Practice Building Technology
It’s Easy to be Green: How 3 Chicago Dentists Built a New Practice in Uncertain Economic Times
Almost every dentist has an ideal practice that they daydream about from time-to-time. It’s beautiful, it has all of the most up-to-date high-tech equipment, it runs efficiently, and it always exceeds patients’ expectations. But that’s where the practice stays…in their daydreams. Most dentists can’t imagine how they would ever achieve this goal.
Meet the dentists at Ora Dental Studio in Chicago, IL: Goran Kralj, DDS, Mladen Kralj, DMD, and Steven Koos, DDS, MD (www.oradentalstudio.com). These 3 dentists took their dream and made it a reality. They have created a general/esthetic dentistry and oral surgery practice that is beautiful to look at, is environmentally friendly, and that provides state-of-the-art dental care. And they did it in the midst of a national financial crisis.
Research and Money
The dream for these 3 dentists was to create an eco-friendly practice that is green in both construction and delivery of care. The partners at Ora Dental Studios had always been environmentally conscious in their private lives and they had been practicing minimally invasive dentistry, so they decided to take it to the next level and create an entirely green dental practice. The project began with extensive research to ensure they worked with the right sources for building materials and equipment. And, of course, making this dream come true required a financial investment. The total cost for the project, including operatory equipment, came to $1.6 million.
Construction on the new practice began in May of 2008. Half way through the project, the financial crisis hit, and financing was withdrawn by the practice’s lender. As Dr. Koos described it, “the situation was dire. In fact, construction stopped for a month.” However, Henry Schein Dental and other lenders came to the rescue. In mid-November of 2008, the practice opened its doors to patients.
What Makes this Practice Green
To ensure they built green and that they practice green, the Ora dentists followed Leadership in Energy and Environmental Design (LEED) and Green Guide for Health Care (GGHC) standards. LEED is a nationally accepted benchmark for the design, construction, and operation of high-efficiency green buildings. GGHS is a best practices guide for healthy and sustainable building design, construction, and operations.
To ensure they met LEED and GGHC standards in the building of the practice, they chose a sustainable site, used environmental quality construction material and resources (for example, aluminum framing and EcoRock drywall), and incorporated energy efficient appliances and lighting.
To off-set their carbon footprint, the practice makes annual contributions to reforestation campaigns, energy efficiency programs, and renewable natural energy sources.
The group has included many environmentally conscious operations into the daily activities of the practice. For example, the practice is paper-free, using digital charts and radiographs. To deal with hazardous waste, they use the Demolizer, a biohazard disposal system that turns this waste into completely safe trash. In the realm of minimally invasive dentistry, the practice uses the i-CAT 3D cone beam digital CT scanner, the DiagnoDent laser for early caries detection, the VELscope oral cancer screening system, and the Navigator soft-tissue laser for nonsurgical treatment of periodontal disease.
Reaping the Rewards
The investment the group has made into this practice is already beginning to show a return. Since opening their doors, they have experienced a 25% to 30% increase in new patients. And they have begun to reap the cost savings associated with using low-flow faucets, high-efficiency lighting, and reducing hazardous waste removal costs.
More importantly, says Dr. Koos, is making a commitment to doing what’s right for patients, team members, and the community. The practice made an enormous investment of time and financial resources to make their dream come true, and they are reaping the rewards in terms of increased business and cost savings and in knowing they are doing the right thing.
Build Your Dream Practice Today
Recent economic news may have you battening down the hatches and delaying needed equipment purchases and office renovations. But there’s other news that you may not have heard: money is available for dentists with good credit and solid cash flow. That means it’s entirely possible to add an operatory or purchase that digital radiography or CAD/CAM system you’ve had your eye on. With interest rates at 40-year lows, it may even be time to open a new practice (See our On-line Exclusive “It’s Easy to be Green: How 3 Chicago Dentists Built a New Practice in an Uncertain Economy” at www.dentalproductshopper.com/practicebuilding). Your dental practice is your biggest investment, and the dollars you invest today will add to your practice’s growth and future stability.
Invest Now for Your Practice’s Future
One of the critical ways to ensure future growth for your practice is through investment in improved technology. The modern dental practice continues to evolve at a rapid pace. Systems that were used in the past may now be obsolete and must be replaced by solutions that allow your practice to run more efficiently. For example, digital imaging in many practices is replacing older film-based systems. This is just one example of the ever-changing technology that your practice needs to stay on the cutting edge.
Purchasing new equipment for your practice now is an important way to not only keep pace with technology, but also to spend dollars that will give you a return on your investment. In the competitive dental environment, retaining existing patients and attracting new ones becomes a vital part of your office operations. By keeping up with technology and offering your patients stateof- the-art dentistry, you develop and retain the patient base you need to ensure the success of your practice.
Purchase, Lease, Finance: The Choice Is Yours 
Dentists have 3 options to choose from when adding new equipment or making renovations to their practices: outright purchase, lease, or financing. The primary factor to consider with any of these options is cash flow.
Making an outright purchase requires a higher initial outlay of cash. In addition, this option may not be feasible if you do not have significant cash flow available. Leasing typically requires less cash down, allowing for more working capital for your business.
The third option is to apply for a bank loan or financing. Most banks and finance agents have certain requirements necessary to obtain financing (see Checklist on this page). As discussed previously, cash flow is critical. While many dental specialty lenders offer 100% financing, local banks may ask for a 10% to 20% down payment.
Credit scores also have become increasingly important in today’s market. A solid credit score will not only help you avoid additional bank fees, but will also greatly improve your chances for approval of a loan. Find out your credit score well before applying for a loan.If your score is low (below 620), make sure it’s accurate. If it isn’t, get it corrected to reflect your true credit standing. If it is accurate, do the work necessary to bring the score up so that you’re on sound financial footing to get a loan.
Some financial institutions are closely reviewing the collateral your practice has available as well as your ability to repay current debts as they become due. Many lenders have established new financing requirements, and they can vary substantially by lender. To avoid confusion and increase your chances of getting your loan, check with multiple lenders to compare and contrast their requirements.
Tax Benefits: Equipment Purchasing Incentives
Another factor that will play a role in your decision to buy, lease, or finance equipment is the tax ramifications. One of the most important benefits of buying equipment outright is tax deductibility. Under Internal Revenue Code Section 179, taxpayers may elect to deduct the cost of a piece of equipment in 1 year, rather than be subject to the regular depreciation methods allowed by the IRS. For 2009, a taxpayer can deduct up to $250,000 of the cost of equipment (subject to a phase-out if you place more than $800,000 of equipment in service in any 1 year). The expense election is also limited by the aggregate amount of taxable income of the taxpayer for the tax year.
If you meet the eligibility requirements, the resulting reduction in your tax burden could be enough to sway your decision to buy. It is also important to note that any principal payments toward a bank or equipment loan are not considered a tax deduction; the deduction is limited to interest payments only. Leasing also allows for a tax deduction. The monthly payments toward an operating lease can typically be deducted as a business expense on your tax return.
Bottom line: talk to your accountant first to ensure you’re making the right purchasing decision for your practice.
Good News
The good news is that you don’t have to delay creating the practice of your dreams. Today’s economy should not be a reason for you to stop investing in your practice. There are many options and many lenders willing to compete for your business. Talk to your accountant or financial advisor to help evaluate your options and assist you in making an informed decision. —Deborah M. Cordivari
