Exclusively to Clients and Friends of Advanced Practice Management
Delta PPO Write-offs Increasing Dramatically
About 40% of Dentists in Minnesota are in the Delta PPO network (formally “Preferred”). The discounts on Delta PPO are 20+% off normal fees. “Normal” Delta Premier discounts are 10+%.
If you’re with Delta PPO, check your Delta write-offs this year. Chances are they have dramatically increased and it’s not because you are seeing a lot more new PPO patients. You’re getting deeper discounts on patients you already have as normal Delta patients who convert to Delta PPO when their companies’ contracts renew.
In just two weeks I visited three clients whose Delta write-offs had increased by more than $30,000 in the first nine months of this year. Ouch! That’s more than $3,000/Mo. off the bottom line. The bigger your practice, the more it costs.
If you can otherwise stay busy this gives you reason to get off the PPO. You could add $10,000’s to your bottom line. And, it’s not been our experience that Doctors who join the PPO are getting a great influx of new patients. It just isn’t a great trade-off.
Now I’m not suggesting all Dentists participating in Delta PPO stop participation. It takes careful consideration based on each practice’s situation. However, we have seen this seriously affect profitability in a number of practices and want to give you a heads-up.
If you decide to drop, it’s very important that you talk to us about how to do this to minimize negative consequences for you, your patients and even Delta.
If your schedule is getting light and you’re considering joining Delta PPO to keep it full…or to avoid a loss of patients get in touch with us. If conditions are right, that can be a valid strategy but it’s potentially very expensive so you must look at things carefully.
The Dental Dow Jones
The mature practices sampled showed production growth of 4.3% and collections up 2% compared to the same period last year. New patients were down 10% but recall patients were up 3.5%. Doctor and hygiene downtimes increased by about 2 hours per month. 80% of the offices showed gains in production and 20% showed declines.
Dentists Watch Out! Minnesota Sales Tax Audits on the Rise:
Recently a client was audited by Minnesota for sales and use tax. They really dug in. They audited 4 years and initially determined that the Doctor owed $38,000 in back sales tax. The client, after much hard work, was able to recreate and document all the sales tax payments and whittled things down to $1,500… but he estimated that he personally spent over 60 hours doing this!
In checking with Chuck Davich, a local accountant who works with a lot of dental offices, about 10% of his clients experienced a sales tax audit this year. The bottom line: Make sure that you keep records documenting the sales tax on your purchases. Unless you can prove you paid the sales tax on taxable items, The State will assume that you didn’t.
This subject is too complex to discuss in this article. Contact your accountant so you truly understand what items the sales and use tax applies to or not and which records to keep.
Are You Upgrading or Expanding? You Could Save $10,000’s:
Through my clients I vicariously go through at least six new facilities or large facility expansions per year.
I’m often shocked to find that my clients are in effect “married” to a specific supplier because from the beginning the plans are drawn up by that supplier. My strong advice: get at least two bids on everything. Even if you’re pretty well committed to a certain computer system or dental unit, the supply guys don’t need to know that.
A recent case history: a client of mine was given a bid from a major supplier. On my advice he got bids from a second supplier and saved more than $50,000. (The original bidder brought the price down to meet the competition).That’s serious money.
I’ve seen similar situations even with mortgages. You’d think your local banker with whom you have been doing business for years would give you his best shot at first. However, often you have to hold their feet to fire with a competitive bid to get the deal you should have received in the first place.
Getting more bids means you or your staff have to deal with more salespeople but it is well worth it. The best way to illustrate the strengths and weaknesses of any purchase you’re making is through the give and take of the salespeople who are more aware of their competitors’ weaknesses.
Transitions – You Have a Lot at Stake
If you are considering adding an associate, selling your practice or some combination there of, be sure to be in touch with us.
We are not practice brokers and we do not accept commissions for selling practices or placing associates. That means we are free to give our clients advice which can help you:
- Determine the feasibility of an associate.
- Ensure associate success and profitability.
- Ensure you get a good price for your practice.
- Ensure a smooth successful transition.
If you’re considering buying a satellite or another practice we can also offer important assistance.
We can help you manage your broker. Within reason, it’s all part of your deal through our monthly retainer. Through our client base we vicariously experience many transitions each year and our insights through those experiences can make or save you thousands of dollars.