Articles for Dentists

White Paper: Veterinary Practice Expansion Guide to Growth

Is your production potential limited by the size of your current veterinary office?
It sounds like you may be ready to expand your clinic and grow your business.
Expanding a veterinary practice is an important decision that involves countless, time-sensitive moving parts. For over 20 years, Cirrus Consulting Group has been helping doctors safely and thoughtfully prepare for their office expansion projects. Use our guide to prepare for your new business venture, armed with the knowledge critical to take your business operations to the next level.
STEP 1: Define Objectives & Create the Plan
Is your potential for revenue capped by the size of your current facility? Strategically thinking about why you need to expand will help define your goals and execute a plan of action.

STEP 2: Analyze the Terms in Your Current Veterinary Office Lease
After outlining your goals, it’s time to analyze the details in your current clinic lease to ensure they will allow you to carry out your expansion plans without obstacles. Contact the veterinary office leasing experts at Cirrus Consulting Group to help you with this important step. A leasing expert will help you review and decipher the complex language within the lease to ensure you are fully protected when you approach your landlord with your plans.

Important Considerations in Your Current Lease:

Putting together a team of capable and trusted professionals is critical to a smooth and successful expansion project. Assemble a reliable team of financial advisors, office designers, builder/contractors and contact your equipment suppliers and technology specialists at Henry Schein Animal Health.
STEP 4: Review and Negotiate the Offer to Lease for the New Space
Once you’ve gotten the go-ahead on the additional space from your landlord, you’ll be presented with either a lease agreement, Offer to […]

Customer Case Study: Dr. Nora C., DDS | Charlotte, NC

Dr. Nora C. is a late-career prosthodontist who’s been practicing in the same dental office in Charlotte, NC for several years. With her dental office lease just 6 months from its expiry date, she was contemplating relocating the practice to a property that would be more suitable to support her plans for a gradual transition over the next 5-6 years.
The Problem
After a lengthy search, the doctor found the ideal location for her practice, and was presented with the landlord’s standard office lease agreement for the new space. The doctor’s primary concerns were to make certain that the relocation go smoothly, to mitigate any potential risks with the new lease, and to minimize any negative impact on her patients, all the while ensuring that both her investment and estate would be protected.

Dr. C’s Henry Schein consultant introduced her to Cirrus Consulting Group, the dental office lease negotiation experts, to review her existing lease for costly surrender provisions and critical dates that might impact her relocation, as well as the new lease proposed by the landlord. Cirrus began by assessing her personal and practice goals, and then developed a strategy to help guide her through a safe relocation.
The Challenge
Upon reviewing Dr. C’s proposed new lease agreement, Cirrus uncovered various issues that could be detrimental to her eventual transition out of dentistry, including an “Assignment” clause that would leave her personally responsible for the practice’s debt after transitioning, and the landlord’s right to collect a significant portion of her practice sale proceeds.

Dr. C. was looking for her new lease agreement to provide her with the following:

The Solution
Cirrus collaborated with Dr. C. to clarify her transition goals, and then guided her through their eight-step strategic lease negotiation process, achieving […]

By | August 17th, 2017 | Case Studies | 0 Comments

Consent and Reasonableness in the Dental Office Lease: Why it’s Important

Are you selling your practice? Installing new signage? Remodeling your dental office? Planning to bring in an associate?
What do all of these actions have in common? Each of them will likely require your landlord’s consent as a condition in your dental office lease agreement.
Standard of Consent in the Dental Office Lease
Consent, in and of itself, is fairly common and a very reasonable provision in the typical dental office lease agreement. However, what most dentists don’t realize is that the standard of consent set forth by the landlord in the lease can be very problematic and restrictive to the practice. Quite often, the element of consent is contractually defined in the lease, requiring the consent “not to be unreasonably withheld”.

Many commercial office lease agreements include language similar to the following:

“The Tenant shall not _________, without prior consent of the Landlord, such consent not to be unreasonably withheld.”

The question of reasonableness is one of fact, and is determined by the circumstances at hand, including the commercial realities of the marketplace and the economic impact on the party being asked to consent. Reasonableness should not be confused with what may seem fair. It is also not necessary for the opposing party to have to prove that their refusal to consent was justified; only that it was reasonable under the circumstances. The onus will generally be placed on the dental tenant to prove that the landlord’s refusal to consent was unreasonable.

To that end, consent language can be quite problematic for a doctor planning to sell their practice, bring in associates, or even try to sublease some of their space to another dental practitioner, and here’s why:

The Importance of Negotiating “Consent” in Your Dental Office Lease
Whenever landlord consent […]

Ten Tips for Monitoring Dental Embezzlement

Prevention of embezzlement is impossible, but, detection of embezzlement is fairly easy if you go about it the right way.  Here are ten tips, written by embezzlement expert, David Harris, CEO of Prosperident, that take very little time and can make your practice much less vulnerable to embezzlement:

Daily:

1. Print reports yourself: This prevents the possibility of a staff member using “selective reporting” in the information that they give you.

2. Review and initial day sheets. Retain for three years or more. You may need these someday if embezzlement is suspected.

Monthly:

3. Review entry log (alarm system). Staff members coming to the dental office at unusual times is often a symptom of embezzlement.  Taking five minutes to review this information from your alarm company is one of the best time investments you can make in detecting embezzlement.

4. Review AR listings and compare with previous months. Make sure that balances are “aging” properly in the reports, and ensure that suitable collection action is being taken on older accounts.

5. Review the modified transactions report (the name varies with the type of practice management software you are using). This is a much smaller report than the “audit log” (which can run to thousands of pages per month), and is often a place where certain types of embezzlement transactions can be seen.

6. Have bank and credit card statements sent to your house instead of your dental office. This prevents employee tampering.

7. Use Prosperident’s Monthly Monitoring Spreadsheet (ask for it at requests@dentalembezzlement.com) to reconcile daily reporting with monthly reporting and deposits.

As needed:

8. Use the Embezzlement Risk Assessment Questionnaire.

9. Instill mandatory vacations and cross training for all staff. Everyone from your office should be gone for at least two consecutive weeks per year, and this needs to be done when […]

Are You Overpaying for Your Practice’s Operating Costs?

Visibility and Audit Rights

Before you sign your dental office lease, it’s important to ensure that you have the “right to review and/or audit statements and invoices for all operating costs” negotiated into the agreement. This will ensure that you have the ability to take prudent steps to protect your practice from unreasonable or hidden charges set forth by the landlord. If you have the right to see exactly what is being charged, it is less likely that you will be billed for something completely unreasonable.

In a Net lease, operating costs are expenses associated with the landlord’s day-to-day maintenance and operation of the property. Your landlord should keep track of all operating costs, and at the end of the fiscal year, provide you with a detailed statement of the actual expenses. As a tenant of a commercial property, you should insist on having the reasonable right to verify, audit, and where applicable, contest any charges that have been passed on by your landlord. Dentists who have not secured such provisions in their office lease may find that they are vulnerable and exposed to unscrupulous landlords.

Exclusions

It is customary for a tenant to cover their proportionate share of charges relating to the maintenance of the building, common areas, insurance, and various taxes; however, some landlords take advantage of their tenant’s lack of knowledge as to what are reasonable pass through costs.

What charges are unreasonable for the landlord to pass along to a dental tenant?

Retroactive Billing

It’s not uncommon for a dentist to receive notice from their landlord communicating that they were not billed correctly for a certain expense, dating back several years. Without proper preventive language negotiated into your dental office, situations like this can result in many unforeseeable future […]

Are You Overpaying for Your Practice’s Operating Costs?

It’s important to understand whether you as the tenant, or your landlord, is responsible for paying for various dental office operating costs when it comes to the maintenance of the property. Your dental office lease plays a key role in dictating the obligations of both parties, and clarifying common grey areas.

What Are Operating Costs?

Operating costs are the expenses related to the operation of a commercial property. Some landlords have been known to take certain liberties in the operation of their buildings. They do so by charging expenses to their tenants, who may only be tenuously linked to the management and maintenance of the property in question. These particular landlords may pass these costs on to their tenants by including them in the “additional rent” or operating cost provisions of their standard form lease with little, if any, explanation.

What operating costs are included in your dental practice’s rent, and what is being charged separately? 

There are a number of factors regarding the landlord’s maintenance responsibilities and costs, they can vary depending on whether you’re presented with a Net Lease, Gross Lease, or Modified Gross Lease.

Type of Leases

Net Dental Office Lease

In addition to base rent, a Net Lease requires a tenant to pay for its proportionate share of all property expenses such as insurance, maintenance, utilities, repairs, and taxes. Typically, the landlord is not responsible for any expenses (with some exclusions) under the lease.

Fully Gross Dental Office Lease

This type of lease is similar to many residential rentals. In a Fully Gross lease, the tenant is only required to pay a flat rental rate, while the landlord covers all additional property expenses.

Modified Gross Dental Office Lease

During the first year (base year), a Modified Gross Lease requires the tenant […]

Customer Case Study: Dr. Daniel R., DDS | Ortonville, MI

Dr. Daniel R. is a General Dentist running a successful practice out of Ortonville, MI.

As building-owners of 35 years, Dr. R. and his wife were growing weary of the constant demands involved in maintaining a property and being landlords. They also strived to grow the practice and expand, but were limited by the size and number of treatment rooms available in their 2,400 sq. ft. unit. After much deliberation, Dr. R. and his wife made the difficult decision to sell the building and relocate their practice.

The doctor had narrowed down the search to 3 locations in Clarkson, MI. Unsure of how to negotiate the details of their tenancy with the landlord, Dr. R. and his wife attended a seminar in Troy, MI presented by Cirrus Consulting Group on the topic of “Dental Office Lease Negotiations”. The seminar discussed the top $100,000 traps buried in a lease, and the harsh negative impact they can have on a practice’s future.

With this newfound knowledge, the doctor decided against using the services of his long-time corporate attorney for the negotiation, and instead sought out the expertise of Cirrus and their dental office lease negotiators. Dr. R. and his wife chose a location for their practice and were soon presented with the dental office lease for the space by the new landlord. Dr. R. was looking for the new lease to provide him with the following:

Cirrus conducted a thorough review and analysis of the lease, highlighting critical dates, risks and pitfalls. They uncovered a lack of death and disability protection in the lease, a significant issue for Dr. R. as a late-career dentist. The lease also permitted the landlord to move competing dentists into the building, and collect proceeds […]

Personal Guaranty in Your Dental Office Lease: Let’s Not Make It Personal

There’s an old business adage that states one should always keep business and personal matters separate. While the intent of this saying is certainly sage business advice, it is often not something that a dentist can avoid in the world of commercial office leasing. The majority of our clients who are starting a dental practice, or have been in business for many years and are renewing their dental office lease often tell us that their landlords are demanding. Why? They often make them sign a “personal guaranty” or “indemnity agreement”, or else the deal is off!

This article is going to help you understand what a “personal guaranty/indemnity agreement” is as it pertains to your lease, and explain how as a small business owner, you can attempt to limit or avoid it altogether.

What is a “personal guaranty” in the lease, and why does your landlord care?

A personal guaranty, in its basic form, is a contractual agreement in your office lease that obligates an individual responsible for paying back a debt, in the event the tenant is in default. In regards to your dental office, it is a safety net that many landlords demand a tenant sign in order to ensure the financial performance of the lease continues, regardless of what happens with the tenant’s corporation, i.e. bankruptcy or business closure. It is important to note that a “guarantor” is often required to guarantee the obligations of not only the initial lease term, but also any “options to renew” or future extensions of the term.

For a startup dental practice, landlords often require you to sign a personal guaranty due to the lack of operational experience of owning a practice or renting commercial property. For an established […]

The Dangers of the Redevelopment/Demolition Clause in Your Office Lease

Picture this – after a few years in your new dental office location, you have developed a solid practice culture with staff and patients that you truly enjoy. Your loans are slowly but surely being repaid and you are building up an enviable patient roster in the process. Your home, your children’s school are all within a three-mile radius of your practice. Life is good, and improving. Then, out of the blue, you receive a notice that your lease is being terminated due to a redevelopment of the property. Can the landlord do this? What happens now?
What is a “redevelopment” or “demolition” clause?

The “Redevelopment” or “Demolition” clause is an increasingly common feature of dental office lease agreements, particularly in high-density, metropolitan real estate markets. This clause gives your landlord the right to terminate your lease if they decide to demolish, renovate, or redevelop the building or center you are practicing in. Often, the definitions of “redevelop”, “demolish”, or “alter” in the lease are highly ambiguous.

The particulars of this redevelopment or demolition – the who, what, when, why and where – will invariably differ from lease to lease and from landlord to landlord.

For example, a given dental office lease might allow the landlord to terminate your tenancy if they decide to build a condominium building on the land. Another lease might permit the landlord to permanently relocate you to another part of the property, or to another property altogether, if renovations are to be carried out.

The struggle is particularly relevant to dentists, as they invest heavily in leasehold improvements and can’t simply pick up and relocate without considerable expense. Sound familiar? That’s because the average dentist spends $200,000 constructing a dental office. As such, the […]

Customer Case Study: Dr. Gordon S., DVM | Woodstock, GA

Dr. Gordon S. is a late-career veterinarian running a successful animal hospital in Woodstock, GA.

As a busy veterinarian, Dr. S. had not been keeping track of critical dates in his lease agreement such as the lease expiry date, which was vast approaching.

The doctor was invited to attend a CE webinar on the topic of “Negotiating or Renegotiating the Terms and Rent in the Veterinary Office Lease” hosted by Cirrus Consulting Group, the veterinary office lease negotiation experts. At the webinar, the doctor learned about the importance of beginning the lease renewal process 18-24 months in advance of the expiry date in order to bring the landlord to the table with enough leverage and time to secure the best deal. The doctor also learned about many of the inherent risks in lease agreements, and was shocked to learn that many of these pitfalls existed in his current lease.

With the negotiation clock ticking, the doctor retained Cirrus to review his current lease agreement, and negotiate the terms of his renewal.

The doctor communicated to Cirrus that as a late-career veterinarian, he was looking for lease terms that would appeal to future buyers, and enable him to transition profitably and smoothly without being indebted to the practice afterwards. In addition, the doctor believed that the new Property Management company that was hired to manage the shopping center was unfairly charging for rent and Common Area Maintenance (CAM) charges, so this was something he would also want addressed in the negotiations.

Dr. S. was looking for his new lease to provide him with the following:

Cirrus conducted a thorough practice needs analysis and reviewed the lease for critical dates and problematic language. Together they created a lease negotiation strategy and were […]

By | March 15th, 2017 | Case Studies | 0 Comments