Low benefits and payouts are dentists’ largest frustration.

Read more: Dentists have no lost love for insurance

Location is highly correlated with hourly base pay, with urban California hygienists being paid twice as much as their rural Southern counterparts.

Read more: How much dental hygienists get paid

According to an ADA survey, half of dentist respondents reported that, during the final quarter of 2008, they saw fewer patients and made less income.

Dental patients have not stopped seeking dental care, but they're more likely to drag their feet nowadays. Dentists report that some patients are choosing less expensive treatment options and postponing regular hygiene visits.

Read more about it

Four out of five dentist report paying hygienists a base hourly wage.

Only 19% say their hygienists are paid on commission.

Read more: Paying Dental Hygiene Staff Not a Dentist’s Most Fun Job

According to the Sageworks study, these were the most profitable industries in 2008:

1. Offices of dentists (17% net profit margin)
2. Accounting, tax preparation, bookkeeping and payroll services (16% net profit margin)
3. Legal services (13% net profit margin)
4. Offices of other health practitioners (12% net profit margin)
5. Support activities for mining (11.9% net profit margin)
6. Offices of physicians (11.9% net profit margin)
7. Outpatient care centers (11.5% net profit margin)

It's hard not to notice that half of these are related to health care. Looking at this data, a consumer might reasonably assume that health care costs have increased so that health professional can keep a healthy profit for themselves. But is that really true?

I can't help but wonder how Sageworks compiles their data. They're only looking at privately-held companies. Are dental offices really that profitable, or are these statistics misleading?

This is not rocket science. It’s solely based on over 20 years of financial planning advice she has given to dentists, many of whom are now fat and happily retired. Mixed with that is my 40 years of personal experience watching economic cycles.

Let’s be clear: These are just my own thoughts and opinions, not guaranteed financial advice. In other words, take all this with grain of salt.

First money maker: Buy stocks at below 8,500 on the Dow. The market has been testing bottom for the last two weeks. Every time it approaches or hits 8,000, it bounces up as the “Professionals” buy in. It is impossible to time a market buy at the very bottom. Don’t worry about it. Just be prepared to hold the stocks for at least threeto five years.

Will the market go lower than 8,000? Quite possibly. So what? The market will rebound… eventually. This economic situation is not a 9/11 event. It is a media-driven panic that is the result of a too-complex set of financial interactions. The real problem is that no one in government understands or has the intellectual capability to regulate it a meaningful way. But I digress…

Second money maker: If you absolutely need cash for immediate needs, cash that is currently tied up in a losing stock portfolio (think kids’ college education costs), don’t panic: there may be a significant market bounce immediately following the presidential election. This has happened before, with reasonable consistency.

It makes no difference who wins. Neither candidate will have any power over the economy. But hope springs eternal in America’s cultural heart.

If this scenario comes to be, don’t expect to be made whole. If your back is really against the wall, half a loaf is just fine. Sell the biggest gainers at a Dow of 10,000… if such a blessing should come to pass.

Third money maker: Buy gold and/or silver. Do not exceed 10% of your investment portfolio. Gold has dropped over $200 an ounce in the last few weeks. It is a relatively good buy. Gold coins are in extremely short supply. Gold bars are still available.

Silver is currently undervalued. It is also hard to store. Think big and heavy.

Why am I saying this? Just one word – INFLATION! Remember the 1980's under Jimmy Carter? His Nobel Prize was not for economics. The government admitted to 12-14% annual inflation. Real inflation was closer to 18-20%!

Let's start counting up government spending:

1. A $50 billion economic stimulus package earlier this year. I’m still waiting for my tax refund check.
2. A $700 billion Wall Street and banking bailout, plus another $150 billion in earmarks to bribe the appropriate congressmen.
3. A second $300 billion is now in the works for immediate passage after the election.

Where did this Trillion-Plus Dollars come from? Government printing presses. We are already at an annualized inflation rate of 4.9% for this year. In about 18 months, these chickens will be fully hatched and running.

Gold reached $900 in the 80′s under Jimmy C. It has an inflation-adjusted value today of close to $2,000. However, it is still trading in a range of $730 to $950. Are you getting the picture?

Next week I will start to discuss how all of this will affect your dental practice. In the meantime, feel free to comment on this in the blog. However, don’t expect me to be answering questions or arguing points. The market is at 8,378 as I write this. I’m going to be buying stocks that have fallen below their corporate liquidation value.

Oh! And there’s one more small reason to buy metals. If there should be a major international incident (like the Israelis taking out Iran’s nuke program), gold and silver will spike. Sell gold at anything approaching $1,000. Don’t get greedy and try to time the high point. Sell and buy back when it readjusts to the 700′s. See you next week.

Currently dentistry is caught in a three part downward spiral. Each part is conspiring to make your business just a little slower…

The first spiral is the presidential election cycle. Every four years, people postpone making decisions about just about anything, including dentistry, until they see who is going to win next presidential election. This is not rational. People are just anxious about change.

The second spiral is the mortgage debacle and the resulting meltdown on Wall Street. There have been about 1,300,000 mortgage defaults so far, and another 1,000,000 are expected in the next year. Once again, people are unsure about the future. They do not want to make major decisions about dentistry or anything else until they feel more secure.

The final downward spiral is the recession. Dentistry is always the bell cow for economic downturns. We saw this coming last November when searches on the Internet for key dental terms (cosmetics, implants, etc.) started to drop dramatically. The recession is here.

The good news is that the election will be decided within the next two weeks. People will begin to adjust to the fact that the winner may not be the anti-Christ they had been lead to believe. The Washington political pendulum will continue to swing, and the bureaucrats will still control most of what goes on.

The bad news is that that we are still left with the mortgage collapse, which will run through until the third quarter of next year, and the recession, which could last through all of 2009.

Now that I’ve made your day, there are steps you can take to safeguard your practice and personal financial security. I will continue with those in next week’s newsletter.

Jim

There are all kinds of reasons why it’s important to have an emergency fund (even if you’re young and poor).

A recent article in US News & World Report highlights another reason to have emergency money: unexpected dental work.

A 24-year-old student from New York recounted how she discovered the root canal she needed would cost over $1500 (even with her dental insurance.) Needless to say, she didn’t have the money. So she went to Capital One for financing instead.

Read more

Chargebacks are becoming the darling of patients who wish to get out of payment for treatment after the close of a transaction. This process can throw a wrench into closed Accounts Receivable. Fortunately, there is help for the dental practice that accepts credit cards in payment for services.

What are chargebacks? Essentially, a chargeback is a mandated return of funds to a client. These clients have gone through their bank card or credit card company to request a refund instead of dealing directly with your dental practice that actually provided the service.

How do chargebacks work? First, a patient disputes a transaction on their statement from the issuing bank or credit card company. The bank then issues the patient a provisional credit while contacting you, the merchant. You are now responsible for issuing a response within 15 calendar days that proves delivery of the treatment. This is challenging for dental practices that are lax with documentation. If your documentation does not prove that treatment was indeed provided, then the provisional credit to the cardholder is finalized and you receive a debit to your account.

How long does it take? Unfortunately, chargeback disputes can stream on for months of back-and-forth. Customers who employ this shenanigan are simply waiting for you to miss a response deadline on the 3rd, 4th or 5th time the issuing card company requires more documentation from you. Some of these customers claim a different reason for the chargeback each time. If you choose not to fight these chargebacks, watch out!

What can happen if a practice does not fight chargebacks? A business with too many chargebacks can be declined from processing credit card receipts in the future, may be charged higher processing fees, and generally loses out on obtaining payment for services delivered honestly.

Do laws differ by state? Absolutely! Depending upon your state, this process can be even more arduous and costly. Arkansas has one of the more difficult set of regulations binding the merchant, and as such, has the lowest number of services and professionals who accept credit cards. California has one of the more clearly defined policies. Consequently, even the smallest businesses can be found accepting credit cards in that state.

What can be done? There is good news, too. The credit card companies and bank issuers are as eager to end charge-fraud as they are to end identity-fraud. Chargebacks are a loss of funds to them, increased processing costs and a source of uniform discontent among their merchants. As such, consumers who lose chargebacks to three or more merchants can lose their credit cards and be moved to “The Match List.” Maintained by banks and credit card companies, “The Match List” catalogs both consumers and merchants who have fraudulently used credit cards. Clearly, this is a list upon which your practice wants to appear.

Amex encourages cardholders to dispute transactions like the 14,000 tennis balls charged to a famous Executive Producer on their TV commercials. For the most part, however, companies would prefer that you just pay your bill. Larger corporations such as Google now have entire departments within their Accounting Division specifically formed to fight chargebacks. As consumers can now lose their charging privileges for issuing and losing too many chargebacks, corporations are seeing this as an opportunity to end these shenanigans by fighting each and every chargeback. Dental practices can only win by staying on top of it as well.

What are some of the basic steps to ensure you win a chargeback?

1. Save all documentation from phone records to faxes to service appointments. Put a statement or timeline together and fax this documentation to the bank or credit card company managing the dispute.
2. Immediately call the Dispute Manager directly after emailing/faxing off your response. They can tell you immediately whether or not you have provided sufficient documentation to win the charge.
3. Keep copies of the dispute paperwork. You will need to include it if and when the customer loses the chargeback on their first attempt and tries again.
4. Once you have won the dispute, file a complaint about fraudulent charging with the credit card company or bank that issued the problem patient the card. The more complaints against a cardholder, the more likely that cardholder is to lose his or her ability to commit further charge fraud.

These steps not only allow you to close your Accounts Receivable for good; they are quite simply good business.

Next time: Closing a collection does not mean ending a patient relationship…

–

The Cranky Collector is a regular column on financial matters from The Wealthy Dentist. The Cranky Collector is the alias of a business consultant providing processing efficiencies to businesses in California and New York for over twenty years.

In a recent survey, The Wealthy Dentist asked dentists about their retirement plans. Two-thirds of our dentist respondents say that they expect to choose keep working part-time to keep themselves busy. Only 13% replied that they’re on track financially and will retire completely once their financial goals are fully met. One in five dentists would like to retire, but aren’t sure they will be financially able to afford it.

We also asked dentists about their target retirement age. And aren’t the specialists lucky! They’re planning to retire an average of six years before their colleagues practicing general dentistry.

Check out the complete dental retirement survey results