimes dental buyers have a relative that is an attorney or another advisor, but when both the buyer and seller utilize dental specific folks, the job gets done correctly and in a timely manner. You are a dentist but may not feel confident with complete boney third molar extractions. It’s the same thing. Using the right people will give you the best experience and result.
What do I need to know about a practice?
The listing transition consultant will provide a Prospectus reflecting all the important aspects of the practice and can walk you through the details. No practice is perfect, and you will want to go in knowing what is happening now and areas of future opportunity. Below are just a few of the items that may be in the Prospectus and if it’s the practice you want, you will have due diligence time later and we can provide an example of how the process typically works.
- Cash flow
- Procedure frequency
- Active patient count
- Accounts receivable and credit balances
- Hygiene stats
- Insurance participation
- Team information
What else should I know or think about?
The listing transition consultant will provide you with a Closing Checklist of what needs to be addressed. Your consultant/broker will work closely with your other advisors to complete a Letter of Intent and conduct due diligence. Your attorney will complete all purchase and sale documents, non-compete agreements, redo treatment provisions, etc. Your CPA will help with taxes relating to the purchase, and set up payroll and accounting, etc.
Should / Can I purchase the real estate?
Many young dentists assume they can’t afford the real estate piece or that the seller wants to wait to sell in the next year or so. We strongly believe the best person to own the dental real estate is the dentist practicing there. Depending on the cash flow of the practice, you may not need any money down and if you do, the seller will often carry the loan on the down payment and the bank will carry the remainder.
Do I have to keep all or most of the existing staff?
It is recommended that you do keep the existing staff. If they are good at their jobs and have well-established relationships with the patients, their presence most definitely contributes to a smooth practice transition.
However, there are always exceptions. If the practice overhead is very high due in part to high salaries of some staff members, then it may be recommended that staff be cut back. Or there may be instances where a seller has kept an underperforming employee on board and letting that person go may be a healthy decision for the overall morale of the other employees.
In Summary
The sooner you purchase a practice, typically the more money you make over the life of your career. The more you make, the more your CPA gets involved to assist you to keep more of what you make by implementing tax and retirement planning. So, start today by talking with your practice transition specialist/broker.
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