In cooperation with Collier, Sarner & Associates, Inc. (www.csanews.com). This is not tax advice. Please consult your own advisors.

Keith Drayer is Vice President, Henry Schein Financial Services. Henry Schein Financial Services provides equipment, technology, practice start-up and acquisition financing services nationwide. Henry Schein Financial Services can be reached at 800-853-9493 or hsfs@henryschein.com.

Modernize Your Collection System for Maximum Profit

In today’s economy, there are many dental professionals that are faced with the challenge to their accounts receivable. Uncollected receivables turn into pure losses. Yet embracing a systematic approach to collections can help practices collect more funds and on a more timely basis.

One mistake providers make is not recognizing the signs of early default. When a patient doesn’t pay their bill within 60 days or haven’t set up or are following a payment plan, they are telling you that they are not going to pay! Should you use your staff’s time trying to collect these accounts?

As a dental provider, you are implementing state-of-the-art methods to treat your patients’ dental needs. You also need to employ the most up-to-date methods to keep your practice fiscally healthy.

In the past, collection agencies were the only “act on the block” and viewed as the last resort to collecting your money. They can be expensive and often cared little about your relationship with your patients. You had no control over how they treated your patient and you never knew if they collected your money or not. Often the collector, who is paid on a commission basis, “cherry picked” over your accounts and attempted to collect only the larger ones and did not work the smaller ones. And, many of your accounts that were collectable were deemed too small to work. Thus, you lost money when you didn’t have to.

What is needed is a proactive, systematic business model that will work all of your delinquent accounts equally. Providers must take an approach that will reduce losses as well as speed up cash flow from past due accounts. You need to work with your patients quickly and effectively. Outsourcing your collection problems to a service bureau can be much more cost effective than working them in-house—and certainly more effective. Utilizing a third-party collection method that will keep you in complete control of the collection process is a must. The third-party system should be respectful, but firm, and utilizes every possible legal tool to collect your money.

The provider who utilizes a systematic third-party approach to collect their money will see an increase in their bottom line.

Keith Drayer, Vice President
Henry Schein Financial Services
1.800.443.2756 / hsfs@henryschein.com

Henry Schein Financial Services partners with MaxCollect to provide your business with an effective means to achieve debt resolution with your patients. Benefits of this method include:
1) Collected funds remitted directly to the doctor (not an agency)
2) Low fees, as little as 5%; average cost 15%
3) Every account, regardless of size, is pursued for collection

MELVILLE, N.Y., April 22, 2009 – Keith Drayer, Vice President of Financial Services at Henry Schein, Inc. (NASDAQ: HSIC), the largest distributor of healthcare products and services to office-based practitioners in the combined North American and European markets, was recently a guest lecturer at the Liebowitz Entrepreneur Program of Brooklyn College. The Liebowitz Entrepreneur Program allows students at Brooklyn College to learn the skills of an entrepreneur through hands-on experience and classroom learning.

Drayer’s lecture focused on the concept of being an “intrapreneur” within one’s own company. He defined “intrapreneurship” as the practice of using entrepreneurial skills within an established organization and systematized business model. Drayer explained that this model allows “intrapreneurs” to draw on the dynamic nature of entrepreneurship while being supported by the resources and capabilities of an established firm. In light of recent global economic challenges, Drayer emphasized that “intrapreneurs” can serve a critical role in the reinvention of a business to enhance relevancy to customers and meet their evolving needs today.

About Henry Schein Financial Services
Henry Schein Financial Services helps healthcare practitioners operate financially successful practices through our diversified suite of financial and business resources, including: practice start-up and acquisition financing; equipment financing; demographic site analysis reports; Henry Schein® Platinum BusinessCard; credit card acceptance; patient collections; patient financing and practice transitions. Henry Schein Financial Services’ portfolio of resources is designed to give our customers the financial advantage critical to success in today’s changing marketplace.

About Henry Schein
Henry Schein, a Fortune 500® company and a member of the NASDAQ 100® Index, is recognized for its excellent customer service and highly competitive prices. The Company’s four business groups – Dental, Medical, International and Technology – serve more than 575,000 customers worldwide, including dental practitioners and laboratories, physician practices and animal health clinics, as well as government and other institutions. The Company operates through a centralized and automated distribution network, which provides customers in more than 200 countries with a comprehensive selection of more than 90,000 national and Henry Schein private-brand products in stock, as well as more than 100,000 additional products available as special-order items.
Henry Schein also offers a wide range of innovative value-added practice solutions for healthcare professionals, such as ArubA®, the Company’s electronic catalog and ordering system. Its leading practice-management software solutions have a user base of more than 60,000 practices, including DENTRIX®, Easy Dental®, Oasis® and EXACT® for dental practices, MicroMD® for physician practices, and AVImark® for animal health clinics.
Headquartered in Melville, N.Y., Henry Schein employs more than 12,500 people and has operations or affiliates in 23 countries. The Company’s net sales reached a record $6.4 billion in 2008. For more information, visit the Henry Schein Web site at www.henryschein.com.

1. Interest Rates are low. We are still 2% lower interest rates then a year ago. The savings over a 5 or 7 year financed project are substantial.

2. Section 179 $250,000 limit. This is a “use it or lose it” benefit to lower taxable income. 2010 it is scheduled to go down to $125,000 + an amount indexed for inflation.

3. Fifty-percent Bonus Depreciation in 2009 (phase out at $800,000). Section 179, 50% Bonus Depreciation & first year expense write off should cover approximately 70% – 100% of the projects the majority of our customers undertake.

4. “Qualified leasehold improvement property placed in service before Jan. 1, 2010 as 15-year MACRS class property. When Congress enacted a 15-year MACRS depreciation period for qualified leasehold improvement property, they stated that taxpayers shouldn’t be required to recover the costs of certain leasehold improvements beyond the useful life of the investment. A 39-year recovery period (which is the recovery period that usually applies for buildings and their structural components) extends well beyond the useful life of investments in leasehold improvements. Also, although lease terms differ, Congress believed that lease terms for commercial real estate typically are shorter than the 39-year recovery period. Additionally, in the interests of simplicity and ease of administration, a uniform period for recovery of leasehold improvements was thought desirable.

a-tale-of-two-doctors

The Bill, $789 billion, includes federal tax cuts, expansion of unemployment benefits and other social welfare provisions, and domestic spending in education, health care, and infrastructure, including the energy sector. There are nearly $275 billion in economic recovery tax cuts and $550 billion in investments with accountability measures built in. Highlights for healthcare practitioners and their practices are:

• $20 billion for health information technology (to modernize health information technology systems), to prevent medical mistakes, provide better care to patients and introduce cost-saving efficiencies.

• $4 billion to provide for preventative care and to evaluate the most effective healthcare treatments.

• $43 billion for increased unemployment benefits and job training.

• $39 billion to support those who lose their jobs by helping them to pay the cost of keeping their employer provided healthcare under COBRA and providing short-term options to be covered by Medicaid.

• $70 billion of Alternative Minimum Tax relief.

• $1.5 billion for community health centers; $420 million to combat avian flu; $335 million for programs that combat AIDS, sexually transmitted diseases and tuberculosis.

• $87 billion to help states with Medicaid.

• $3.75 billion for new construction of hospitals and ambulatory surgical centers at Department of Defense Facilities, and $455 million in renovations to provide state-of-the-art medical care to service members and their families.

• Veterans Medical Facilities: $950 million for veterans’ medical facilities (in needed repairs, including energy efficiency projects, at its 153 medical facilities)

• Prevention and Wellness Fund: $3 billion to fight preventable chronic diseases and infectious diseases. This includes hospital infection prevention, Preventive Health and Health Services Block Grants for state and local public health departments, immunization programs, and evidence-based disease prevention.

• Healthcare Effectiveness Research: $1.1 billion for Healthcare Research and Quality programs to compare the effectiveness of different medical treatments funded by Medicare, Medicaid, and SCHIP.

• Training Primary Care Providers: $600 million to address shortages and prepare our country for universal healthcare by training primary healthcare providers including doctors, dentists, and nurses as well as helping pay medical school expenses for students who agree to practice in underserved communities through the National Health Service Corps.

• Indian Health Service Facilities: $550 million to modernize aging hospitals and health clinics and make healthcare technology upgrades to improve healthcare for underserved rural populations.

• Unemployment Insurance Benefits Extension: $27 billion to continue the current extended unemployment benefits program – through December 31, 2009 given rising unemployment.

• Increased Benefits: $9 billion to increase the current average unemployment insurance.

• Medicare and Medicaid Regulations: The bill extends the moratorium on Medicaid and Medicare regulations.

See equipment-tax-savings-flyer1 for more information from Henry Schein Financial.

“The pessimist complains about the wind, the optimist expects it to change, the realist adjusts the sails.”

We all have to adjust our sails for the challenging times. How is your practice positioned to help YOUR customer navigate the storm in 2009?

In 2008 my business, Henry Schein Financial Services (HSFS), facilitated equipment and practice financing for more than 10,000 Henry Schein customers like you. Our array of tools?equipment finance and lease services, the Henry Schein Credit Card and our patient financing services enabled us to assist healthcare practitioners. As they say, “past results are no guarantee of future performance,” especially during these dramatically changing times. To succeed, I must change my businesses product and service mix so that it remains relevant for my customers. Your dental practice is facing similar challenges. What made you successful last year does not guarantee success in 2009.

The current financial crisis and slowing economy are creating challenges from the largest to the smallest companies, from hi-tech to non-profit organizations, from all countries, states, and towns, to entrepreneurs, to hospitals, and to healthcare practitioners. Fortunately, my portfolio and service mix allows HSFS to truly be solution providers and positively differentiate ourselves to our healthcare practitioner customers.

Henry Schein’s mission is to help heathcare practitioners to be more efficient, productive and profitable. What is your mission? It’s essential to let customers know what YOUR mission is. Whether it’s providing patient financing options or changing your insurance acceptance mix, it’s important to communicate this relevant information to your patients. Have you examined your service mix to see how different it is from a year ago? Are you looking for trends that will make you more patient centric? Are you opening earlier or staying later to accommodate business people in your community?

Given financial challenges that patients are facing, it can only help to be pro-active. You should ask your patients what their short- and long-term plans are. (If you don’t ask, you won’t know). Not all patients know there are financial options and more than one treatment possibility. You have an opportunity today to facilitate third party patient financing (remember 12 months same-as-cash patient financing will cost you only 2.5%) and to help patients acquire treatment, thus creating a win-win situation.

Within the next 30 days, many details about the proposed 2009 Stimulus Act (with all sorts of incentives for safety nets, businesses, and individuals) will become available. HSFS will stay on top of developments, educate you, and provide information for patients. Keep in touch, and we will provide you with information so we can all navigate the storm.

Mr. Drayer’s analysis of the Economic Stimulus Package will be featured on DentalBlogs later this month, so stay tuned!

• Increased annual retirement plan compensation limit from $230K to $245K
• Increased annual defined contribution plan dollar limit from $46K to $49K
• A $10K increase in the annual defined benefit pension plan limit
• Increases in the 401(k) employee elective deferral limit and catch-up contribution limit
• A small increase of $100 in the HAS contribution and catch-up limits
• Federal lifetime estate tax exclusion increase from $2M to $3.5M
• Gift tax increase of $1K per person
• Decreased first-year depreciation limit (Section 179) from $250K to $133K
• $4800 increase in Social Security taxable wage base

This information was sourced from Collier, Sarner & Associates.

Keith Drayer is the DentalBlogs financial expert and Vice President of Henry Schein Financial Services. See his full bio here.

What is a dental practice’s uncollectible percentage?  While this number will vary substantially (many factors ranging from service mix, use of practice management software, aggressive or lax payment policy compliance) when averaged shows the nationwide number of approximately 2.5%.  Many practice owners think they can live with 2.5%. However, further inspection reveals a more in-depth appreciation of collection effectiveness on a practice.

Let’s suppose a practice grosses $1,000,000 annually.  If the practice has bad debt or “uncollectible receivables” of $25,000 that is 2.5% and that write off number would be correct. 

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Accounts Receivable trends for any business from a FORTUNE 500® company to a dental practice are identical Receivable are like gravity. You can’t resist gravity and you can’t resist Receivables falling value over time This chart shows the effects of time on.

Click image for a larger view.

Thus, the case can be made for dental practices to devote more focus to their “payment is due upon service” policy -so the practice is not being the bank to patients.  Offering patients (monthly, more affordable) financing options makes optimal treatment acceptance more likely as well as removes a practice that offers selective financing from appearing as credit officers and lenders to patients.

Today, a good patient-financing plan will accept from 50% to 60% of the patients who apply. There are patient-financing companies that indicate an approval rate of 90% based on the total patient base being considered.  That may be a misleading number-as not every patient wants to be approved.  Your patient- financing candidates can automatically by any who might remark:

• I forgot my checkbook” patient
• Just bill me
• I can pay you $100 a month until we’re done
• I want to have the treatment, but can’t afford it now
• Let me know the balance after the insurance pay-in

It is prudent to offer patient financing when you examine what consumers are advised to pay on a graded scale.  Data reveals the recommended consumer order of payments is as follows:

•1)     Child Support.  By law, credit bureaus must report any information received about overdue child support, as long as it’s verified by the proper agency, and is not more than seven years old. Consumers are told this should be #1 payment priority.  Penalties includie garnished wages, liens on property, and suspend driver’s license are considered quite serious. Dentists should be aware that finance companies might consider open child support lien on a credit bureau report as very negative.

•2)     Mortgage.  After more than 90 days, late mortgage payments can end up on a credit record. Mortgages also tend to have hefty late-payment fees, and if a mortgage holder misses two or more, a lender may start foreclosure proceedings.

•3)     Car Loans.   Repossession laws vary (some places repossessed happens after only one missed payment). Mass transit isn’t applicable everywhere and the risk of not having a vehicle probably impedes a person’s ability to work.

•4)     Taxes.  The Internal Revenue Service (IRS) is tough when taxpayers don’t pay on time. Penalties accrue with time and the clock keeps going from the time of the infraction. 

•5)     Bank Credit Cards. Credit cards are important. Paying them on time is more important then ever today as late payments give ALL credit card issuers the right to reprice a cardholder because of economic risk status.  Recent legislation was passed about sudden rate increases from credit card companies; though the effective date isn’t until 2010!

•6)     Department Store Cards. Many will negotiate and or accept lower payments for various periods of time.

•7)     Electric/Gas/Water Utilities. Utility companies may work out payment schedules for consumers (though security deposits for future services will be a factor).  Nationwide rules vary as regional regulators have rules protecting homeowners from losing vital services and keeping consumers safe.

•8)     Student Loans. Federal student loans may be deferred for financial challenges. When loans are deferred payments aren’t required, but you can’t qualify for deferment once loan is in default, so don’t wait until you are behind in payments to apply. Continue making payments until your request is approved.

•9)     Healthcare Bills. Most medical bills aren’t reported to credit bureaus until they are sent to collection agencies.  Doctor’s rarely will do a patient credit check before starting a major treatment case.

With healthcare bills ranked in order at number #9 and a new era of a tough economy, can your practice benefit from a proactive approach to patient financing?

 Keith D. Drayer is Vice President of Henry Schein Financial Services.  Henry Schein Financial Services represents the only 2.5% same-as-cash patient financing and no dedicated terminal program.     He can be reached at hsfs@henryschein.com or 800.443.2756.  Henry Schein, Inc. is the leading distributor of services and products to office based healthcare practitioners.

Keith Drayer, Vice President of Henry Schein Financial Services and DentalBlogs contributor shares this 60-second tax tip to make dentists’ lives a little easier!