All large corporations have an all-encompassing business model in Microsoft Excel that they use for strategic planning, operations analyses, and monthly reviews with top management. The Dental Practice Financial Calculator provides this same style of all-encompassing strategic business planning model for dentistry.
My vision was to create an Excel-based strategic planning model designed for dentistry that could be adopted as a standard financial model for any dental practice.
An accepted standard Excel-based strategic financial planning model could revolutionize the financial practice management side of dentistry just as the introduction of the first spreadsheet software transformed corporate accounting. The two greatest benefits that the dental industry can achieve from adopting the Dental Practice Financial Calculator as an industry standard are:
I. A substantial
decrease in the cost of practice ownership.
II. More time to focus on what dentists enjoy most; the
clinical side of practice ownership.
The Dental Practice Financial Calculator was designed with the understanding that dentists are trained in medical science, not business management. My aspiration is to help dentists utilize this strategic financial model to reduce costs and have more time with their patients.
Microsoft Excel has become the global standard for spreadsheet software. Most dentists have at least basic knowledge of Excel. My model is great way to learn how to use both the model and Excel.
Today's dental students will most likely have much better computer skills than dentists from whom they will be buying their future practices. These new dentists will also most likely have some knowledge of Microsoft Excel. In the next 10-15 years, supply will greatly exceed demand for dental practices. Getting to know how to use the free practice model available on the website will give these new dental entrepreneurs a significant advantage at the bargaining table when they purchase a practice.
The Dental Practice Financial Calculator is poised to become an industry standard for dental practices. Dental practice accountants can use this model as a value-add feature to report monthly results to their clients in place of the normal four-page reports they issue, while reserving traditional formats for year-end reports.
One of the five primary functionality features in the model is the ability to estimate the fair market value of a dental practice. The simple terminology used in the three FMV segments facilitates its use as a teaching tool and reference guide to financial formulas commonly used in most FMV calculations. The initial version of my software product evolved from the financial-management assistance I provided Dr. Joseph Pesicek shortly after he purchased his dental practice in 2004. The software was developed over a two-year period through our careful collaboration, and draws on his experiences as a new practice owner. Dr. Pesicek was less than 30 when he purchased his dental practice and paid a consulting company $20,000 to determine its fair market value.
Dr. Pesiceck earned his degree in 2002 from UNC-Chapel Hill. He had no previous business experience, and had held only nominal summer employment. Two years after graduating from dental school, he found himself running a business with 11 employees.
My goal was to develop a dental practice strategic financial management tool that would be easy to use by professionals trained in medical science rather than business management. Most dental schools offer limited courses in finance and management in their dentistry curricula. I hope to persuade dental students to use my free, downloadable practice model to assist in their finance and management courses.
Major design considerations regarding the targeted customer base were:
- Computer skills
- Business-management exposure
- Prior supervisory experience
- General understanding of accounting and finance
When I reviewed financial statements from Dr. Pesicek’s accountant and several of his colleagues who participated in the software development, I couldn’t understand the rationale behind their accountants’ choices for the chart of accounts. For instance, one accountant used more than 100 P&L accounts in his statement. The 26 expense accounts I use in our model are the 26 categories the IRS considers major expense categories.
As discussed above, one of the five primary functionality features in the model is to determine the fair market value of a dental practice. It’s not unusual for third-party appraisals – which come in big, impressive black books - to cost as much as $20,000. To pad their deliverable, consultants often feel it is necessary to write out the mathematical formulas for calculating present value and many other calculations used in the appraisal. In my opinion, most of the information is nothing but page-filling boilerplate and simply a reason to charge $20,000 for the appraisal.
The Dental Practice Financial Calculator is a solid starting point for a fair market value appraisal of a dental practice. Both the financial rates and financial criteria that I selected for the FMV calculation in my model can be replaced with different rates or criteria, as selected by the dentist or his/her financial advisor. Using the Dental Practice Financial Calculator as a starting point would save time and money and force consultants to think twice before charging $20,000 appraisal fees.
Below is an explanation of the unique structure I used to create my strategic dental practice financial model within Microsoft Excel.
There are three copies of the Excel model that I maintain and continue to update:
- The Excel file that that I sell for a one-time license fee of $399 and e-mail to new
customers.
- The Excel file that is named the
Practice Model. It can be downloaded free from my Web site. This model contains 24 months of financial and productive data for demo purposes. It’s a great way to learn how to use the model and Microsoft Excel. It is a fully functional model of a
fictitious dental practice that contains all the data you need to
try out the model, including generating various strategic simulated plans,
forecasts, and “what-if” scenarios.
- The Excel file formatted for the “2-month” - free trial offer.
All three files are exactly the same except for a few minor cell formatting changes. The free Excel files are a great way to improve your Excel skills.
There is no difference in these files than any other Microsoft Excel file you have saved on your computer. These Microsoft Excel file are 7.5 MB. (To put this in perspective TurboTax 2008 is 443 MB).
The Dental Practice Financial Calculator for the 2-month free trial offer, which will be e-mailed to you, can also be used to calculate an estimate of the fair market value of your dental practice. To use this free trial offer to calculate the FMV of your dental practice you only have to use one of the two monthly data input periods available for use to enter monthly data. - Only one period is required to fully run the model. Calculating an estimate for the FMV of your dental practice is achieved by entering your best estimate in the cells for both the Financial and Productivity data input software segments. There are 28 financial data fields and three productivity data fields for each dentist and hygienist entered.
Your estimate should be based upon the practice's current or anticipated level of business and expenses. You will also have to enter your Manpower practice data in the Excel template in the same way as you would when using the 2-month -free trial offer.
My Strategic Plan is to upgrade the web-site once per quarter, releasing one new free annual model upgrade to licensed clients. Some of the quarterly upgrades include new software segments that provide additional functionality. The model is designed to easily allow copying data from one Excel file to another. Free telephone support is offered to anyone. The goal is to continue to improve the model with every annual model release.
Only one other software vendor – Sikka Software - focuses on practice financial management. Sikka positions its solution as "business intelligence and optimization." But there many important differences between the Sikka software and the Dental Practice Financial Calculator.
To begin with, Sikka is very expensive - $200 to $500 per month, depending on the functionality level used. Sikka builds business management and business intelligence solutions for the dental and medical provider marketplace. It focuses on certain key areas of the practice and on return on investment (ROI) in marketing, patients, fees, and insurance that enable practice owners to make informed business decisions and focus on essential areas that require attention. While larger in scope than our software, it requires a major commitment to learn, use, and integrate with other practice management and financial software. Keep in mind, the American Dental Association lists 40 vendors in its directory of practice management software solutions. If the practice financial statements are not generated by QuickBooks or similar software (perhaps prepared by an accountant), you cannot download them into Sikka.
Sikka offers a benchmarking tool they call the hotoptimizer. It is a benchmarking tool populated by zip code for the dental industry. The problem with the data is that you do not know how many data contributing dental practices are in the zip code. If there is only one or two the information could be misleading. I have also analyzed some of the information it generates. Many of the statistical formulas that the hotoptimizer offers as benchmarking information make very little sense to me. In fact, it’s hard to find a zip code that offers any data. I think they only have a few hundred customers, compared against tens of thousands of zip codes.
I accumulate anonymous data from service clients to allow me to give benchmarking information so that my clients can see how their practice compares to other dental practices. All consulting services include a strict confidentiality agreement to carefully protect and preserve user privacy. In simple English, this agreement ensures that their information is not disclosed, shared, sold, or otherwise distributed to anyone whatsoever. I also guarantee that I will never ask to or use clients as a reference to sell my software and or services or reveal the name of any client.
The Dental Practice Financial Calculator is easy to learn and use, and was designed for computer, accounting, and financial novices. The Excel model sells for a one-time license fee of $399, and includes free telephone support. It only takes a few minutes each month to enter the required data, and the process is intuitive and informative.
In addition to my free telephone support, I offer my consulting services for $100 per month. There is no contract or obligation. My maintenance service enables dentists to derive immediate benefit from the strategic practice financial model. I do it all, satisfaction guaranteed. The primary benefit for dentists to use my service is that it enables them and their staff to focus more time on what they do best, dentistry. There is nothing to learn and no additional work for the dentist, the office staff, or their accountant.
When dentists subscribe to my service, they receive an updated copy of the Dental Practice Financial Calculator Microsoft Excel file e-mailed to them each month. I often add customized software segments that I feel the clients require to better understand the financial drivers of their practice. After I populate their practice financial model with the data, I’ll schedule a webcast meeting with them to review it. Some clients have several staff members join the webcast. One client even has staff members participating from several different locations. During this webcast meeting, I review the monthly financial results, express my opinions, and highlight financial issues that may require attention or further investigation.
The Dental Practice Financial Calculator focuses only on the operational activities of a dental practice. However, this isn't a focus on tactical processes (setting appointments, collecting receivables, storing images, interfacing with dentistry-related services, etc.). Instead, I focus on the strategic, operational decision-making aspects of the business. This software does not compete with or replace PMS software.
My software and consulting service is different than what most CPAs or dental practice consultants provide. My consulting service aligns with and complements the software model, the Dental Practice Financial Calculator.
Most CPA’s that have dental clients perform the following functions:
- Payroll and all related transactions and filings - Transferring direct-deposit payroll twice a month into the correct bank accounts is the easy part.
- Cash Management - The scope of this tactical work is normally confined to reconciling S-Corp.-required bank accounts and accounts payable and all related transactions.
- All required tax requirements and filings – This is for both S-Corp. and personal federal/state tax reporting for practice owners.
Many dentists use one of many practice management software solutions and rely on administrative employees to handle other tactical work not handled by the CPA. The CPA normally is not actively involved in the everyday production reconciliation or the accounts receivables tactical workload.
Many dentists choose or inherit a local CPA. The CPA practice might not have many dental clients -- if any. And the professional services fees that competitive CPAs charge are often highly price-sensitive which results in a fair value for most dentists. However, those professional services fees allow little time for the CPA to get actively involved in the strategic challenges facing dental practice owners. And, of course, the CPA may not have much – or any - experience with the business side of a dental practice.
All consulting services include a strict confidentiality agreement to carefully protect and preserve your privacy. In simple English, this agreement ensures that your information is not disclosed, shared, sold, or otherwise distributed in anyway whatsoever. We also guarantee that we will never ask to or use you as a reference to sell our software and or services or reveal the name of any client.
The one-time license fee for the Dental Practice Financial Calculator is only $399. My consulting fees are $100 per month with a three-month initial minimum. After this period, we will contact you to see if you want to continue the service for the next three months. There is no contract or obligation. To cancel, just call and we will immediately delete your credit card information from our records.
To obtain more information call me at 919-975-5368.