Ideas for Independent Dental Practices Competing Against DSOs

In this, the second of three podcast synopses discussing some of the biggest issues facing dental practices today, we focus on ways that smaller practices can differentiate themselves from corporate providers. (Go here to read the first post in this series, and here to listen to the podcast episode on which this article is based.)

In a dental market increasingly dominated by Dental Service Organizations (DSOs), small practices need strategic advantages to remain competitive. DSOs leverage economies of scale, enabling them to access lower costs and broader resources, making them formidable competitors, particularly in terms of pricing and operational efficiencies. However, independent dental practices can distinguish themselves by focusing on quality, personalized service, and building a positive workplace culture.

One way they can do this is by offering exceptional customer care, something that might be diluted in larger corporate settings. This involves training staff not just in dental skills but in customer service excellence. For example, staff can make a notable difference by remembering personal details about patients – like upcoming vacations, recent marriages or births, or promotions at work – which can be noted in their profiles and mentioned during visits to create a more welcoming and personalized experience. 

Moreover, fostering a strong workplace culture is vital. Independent practices often offer a more intimate setting where employees can feel genuinely appreciated and part of a team, unlike in some larger organizations where they might feel like just another number. This can be enhanced by providing opportunities for professional development, recognizing employee contributions, and ensuring that work-life balance is respected. Practices that invest in their teams not only improve morale but can also see increased patient satisfaction, as happy employees are more likely to provide better service.

Independent practices can also differentiate themselves by focusing on the qualitative aspects of their services. This includes the way they manage patient relationships, the atmosphere of the office, and how they handle patient communications and follow-ups. Practices might consider adopting advanced customer relationship management (CRM) systems to manage these aspects more effectively, ensuring that every patient interaction is as personalized and engaging as possible.

Incentivizing staff through performance bonuses linked to patient satisfaction and online reviews is another strategy. This not only motivates staff but also helps in building a positive online presence, which is crucial to attracting new patients. Offering unique services that DSOs may not provide, such as boutique cosmetic procedures or advanced patient education sessions, can also create patient “stickiness” and encourage them to refer you to their friends and colleagues.

Finally, embracing technology is crucial. This doesn’t mean only investing in new dental technologies but also improving the digital experience for patients. Ensuring that online booking is seamless, enhancing the practice’s website, and utilizing social media effectively can significantly enhance a practice’s visibility and appeal.

By focusing on these qualitative differentiators, independent dental practices can carve out a niche in an industry increasingly inclined towards consolidation. This approach not only helps in competing with DSOs but also in building a loyal patient base that values quality and personal touch over cost alone.

At Edwards and Associates, we take pride in the fact that we know the dental industry so well. And while we focus on your practice’s financial health, we know others that provide myriad other services and are happy to make referrals that will enhance your service delivery. Reach out to us if we can help in any way!

HSA Limits Increased for 2025

In our effort to keep dental practices in Texas apprised of pertinent tax information, we wanted to let you know that the IRS recently announced the 2025 inflation adjustments for health savings accounts (HSAs) and health reimbursement arrangements (HRAs), reflecting the ongoing economic conditions. The adjustments show an increase in allowable contributions and cost thresholds for high-deductible health plans (HDHPs), which could impact financial planning for those utilizing these accounts and the available funds of your patients.

For individuals with self-only HDHP coverage, the maximum HSA contribution limit will rise to $4,300, up from $4,150. Those with family HDHP coverage will see their limit increase to $8,550 from $8,300. Additionally, the minimum deductible for an HDHP will increase slightly, as will the maximum out-of-pocket expenses allowed under the plan.

Additionally, the limit for excepted benefit HRAs will increase to $2,150, up from $2,100. These savings opportunities can play an important role in tax and overall financial planning. We encourage you to consider adjusting your contributions to take full advantage of the tax benefits provided by higher limits and prepare for increased health care costs associated with higher deductible and out-of-pocket limits.

Keeping up with these changes is crucial for optimizing healthcare spending and savings strategies next year. For more detailed information and assistance with financial planning and tax strategies, feel free to reach out to our team.

CANDIDATES’ TAX PLANS, WHAT YOU SHOULD KNOW

With elections around the corner, paying attention to the candidates’ tax plans is crucial. Clinton wants upper-income Americans to pay more, while Trump seeks across-the-board tax cuts.   Per The Kiplinger Tax Letter, some highlights of both candidates’ plans are:

CLINTON

    1. Raise in capital gains rates for individuals in the 39.6% bracket who sell assets they have owned for six years or less. Taking into account the 3.8% surtax on net investment income, these folks would pay tax at a 43.4% rate on gains from assets held two years or less. The rate would drop incrementally to 23.8% (the rate currently) for assets held more than six years.
    2. Surcharge on taxpayers with AGIs over $5 million.
    3. Payroll tax hikes by increasing the wage ceiling on the 6.2% Social Security tax.
    4. Cap of 28% on the value of itemized deductions (except charitable contributions).
    5. 30% minimum tax on millionaires.
    6. Restrictions on those taxpayers with large balances in their retirement plans or IRAs.
    7. Doubling of the child tax credit to $2,000 for each child up to age four.
    8. New caregiver credit of up to $1,200 to provide relief to people who help care for elderly parents or grandparents.

TRUMP

    1. Reduce individual tax rates into three tax brackets: 12%, 25%, and 33%. For married couples, the 12% rate runs to $75,000, the 25% one tops out at $225,000 and the 33% rate kicks in after that. These thresholds are cut in half for single filers.
    2. 15% business rate.
    3. Standard deductions would go up to $30,000 for joint filers and $15,000 for singles.
    4. No more personal exemptions or head-of-household filing status.
    5. Capital gains tax would stay as is.
    6. Elimination of the 0.9% and 3.8% Affordable Care Act surtaxes.
    7. Elimination of alternate minimum tax, as well as estate and gift tax.
    8. Expansion of dependent care breaks for working and stay-at-home parents and creation of tax-favored savings accounts for child development and elder care expenses.
    9. Itemization would be capped at $200,000 for couples and $100,000 for singles.

The most noticeable disagreement between the two candidates is over the Affordable Care Act (aka Obamacare):

CLINTON

  1. Increase premium tax credits.
  2. Refundable tax credit up to $2,500 to insured individuals, $5,000 for families for individuals whose out-of-pockets expenses exceed 5% of income.

TRUMP

  1. Ditch the plan completely.
  2. Give individuals an above-the-line deduction for premiums that they pay and not subjecting the write-offs to an adjusted-gross-income threshold.
  3. Rely more on HSAs to help individuals pay for coverage

Update of Tax Changes

As of May 15th here are more changes to consider when anticipating your taxes for 2009.

Some good news, believe it or not. In the true spirit of loopholes, the Obama administration has inadvertently lowered taxes on taxpayers that fall close to the upper limit of the 28% tax bracket for 2011. The way this works is the upper limit of the 28% bracket will move from $210,000 now to about $250,000 in 2011. So, the $40,000 between those two amounts will be taxed at 28% in 2011 compared to 33% today. Quit reading here if all you want is good news. The rest isn’t going to be pretty.

The income to be taxed at the new higher rates will be that above $250,000, not some lower amount which had been discussed previously.

The tax rate on capital gains will increase from 15% now to 20% in 2011, maybe sooner.

The phaseout for itemized deductions which is set to expire after the 2009 tax year, will be reinstated for uppers income earners in 2011 and later years. Right now it looks like there will be no phaseout of itemized deductions for any taxpayers in 2010. It also looks like the itemized deductions will not be allowed to reduce taxable income below the 28% tax bracket although there is a lot of political opposition to that proposal.

From a compliance standpoint, the President is proposing the corporations be forced to issue 1099’s to everyone, not just individuals, to which they pay more than $600 a year.

Independent contractors would be subject to withholding if they don’t provide a valid tax id number to the person for which they are providing services.

Employee leasing firms would be liable for unpaid payroll taxes, removing the employer from the burden of making those payments.

Estate taxes will be kept at this year’s level of $3.5 million. But estate planning will get trickier for those of you using the family limited partnerships for that purpose. The proposed rules include restrictions on valuation discounts for family limited partnerships making them less attrative to reduce the overall value of an estate.

The social security wage base is expected to remain the same for 2010, the first time since 1971 that the base amount on which social security taxes are assessed did not increase. In addition, there has been some talk of the social security tax rates increasing. This will not happen in 2011.

There has been a lot of discussion of the new sales tax deduction for new car purchases made between Feb. 16, 2009 and Jan. 1, 2010. The issue is the cap on the value of the new car on which the sales tax can be deducted. That cap is $49,500. Now, the IRS is saying they will allow the cap to be deducted for each car. Not just a single cap per taxpayer. So, if you buy two new cars this year, you can take the deduction for the sales tax on the first $49,500 cost of each vehicle, even if you don’t itemize.

That summarizes the most recent changes to the tax laws. But I am sure there will be many more proposals and we will try to keep you updated as they happen. As we approach the last half of the year, it will become more important to consider these changes in your tax planning meetings with us.

As always, please call us with any questions.