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The OBBB (Oh-Triple-Bee as we are starting to call it) Act officially passed and signed into law on July 4th, 2025 by the President. We have been diligently reviewing source material to craft our tax planning approach for 2025 and future years. Please note that we are still waiting for additional IRS guidance, but in the interim, here is a short summary of the key tax provisions:

Key Takeaways for Dentists:

  • Tax rates from the 2017 Tax Cuts & Jobs Act made permanent
    • 10%, 12%, 22%, 24%, 32%, 35%, and 37%
    • Enhanced inflation adjustment for 10%/12%/22% brackets.
  • Qualified Business Income Deduction made permanent at 20%
  • State and Local Tax (SALT) limit raised to $40k ($20K MFS) with a phase-down over $500k of Modified Adjusted Gross Income. Reverts back to $10k in 2030.
  • SALT cap increases 1% per year starting in 2025 through 2029

The Pass-Through Entity (PTE) tax work around was on the chopping block, but in the final Senate version this tax saving strategy for business owners was saved, which will benefit high-earning practice owners in income tax states like California and Montana.

  • Child tax credit increased to $2,200 per child, adjusted for inflation thereafter. Phase out begins at $400k Modified Adjusted Gross Income (if filing jointly).
  • Trump Retirement & Savings Account (Trump Account) is introduced – Invest up to $5,000 per child per year until the child turns 18. Funds must be invested in US stock market index funds. The US Government will give $1,000 per baby born between 2025 – 2028.
    • Employers can make up to $2,500 in nontaxable contributions per employee. We need more guidance from the IRS regarding compliance.
    • Trump accounts grow tax-deferred until the beneficiary withdraws the money.
  • Expanding the use of section 529 tax-advantaged savings accounts for qualified higher education expenses, including “qualified postsecondary credentialing expenses” related to professional licensure. We believe CE programs like AGD, Spears and KOIS fall under this new definition. 
  • Charitable deductions: Under OBBBA, the deduction has been expanded to include a permanent “above-the-line” deduction for taxpayers who do not itemize their deductions. Beginning in 2026, taxpayers who do not itemize can claim a deduction of up to $1,000 ($2,000 for those taxpayers who are married filing jointly) for certain charitable contributions. Taxpayers who itemize are subject to a 0.5% floor of their modified adjusted gross income. For example, a household with $300k in MAGI would not be able to deduct the first $1,500 in charitable contributions. New carryover rules would also apply. OBBBA also makes the 60% contribution limit for cash gifts to qualified charities permanent.
  • Green energy tax credits are repealed including electric vehicle credits, installation of home EV charging equipment, and some residential energy credits such as insulation, windows, or energy efficient heating and cooling systems (including solar). Most Inflation Reduction Act (IRA) credits will terminate 2025-2027. 
  • Exemption for overtime pay up to $12,500 per year (2025 to 2028) via a tax deduction (above the line). Must be reported on Form W-2 (waiting on additional guidance).
  • Above the line deduction for auto loan interest up to $10,000 per year (2025 – 2028). The car must be new (not used) and be assembled in the United States.  EV cars are eligible. Debt must have been incurred after 12/31/24. Deduction is completely phased out when income is over $150k ($250k married filing jointly)
  • Senior Citizens aged 65 and older will get an additional $6,000 added to their standard deduction (in an effort to offer relief to those collecting Social Security (2025 – 2028).
  • Health Savings Account (HSA) changes – expanded coverage & eligibility.
  • Employer education plans paying student loan payments – extended permanently.
  • Increasing the filing threshold for Forms 1099-NEC and Forms 1099-MISC from $600 to $2,000, adjusted for inflation.
  • The 100% depreciation deduction is now permanent. This replaces the phase-down of 40% for property after January 19, 2025.
    • A temporary 100% expensing for qualifying structures that start construction in 2025-2028 will be granted.
  • The OBBB Act overhauls federal student loan repayment by eliminating all existing Income-Driven Repayment (IDR) plans and replacing them with the standard repayment plan and the Repayment Assistance Plan (RAP). While RAP caps monthly payments at 10% of discretionary income, it extends the repayment period to 30 years (360 payments) before any remaining balance is forgiven, compared to current plans that offer forgiveness after 10-25 years.
  • The temporary increase to the estate and gift tax exemption has been made permanent and increased further to $15 million.
  • Higher exemptions and phase-out thresholds for the Alternative Minimum Tax have been made permanent, meaning very few taxpayers will be subject to it.
  • Total itemized deductions are subject to a new phase-out for higher incomes. The otherwise allowable deduction is reduced by 2/37 of the lesser of (1) the amount of the itemized deductions or (2) the amount of the taxpayer’s taxable income that exceeds the start of the 37% tax rate bracket.

Impact for Dental Practice Owners:

Most of our clients will continue to benefit from key tax provisions passed in the original Tax Cuts and Jobs Act (TCJA) from 2017. We continue to review text from the One Big Beautiful Bill Act and participate in CPA industry group discussions. We will keep you updated as information becomes available from the IRS.

Any Questions? Feel free to reach out to our office.

-Your Dental Accounting Group

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Questions?  Please email us at mail@cpa4dds.com or call us at 425.216.1612

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STUDY CLUBS

If you would be interested in having us speak at one of your upcoming Study Club events, we would be happy to do so. Online meetings are available.  Contact our office for more details: mail@cpa4dds.com

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2025 brings some notable changes to local taxes in Washington State. 

Capital Gains Tax 

The Washington capital gains tax has been in place for a few years now.  Washington taxpayers are subject to a 7% tax on long-term capital gains that exceed an annual threshold (currently $270,000).  An additional 2.9% tax is now being added for taxable gains above $1 million.  This retroactively applies to any gains realized as of January 1, 2025. 

With the annual exemption, this essentially means you must have long-term capital gains of $1,270,000 before the additional tax applies.  The first $270,000 is still exempt, and gains from $270,000 – $1,270,000 are still taxed at 7%.  Only the gains exceeding this amount are taxed at 9.9%. 

There are no changes to the existing exemptions and deductions, such as gains on real estate, retirement accounts, and qualified family-owned small businesses. 

Estate Tax 

Many are aware of the increased federal estate tax exemption.  When someone dies, they can leave assets to their heirs without paying any estate tax as long as the estate is under $13.99 million (or $27.98 for a married couple).  This effectively means that very few people need to worry about the federal estate tax.  (Note that this is currently scheduled to sharply decrease next year, although legislation is currently in the works that could extend it). 

However, many states also have a state estate tax, including Washington.  The state exemption is currently much lower, at $2.193 million and has been unchanged for several years.  It will increase to $3 million on July 1, 2025, and it will be indexed to inflation each subsequent year.  Note that unlike the federal exemption, this is not “portable” between spouses, meaning you cannot double the exemption to get $6 million per couple.  When the first spouse dies, everything can pass to the surviving spouse tax free.  But when the second spouse dies, they will only be entitled to a $3 million exemption, the same as someone who was never married. 

While the increased exemption will allow more people in the state to avoid the state estate tax, once you are above that exemption, the rate at which you pay the estate tax is increasing.  Similar to the federal income tax, the state uses progressive brackets where larger estates pay a larger percentage in taxes.  The rates currently range from 10%-20%, but the top bracket will now increase to 35%. 

Taxable Estate (amount above exemption) 

Current Rates 

Rate as of 7/1/25 

<$1m 

10% 

10% 

$1m – $2m 

14% 

15% 

$2m – $3m 

15% 

17% 

$3m – $4m 

16% 

19% 

$4m – $6m 

18% 

23% 

$6m – $7m 

19% 

26% 

$7m – $9m 

19.5% 

30% 

>$9m 

20% 

35% 

Business owners can also take advantage of another exclusion, if the value of the business owned makes up over 50% of the taxable estate and has been actively operated by the decedent or a family member for at least five of the previous eight years.  Currently, you can exclude $2.5 million of the business from your total estate value.  That amount is increasing to $3 million. 

However, if the business is later sold, or the business no longer qualifies within three years of death, the State can go back and assess tax on the business as if it had been included in the taxable estate. 

Should you have any questions on these tax changes, or how you can best plan to limit your exposure, please do not hesitate to reach out to us. 

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3015 112th Ave NE, Suite 210

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STUDY CLUBS

If you would be interested in having us speak at one of your upcoming Study Club events, we would be happy to do so. Online meetings are available.  Contact our office for more details: mail@cpa4dds.com

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The PDF version of our formal letter can be found Here

January 29, 2025

RE:        Testimony in support of HB 1535 / SB 5351

Our firm specializes in working with dental practices, which we have been doing since 1989.  We understand the economics of the dental profession, how the current financial model dictated by large insurance carriers is threatening its financial health, and how this directly leads to less access to care and more expense for patients.

Here’s some background on the economics of a dental practice.  Dental graduates typically leave school saddled with $300,000 or more in student debt.  In addition to servicing that debt, they will require nearly $1 million in financing if they want to buy or open a basic clinic.  Once a clinic is up and operating, it faces economic challenges over which it has little control.  Post-pandemic, we have seen a decline in experienced dental office employees, a trend identified by the American Dental Association as a critical challenge for the dental profession nationwide.  Due to this acute shortage of experienced dental workers (especially hygienists), average dental employee wage rates have increased by at least 30% in the last five years alone across Washington (and up 40% in Seattle/Bellevue Metro).  Other expenses have also increased, if not as significantly.

Despite these rising costs and despite an overall increase in the general Consumer Price Index of more than 45% since 2010, dental benefit reimbursement rates have remained relatively flat.  Delta Dental of Washington (DDWA), by far the largest carrier in the state, unilaterally reduced its reimbursement rates by approximately 15 percent in 2011 and froze those rates for 10 years. More recently, DDWA has increased reimbursements by approximately 3% in 2024 and 4% for 2025 for select Current Dental Terminology (CDT) reimbursement codes.

These increases are insufficient to keep up with rising costs, much less make a dent in the gap created by more than a decade of frozen reimbursements.  They create a clear imbalance between the huge costs associated with obtaining a dental education and operating a dental clinic and the potential rewards for pursuing a career in dentistry.  In short, the current financial model is killing the future of the profession. It is a formula for a shrinking number of providers and a decline in the supply of dental care resources – reducing access, availability and quality of care. In the end, patients are the ones that will suffer.

We have seen this trend in the medical profession over the last 20 years, where changing economics have led to provider consolidation, private equity acquisition of health systems, and diminished access to care for patients. 

HB 1535 and SB 5351 can help prevent this from happening in the dental arena.  It will:

  • Support dentists in covering rising expenses like wages, equipment, and rent
  • Ensure parity of reimbursement between in-network and out-of-network providers, giving patients true freedom to choose their dentist and unrestricted access to the benefits they are paying for. 
  • Reduce anti-competitive practices by dominant insurers (For example, several insurers already provide relative parity for in-network and out-of-network reimbursements, but DDWA as the dominant player does not.).
  • Provide sufficient economic incentives for students to pursue dentistry, critical for maintaining an adequate dental workforce and appropriate access to care
  • Prevent rural and underserved communities from losing access to dental care
  • Mandate insurance plans spend 85% of premium revenue on care, not profits or administrative costs.

Everyone in Washington will benefit from a more competitive and better functioning market for dental benefits.  It will allow dentists to tailor their practices to compete for and meet the needs of their patients without insurance companies dictating how and how much they are reimbursed for the care they provide.  It will allow patients to pick the dentist they are most comfortable with and not be forced to accept a lower level of benefits because of that choice.  It will allow insurance companies to adjust their reimbursement rates to become more competitive.  Premera’s recently announced plan to increase its reimbursement rates 24% clearly shows how this can benefit consumers.  Most importantly, it will require that 85% of patients’ premium dollars are directed to their care, helping ensure that they – and the dental profession that cares for them – remain healthy in the years ahead.

We urge you to support this vitally important legislation.

ADDITIONAL BACKGROUND INFORMATION

  • Dental care is financed in large part by employer provided dental insurance.

  • Delta Dental of Washington (DDWA) covers the majority of insureds in Washington State. In some markets, it exceeds 80% of the patient population. Premera and Regence also have large insured populations. We refer to these as The Big 3.

  • Effective July 2011, DDWA reduced their reimbursement rates to providers by roughly 15% with some more frequently used CDT codes, such as those for preventive care, being cut even greater than 15%. DDWA froze those lower rates for 10 years

  • In 2024, DDWA increased a handful (around 20 of the over 800 CDT codes) of the CDT reimbursement rates by approximately 3%. For 2025, DDWA has increased some CDT reimbursement rates by approximately 4%, with an emphasis on selective hygiene CDT codes.  

  • Premera followed DDWA’s lead in 2018 with a significant cut to their CDT reimbursement rates. Premera and Regence have followed DDWA’s frozen reimbursement rate model in lockstep. Premera is one carrier that pays the same in-network reimbursement rate to out of network providers which allows insureds unrestricted provider choice and full access to their benefits.

  • Following Premera’s rate cut in 2018, based on experience with our clients, a substantial number of clinics dropped out of Premera’s PPO network. The out of network reimbursement rates for many carriers, with the exception of DDWA, are on par or nearly on par with in-network reimbursement rates without transferring an onerous financial burden to patients who choose to continue their relationship with their dental provider regardless of their PPO status. Delta, on the other hand, slashes reimbursement rates as low as 20% of in network rates, even for preventive care, and transfers the financial burden of dental care back to those patients who choose/desire to continue with their established dental provider. DDWA’s punitive financial terms for out of network providers (and patients that desire to continue working with their long-term provider that has dropped their DDWA PPO status) are so onerous that it forces most patients to transfer to an in-network provider. Dictating consumers (patients) to seek services solely from in-network providers due to DDWA’s control and influence in the market is anti-competitive and monopolistic, especially when you factor in the punitive outcome to both providers and patients that are out of network. It is a barrier to a patient’s choice and access to care.   

  • Market conditions (presumably Premera insureds complaining about difficulties to access care with in-network providers) must have come into play to trigger Premera to raise their reimbursement rates by 12% effective October 1, 2024 and another 12% effective March 1, 2025. Given the frozen reimbursement rate environment since 2011, Premera’s 24% rate increase within 5 months is a “drastic” reaction to presumably free market forces.

THE CURRENT PPO BASED FINANCIAL MODEL IS NOT SUSTAINABLE

  • The Big 3 carriers have monopolistic influence in the marketplace. They dictate what providers can charge for their services. They have influence over approving or disapproving insureds claims diagnosed by their providers. Because they “control” the majority of “customers,” they make it nearly impossible to compete for doctors who choose to drop out of the carrier’s PPO networks.

  • Between 2010 and 2024, the consumer price index (CPI) has increased by 45.65%. The CPI is a measure of increasing costs. Meaning how much the cost of delivering dental services has increased over the 10 plus years that reimbursement rates have been frozen. Post the 2020 pandemic, we have seen a decline in experienced dental office employees which has been identified by the ADA as a nationwide critical challenge for the industry. Combine the short supply of experienced dental workers with wage inflation in recent years, dental employee wage rates have increased by 30% just in the last five years alone across Washington on average (and up 40% in Seattle/Bellevue Metro).

  • The medium-term trajectory for this model threatens the economic viability of independent private practice and leads to a declining interest in the profession due to the miss-match with the financial reward relative to the huge investment (educational costs and student loans). The University of Washington’s current projected cost for an in-State student to complete dental school is approximately $432,000. We regularly see new dental grads saddled with student debt in excess of $300K at current interest rates in the 7% to 9% range. Currently it typically cost a dentist at least $1.0M in practice financing to buy or open a basic clinic. The long-term implications we are potentially faced with is a shrinking number of providers relative to a growing population which will stress insureds access to in-network dental care. The current financial model is killing the future of the profession. It is a formula for a decline in the supply of dental care resources – reducing access, availability and quality of care. In the end, patients are the ones that will suffer. Simply look at what has been going on with medical care over the last 20 years as a predictor of future dental care without needed structural changes with the financial model. Medicine has pivoted to a concierge model which is simply a pay for access model which has created financial barriers to accessing highly experienced and sought after providers. The concierge model, created out of the financial failings of the PPO model, allows providers to deliver quality care that is focussed on the patient’s needs and not dictated by a carrier’s claim approval or subsistence reimbursement rates. One could argue that the concierge model has created a two-tier health care system. One able to deliver unbridled high-quality care to those with financial resources and a second constrained by the financial model dictated by the carriers for everyone else. This can be avoided in dentistry with some needed structural changes in the financial arrangement between the carriers, the providers and patients.  

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COMPANY BIO

DG Accounting Professionals LLC dba Dental Accounting Group 

  • Washington Chapter of the Academy of Dental CPAs
  • We are a dental specific CPA firm that works with hundreds of dental practices.
  • We are a member of an exclusive organization of dental CPA firms (the Academy of Dental CPAs) nationally that serve over 11,000 practice units.
  • We understand the economics of the dental industry and the in-network or PPO financial model dictated by the large dental insurance carriers.

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LEADERSHIP BIOS

Brian F. Bray, CPA
Co-Managing Partner | Senior Client Advisor
Working with dentists since 1989

Brian has been a Certified Public Accountant and business advisor for over 40 years and is Co-Managing Partner of the Dental Accounting Group. Brian offers clients a business-minded perspective, sharpened by decades of practical experience, to help clients grow and improve their business. He is passionate about helping the next generation of dentists learn how to be financially successful in today’s challenging economic environment.

Affiliations:
Washington Society of Certified Public Accountants
American Institute of Certified Public Accountants
Academy of Dental Certified Public Accountants

Education:
University of Washington

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Margaret M. Boyle, CPA
Co-Managing Partner | Senior Client Advisor
Working with dentists since 1990

Maggie is the Co-Managing Partner of the Dental Accounting Group. She is a University of Washington graduate, a Certified Public Accountant (CPA) and a former Certified Valuation Analyst (CVA). Maggie has been providing tax, consulting and planning services to dental professionals since 1990. She served on the board of the ADCPA for 6 years and is the Washington representative for the Academy of Dental CPAs, a select group of 26 CPA firms throughout the US that provide progressive consulting, accounting and tax services to dental professionals. Maggie has guest lectured at the University of Washington Dental School, SKCDS and many local study clubs.

Affiliations:
Washington Society of Certified Public Accountants
Academy of Dental Certified Public Accountants

Education:
University of Washington

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Kevin J. Bray
Partner | Client Advisor
Working with dentists since 2014

Kevin has been working with Dentists since 2014, building a dental focused bookkeeping practice from scratch, that later merged with the Dental Group to form the Dental Accounting Group in 2022. DAG was recently honored as one of the Puget Sound Business Journal’s Best Places to Work in 2024 and was featured in the INC. 5000’s Fastest Growing Companies in America list. Kevin is passionate about building businesses, financial planning and education.

Affiliations:
Academy of Dental Certified Public Accountants

Education:
University of Washington
Washington Governors University

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Questions?  Please email us at mail@cpa4dds.com or call us at 425.216.1612

3015 112th Ave NE, Suite 210

Bellevue, WA  9804

 

STUDY CLUBS

If you would be interested in having us speak at one of your upcoming Study Club events, we would be happy to do so. Online meetings are available.  Contact our office for more details: mail@cpa4dds.com

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Another Important Update… as this issue appears to continue unfold. There is another temporary pause on enforcement. Regardless, our recommendation is to discuss with your attorney and pre-emptively file assuming it moves forward. It’s not worth the time and energy thinking about it. File and move on… Not legal or tax advice. Just sharing my opinion as a business owner and what I would do. 

Best,
–Kevin 

 

Important Update: On December 23rd, 2024 a ruling out of the Fifth Circuit’s Court has reinstated the BOI Reporting requirements. 

In response to the Court decision of Dec. 23, the Financial Crimes Enforcement Network (FinCEN) has announced the following updated deadlines for beneficial ownership information (BOI) reporting:

Extended Deadlines for Existing Companies

Companies created or registered before Jan. 1, 2024, must file their initial BOI reports by Jan.13, 2025 (extended from Jan. 1, 2025).

Extensions for Recently Registered Companies

Companies registered between Sept. 4, 2024, and Dec. 23, 2024, now have until Jan. 13, 2025, to file their BOI reports.
Companies registered between Dec. 3, 2024, and Dec. 23, 2024, receive an additional 21 days from their original filing deadline.

Disaster Relief Extensions

Depending on their circumstances, companies qualifying for disaster relief may have filing deadlines beyond Jan. 13, 2025.

New Companies Starting in 2025

Companies registered on or after Jan. 1, 2025, must file their BOI reports within 30 days of their creation or registration becoming effective.
Additionally, plaintiffs in the case National Small Business United v. Yellen are not currently required to report their BOI to FinCEN.

This update follows the Fifth Circuit’s stay of a nationwide preliminary injunction against the Corporate Transparency Act (CTA), pending the Department of the Treasury’s appeal.

Written by Kevin J. Bray, Partner @ the Dental Accounting Group

As a dental practice owner, staying compliant with the ever-evolving regulations is essential to maintaining your business’s integrity and avoiding unnecessary penalties. A critical new requirement for businesses, including dental practices, is the Beneficial Ownership Information (BOI) filing mandate. This regulation is aimed at enhancing transparency in business operations and ensuring compliance with legal standards. In theory the new law has good intentions, but in practice it’s creating confusion and another layer of compliance headache for small business owners. Here’s everything you need to know about BOI filings and how to stay ahead of the curve.

What Is BOI Reporting?

The BOI filing requirement mandates businesses to disclose information about individuals who own or control a significant portion of the company. This initiative is part of broader efforts to prevent financial crimes such as fraud and money laundering by ensuring that ownership structures are transparent. Business Ownership Information (BOI) reports with the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN). This new filing is a result of The Corporate Transparency Act (CTA) that went into effect on January 1, 2024, requiring businesses to now file ownership information with FinCEN to help identify criminal activity.

Key Facts You Should Know

Here are the main highlights of the BOI filing requirements:

  • Who Needs to File: If you registered your business with the Secretary of State in your state, you are required to file. All limited liability companies (LLCs) and corporations must file. Disregarded entities, for U.S. tax purposes, must also file. For example, if you own multiple LLCs, each requires a separate BOI report. This includes all dental practices and other businesses as well as Single Member LLCs holding real estate.
  • How to File: You will need to file directly with FinCEN on their website https://boiefiling.fincen.gov/or engage legal counsel to file on your behalf.
  • Filing Deadline: If your business existed as of January 1, 2024, you must file your BOI report by January 1, 2025.
  • Penalties for Non-Compliance: Failure to file on time can result in significant penalties, including fines of $591 per day, a potential $10,000 criminal penalty, and up to two years in prison.

Next Steps for Dental Practice Owners

If you haven’t yet filed your BOI report, now is the time to act. Here’s what you should do:

  • Contact Your Attorney: Reach out to your attorney to understand the specific filing requirements for your practice. They can guide you through the process and ensure compliance.
  • Gather Required Documentation: Collect all necessary details about the beneficial owners of your business. This includes full names, ownership percentages, and any supporting documents.
    1. Company legal name and current address
    2. Any assumed business name (DBA) used by the company
    3. EIN of the entity (Federal tax ID)
    4. Ownership information – Each owner’s name, birthdate, residential street address, and social security number
    5. A high-resolution PDF copy of your driver’s license or passport
  • Submit Your Filing: Work with your attorney to file the report accurately and on time. There are multiple providers in the space offering to assist with this, but we recommend proceeding with caution due to the sensitive nature of the information. DO NOT SHARE YOUR SENSITIVE PERSONAL & FINANCIAL INFORMATION WITH UNKNOWN SERVICE PROVIDERS. 

Key Deadlines: 

  • Existing businesses formed before January 1, 2024 – file by January 1, 2025
  • New businesses formed on or after January 1, 2024 – file within 90 days of business formation
  • New businesses formed on or after January 1, 2025 – file within 30 days of formation

The Bottom Line

Compliance with the BOI filing is a small task, but has huge penalties. We recommend all business owners (and real estate LLC’s) take prompt action. Don’t hesitate to contact your attorney to ensure your BOI filings are handled correctly and to avoid any penalties.

Stay informed, stay compliant, and focus on what you do best—caring for your patients!

Disclaimer: DG Accounting Professionals LLC dba Dental Accounting Group is not filing BOI for clients. This is a legal matter and we are not licensed to practice law. Work with your attorney to file the report accurately and on time. 

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Questions?  Please email us at mail@cpa4dds.com or call us at 425.216.1612

3015 112th Ave NE, Suite 210

Bellevue, WA  9804

 

STUDY CLUBS

If you would be interested in having us speak at one of your upcoming Study Club events, we would be happy to do so. Online meetings are available.  Contact our office for more details: mail@cpa4dds.com

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Written by Kevin J. Bray, Partner @ the Dental Accounting Group

Navigating the financial landscape of a dental practice is a bit like perfecting a smile makeover – it requires precision, expertise, and a keen eye for detail. As dental CPAs specializing in accounting and business advisory for more than 400 dental practices in the Pacific Northwest, we’ve seen firsthand how crucial it is to keep a finger on the pulse of your practice’s financials. Much like advising patients on the importance of regular dental check-ups, we recommend that owners review their financials monthly as a preventative measure against fiscal decay and a strategy for cultivating a thriving practice.

What is Financial Benchmarking?

Financial benchmarking, in the context of a dental practice, involves the analysis and comparison of your practice’s financial performance against that of similar practices within your geographical area. Using local data vs national averages is important when creating budgets and production goals. For example, insurance reimbursements and staffing costs for a practice in Washington are going to vary significantly from a practice in Iowa. By comparing your financial health to that of like-kind practices, you will gain valuable insights into local market dynamics, competitive positioning, and potential areas for improvement or growth. This laser-focused approach enables you to make informed decisions, set realistic goals, and implement best practices, ultimately scaling your practice to new heights of success.

Key Overhead Benchmarks at a Glance:

  • Staff Expenses: 36.48%
  • Dental Supplies: 6.89%
  • Lab Fees: 5.01%
  • Facility Expenses: 6.85%
  • Marketing Expenses: 1.13%
  • Merchant Service Fees: 3.32%

Note: These benchmark figures are based on 2023 financial survey data for general practices between $800k to $1m in annual revenue. This is only a snapshot from our extensive Practice Analysis Report.

Additional Key Performance Indicators That Every Practice Should Track:

  • New Patient In-flow
  • Average Daily Production
  • Hourly Chairside Production
  • Gross Production, Net Production & Net Collections
  • Accounts Receivable Aging
  • Profit Margin Before Owner & Associate Compensation

Fiscal Hygiene: Clean Up Your Practice’s Accounting Records

At the heart of effectively managing these benchmarks lies the imperative approach of keeping clean bookkeeping records and a streamlined dental specific chart of accounts. This is equivalent to maintaining a well-organized dental office where every instrument has its place, simplifying diagnosis and treatment. Clean financial records ensure that every transaction is accurately captured, enabling a clear view of the practice’s fiscal state. At the Dental Accounting Group, we use a standardized dental practice chart of accounts across all of our clients, which allows us to synchronize data into customized benchmarking reports.

Create the Habit of Reviewing Your Financials Monthly

Don’t wait until the end of the year to complete your bookkeeping. If you don’t have the time, then hire a professional bookkeeper. Think of bookkeeping and reviewing your financials as your patient’s routine cleaning: it’s essential for identifying small issues before they require major restorations. Just as regular dental cleanings and exams are essential for maintaining oral health, a disciplined approach to bookkeeping and tracking your financials with benchmarks is crucial for the vitality of your dental practice. Embrace the routine financial check-ups with the same enthusiasm you have for patient care and watch your practice not just grow, but flourish!

Need better bookkeeping and financial reporting?
Reach out to us today

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Questions?  Please email us at mail@cpa4dds.com or call us at 425.216.1612

3015 112th Ave NE, Suite 210

Bellevue, WA  9804

 

STUDY CLUBS

If you would be interested in having us speak at one of your upcoming Study Club events, we would be happy to do so. Online meetings are available.  Contact our office for more details: mail@cpa4dds.com

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The following alert comes from the American Dental Association.

 

On Tuesday, May 6, 2024, the FBI informed the ADA and the American Association of Oral and Maxillofacial Surgeons (AAOMS) of a credible cybersecurity threat to the practices of oral and maxillofacial surgeons. The FBI said that as of that date, there were no known cyberattack victims, but the agency is working proactively to raise awareness to help prevent victimization. The FBI suspects the group behind the cyberattacks may be shifting tactics to oral and maxillofacial surgery practices after targeting plastic surgeons last year.

While this current threat is focused on oral and maxillofacial surgeons, the FBI is concerned that the practices of general dentists and other specialists could also eventually be targeted.

Cybercriminals often use social engineering scams — such as phishing (email), SMSishing (through text or instant messaging apps) and vishing (using phone calls and voicemail) — to gain access to sensitive personal data such as electronic protected health information. Spear phishing refers to a phishing email appearing to be from a trusted contact. For example, a threat actor may use phishing to impersonate a credentialing agency. Through these scams, threat actors try to convince people to reveal sensitive information, or to click on a link, open an attachment or visit a website that causes malware to be deployed. This malware can lead to ransomware, which blocks system and/or file access  until money is paid.

The FBI provided an example in which the threat actor poses as a new patient or says they want to become a patient at the practice to obtain new patient forms online. Once the forms are received, the threat actor will then contact the practice to report they are having trouble submitting them online and ask if they can scan the forms and email them instead. The threat actor then emails the “forms” as an attachment. When the attachment is opened, malware is deployed in a phishing scheme.

The FBI requests dental practices that experience any fraudulent or suspicious activities to report them to the FBI Internet Crime Complaint Center at ic3.gov.

Precautions Practices Can Take
The Cybersecurity & Infrastructure Security Agency (CISA) recommends four vital ways to protect your practice from cyberthreats:

The following resources are also available to support healthcare professionals:

  • A CISA.gov toolkit aids healthcare practices in building cybersecurity foundations and implementing more advanced, complex tools to stay secure and ahead of current threats.
  • The U.S. Department of Health and Human Services’ Knowledge on Demand resource offers five free cybersecurity trainings that align with the top five threats named in HHS’ Health Industry Cybersecurity Practices. HHS also offers information on how the HIPAA security rule can help defend against cyberattacks.
  • The Office of the National Coordinator for Health Information Technology’s Security Risk Assessment Tool, a resource designed to help medium and small providers conduct a security risk assessment as required by the Health Insurance Portability and Accountability Act.
  • The U.S. Department of Health and Human Services Office of Information Security and Health Sector Cybersecurity Coordination Center’s “Artificial Intelligence, Cybersecurity and the Health Sector” guide shares how health care entities help protect against AI-enhanced cyberthreats.
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Questions?  Please email us at mail@cpa4dds.com or call us at 425.216.1612

3015 112th Ave NE, Suite 210

Bellevue, WA  9804

 

STUDY CLUBS

If you would be interested in having us speak at one of your upcoming Study Club events, we would be happy to do so. Online meetings are available.  Contact our office for more details: mail@cpa4dds.com

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We are proud to announce the recipient of the Dental Accounting Group Business Leadership Scholarship.

dag business leadership scholarship
The Dental Accounting Group Business Leadership Scholarship (DAG Scholarship)

 

Scholarship Vision

To help bring awareness to the business side of dentistry and encourage young dentists to pursue private practice ownership. We felt it was necessary to launch this scholarship initiative to help contribute towards the success of the next generation of dental practice owners, and to help counter DSO’s growing influence in our institutions and communities.

2024 recipient elliot willis
Elliot Willis, University of Washington School of Dentistry, Class of 2024

 

About the 2024 recipient

Elliot Willis (graduating class of 2024) is this year’s recipient of the DAG Scholarship. He is a well-rounded individual that shows care and eagerness to learn and advance in the profession of dentistry. He ranks in the top 10% academically in his graduating class at the University of Washington School of Dentistry. When not studying or in clinic, he volunteers his time with local non-profits, including the Special Olympics, Everyone 4 Veterans, and the Union Gospel Mission to name a few. Prior to dental school Elliot studied business administration at Utah State University while being a student athlete. He is an outdoor enthusiast- which started at a young age growing up in foothills of the Rocky Mountains hiking, rock climbing, and camping. Elliot plans to continue his career in public health after graduation before pursuing private practice ownership. “I’m grateful to be the first recipient of the DAG Scholarship and I look forward to running my own dental practice one day after gaining more clinical experience.”

LEARN HOW TO APPLY

Benefit:

Recipient(s) will receive $3,000 & a one-hour business planning consultation with a senior client advisor.

Recipient(s):

Each year our scholarship board of advisors will select:

· One (1) dental school undergraduate student

and/or

· One (1) dental specialist graduate student

Requirements:

Must be a current 3rd or 4th year undergraduate dental student or dental specialist graduate student in the State of Washington.

Scholarship Intent:

To help bring awareness to and promote private practice ownership. We want to encourage young dentists to learn the business of dentistry and pursue private practice ownership early in their careers. The Dental Accounting Group is devoted to helping the next generation of dentists develop their business management & leadership skills to be successful practice owners.

How to apply:

Applicants must submit a cover letter, CV and business plan for their dream dental practice based on our acquisition or startup case study. Applicants must apply by November 30th. Recipient(s) will be chosen by or before March 1st.

https://dagscholarship.com/application-case-studies

After building your business plan, apply here: https://dentalaccountinggroup.typeform.com/to/IJjs4ycW

Learn More: https://dagscholarship.com/

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Questions?  Please email us at mail@cpa4dds.com or call us at 425.216.1612

3015 112th Ave NE, Suite 210

Bellevue, WA  9804

 

STUDY CLUBS

If you would be interested in having us speak at one of your upcoming Study Club events, we would be happy to do so. Online meetings are available.  Contact our office for more details: mail@cpa4dds.com

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Author: Kevin J. Bray, Partner @ The Dental Accounting Group


Starting in 2020, Washington Delta Dental (DDWA) introduced pivotal changes to its Provider Reimbursement Model (PRM), designed to address the economic challenges and feedback from dental care providers across the state. This collaborative approach has culminated in a revised system that’s attempting to meet the economic and clinical demands of tomorrow.

As we head into 2024, Washington Delta Dental (DDWA) will introduce another update to their Provider Reimbursement Model (PRM), promising to help the financial underpinning of dental practices. But the question on every practitioner’s mind is straightforward: are these adjustments a beacon of progress or merely a drop in the ocean of economic necessity?

DDWA PRM Overview

Credit: Delta Dental of Washington

The Promise of Progress

DDWA has pledged a significant investment in reimbursement enhancements, with an estimated $100M earmarked for provider compensation. Additionally, the model now promises to bring about “an increase to your rung score” for 60% of practices on the PRM, ensuring no decreases in fees from the previous year.

The revised PRM marks a significant departure from the status quo, responding to practitioner feedback with a series of strategic enhancements. The highlight is a 5% increase in select hygiene codes, projected to deliver an “overall average annual increase of approximately $5K for each eligible practice.” This is complemented by a shift from a 10-year to a 2-year look-back period for Continuity of Care metrics, reflecting a pragmatic approach to measuring practice performance. Furthermore, DDWA has taken a commendable step towards equity by integrating the “Ultra-Rural” market type into the PRM, aiming to level the playing field for practices across diverse geographic locales.

DDWA PRM Timeline for Inflationary Increases

Credit: Delta Dental of Washington

The Economic Realities

Despite DDWA’s proactive stance, the adequacy of the 5% increase is under intense scrutiny. With overhead costs skyrocketing and hygienist wages in metropolitan areas like Seattle nearing $75 per hour, the incremental raise falls short of what is needed to navigate the economic currents of 2024 and beyond. The hygiene department is not only central to patient care but also to the financial health of a practice. As such, practice owners are advocating for further increases in hygiene reimbursements. This would enable them to pay competitive market wages to hygienists, maintain the quality of patient care, and ensure the profitability of their hygiene department. The delicate balance between fair compensation and operational sustainability is critical. Without additional adjustments to the reimbursement model that account for the steep rise in labor costs, particularly in metropolitan areas, practice owners may find it increasingly difficult to manage profitability while upholding the highest standards of patient care. The adjustment, although a positive acknowledgment, does not fully mitigate the escalating expenses in supplies, services, utilities, and equipment that are outstripping general inflation rates. Therefore, a call to action is clear: future iterations of the PRM must consider more substantial increases in  reimbursements to ensure the vitality and success of dental practices.

2023 DAG Client Survey Staffing Cost %​

2023 dag client survey staffing cost percentage

© 2023 DG Accounting Professionals LLC.

Staffing costs continue to grow in real dollars and eat up a greater portion of the overall overhead. Many practices are watching total staff costs rise to nearly 40% of their revenue as staff wages increase and revenue remains stagnant.

2023 DAG Client Survey Profit Margin %

2023 dag client survey profit margin percentage

© 2023 DG Accounting Professionals LLC.

Profit margins before associate pay have dropped in recent years mainly due to wage inflation and other rising costs of doing business in urban metropolitan areas. Practices across the board saw roughly a -5% decline in profits YOY.  

A Tale of Two Practices

The disparity between urban and rural practices remains a critical subplot in this narrative. While the new model intends to harmonize this imbalance, rural practices continue to navigate unique challenges that a universal model might not fully address. Meanwhile, urban practices grapple with a competitive job market and elevated living costs. The “Ultra-Rural” adjustment, although well-intentioned, could still leave certain practices grappling with financial sustainability. The implications of these changes are far-reaching. Dental practices across Washington can anticipate a more equitable reimbursement scenario. By integrating “ultra-rural” market type and adjusting targets to the 95th percentile per market, DDWA aims for a fair comparison among peers, fostering a level playing field for all practices, irrespective of their size or location​​.

New Ultra Rural Market Types Added:

DDWA PRM New Ultra Rural Market Types

Credit: Delta Dental of Washington

Summary of Key Modifications Taking Effect

In the spirit of transparency and to aid providers in understanding the impending modifications, DDWA has offered a detailed glimpse into the changes:

  • Inflationary Adjustments: A 5% increase on select hygiene codes for participating providers will be instituted. This adjustment is a strategic move to counteract inflationary pressures but falls short of the needs of the average practice. The overall average annual increase is only approximately $5K for each eligible practice. This is hardly an “inflationary adjustment” considering wage inflation alone for full-time hygienists has increased on average 15% during the last two years.
  • Simplified Metrics & Feedback-Driven Revisions: The PRM will adopt simplified metrics for assessing practice performance. For instance, the retention metric has been revamped to a “Continuity of Care” standard, focusing on a 2-year look-back period, down from the previous 10-year span, to better align with practice realities.
  • Expansion of Eligibility: With the PRM modifications, a significant “68% of practices on the PRM will experience a score increase and an additional average annual projected increase of ~$9K per practice”.
  • Fee Schedule Updates: Providers will see their new fee schedules on the Provider Portal, which will automatically reflect the changes for 2024.
  • Inclusive Model Adjustments: Modifications will affect all four inputs—practice costs, prevention, access, and retention—streamlining the metrics for better clarity and ease of management.
  • Prevention-Centric Increases: There is a special focus on preventive procedures, with a 5% inflationary increase on codes such as D1110 (adult cleaning) and D1120 (child cleaning), which are essential to maintaining oral health.

A Future in Flux

Looking ahead, the true impact of the PRM changes will only be measurable in hindsight. While the modifications are a testament to DDWA’s commitment to iterative improvement and stakeholder engagement, the sustainability of dental practices hinges on the alignment of reimbursement rates with the dynamic economic landscape. As practitioners and DDWA alike navigate these changes, ongoing dialogue and flexibility will be crucial in ensuring that the PRM evolves in step with the real-world financial demands of dental care.

Conclusion: Caution Meets Optimism

In conclusion, while DDWA’s PRM updates for 2024 mark a significant step towards addressing the economic challenges faced by dental practitioners, there’s a palpable sense of caution. Is a 5% increase sufficient to keep up with wage inflation and the ever-growing overhead costs? Will these changes truly bridge the gap between rural and urban practice economics? And importantly, will the revisions enable practice owners to sustainably compensate their team and ensure profitability?

From our perspective, the increases fall short. Based on our 2023 DAG client survey, hygiene wages increased more than 15% during the last two years, which is roughly a $17k-$20k payroll increase per full-time hygienist. If an average practice is doing $1m in collections and they are only seeing a $5k bump as an inflationary adjustment, it’s clearly falling short of the economic demands of a traditional practice staff model. Time will tell if these changes herald a new era of financial prosperity or if they serve as a precursor to a more comprehensive overhaul that many practitioners believe is necessary. What is clear is that the dental community must remain vigilant, adaptive, and vocal to ensure that their economic needs are met not just in 2024, but in the years that follow.

Author’s note: This article merges two perspectives into a comprehensive narrative, weighing the optimism surrounding DDWA’s PRM changes against the skepticism of whether they go far enough in addressing the real economic pressures of dental practices. It offers a balanced view that acknowledges the effort while calling attention to the reality of the financial challenges that lie ahead. The Dental Accounting Group is a fierce advocate for dental practice owners. We will continue to analyze this reimbursement model in the years to come and voice our perspective to DDWA.

 

Questions? Refer to your new Delta Dental PRM portal to see the economic impact on your practice. They’ve also added a new glossary of terms:

Additional Reimbursement Resources:

Additional DDWA PRM Resources

Credit: Delta Dental of Washington

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Questions?  Please email us at mail@cpa4dds.com or call us at 425.216.1612

3015 112th Ave NE, Suite 210

Bellevue, WA  9804

 

STUDY CLUBS

If you would be interested in having us speak at one of your upcoming Study Club events, we would be happy to do so. Online meetings are available.  Contact our office for more details: mail@cpa4dds.com

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Since March 17th, we have been proactively distributing information to our clients and the larger dental community through our partnership with the Washington Academy of General Dentistry.

We’ve invested thousands of dollars worth of our billable hour time on these webinars. Our team has read the 800+ page CARES Act statute and additional SBA & Treasury Department guidance as it becomes available. We’ve held numerous meetings and discussions internally and externally with industry attorneys and bankers. We are working hard to help our clients navigate this crisis. Information changes every week as more guidance from the SBA & Treasury Department gets released.

Here are links to our previous webinars and Prezi presentations regarding the CARES Act.

PPP Loan Forgiveness and New SBA Guidance

June 3rd, 2020

Prezi Presentation Link: https://prezi.com/view/apu3WGxEFH7ILNU1WwdD/

COVID-19 Update on Relief Provisions

May 6th, 2020

Prezi Presentation Link: https://prezi.com/view/d7Pt2asv3F75UPo4QGBX/ 5/6/2020

Covid-19 Update

April 15th, 2020

Prezi Presentation Link: https://prezi.com/view/jj3dXPtPAn8ySuRnBCMK/

Cares Act – Major COVID Relief

April 1st, 2020

Prezi Presentation Link: https://prezi.com/view/GG9AuKG8AICpCDs5bpIq/

COVID-19: Employee & Business Implications for Practice Owners

March 26th, 2020

Prezi Presentation Link: https://prezi.com/view/h3jjQHcMIBnYnKV0ZuFr/

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Updated 4/1/2019:

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Disclaimer: What follows next is general information and not legal or accounting advice. We are not your attorney or CPA and every situation is different. You should call your attorney or CPA for specific advice with regards to the topics of this presentation. If you are not receiving the guidance you need, we can entertain bringing you on as a paying client. 

Since our last update on March 25, 2020, the CARES Act was passed and signed into law late on March 27, 2020 and the Department of Labor has issued additional guidance on implementation of the Families First Coronavirus Response Act (FFCRA).

Today we are going to cover:

A. Recap of FFCRA and DOL Guidelines
B. Recap of Standby Unemployment
C. SBA Disaster Assistance Loan program
D. CARES Act – Paycheck Protection Program loans (Forgivable Loans)
E. CARES Act – Unemployment Assistance
F. Emergency EIDL Grant

Source Document Links & Additional Information:

Link to Prezi presentation: https://prezi.com/view/GG9AuKG8AICpCDs5bpIq/

Kevin manages marketing, business development, and customer success for Dental Accounting Professionals LLC & Benton Bray PLLC. He is highly analytical, creative, and forward thinking in his approach to working with clients. His background is in commercial real estate with a focus in dental office leasing and investment sales. Kevin’s passionate about investing for the future and implementing new technologies to streamline outdated workflow processes to increase bottom line results.  

Follow Kevin J. Bray on LinkedIn

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