Building or refreshing your dental practice

Building a Team You Can Trust

Creating a reliable team is essential for successful office construction or remodeling This article highlights the significance of specific steps, procedures, and services, as well as the professionals involved in the process It also addresses common issues within dental office development systems By identifying these flaws, you can effectively manage your project to ensure it remains on schedule and, crucially, within budget.

• Develop a criteria for selecting a trustworthy team that keeps your best interests at the forefront

• Understand and control the inherent pitfalls associated with new dental office development

• Reduce the risk of contractor change orders by preparing detailed design documents

• Research and find a mortgage that will work for you — and save money in the process

• Learn how to turn your dental equipment sales rep into a high-performance ally

Financial Planning

4 BUILDING OR REFRESHING YOUR DENTAL PRACTICE

The vendors you select for your dental office development project are crucial to the success of your practice; any misstep on their part can lead to significant time and financial losses that may impact your business for years to come.

In the dental industry, be cautious of the prevalent "I'll refer all my clients to you if you refer all your clients to me" partnerships To ensure you build a strong team, it's advisable to ask the person assembling your team for multiple recommendations in each relevant field.

Here is a list of the team members who can help you successfully complete your dental office:

• Commercial real estate agent/broker

A dental equipment consultant can collaborate with you to create a comprehensive 10-year plan, which will help determine the necessary square footage for your office While you search for dental office space and seek loan pre-approval, the consultant will guide you in making informed equipment choices It's essential that your consultant prioritizes securing the best value and adhering to your dental equipment budget over earning commissions from equipment sales.

After signing a lease or purchase agreement and securing loan pre-approval, it's essential to collaborate with your consultant and architect to develop a comprehensive space plan for your new office During this phase, the equipment consultant can assist in selecting a technology specialist with dental experience to ensure that your technology choices align with your budget It is crucial to finalize all dental equipment and technology decisions before the space plan approval and engineering phase begins, as this discipline is vital for maintaining budget integrity Neglecting to solidify these choices and incorporate their requirements into construction documents is a significant pitfall in the dental office development process.

After signing a lease or purchase agreement and obtaining loan pre-approval, you and your consultant can collaborate with an architect to start creating a space plan for your new office, following the completion of all equipment decisions.

A dental equipment consultant collaborates with architects to develop a tailored dental equipment specification sheet, which is integrated into construction documents This specification sheet provides crucial guidance for the architect's engineers during the project Additionally, while the engineers focus on their tasks, the equipment consultant assists the architect in designing the millwork, incorporating your feedback throughout the process.

A consultant can provide valuable insights into the design of your operatory ceiling grids, ensuring they effectively accommodate ceiling-mounted dental lights, computer monitors, and microscopes, while also considering subcontractor-built cabinetry.

After the architect submits construction documents for a permit, the dental equipment consultant reviews the plumbing, electrical, and mechanical plans to verify that all equipment requirements are included If any items are identified as missing, the consultant collaborates with the architect to create an addendum for the bidding process, minimizing potential contractor change orders This thorough review process is essential for ensuring that the contractors' quoted prices align closely with the final billing.

Once the construction documents and addendum are sent to contractors for bidding, the tenant improvement stage commences upon selecting a contractor During this phase, the dental equipment consultant plays a crucial role by being present at key stages of the job site to ensure that all dental equipment requirements are met Depending on the contractor's dental experience, the consultant may need to make between 14 and over 20 visits to the site throughout construction Given that each piece of dental equipment has unique installation needs, it is essential for the consultant to conduct thorough research to facilitate a smooth installation process.

The dental industry faces a significant challenge due to the varying levels of expertise among dental equipment consultants and salespersons in the United States Not all individuals in these roles possess the necessary training to manage the complexities of dental equipment or interpret construction documents effectively Therefore, it is crucial to ask potential consultants or salespeople detailed questions regarding their qualifications and commitment before engaging their services Additionally, collaborating with a qualified attorney to ensure that contracts clearly outline the responsibilities and timelines of these professionals can prevent misunderstandings Failing to verify their capabilities may lead to costly delays and complications, ultimately impacting your practice's success.

A dental equipment consultant can assist architects in developing a tailored dental equipment specification sheet, which is integral to construction documents This custom specification sheet provides crucial guidance to the engineers involved in the architectural project.

To find your ideal dental office location, it's essential to consult two key professionals: a commercial realtor and a dental office transition specialist (broker) Ensure that these experts possess dental experience and are well-acquainted with the local dental market conditions Additionally, be aware that their compensation structures differ significantly.

To locate your ideal dental office, it's essential to enlist the help of two key professionals: a commercial realtor and a dental office transition specialist (broker) Ensure that these experts possess dental industry experience and a strong understanding of local market conditions to effectively guide your search.

Commercial realtors earn income through a split commission with the lessor or seller's agent, meaning you pay them nothing directly for their services in finding and negotiating your lease or purchase They have no incentive to favor any particular property, as their commission remains the same regardless of your choice, except when showing their own listings This approach provides you with a broad selection of options and simplifies the process by having a single point of contact It’s essential to ensure that the realtors you engage understand your specific square footage requirements and to inquire if any of the properties they present are their own listings to avoid any potential bias.

Dental office transition specialists, also known as brokers, primarily concentrate on the sale of established dental practices In certain states, they have the ability to represent both buyers and sellers; however, this dual representation may lead to perceived conflicts of interest, prompting some clients to prefer separate brokers for each party Upon engagement, brokers enter into a contract with the seller, granting them exclusive rights to facilitate the sale.

Location Selection and Siting Concerns

Designing your dental practice is an exciting journey that transforms your vision into reality, complete with your desired ambience, equipment, and technology However, achieving this requires disciplined financial planning, which involves a thorough examination of all financial aspects to create a realistic design plan and budget This process is not dull; rather, it's essential for turning your dream practice into a reality By developing a financial plan, you can determine the feasibility of your project, understand the financial implications of remodeling versus rebuilding, explore available loan options, and calculate the manageable debt for your practice This groundwork begins well before any blueprints are drawn, establishing a strong financial profile that enhances your leverage with lenders.

NOTE: All financing is subject to credit approval, and if applicable, determination of SBA eligibility.

• Manage your financial profile to help qualify for preferred loan amounts, rates and terms

• Understand the financial implications of a practice construction, expansion or remodel project and how to calculate whether your practice can absorb your project costs

• Compare financing options and understand the differences between conventional practice financing, Small

Business Administration loans, and specialty lender financing

• Differentiate types of lenders and the approaches they use to make credit decisions

• Identify the tax programs that can help maximize your project investment

Dental Equipment and Technology

By Wells Fargo Practice Finance

Ask yourself: “How strong is your financial profile?

What does your credit history tell a lender?”

A good credit score is essential for both personal and professional financial investments, as it reflects your creditworthiness to lenders This score plays a crucial role in determining the loan amount you can borrow and the interest rates you will face Lenders evaluate various factors when assessing credit, but the most important elements are your personal debt, such as student loans and credit cards, along with your overall credit score rating.

Good credit is the key to both your professional and personal financial investments, and your credit score signifies to lenders your overall creditworthiness.

Factors Used in Calculating Credit Scores

Your credit score is a numerical representation of the information in your credit reports from the three major credit bureaus: Equifax, Experian, and TransUnion These reports detail your credit history, including past debts and payment punctuality Negative credit events such as charge-offs, debt collections, bankruptcy, foreclosure, tax liens, and judgments can significantly harm your credit reports.

Credit scores are assigned by independent rating companies, primarily FICO (Fair Isaac Corporation) and VantageScore 3.0, which utilize a scoring range from 300 to 850 While higher scores indicate a more favorable credit risk, the scoring systems are not uniform, as each company has its own range and lenders define good or poor credit scores differently.

Credit scores from FICO for the general population are typically comprised of the following mix of personal information:

FIGURE 2.1: HOW CREDIT SCORES ARE CALCULATED

CREDIT FACTOR % OF TOTAL SCORE CONSIDERATIONS FOR IMPROVING YOUR SCORE

Payment history 35% Have you made your payments on time?

Outstanding debt 30% How much do you owe? Have you “maxed out” your credit line?

Credit history 15% How long have you held your credit card accounts?

Pursuit of new credit 10% Have you made numerous applications for new credit?

Are you taking on more debt?

Types of credit in use 10% Do you use a variety of types of credit?

Source: www.myfico.com/crediteducation/whatsinyourscore.aspx

FIGURE 2.2: HOW CREDIT AFFECTS INTEREST RATE *

CREDIT SCORE SAMPLE RATE SAMPLE PRACTICE LOAN

TOTAL AMOUNT OF ADDITIONAL PAYMENTS OVER LIFE OF LOAN

Below 665 Applicant may be turned down

* Payments based on a 10 year, $300,000 practice loan

Mismanaging your debt can significantly harm your credit score, leading to detrimental effects on your overall financial health Poor credit management often results in reduced credit availability and higher interest rates on loans, making it more challenging to secure favorable financing options.

This can significantly impact the amount you pay over the life of your loan, as shown in figure 2.2

Ultimately, a poor financial profile can impact your ability to build a solid foundation for dental practice success, including:

• Less money to design your practice according to your vision

• Restrained ability to develop a competitive operation

• Fewer funds for growth in salaries, marketing and overhead

• Less profit due to higher loan expenses

• Potentially a decreased opportunity for full practice success

Five Actions That Can Ruin

Although a single day late on a bill payment may not severely impact your credit score, there are five critical credit actions that can significantly lower your rating To protect your credit health, it’s essential to steer clear of these detrimental credit situations.

• Maximized credit card A credit card that is

When a credit card is "maxed out," it means that it has reached or is near its credit limit, signaling to lenders that the cardholder may be struggling to manage their debt effectively.

A payment that is just a day or two late may not raise concerns, but a 30-day late payment signals to lenders that you could be struggling to meet your loan obligations.

• Debt settlement Settling debt with a creditor is better than simply not repaying the loan, but still has a negative impact on your credit score.

• Foreclosure Foreclosure on a personal or business mortgage will have a significant negative impact on your credit score.

Bankruptcy represents a severe setback, leading to a substantial decline in your credit rating for an extended period However, the positive aspect is that you have the power to actively build and sustain a strong financial profile.

Ten Simple Steps Towards a Healthy Financial Profile

Following are 10 simple steps you can take to improve your credit rating and ensure a healthy financial profile:

1 Maintain at least two or three revolving credit accounts such as credit cards and lines of credit This shows you are creditworthy and able to manage debt.

2 Avoid applying for credit from too many lenders Multiple credit inquiries within a short period of time negatively impact your credit rating.

3 Demonstrate that you know how to use your credit wisely by not using all the credit available to you.

4 Make on-time monthly payments on credit cards, mortgages, installment loans and student loans Remember, many service providers do report late payments and collections to credit bureaus.

5 Consolidate your personal loans in order to improve cash flow and generate a better financial profile.

6 If you are in dispute with a creditor, continue to make minimum monthly payments while working towards a resolution.

7 Notify creditors in writing of your address change.

8 Avoid co-signing or guarantying a loan for a friend or family member, as it has the same impact on your credit as being the primary borrower.

9 Protect your identity Review your personal credit report at least twice a year to ensure accurate reporting of all accounts Inform all credit bureaus in writing of any discrepancies

It is essential to retain copies of all agreements, documents that clear judgments or liens, and correspondence from creditors that address discrepancies in your loan history, as this information may impact your credit report Remember that all credit-related information can remain on your records for as long as 10 years.

Start enhancing your financial profile at least a year prior to launching your practice design project A robust financial profile significantly increases your chances of securing affordable financing with the most favorable rates available.

When considering a practice upgrade, doctors often deliberate between remodeling their current facility or constructing a new office Both options come with practical and business advantages, but it is crucial to evaluate the financial implications of each choice.

Advantages of Remodeling an Existing Practice

Remodeling an existing facility is often more cost-effective than constructing a new building, as it utilizes the current structure If your space has the potential for expansion, you can allocate more of your budget towards décor rather than the expenses associated with new walls, flooring, electrical systems, and plumbing.

A remodel typically requires a more modest budget compared to new construction, making it easier to secure financing, especially for new practices without established cash flow Although a remodel may not include every feature of your ideal practice, it still provides sufficient funds to modify the floor plan for better traffic flow, integrate modern equipment, expand functional areas, and enhance office décor.

Remodeling or expanding an existing practice offers the significant advantage of maintaining your patient base, as they can continue to visit the same location However, it is crucial to strategically plan for any downtime during the renovation process, as mismanagement can lead to increased costs and delays.

Investment Benefits for Ground-Up Projects

Building a practice from the ground up may necessitate a substantial financing package; however, this strategy offers a notable investment benefit, especially if you acquire the commercial real estate associated with your practice.

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