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What you need to know for a successful 2013.
What you need to know for a successful 2013.
If you were waiting for the end of the Mayan calendar and the world, that passed on December 21. The rest of us have survived to make it to a new year! All of us at Professional Transitions hope you enjoyed your 2012 holiday season and wish you a very happy, healthy and prosperous 2013.
In the last few years, we have noted that doctors have faced unprecedented uncertainty in the economy, their practices and investments. Our outlook has certainly brightened because of the general trends of the economy during 2012. (Most signs continue to point toward an ongoing and imminent recovery; visit our sister company’s site here for indicators.)
Economists nationally and worldwide have become more optimistic, but we know we are not out of the woods yet, and there continue to be constant and varying pressures on your practices. Uncertainty in Europe continues to affect our financial system. The “Fiscal Cliff” has been put off for two more months but will only be packaged within a larger discussion that will now include the nation’s debt ceiling. At this point, we can only hope the politically charged gridlock in Washington can be lessened and our “new” Congress and President can get to work on substantive policies that will enable our economy to continue its recovery.
Key to success in 2013: A practice budget
To help ensure success, it has become most imperative that doctors spend the time and energy to establish a practice budget, in conjunction with a full review of their fee structure. Doctors who have not already completed a budget should begin the process now so they can have a comprehensive budget in place as soon as possible for the remainder of 2013. While only about 10% of doctors nationwide have a written practice budget, their practice profits are dramatically higher than the remaining 90% who do not.
Previously, we have suggested a close examination of overhead expenses, comparing to prior years and then adjusting accordingly. We also have suggested a review of your staffing, as this is the largest single overhead expense item. You should also review your policy on automatic pay raises versus bonus plans.
Another change to be aware of for 2013 is the treatment of health insurance. Health care reform does not require practices with fewer than 50 employees to provide health care insurance coverage for the staff. However, if you do provide health care insurance, there is a provision requiring that eligibility and benefits no longer discriminate in favor of the doctor and/or his family once the plan loses its “grandfathered” status. Policies already in effect on March 23, 2010, may not be affected, but the new regulations will be triggered if “significant” modifications are made. Fines and penalties for non-compliance are severe, so you will need to keep up to date with the implementation of this new provision. Other new taxes will be decided–or not–after the first of the year. We have already anticipated increases in capital gains tax, Medicare tax, and Federal income tax.
Another new tax?
Of recent interest to dentists, a Medical Device Excise Tax is set to be imposed. The ADA has recently sent an advisory as follows:
1. Dentists will not be responsible for collecting, reporting or paying the new 2.3 percent tax.
2. The tax on "devices" specific to dentistry will in many cases be applied to the materials from which dental devices are manufactured rather than to the customized items supplied by a dental laboratory, whether a device is ultimately adjusted and adapted by the dentist for a patient. "Device" is used as a term-of-art because many "devices" would be more commonly described as "products," "materials," or "substances."
3. The tax will result in some increased costs for dentists and dental patients.
4. Dentists should be alert in reviewing manufacturer and vendor price lists and invoices to make sure the 2.3% tax is not being applied as a general cost increase with respect to all items, but is only being applied in cases where the law so requires. This tax survived the New Year’s votes, so is currently in effect.
Review fees to offset loss of income
All of these tax increases mean only one thing for you: less take-home income, unless you are able to offset them with higher gross income or an increase in the profitability of your services. As a supplement to budgeting, you should also review your fee schedule and consider the timing and amount of a fee increase for this year. We recommend that doctors select a fee percentile that accurately reflects their quality of care, and then increase all fees below that percentile up to it. (Request a localized ADA code report here. Once your fees are at the desired percentile, you should raise every fee by the same percentage across the board, every year.
Your practice budget and fees are vital for the ongoing success and health of your business. A little time now will save stress, and dollars, throughout the year.
Stuart Auerbach, DDSStuart lives in Pembroke Pines, Florida and is a partner in Professional Transitions. Professional Transitions is a full-service firm providing comprehensive transition services for dentists from graduation to retirement. Its central focus is to assist clients in realizing lifetime personal, professional and financial goals in win-win-win-win (seller-buyer-staff-patient) structured transitions. Stuart has been associated with Professional Transitions Inc. and sister company ADS Florida LLC since 1994. He is a graduate of the University of Maryland Baltimore College of Dental Surgery, and practiced general dentistry for 18 years. Stuart has been a speaker at study clubs and dental society programs and has written for local, regional and national publications. Stuart can be reached at firstname.lastname@example.org or by calling 888.229.5764.