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Renewing Your Lease

Leases and lease renewals are not
typically conducted on a level playing
field. By planning ahead and having
professional representation, it is possible to negotiate a
lower lease rate and receive a substantial tenant
improvement allowance and free rent.
How does the lease renewal process work?
Renewal options include terms for specific lease rates,
concessions such as free rent and tenant improvement
allowance, and whether a new base year for operating
expenses will be granted. Whether or not a renewal
clause exists in the original lease, all of these terms
are negotiable and play a large role in the financial
structure of a lease renewal.
When should the process begin?
As a rule of thumb, you should begin to consider
the renewal process 12 – 18 months in advance of
your lease’s expiration. Landlords view this as an
opportunity to push rents higher as the window of
opportunity to relocate closes. If tenants hold over
(stay in the space after the lease expires), they often
see penalties of 150% – 200% of their last month’s
rent and can also incur damages if they holdover
without permission. The bottom line is that if there is
not ample time to relocate, if necessary, the landlord
has too strong an advantage.
What type of cost savings can be achieved through
a successful renewal?
If properly negotiated, you can achieve significant rent
savings, a build-out allowance, free rent and other
concessions. It is very common to start a lease renewal
term at a lower lease rate than what you are currently
Below are actual examples of recent lease renewals for
dental practices located in the Midwest. These cases
illustrate the importance of properly negotiating your

Case #1
Landlord “Best Offer” Final Terms
Starting Lease Rate (Per SF) $24.00 $18.00
Monthly Payment $4,000 $3,000
Other Landlord Concession Tenant option for early termination in
the event the practice is sold
Total Savings (5-year lease) $60,000

Takeaway: Many landlords see lease renewal as an
opportunity to aggressively raise rates. Good renewal
negotiation can drastically improve on what is claimed
to be their “best offer.” Additionally, certain lease
terms make it easier to sell your practice and can be
achieved during renewal.
Takeaway: Renewing your lease without properly
negotiating the terms could lead to overpaying by
hundreds of thousands of dollars.
Takeaway: Lease renewal negotiations are
multifaceted; significant savings can be achieved
through concessions other than lease rate.
Tyler Van Eps and Carr Healthcare Realty provide real estate services to
healthcare tenants and buyers. Tyler specializes in representing dental
practices. Telephone: 612-708-2631


Most incentives need to be “retuned” each year. They should be in line with practice goals and calculated so that it’s Win/Win. That is, staff share in the practice’s success and wage overhead is kept proportional to collections. Here are some important ground rules for any Incentive Program:

  1. All incentives are subject to change or discontinuation at any time based on the Doctor’s discretion.
  2. Incentives are meant to pull the team together, not apart. If they’re causing discord, they may be discontinued.
  3. Individual team members can be pulled off the incentive if, in the Doctor’s opinion, they are not appropriately contributing to the team effort.
  4. All incentives automatically cease at year-end subject to next year’s goals and strategies.*

The last one is most important, because otherwise there’s a real danger the staff will just take the incentives for granted. Incentives can lose their power to stimulate performance over a long period of time. They must be set to coincide with practice objectives.

We can help you set up or “retune” your incentives. Just call.

*Hygienists paid in some form on their productivity, are not really on incentive programs so much as a “compensation formula”. So those are not as readily subject to change or discontinuation, but you still must give yourself some leeway in doing so.

Dental Dow: Fourth Quarter 2017

For the year, practice production was up 6.1%. Collections were up 4.3%. Patient traffic increased 2.4%. New patients were up 2.7%. Crown and Bridge was up 9.4%. Production per patient examined was up 4.2%. All in all then, 2017 was the strongest growth year since the “Great Recession”.

Collection Increase Percentages

2009 2010 2011 2012 2013 2014 2015 2016 2017
0.4% 0.4% 1.6% 3.5% 2.2% 3.1% 4.8% 3.3% 4.3%

Production Increase Percentages

2009 2010 2011 2012 2013 2014 2015 2016 2017
0.5% 1.4% 2.5% 3.3% 3.3% 4.2% 6.0% 4.1% 6.1%

Collections Made Comfortable Seminar

Presented by: Shelly Ryan
Friday, November 3, 9:00 am to 1:00 pm
Embassy Suites Bloomington, MN
Fee: $219 First person, $199 each additional

Everyone on Your Team Has to Deal With Patients, Money andInsurance. Make Sure They Know How!

This perennial favorite is a must-attend for you and your team. Dealing with patients, money and insurance is something you have to do every day so why not do it well? And, it takes the whole team!

Take the confusion out of dental fees and insurance so your patients follow through on treatment and your schedule stays full.

This seminar is almost always a sellout. $219 first person and $199 each additional. $20 discount per attendee if registered by September 15th.

CALL TODAY (952-921-3360) to reserve your space before we do our general mailing.

Employee Dental Perk Pitfall

Don’t Let Your Employee Dental Perk Become a Headache

We recently visited with a doctor who had a long-term staff member leave due to a move. The doctor discovered, though, that through the years she had created a balance of over $5,400 for her family’s dentistry.

As with most doctors, he gave the employees and their family members a dental perk. Commonly it is 50% off and the patient pays lab. But the doctor didn’t collect the 50%! And, now it is very awkward to try to collect it. He probably won’t even try.

Lesson to Be Learned:

Go ahead and give your employees and their family members your dental perk but insist that whatever payments they have due are paid at the time of service. Otherwise, it could be very uncomfortable to try to collect that later.

Out of Network BCBS and United Concordia

There is much confusion regarding the Blue Cross Blue Shield plans that are now administered through United Concordia. If you are an out-of-network provider, here are a few things we think will help you:

The “Standard Plan” – This can be identified through a group number beginning with 10. You must click on the box of the claim form that authorizes the check but the check will go to the patient. Patient reimbursement is minimal (approximately $12 for a Prophy) have the same benefits out-of-network with this plan and the check will go to them. The patient pays your full fee.

The “Basic Plan” – Group numbers begin with 11 and there are no out-of-network benefits. However, we have heard from clients that Blue Cross Blue Shield will pay the first claim if a patient calls and complains. This is because Blue Cross did not notify patients of their relationship with United Concordia.

Credit Card Payments

Insurance companies are also sending payment via credit card such as “Quick Remit.” It is important to know that you are paying credit card fees every time you accept a payment with cards such as these. You are not required to accept credit cards and you can opt out. It seems it takes a number of phone calls to opt out, however, I recommend that you look at your credit card statements and identify how much it is costing you to accept these payments.

The Pacific Dental Tsunami

Three years ago there was one Pacific Dental office in the Twin Cities metro area. Now there are 12! More to come I’m sure.

Pacific Dental has over 275 practices in the Southwest U.S. and plans to add 50 practices per year across the country. Minnesota is one of their target states. Their practices are usually “Scratch Starts.”

It is interesting to note that they do lots of paid advertising through Google. And, as far as I know, most or all of the practices are located in a retail setting with good signage.

In fact, when you look at all the larger DSOs you see they are active with paid online advertising. We think there is a reason for that.

Google has basically replaced the Yellow Pages except it is a lot more hassle than writing a check to the Yellow Pages! Still, you have to have a presence there. You do not have to spend $2,000 or $3,000 per month for a “SEO” firm. It is a matter of having decent personalized content on your website and then paying Google! However, getting an AdWords campaign up and running can be complex—sort of like trying to assemble your own bicycle.

For our clients who want to experiment with online advertising, we can help you do it affordably. For $100s, not $1,000s, you can get up and running. We have seen that this can add to a practice’s online presence and new patient flow. Not double or triple it, but add to it.

A year ago we did a study in which we isolated the top 10% of practices with the highest numbers of new patients and the 10% with the lowest number. We found that those practices in the top 10% offices had facilities with high visibility in growth locations. Practices with good online presences—meaning having a decent website and positive Google reviews—were also in that top 10%.

Furthermore, the research showed that practices with expanded hours did well too. And, it helped to participate with some PPOs…but not too many!

You can see that with all of these factors, it helps to have experience\ on your side as you sort out what to do to keep your practice vital in the face of competition. That’s why we’re here.

Mind the Gap!

Actually, mind the 2 gaps!

First, the gap between what you produce and what you collect.

As you can see from the above, the average gap between production and collections is almost 2 months-worth of work! This isn’t due to patients not paying their bills, it is due to PPO write-offs. If you are collecting less than 80% there’s a very good chance you can shorten that gap. Talk to us about it.

The other gap is more insidious, and could be even more significant. That is the gap between what you diagnose and what actually gets scheduled. Of course you know if you produce more you’ll collect more. But ironically, offices that have better collection systems produce more. How does that happen?

Because a good collection system is a communication system. One of the biggest gaps we see is the handoff between the clinical staff to the front desk. There’s lots of fumbles when it comes to that handoff! Patients come up front without the treatment plan, aren’t stopped at the front at all, or the administrative staff doesn’t really know how to finesse the treatment plan into the schedule.

That’s why the “Collections Made Comfortable” seminar is a perennial favorite with our clients. Your entire team plays a part. Starting with you, doctor. Everyone needs to know how to tactfully deal with money, insurance and all the confusion and discomfort those issues can cause (or worse, non-discussions of the issues can cause!). See back page.

Dental Dow: The First Half of 2017

Practice production was up 5.8% and collections were up 4.7% for the mature area practices sampled.

The increase was driven by 2% growth in total patient flow (recall, emergency and new patient exams). However, new patients were up less than 1% from the previous year.

Crown and bridge was up 9% and production per exam was up 4%. The average practice collections was 84%–down 1 point from last year’s 85%.

Save the Date! Collections Made Comfortable Seminar

Everyone on Your Team Has to Deal With Patients, Money and Insurance. Make Sure They Know How!

This perennial favorite is a must-attend for you and your team. Dealing with patients, money and insurance is something you have to do every day so why not do it well? And, it takes the whole team!

Take the confusion out of dental fees and insurance so your patients follow through on treatment and your schedule stays full.

Register by May 15th and receive $40 off per attendee!

This seminar is almost always a sellout. As clients, you get first dibs and a discount! $179 first person and $159 each additional.

CALL TODAY (952-921-3360) to reserve your space before we do our general mailing.