by Bruce Bryen, CPA, CVA
Whoever thought that the dental profession would be faced with a pandemic of this article’s title’s proportion that ultimately could produce any of the three points mentioned? When the world of dentistry was looking at consistent continued growth, income and reputation building, all of a sudden there was the coronavirus and the implications of what came with it. There were tensions building, staff layoffs and locking down at home while the country and the world isolated itself to overcome some of the results of the virus. Sickness and death were everywhere and dental offices were shutting down at a rapid rate. Who knew how temporary or long term the shut downs of the practices would be. Congress passed certain laws to allow cash flow to dental practices and some dentists and dental advisors had their own creative ways to produce a cash flow during this mess. There were consequences to all of this trouble, however, with the tensions that were building while trying to survive personally, financially and professionally. One pressure point was living at home twenty four hours a day and seven days a week and the emotional impact that was incurred with that. Proceeding with divorce became an outlet for some dentists mainly from the financial and emotional heartbreak from the virus, closing the office for an undetermined time and living twenty four hours a day in an isolated home environment. Steps should be taken to attempt to change the situation prior to going to court if there is any hope for resolving the issues. Mediation could be an approach to settling a lot of the problems, at least when it came to the financial basis and for some of the emotional setbacks. Before going through a divorce trial or even proceedings leading up to a divorce, it is certainly worth the risk of attempting some type of resolution. One can always go to court if all else fails to ameliorate the problems.
Too many bills and not enough income:
For some dentists who just have “had it,” with some dental supply houses, equipment sales companies and other bills in general, the thought and actual filing of bankruptcy occurred. This concept is a must for consultation with experts on the results, reputational consequences and overall financial effect that it has or will have on the dental practice and personal outcome for the dentist. If the current cash flow and the expected future results of operations are so low that there seems to be no hope, expert attorneys and other dental advisors are those to look to for guidance in discussing this approach. Sometimes it leads to a new start and expected turn around in the dental practice’s fortunes as well as those of the dentist/owner. This concept should only be taken when there is no other choice to explore to resolve the problem of having less income than overhead.
It is definitely the time to speak to the supply house first for assistance with the financing prior to speaking with the attorneys and dental practice advisors about the outcome of a bankruptcy petition for protection from the creditors.
Some dentists had recently purchased one or more dental practices and added desperately needed new equipment and dental instruments which of course forced a high expenditure. While the dental supply houses were happy to provide these items, neither they nor the dentists ever expected the dental practice to suffer such financial hardships as they have during this crisis. Even those dentists who maintained their own practices without additional acquisitions to it may have purchased one or two expensive pieces of equipment with easily obtained financing. Now they payments are not affordable since there is little to no patient income flow and the prospects for opening at almost full capacity are bleak.
What does the dentist do after discussions with the dental supply houshane lead to no resolution?
The threat of a bankruptcy petition to protect the dentist from his or her creditors may enlist the ear of the dental supply house or equipment and instrument seller. A reasonable approach for the supply house and the dentist is certainly worth considering. Of course the terms must be appropriate and acceptable to each party or there can be no compromise. Sometimes merely stretching out the payment terms allows a lower monthly payment that can be achieved event during the financial conditions coming from the virus A financial restructuring will allow the amounts paid to attorneys if a law suit ensued to be used in a settlement for the payment to the supply house without the litigation. Worse for the supply house would be the bankruptcy petition where the dentist would be mostly protected from the payment to his or her creditors at least at the current level. The virus has caused all kinds of problems financially, emotionally and also for many of those employed by the dentist. The reason for layoffs of personnel was because there was no cash flow to pay the employees. The same circumstances affect the dentist himself or herself as well since there is little to no patient income. If there are parties who are willing to work together with proper advice, many of these issues can be over come or at least postponed until the virus situation has settled somewhat. A return to the more normal approach to the dentist’s affairs regarding financial security and the relationship with suppliers and other creditors will be returned once there is some clarity to the downturn in the situation caused by the virus. When the various governors open their states for the dental profession to continue, there should be a surge in patient requests for appointments and the flow of patient income will commence.
Speaking with advisors:
Its always good advice for dentists to speak with their trusted advisors regarding any type of financial situation. While the virus is still in existence, it is even more important to talk to advisors. Seeking their opinions about the approaches they see as significant for the future can only assist the dentist in returning to the financial wellness of his or her practice prior to the inception of the Coronavirus.