COVID-19 Update #9 from IPS
Dear friends, partners, and colleagues,
We are – slowly, cautiously – on our way back!
In this newsletter, I’ll cover:
- The CDPH Announcement
- PPP Loan Forgiveness Questions
- Re-hiring Employees (including those who decide not to return)
- Dental Practices for Sale
- Another Musical Interlude
In the meantime, I cannot believe that another week has passed. I am very much in need of a haircut.
Perhaps I should take my cue from Pawnee, Indiana’s premier orthodontist Dr. Jeremy Jamm and give myself a quarantine cut. He is also promoting dental delivery services. Maybe it’s time to change the business model? Take a look…
CA Dental Updates
By now you’ve probably seen CDA President Dr. Richard Nagy’s announcement that dentists have the “yellow light” to practice dentistry with reference to the CDPH’s for Resuming Deferred and Preventive Dental Care. (If you haven’t seen it, you can find it here.)
Remember: this is just a guideline. The CDA is not a regulatory body and as a healthcare provider, you are responsible to make your own decisions about how and when to be practicing, subject to applicable CA law.
The substance of the “yellow light” is given by the California Department of Public Health’s Guidance for Resuming Deferred and Preventive Dental Care, which was released last night. (I had some trouble accessing the site, so if you’re having the same trouble, here’s a PDF of the page that I printed.)
It’s worth reading the entire thing (and I suspect that most of you already have). In essence, the guidance is fairly simple:
- Follow local guidelines
- Have sufficient PPE
- Screen everyone and don’t treat COVID positive patients
- Develop policies and procedures to reduce possible transmission
- Reduce aerosol generation as much as possible
- Clean and disinfect all office spaces
Basically, it’s everything we’ve been discussing for the last few weeks. In terms of which patients you should prioritize (see our discussion last week on ‘triaging’ patients), “Clinicians should prioritize care that was previously postponed and for those conditions that are likely to lead to dental emergencies if treatment is not provided in a timely manner.”
PPP Loan Forgiveness
I’ve heard a lot of confusion over the last few weeks around PPP loan forgiveness. There’s a simple reason for this: the guidance from the SBA and the Treasury has been confusing and they have yet to issue the IFR (interim final rule) on forgiveness.
In the meantime, here’s what we do know about PPP loan forgiveness:
The percentage of the loan that is forgiven can be reduced by a number of factors.
- The forgiveness window is the 8-week period beginning as soon as the funds are deposited in your bank account. That means that any PPP loan money that is spent after that 8 weeks is not eligible for forgiveness.
- Within that 8-week window, you can spend a maximum of 25% of the total loan amount on qualified non-payroll expenses (utilities, rent, and mortgage interest). If you’re looking for total forgiveness, at least 75% of the loan must be spent on payroll.
So far, so good. The loan was designed to get employees off of unemployment and back to work. However, there is more uncertainty about the requirements to bring employees back at their former salary levels.
- For full forgiveness, you are required to maintain at least 75% of individual employee salaries compared to the most recent full quarter prior to the origination date of the PPP loan.
- For full forgiveness, you are required to maintain employment levels when compared to one of two periods (your choice): either Feb. 15, 2019 – June 30, 2019, or Jan. 1, 2020 – Feb 29, 2020.
What does maintain mean? 1) It is unclear whether we are talking about headcount or full-time equivalent (FTE). (If you have 4 half time employees, that is the same as 2 FTE employees.) 2) It is unclear whether employment levels are calculated as an average over the 8 weeks or by June 30, 2020. Without clarification on these points, it’s hard to make good decisions about when to re-hire.
I wish I had more advice to offer here, but the primary take away is this: no one knows what the final rule will be. Be wary of anyone who says that they have all the answers right now…
Can employees who decide not to return jeopardize my loan forgiveness?
If your employee refuses your offer to re-hire them, then that employee cannot count against ‘maintaining’ employment levels with regards to your forgiveness. In other words, an employee who refuses to come back to work after his or her employee makes a good faith, full-wage offer to rehire cannot be counted against the employer’s loan forgiveness.
This is new as of this week: see question #40 here. Furthermore, if they do refuse the offer to return to work, you may have an obligation to inform the state and it can put their unemployment in jeopardy.
In the spirit of slowly returning to (semi-)regular business, here are some fantastic new listings that our team have brought to market in the last few weeks.
San Diego General Practice
Asking Price: $1,090,000 | 7 OPS | Seller Net Income: $550,000
Building Type: Freestanding Dental Office
Revenue Sources: Mix of Fee For Service and PPO
Summary: This location has been a dental office for over 50 years, is considered a mainstay in the community, and has a stellar reputation for giving high-quality, gentle dental care. Beautifully decorated, paperless, up-to-date practice features seven equipped operatories and high-tech dental equipment. Sign the NDA and receive more information here.
Vista General Practice and Real Estate
Asking Price: $100,000 | Building: $390,000 | 3 OPS | Seller Net Income: $53,000
Revenue Sources: FFS 60%, PPO 25%, Capitation 15%
Building Type: Freestanding Dental Office
Summary: Modest, recently updated, 64-year established dental office with real estate available. If you have an existing practice in the area with a lease expiring soon, bring your patients to this location and merge offices! Sign the NDA and receive more information here.
Chula Vista General Practice
Asking Price: $415,000 | 5 OPS | Seller Net Income: $215,000
Revenue Sources: FFS 55%, PPO 43%, Capitation 2%
Building Type: Medical Complex
Summary: Updated, modern, and paperless 5-operatory practice located in a prominent medical building features stunning picture windows in every operatory that highlight its beautiful surroundings, a large executive office, an open floor plan, and a fantastic reputation within the community. Sign the NDA and receive more information here.
Hollywood General Practice
Asking Price: $625,000 | 5 OPS | Seller Net Income: $310,000
Revenue Sources: FFS 30%, PPO 70%
Building Type: Shopping Center
Summary: Profitable, paperless office features an updated computer network and 4 operatories are equipped with brand new, computers, & monitors. Two of the operatories received brand new chairs, lights & units, and Kavo electric motors and handpieces. Upgrade was completed early 2020 and no expense was spared! Sign the NDA and receive more information here.
Vacaville General Practice
Asking Price: $650,000 | 4 OPS | Seller Net Income: $308,000
Building Type: Medical/Retail Building
Summary: The beautiful office is located in a modern and attractive freestanding medical/retail building within a very busy shopping center with several popular big-box anchor stores. The busy office features 4 equipped operatories, Eaglesoft software, and operates very profitably on an ultra-comfortable 3-day work week! Sign the NDA and receive more information here.
Los Alamitos General and Cosmetic Practice
Asking Price: $1,650,000 | 7 OPS | Net Income: $802,000
Revenue Sources: FFS 63%, Insurance 34%, Care Credit 3%
Building Type: Professional Medical Building
Summary: Stunning, ultra-profitable, one-of-a-kind practice features 7 fully equipped operatories, pano, Dentrix, in a generous 1,950 square feet. The high-end office is full of modern amenities and needs absolutely nothing but a passionate new owner!
The office has a reputation for being the place to go for highly aesthetic cases. They specialize in cosmetic dentistry, as well as Invisalign, implants, and more. Sign the NDA and receive more information here.
Huntington Beach Lease – Two Dental Suites Available
Asking $2,129/month | 3 OPS – Get More Info
Asking $2,789/month | 4 OPS – Get More Info
Summary: The offices are located directly off of the 405 in a very busy retail corridor across the street from the highly-trafficked Westminster Mall. The building sees over 276,000 vehicles per day in this prime location with high visibility and access from Bolsa Ave and Edwards Street.
Once again, Yo-Yo Ma…this time at a Tiny Desk Concert. This is a classic, low-key performance that not only highlights Ma’s musicality, but also his humility and kindness. Enjoy!
Stay safe out there.
Good health and best wishes to you and your families,
Trevor Kimball, PhD
President, Integrity Practice Sales