Managing a practice requires that
you look at "the numbers" on a regular basis. If you're like most practicing
Doctors, you probably try to glance at the production and collections
figures at least monthly. Did you know that there are a lot of other
performance metrics that can help you gauge how your practice is performing?
Figuring out which metrics are
meaningful is one challenge. The problem is that calculating those metrics
and then looking at
those performance indicators in a vacuum doesn't provide you with much insight
at all. For that reason, calculating various performance metrics will be
much more valuable to you if you can compare
your practice's metrics to your peer group.
My CPA firm
currently provides tax, accounting, payroll, and basic practice management services
to more than 130 dental practices. This past winter, we collected practice
management data from many of our practice clients and used that data to calculate the
following ten meaningful performance metrics for general dentists for 2012:
Number of Active Patients
(Defined as an individuals treated at least once during the prior twelve
Collections per Active Patient
Collections per Doctor Hour
Collections per Procedure
Number of Procedures per
Number of Non-Diagnostic and
Non-Preventive Procedures per Active Patient
Re-Care Efficiency (Defined as
the percentage of Active Patients who came in for two exams during the year)
Number of New Patients brought
in during the last year
Percent of New Patients to
Percent of Adjustments and
Write-Offs to Gross Production
Please note that even though the data was collected mostly
from practices in the Greater Boston area, I feel that most of these metrics are
relevant to practices located within all 50 states.
To make these metrics even more
meaningful, we calculated each performance metric based on the data collected
from all the participating practices, and then re-calculated them based on the
practices that collected $1 million dollars or more during 2012. It's
very interesting to see how the performance metrics for the total sample
compare with the same metrics calculated from just the million dollar practices.
An part of our analysis, we also
created a graph that we call our "Internal Marketing Matrix". This graph
Efficiency on the x-axis versus New Patient Percentage on the y-axis for each of
the participating practices.
Depending on your practice metrics and where you fall on this graph, you'll either be a
neophyte, or "dentist-preneur".
And if you'd like to set up a time
for my firm to help you figure out these metrics for your practice, please do not hesitate to
e-mail me that request. We'd really
appreciate the opportunity to help you gain some insight on the performance
metrics for your practice.
In June 2013,
the US Supreme Court overturned Section 3 of the Defense of Marriage Act (DOMA),
which defined a marriage as a union between a man and a woman for federal
purposes. With the historic June 2013 decision, same sex married couples
(SSMC’s) have been granted the same federal rights, privileges, and protections
as heterosexual married couples as long as they were legally married in states where same sex marriages are
Section 2 of DOMA was not overturned – leaving the decision to allow same sex
marriages to be determined at the state level. Currently, 13 states recognize
same sex marriages: CA, CT, DE, IA, MA, MD, ME, MN, NH, NY, RI, VT, and WA, as
well as the District of Columbia.
In addition to
numerous benefits such as health insurance, retirement and social security, the
new law also extends to federal income taxes. However, still unresolved at
this time is the
issue of whether or not the extended rights are retroactive. Currently,
uncertainties exist and guidelines from the IRS and other federal agencies
specifying how to handle past years are expected to be forthcoming in the next
this uncertainty, SSMC’s should consider filing a Protective Claim for Refund
amended federal tax return (Form 1040X), where SSMC’s would
financially benefit by filing a joint tax return, provided they were legally
married in one of the states that
recognizes same-sex marriages. A Protective Claim for Refund preserves your
right to claim a tax refund that is dependent upon a contingency being
resolved. In this situation, the contingency would be the IRS resolution to
past years’ filing status for SSMC’s. Currently, a taxpayer can go back three
years to file an amended tax return, opening the door to amend tax years 2010,
2011, and 2012 (as well as 2009 if you had filed an extension for that year).
Protective claim for refund.
If your right to a refund is contingent on future events and may not be
determinable until after the time period for filing a claim for refund expires,
you can file a protective claim for refund. A protective claim can be either a
formal claim or an amended return for credit or refund. Protective claims are
often based on current litigation or expected changes in the tax law, other
legislation, or regulations. A protective claim preserves your right to claim a
refund when the contingency is resolved. A protective claim does not have to
state a particular dollar amount or demand an immediate refund. However, to be
valid, a protective claim must:
Be in writing and be signed,
Include your name, address, social security number or individual taxpayer
identification number, and other contact information,
Identify and describe the contingencies affecting the claim,
Clearly alert the IRS to the essential nature of the claim, and
Identify the specific year(s) for which a refund is sought.
Generally, the IRS will delay action on the protective claim until the
contingency is resolved. Once the contingency is resolved, the IRS may obtain
additional information necessary to process the claim and then either allow or
disallow the claim.
Mail your protective claim for refund to the address listed in the
for Form 1040X.
married taxpayers will most like benefit by filing a joint tax return when one
spouse earns significantly more income than the other spouse. In such cases,
SSMC’s would certainly want to file a Protective Claim for Refund. However,
SSMC’s cannot pick and choose years to amend their filing status, so either
would file for all three years or do not file for any of the years.
situation that might prove tax advantageous to file a Protective Claim for
Refund would be when a taxpayer had his partner included on his employer
sponsored pre-tax health insurance plan resulting in his federal wages reported
on his W-2 being increased by the financial benefit provided on behalf of the
are also “pitfalls” to be aware of when filing the Protective Claim. For
example, if one spouse had claimed the adoption credit when adopting the other
spouse’s child, that credit potentially would need to be recaptured and would no
longer be allowed if amending to a joint tax return puts these parents over the
maximum income threshold. Another example would be
when spouses own rental properties where the passive activity tax rules could
significantly affect prior years’ income as well as losses being carried forward
when amending to a joint tax return due to the $150k income limit applicable to
beginning with the 2013 tax year (and assuming the IRS finalizes guidelines
before year end), SSMC’s will no longer be able to file as single or head of
household filing status for federal tax purposes in those states that recognize
same-sex marriages. The result of filing Jointly or Married Filing Separate
could have a significant adverse federal income tax impact for many SSMC’s due
to the “marriage penalty”. Therefore, as soon as possible, SSMC’s should
project their 2013 tax liability based upon their new federal tax filing status
in order to prevent any year end “surprises”. Determining their 2013 joint tax
liability now as opposed to next winter will allow SSMC’s to make any necessary
adjustments to their federal income tax withholdings and federal estimated tax
payments sooner rather than later.
Bipartisan Student Loan Certainty Act of 2013
passed the House and Senate earlier this summer.
After all of the moaning and groaning from both
sides of the aisle, the Higher Education Act of 1965
has been amended (again) to address the changes to
the Subsidized Stafford Loan that went into effect
on July 1, 2013.
passage of H. R. 1911 established a new formula for
setting the interest rates on Federal loans to
students and parents for the upcoming year and will
be retroactive to July 1, 2013.
Undergraduate students, Federal student loans (also
known as Stafford Loans) disbursed after July 1,
2013 (the beginning of the academic year at colleges
across the country) and up to June 30, 2014, will
have an interest rate of 3.86% for the life of the
loan. This will be for both
subsidized and unsubsidized loans.
Graduate student loans through the Stafford program
are set at 5.41% for the life of a loan disbursed
after July 1, 2013.
Loans for Undergraduate Students (PLUS
loans) for the 2013-2014 academic year, will
have an interest rate of 6.41%.
confirmation yet on if the origination fees will be
updated. Due to
Sequestration, the origination fees for the
Stafford Loans (1.051%) and for the PLUS Loans
(4.204%) were adjusted on March 1, 2013.
question remains: what happens for the next academic
year? As the bill is written, future academic years
will tie the interest rates to the 10 Year Treasury
Note based on the price set on June 1 each year. The
interest rates will be capped on Stafford loans for
undergraduates at 8.25% and for PLUS loans for
parents at 10.5%.
For 2012, the standard deduction for a single individual is $5,950 and
for a married couple is $11,900. A person will benefit by itemizing once
allowable deductions exceed the applicable standard deduction. Itemized
deductions include state and local income taxes (or sales taxes), real estate
taxes, mortgage interest, charitable contributions, and unreimbursed employee
For 2012, the personal exemption is $3,800.
Individuals will claim a personal deduction for themselves, their spouse, and
The maximum earnings subject tosocial security taxes is $113,700
for 2013, up from $110,100 for 2012.
The standard mileage rateis $.565 per business mile as of
January 1, 2012, up one cent from $.555 per mile since July 1, 2011.
The maximum annual salary deferral into a 401(k) plan or a
403(b) plan is $17,500 in 2013, up from $17,000 in 2012. And if
you'll be 50 or older by December 31st, you can contribute an extra $5,500 into
your 401(k) or 403(b) account that year.
The maximum annual contribution to your IRA is $5,500 for
2013, up from $5,000 in 2012. And if you turn 50 by December 31st,
you can contribute an extra $1,000 that year. You have until April 15,
2014 to make your 2013 IRA contributions.
In a shocking development, the
IRS recently announced that they will be honoring the FICA tax refunds
submitted by residency programs and individual doctors. The catch is
that only FICA taxes paid prior to 4/1/05 qualify.