CFS Dental Division
Specialists Protecting Specialists
Dedicated Expertise: Industry leader in dental specific financial and insurance options.
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Dental Dummies Digest
Running a successful dental practice requires both excellent patient care and effective business management. While most dentists budget for major expenses such as rent, equipment, and payroll, hidden costs can erode profitability if left unchecked. These less visible expenses can accumulate quickly, making it difficult to grow the practice and maintain financial stability. Staff turnover is often an underestimated expense in dental practices. Recruiting and onboarding new team members involves costs beyond salaries, including recruitment fees, training time, and reduced productivity during transitions. Frequent staff changes can disrupt workflow and diminish the patient experience, ultimately affecting retention and revenue. Practices that invest in a strong culture, competitive compensation, and efficient training systems typically reduce turnover and maintain consistent performance. If you ever run into issues, feel free to reach out to one of our regional advisors to put you in touch with one of our staffing partners. Another area where costs often go unnoticed is equipment maintenance and downtime. While the initial investment in dental equipment is significant, the ongoing costs associated with keeping that equipment running smoothly are frequently underestimated. Minor issues can escalate into major repairs if they’re not addressed early, and unexpected downtime can result in canceled appointments and lost production. Planning for routine maintenance and setting aside a budget for repairs can help prevent these disruptions and protect long-term profitability. Insurance is another critical area where hidden costs can emerge, particularly when coverage is not properly aligned with a dentist’s needs. Many practitioners carry standard policies, but gaps in coverage, such as insufficient disability insurance, limited malpractice protection, or an underinsured business owner policy, can expose them to significant financial risk. Without the right safeguards in place, a single unexpected event can have long-lasting consequences. Regularly reviewing policies and ensuring they match both personal income and practice size is essential for minimizing risk. Operational inefficiencies, especially in scheduling, can also create substantial hidden costs. An empty chair represents lost revenue that can never be recovered, yet many practices struggle with last-minute cancellations, no-shows, and underutilized appointment slots. Over time, these inefficiencies can add up to a significant loss in production. Implementing systems like automated reminders, tracking patient behavior patterns, and optimizing scheduling templates can help ensure that chair time is used as effectively as possible. Inventory management is another area where money can slip away. Ordering too much ties up cash flow and leads to waste when materials expire, while ordering too little can disrupt daily operations and create unnecessary stress. Without a clear system in place, these small inefficiencies can compound over time. Assigning responsibility for inventory management, tracking usage trends, and building strong relationships with vendors can help reduce waste and improve cost control. Another good resource to take advantage of is Torch. They are essentially Amazon for dental offices, often allowing owners to save significantly on inventory. Written by: Michael Magargee
Everything is done for you to buy that practice, you have been approved by the bank, the lease has been signed, and the bank is ready to disburse the loan so you can be a practice owner! There is just one issue, they need you to collaterally assign them a life insurance policy. Now usually no one ever explains what this actually means and what you should do. Should you assign your personal policy to them? Do you need to get a new one? There are many different options and while no one will stop you from doing either of them, there are different considerations to be made when making that decision. What is a Collateral Assignment? When getting a loan for a dental practice, the bank will almost always require the borrower to assign to them a life insurance policy that will cover the amount of the loan for the term of the loan. It basically means that if the borrower were to pass away during the loan term, the bank still gets the money they were owed, and the loan is paid off by that life insurance. If that is a requirement from your bank, then there is no getting around having to assign the policy to them with the help of your agent. Should I Assign My Current Policy or Get Another One? The first point we always help our clients to make is that personal life insurance is just that, personal! It is almost always in someone’s best interests to separate church and state in a sense when thinking about their own finance’s vs the finances of their business. If you already have a personal life insurance policy, that’s great! That policy is meant for your family and next of kin if you pass away. However, while the prospect of having to get life insurance again may not be what you were hoping for, the flip side is that if you were to assign that policy to the bank and then pass away, your family will most likely not get the payout they were planning to live on. Reason is, because the bank will need to satisfy their loan, and that is exactly what is avoided with the concept of separating business vs personal finances and getting a second policy! What Does Getting a Second Policy Entail? It’s fairly simple since it is the exact same process as the first! Starting with figuring out the term and amount of the loan, getting a quote, filling out the application and then getting the policy! Term life insurance tends to be very cost effective for most people when it comes to the amount and terms one needs for the collateral assignment. So, it is almost never an issue with budgeting or cost as well! There is also the added benefit, because it is exclusively tied to the loan, if you pay it off early you can always cancel the policy since it wouldn’t be needed anymore. Along with that, since the bank is not the beneficiary of the policy, but the assignee is, there is still a beneficiary as well (still usually your family or next of kin). So, if the worst still does come to pass and the practice is paid 50% off, then the bank still gets what is owed to them. But then the beneficiary may get something that they weren’t expecting during a hard time too. I hope that helps all the new practice owners out there! We at CFS Dental Division are always here to help and work in your best interest to figure out what is going to not just be best for you now, but in the future as well! Written by: TJ Stanton