Addressing Gender Gap Pay: Why Some Employers May Treat Female Providers Differently

Addressing Gender Gap Pay: Why Some Employers May Treat Female Providers Differently

By: Shannon Patterson, CPR, CMSR
Kolbe Certified™ Consultant
Director of Practice Opportunities

During the past few decades, there has been a significant increase in the number of women entering dentistry. While pediatric dentists continue to lead the charge with a whopping 52% of providers being female, the orthodontic industry is also making headway with females representing 31% of the workforce. According to the 2019-2020 Survey of Advanced Dental Education, females represent 69% of all pediatric dental residents and 52% of all orthodontic residents. And for the first time in history, more females (195) than males (193) graduated from orthodontic residency in the United States in 2019-2020.

While we continue to expect the percentage of female providers in these specialties will increase in years to come, what effect has the growth had on gender gap earnings? The answer may surprise you.

According to a 2017 study from the ADA Health Policy Institute, male dental providers earned as much as 54% more than women in 2010. Even after controlling for observable characteristics including age and hours worked, the difference would still be 36%, or what the study’s authors call the “unexplained difference.” The study also looked at wages in medicine and law over a 20-year period. It found that despite accounting for observable characteristics there continues to remain a large, unaccountable earnings differences between men and women among all three of these professions.

Why would there be a gap in earnings between male and female dental providers with similar hours worked, experience, specialty, and practice ownership status? Would a potential employer compensate a female less for the exact same work schedule as her male counterpart? Let me put it this way, would a female provider enter into an associateship or partnership arrangement with less favorable terms than a male counterpart willingly? The answer to these questions may very well be yes.

Studies show that female providers often accept lower compensation packages than their male counterparts, especially in their first job post-residency. Let’s look at some historical data. According to the ADA study, historically, male providers tended to be self-employed (80% compared to 45%) and worked about four hours more per week than their female counterparts did. However, the study also found that by 2010, men and women worked the same number of hours a week and the number of female owners was up to 50 percent while male owners had fallen to 73 percent. If that is indeed the case, why does the wage gap still exist?

The ADA commentary article also referenced the book “Lean In: Women, Work, and the Will to Lead” by Sheryl Sandberg, chief operating officer at Facebook, who writes how women approach work differently than men, particularly when it comes to salary negotiation. The reality is that female providers may simply be less aggressive during contract negotiations and just accept an offer given to them. Women may simply define success differently and money may not be their driving force.

However, there is actual evidence of a wage penalty for motherhood in the workforce. With all else being equal, there is a negative relationship between a woman’s wage and the number of children she has. According to OECO (Organization for Economic Co-operation and Development) data, the penalties averages to about a 7% wage reduction per child. On the flip side there is also evidence of a fatherhood premium; a positive relationship between a man’s wage and the number of children he has. However, when you compare men and women with the same educations, working full-time in the same capacity the gender gap in earnings has largely disappeared. It is often several years after accepting a position and the arrival of children that the gender gap in earnings shows up. If a woman chooses to move to part-time employment in order to spend more time at home it is when she returns to work full-time that she may accept a lower wage compared to the wage she would have earned had she stayed on full-time. It is important to note that if you work less hours you may have less experience and therefore you will possibly see a wage difference.

It is important to remember that, if a female provider works less than her male counterparts, it is reasonable to be paid less. However, if you find that you work the same number of days and hours and you still make less you might consider asking for a higher compensation rate. Remind your employer that you took on just as much student debt as your male counterpart therefore you have the same financial needs.

Tips for advocating better pay:

1. Remember you are always your best advocate. If you don’t stand up for yourself, no one will! Remind your employer that you received the same education, work the same schedule and you should receive the same pay.

2. Don’t be afraid to negotiate for a higher salary before accepting a position.

3. If you have an income guarantee or daily rate gently remind your employer that it should be the same for candidates who have the same experience and work the same schedule. However, if you receive a production incentive it will be up to you produce and meet the pre-determined goals the employer/practice has set.

4. If you are in a group practice be sure that you are seeing as many new patients as your male counterparts so that you can meet your production goals. Understand who and how the new patient exams are scheduled.

5. Know your worth! If you are active in the community and close to referring doctors be sure your employer understands the goodwill and referrals you bring to the practice.

Also, be sure to study up or even consider contacting a career coach on how you can develop and understand negotiation techniques advocating for better pay. Understanding the gender gap in pay has never been more important because the tides are shifting ladies.

Orthodontic Practice for Sale: Texas/Southeast New Mexico

Northwest Texas_Southeast New Mexico - Orthodontic Practice for SaleA busy, two-location practice, focused on the highest quality of orthodontic care with locations in Northwest Texas and Southeastern New Mexico is for sale.

This friendly city is positioned at the crossroads of culture located on the South Plains of West Texas. It’s called home by one of the local universities, legions of musicians, and award-winning wineries. It’s a hub of art exhibits, live music, theatrical performances, and annual festivals. The area has nearly 1,000 restaurants, and it boasts of great eats offering down-home country dining to incredible dishes in a one-of-a-kind atmosphere.

The general area is projected to grow seven percent in the next two years. The cost of living is below the national average providing both employers and their employees the benefit of a higher standard of living at a lower cost than almost anywhere else in the nation. This ‘big little city’ is home to numerous parks; whether you prefer hiking or mountain biking, each mile of the trail located in the canyons, lakes, and parks holds an adventure.

The practice’s satellite location is in a welcoming community located in Southeastern New Mexico – which is part desert, part mountain, and part underground caverns. The landscape of the region is considered the most ecologically diverse in the state.

The city experiences four seasons of weather making the area perfect for any outdoor adventurer. There is an abundance of nearby opportunities for world-class backpacking, mountain biking, fly-fishing, hunting, snowmobiling, camping, and golfing. Many organized indoor activities are available as the area prides itself on having some of the best facilities in New Mexico for children and senior residents. It has been ranked as one in the “Most Affordable Cities in New Mexico” based on its excellent school system, tons of recreational opportunities, great shopping, and dining. The diverse business community is balanced with major stores mixed in with small, individually-owned shops. Ranching and agriculture, oil and natural gas, nuclear, wind, and solar energy production drive the local economy.

Purchase a busy, state-of-the-art, eco-friendly practice while enjoying the conveniences and excitement of a larger city, but with the charm and hospitality of a close-knit community. You and your family will be enriched by interesting people, amazing art, incredible food, and rich history.

To learn more about this opportunity, please forward your CV and letter of interest to shannon@bentsoncopple.com.

Click here to view additional practice opportunities available from Bentson Copple & Associates.

Orthodontic Associate Opportunity: Hattiesburg, Mississippi

Full Time Orthodontic Job - Hattiesburg, MississippiA well-established, practice with multiple locations in Hattiesburg, Mississippi is currently seeking a full-time orthodontic associate.

What do Jimmy Buffett and Brett Favre have in common? Their roots in Hattiesburg, Mississippi, the state’s second-largest city. With its well-preserved historic homes and shaded streets, its Historical Neighborhood District was named one of the “Great Places in America,” to live by the American Planning Association.

The area has a lively music scene and an impressive variety of local eateries – approximately 500 restaurants and more than 200 of them are locally-owned. Hattiesburg has a growing craft beer industry so you can enjoy your brew outdoors or sip in a mellow atmosphere. Shop in its revitalized downtown at one of its vintage boutiques or the Farmer’s Market. Discover the art scene, visit the African American Military History Museum, enjoy a beautiful town park, or spend the day at Hattiesburg Zoo. For outdoor adventurists, bike 42 miles down the Longleaf Trace or canoe at one of three public waterways. Within two hours, you can drive to the Mississippi Gulf Coast or to nearby New Orleans for a long weekend or day trip.

This premier city in the Gulf South host many highly-anticipated annual events and street festivals throughout the year. Live at 5 Outdoor Concerts, Downtown BBQ Showdown, Homebrew Competition, and FestivalSouth are just a few of the most popular events for the residents of the city.

This is a superb opportunity for an orthodontic associate to work and play in an authentic southern city full of contemporary charm and culture steeped in history. The Hub City’s unique mix of retail, dining, and services makes it the perfect place to enjoy a work-life balance while creating beautiful smiles.

To learn more about this opportunity, please forward your CV and letter of interest to shannon@bentsoncopple.com.

Click here to view additional practice opportunities available from Bentson Copple & Associates.

Orthodontic Associate Opportunity: Guilford County, North Carolina

Orthodontic_Job_Full_Time_Associate_Guilford_County_North_CarolinaA well-established, two-location practice located in Guilford County, North Carolina is currently seeking a full-time orthodontic associate.

Seeking big city amenities with southern charm and hospitality? Centrally located in North Carolina’s picturesque heartland, Guilford County is the perfect place to relax and be immersed in arts and entertainment. Beautiful and affordable homes in an array of styles, sizes, and characters reflect a low cost of living for a variety of lifestyles. There’s an abundance of outdoor

activities via its parks and recreational areas for year-round leisure activities – from fishing to biking, to hiking and greenway trails. Within a few hours, you can drive to the Blue Ridge Mountains or North Carolina’s beautiful coastline for a long weekend or day trip. The area’s selection of family-owned restaurants, fine dining eateries, and craft breweries offers something for everyone.

Its rich history has given it many nicknames including the “Gateway City” because of its commercial transportation hubs at Piedmont International Airport, downtown Amtrak stations, and highway and interstate systems.

Additionally, it is referred to as “Tournament Town” due to the many sports tournaments the area hosts including US Figure Skating Championship, ACC Swimming and Diving Championship, and rounds of the NCAA Men’s Basketball Tournament.

This is an opportunity for an associate to work in a practice focused on high-quality, leading-edge care in a welcoming and family-friendly environment. Make your mark and become immersed in the local community in a relaxed urban environment you can call home.

To learn more about this opportunity, please forward your CV and letter of interest to shannon@bentsoncopple.com.

Click here to view additional practice opportunities available from Bentson Copple & Associates.

Orthodontic Associate Opportunity: Columbus, Ohio

Orthodontic_Job_Full_Time_Associate_Columbus_OhioAn amazing, private orthodontic practice located in Columbus, Ohio, is seeking a full-time associate to join their passionate team. This practice desires an associate that is motivated about practicing orthodontics in an environment that offers an exceptional patient journey and a beautiful smile.

Columbus is known as one of the best places to live in the Midwest. Columbus offers residents an affordable cost of living, endless outdoor activities, amazing food, and friendly neighborhoods. It is also known for its unbridled passion for college football, home to the Ohio State Buckeyes. One of the best parts of living in Columbus is experiencing its cool neighborhoods. The Short North Arts District offers some of the best art galleries and public art displays in the city, as well as great food at restaurants. There’s also the locally-beloved German Village, where you can find restored old homes, quaint shops.

If you are a sports fan you might like the Arena District, home to multiple music and sports venues, and dozens of restaurants and sports bars. The state is home to an array of pro-sports teams including the Columbus Blue Jackets, Cincinnati Reds, Cleveland Indians, Cleveland Browns, and the Cleveland Cavaliers. The Buckeye City also has over 350 parks throughout the area, making it a great place for outdoor enthusiasts.

If you are looking to practice in a diverse city with lots of social activity, this opportunity is a perfect fit! To learn more about this opportunity, please forward your CV and letter of interest to shannon@bentsoncopple.com.

Click here to view additional practice opportunities available from Bentson Copple & Associates.

Orthodontic Residents: Don’t Stop The Job Search

Shannon Patterson Ortho Resident Don's Stop The Job SearchIn the latest issue of Orthodontic Products Magazine, Shannon Patterson, Partner at Bentson Copple & Associates, provides advice to orthodontic residents as they navigate the COVID-19 crisis.

No one could have predicted what has happened in the world since mid-March, especially in the orthodontic world. Most offices were experiencing year-over-year growth spurred by advanced treatment technologies and a consumer push for cosmetic dentistry. Overnight we witnessed orthodontic offices across the country shut-down due to ADA regulations and recommendations. Approximately 9,000 orthodontists, their employees, and over 1,000 orthodontic residents are all on pause. Orthodontists who own offices had to make heart-wrenching decisions and tackle mounds of paperwork to apply for the stimulus loan package. Employed orthodontic associates are out of work not knowing if they will receive unemployment or will be rehired at a reduced schedule. Final-year residents who probably had a handful of potential opportunities are now experiencing radio silence on their phones.

There is a lot of uncertainty in the world, and as we watch media coverage of the virus it might feel selfish to be worrying about your potential career. However, the reality is you still need to find a job, and going dormant during this period may not the best scenario for job seekers.

Read the entire article in the April/May 2020 issue of Orthodontic Products.

Video: How COVID-19 is Impacting Orthodontic Residents

Shannon Patterson talks with Orthodontic Products’ Chief Editor, Alison Werner, about how the crisis is affecting residents – including the impact on classes, graduation, and licensure exams. She also focuses on how COVID-19 is affecting their job search and pending employment offers. Moreover, she offers advice to residents about how to manage this time and to established doctors who are wondering if they should be hiring now. Watch The Interview Here.

Orthodontic Associate Opportunity: York, Pennsylvania

Orthodontic_ Associateship_Opportunity_York_PennsylvaniaThe historic community of York, Pennsylvania is located in the heart of the Susquehanna River Valley centrally located from Philadelphia, Washington, D.C., and Baltimore. The residents in York enjoy an array of outdoor recreational opportunities including three state parks, eleven county parks, and a 21-mile biking and jogging path that runs from York all the way to the Mason-Dixon Line. The area is also home to Gettysburg National Military Park and Hershey Park.

The overall cost of living in York is slightly lower than the national average and that in nearby communities. Commuters working in Maryland take advantage of York County’s lower housing costs, with townships in the southern portion of the county serving as bedroom communities for an increasing number of residents traveling as far south as Baltimore. The schools in York County routinely rank among the state’s top-performing districts offers students a top-notch education.

To learn more about this opportunity, please forward your CV and letter of interest to shannon@bentsoncopple.com.

Click here to view additional practice opportunities available from Bentson Copple & Associates.

CARES Act Summary: What All Orthodontists Need to Know & FAQs

CARES_Act_ For_OrthodontistsBy: Doug Copple, CVA & Shannon Patterson, CPR, CMSR
Partners, Bentson Copple & Associates

The guidance regarding the CARES Act and specifically the PPP Loan is constantly being updated. The blog post below regarding the CARES Act and FAQs have been updated in the attached PDF document. Also, below is a link to the Small Business Administration’s Interim Final Rule issued on April 2, 2020, that provides additional guidance on the PPP loan.

Click Here to download a PDF of this article (as of April 3, 2020).

Read the Small Business Administration’s Interim Final Rule (issued April 2, 2020).

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On Friday, March 27th, the President signed the Coronavirus Aid, Relief, and Economic Security Act – or the “CARES Act”. The CARES Act is the largest stimulus package in the nation’s history, totaling approximately $2.3 trillion to assist individuals and businesses in the U.S. Our team at Bentson Copple & Associates has been reviewing drafts of the Act while it was being presented in the Senate and has continued to review it after the bill was signed into law this past Friday. It is an extremely long (880 pages) and complicated bill that provides many incentives and stimuli for individuals and businesses. Below is a summary of the sections that are of most importance to our clients and their teams, followed by FAQs related to the CARES Act and FAQs related to Practice Valuations and Transitions.

Also, please note that all sections of the CARES Act are still being interpreted by experts, and our interpretation and comments below are subject to change as additional information is obtained. Due to the complexity of the Act, all of this information is generalized, and all businesses and individuals that wish to take advantage of the benefits in the Act should consult their personal CPA and/or attorney. There are many other sections of the Act that are not covered below.

Read the Final CARES Act here: https://www.bentsoncopple.com/uploads/CARES_Act_Bill.pdf 

Section 1102: Paycheck Protection Program (“PPP”)
This section (and the related Section 1106 outlined later herein) is the provision most of our clients have heard about and many are asking how they can take advantage of this forgivable loan. This section provides for businesses with less than 500 employees to be provided a loan under section 7(a) of the Small Business Act (SBA) that is guaranteed by the government. If certain conditions per Section 1106 of the CARE Act are met, the loan is forgivable (i.e. does not have to be repaid). These loans are referred to as ‘PPP Loans.’ There are several definitions to be aware of in this section:

1. Covered period is between February 15, 2020 and June 30, 2020, which basically means the loan must be applied for and proceeds disbursed to the borrower prior to June 30, 2020. Although the bill was passed on March 27, the covered period starts on February 15, 2020 because if certain other SBA loans (e.g. an EIDL loan) were obtained prior to the Act going into effect, the bill covers such loans, and these loans may be converted to a PPP loan if certain criteria are met.

2. Payroll costs means the sum of salary, wages, paid time off (vacation, parental, medical or sick leave and severance), group health care benefits (only the portion that is paid by the practice on behalf of employees), payment of any retirement benefit (e.g. employer contribution on any retirement plan), and payment of state or local tax assessed on the compensation of employees. However, the compensation of an individual employee in excess of an annual salary of $100,000 shall not be included in the calculation of the maximum loan amount. Further, it does not include employer paid FICA taxes or taxes withheld on behalf of the employee for the payment of income or FICA taxes.

3.  Maximum loan amount is 2.5 times the average total monthly payroll costs (i.e. all items above) incurred during the one-year period before the date on which the loan is made (but other pay periods can be used in certain circumstances). Thus, if a practice’s total average monthly payroll costs are $50,000, the maximum amount of the PPP loan would be $125,000.

The PPP loan can then be used to pay the following allowable expenses:

  • All payroll costs outlined above.
  • Interest incurred on mortgages (not principal payments) in force before February 15, 2020.
  • Real estate leases/rent on agreements in force before February 15, 2020.
  • Utilities for services in force before February 15, 2020.
  • Interest (not principal) incurred on any other debt obligations that were outstanding prior to February 15, 2020.

To obtain the covered loan, the borrower must make a good faith certification that the business has suffered due to the Coronavirus and acknowledge that the loan proceeds will be used to retain workers and maintain payroll, and make mortgage payments, lease payments, and utility payments. It seems that every orthodontic practice in the country will qualify for this loan due to required shut downs in every state.

There is no personal guarantee for the loan, and the interest rate on the covered loan will be no more than 4.0%.

Interest and principal payments on the covered loan can be deferred for up to 12 months.

Section 1106: Loan Forgiveness
The PPP loan will be forgiven and the borrower will not be required to repay the loan if the funds are used for certain approved purposes during the 8-week period beginning on the date that the loan is obtained. Note that this 8-week period is defined as the “covered period” in this Section 1106. Also, note that the covered period for this loan forgiveness section is different than the covered period for the PPP loan itself. Basically, the PPP loan can be applied for anytime between February 15, 2020 and June 30, 2020 (the covered period for purposes of obtaining the PPP loan). The covered period for the loan forgiveness section means that the funds obtained from the PPP loan must be used on the allowable expenses during the covered period (i.e. the 8-week period after the PPP loan is obtained) in order for the loan to be forgiven.

As long as the PPP loan is used to pay payroll costs, interest on loans, rent, and utilities (electricity, gas, water, transportation, telephone or internet access) during the 8-week covered period, the loan is eligible to be forgiven. However, the compensation of an individual employee in excess of an annual salary of $100,000 is not an allowable use of the loan proceeds that can be forgiven (just as such excess earnings are not allowed to be included in the payroll costs when calculating the amount of the PPP loan).

The amount of the loan forgiveness will be reduced if the number of full-time equivalent employees is not maintained or if employee compensation levels are not maintained. Employees laid off or salaries reduced between February 15, 2020 and April 26, 2020 will not be factored in to the forgiveness reduction above if employee and compensation levels are corrected by June 30, 2020. In general, the goal of the loan forgiveness is to encourage businesses to rehire employees previously laid off/furloughed and/or maintain employee levels and compensation at levels prior to the start of the COVID-19 crises, and if such levels are not maintained, some portion of the PPP loan must be repaid. This is a very simplified explanation – see section 1106 of the Act for details on the calculation.

If the loan proceeds are not spent on approved expenses or employee counts/compensation is reduced below a certain level, a portion of the loan must be repaid and is not forgiven. The amount that is not forgiven must be repaid over a 10-year period with interest accruing at no more than 4.0%. The amount may be prepaid at any time.

The amount that is not forgiven shall not exceed the principal balance of the PPP loan. Accrued interest on the loan is not forgiven and must be paid, although the payment of the interest is deferred for up to 12 months rather than paid monthly.

Unlike all other debt forgiveness, the amount of the PPP loan forgiveness is not included in the gross income of the recipient and is not taxable. 

Section 2301: Employee Retention Credit for Employers Subject to Closure Due to COVID-19
The provision provides a refundable payroll tax credit for 50% of wages paid by employers to employees during the COVID-19 crisis. The credit is available to employers whose (1) operations were fully or partially suspended, due to a COVID-19-related shut-down order, or (2) gross receipts declined by more than 50% when compared to the same quarter in the prior year.

The credit is based on qualified wages paid to the employee. For eligible employers with 100 or fewer full-time employees, all employee wages qualify for the credit, whether the employer is open for business or subject to a shut-down order. The credit is provided for the first $10,000 of compensation, including health benefits, paid to an eligible employee. The credit is provided for wages paid or incurred from March 13, 2020 through December 31, 2020.

Section 2104: Emergency Increase in Unemployment Compensation Benefits
This section does not apply specifically to the doctor, but should be beneficial to practice employees that were or will be laid off or furloughed by the practice. Unemployment benefits (we have seen this referred to as unemployment insurance or ‘UI’) are administered by the states, and the weekly amounts and time periods that unemployed individuals can receive unemployment benefits vary from state the state. The CARES Act increases the time period that an employee can receive unemployment benefits by allowing the unemployed individual an additional 13 weeks of unemployment compensation from the federal government in the event the state does not extend the benefits by such time period.

This section also increases the unemployment compensation by $600 per week for up to 4 months – the period beginning on the effective date the CARES Act and ending on July 31, 2020. For example, if the state unemployment compensation is for 26 weeks at $350 per week, the unemployed individual is allowed to receive $950 per week ($350 from the state, plus $600 from the federal government) through July 31, 2020. The benefit then reverts to $350 per week after July 31, but will extend for an additional 13 weeks beyond the states’ typical 26-week period from the original date unemployment benefits were claimed.

Owner-doctors and family members receiving W-2 wages from their respective S-Corporations or C-Corporations may be eligible for state unemployment benefits. You should inquire with your respective state agency.

Section 2201: 2020 recovery rebates for individuals
This section also may not apply specifically to the doctor, but should be beneficial to practice employees. All U.S. residents with adjusted gross income up to $75,000 ($150,000 married), who are not a dependent of another taxpayer and have a work eligible social security number, are eligible for a $1,200 ($2,400 married) rebate. In addition, they are eligible for an additional $500 per child. This is true even for those who have no income, as well as those whose income comes entirely from non-taxable means-tested benefit programs, such as SSI benefits.

For the vast majority of Americans, no action on their part will be required in order to receive a rebate check as IRS will use a taxpayer’s 2019 tax return if filed, or in the alternative their 2018 return. This includes many low-income individuals who file a tax return in order to take advantage of the refundable Earned Income Tax Credit and Child Tax Credit. The rebate amount is reduced by $5 for each $100 that a taxpayer’s income exceeds the phase-out threshold. The amount is completely phased-out for single filers with incomes exceeding $99,000, $146,500 for head of household filers with one child, and $198,000 for joint filers with no children.

FAQ from Clients on the New CARES Act and Their Individual Transition Plans:

FAQ #1: Does my practice qualify for the forgivable PPP loan?
A: It seems that nearly every orthodontic practice would qualify for a PPP loan because of the ADA’s directive that all non-elective dental procedures be halted and because most states and state dental societies imposed similar shut-downs. All practice types are eligible for the loan – e.g. C- and S-corporations, sole proprietorships, independent contractors and eligible self-employed individuals.

FAQ #2: How do I apply for a PPP loan?
A: The loans will be handled through most traditional banks, and you should first speak with your local banker. As of this writing, there is not a process in place to apply for these loans. The forms to complete the PPP application are supposed to be a simplified 1 – 3-page form. It is also expected that funds will be disbursed quickly once the application is completed and evidence verifying the amount of the loan is provided. Stay in touch with your local banker to determine when the application process can be started.

FAQ #3: What should I do in preparation of applying for the PPP loan?
A: Start speaking with your local bank about the process and when the application will be available. Begin gathering all reports and invoices to calculate the total monthly payroll costs. These will include:

  • Monthly and/or quarterly payroll reports for calendar 2019 and first quarter of 2020 (actual time period used for loan amount calculations could vary per the Act). These reports should provide employee compensation, paid time off, and employer taxes paid on such compensation.
  • 2019 Employees – 1099’s for 2019 employees and independent contractors that would otherwise be an employee of your business.
  • Invoices for premiums on group health plans for 2019 and 2020. You will need to determine the amount the practice actually pays on behalf of the employees (gross premiums, minus the amounts withheld from employees’ pay to cover their portion of the premium).
  • Retirement plan reports for 2019 that detail the employer portion of retirement plan contributions.

By having all of this information available, you can calculate the expected amount of the PPP loan and ensure your application is processed quickly.

FAQ #4: When (or how quickly) should I apply for and obtain the PPP Loan?
A: This depends on your specific situation. You may want to consider waiting to obtain the loan until all stay at home mandates or directives by the ADA, local governments, state societies, etc. are lifted and your practice is allowed to operate freely. This is for the following reasons:

  • With increased unemployment benefits provided by the CARE Act (up to an additional $600 per week in addition to current state unemployment benefits), it may be just as beneficial to your employees for them to receive full unemployment benefits rather than to work part-time in your practice if not truly needed (as this drains your cash balance if little to no revenue is coming in during the mandated office closure). This unemployment benefit extends through July 31, 2020, but the start date when unemployed individuals will receive it may vary from state to state.
  • The PPP loan proceeds must be used during the ‘covered period’ which is the 8-week period immediately after the loan is funded. And, the loan proceeds must be used on allowable expenses, which includes payroll costs. If your practice is not up and running at or at least close to operating levels prior to the Coronavirus-related closures, there is no reason to obtain the PPP loan too early.
  • Practices have until June 30, 2020 to obtain the PPP loan.
  • Thus, waiting until the practice is open again may be the best option because your employees will be taken care of through the increased unemployment benefits, and you can take full advantage of the PPP loan proceeds and loan forgiveness once the practice is operating with a complete (or nearly complete) team.

In any event, you should not delay compiling all of the pertinent data to calculate the loan amount and prepare your application. However, you may want to wait to submit the application and obtain the funds until the practice is open again. One final caveat on timing – our understanding is that approximately $350 billion has been appropriated to support small business, and there is currently no clear guidance as to whether this amount will be extended once utilized.

FAQ #5: Can owners’ compensation be included in the payroll costs when calculating the amount of the PPP loan (payroll costs x 2.5)?
A: This is a bit of a gray area. It appears that owners’ W-2 wages, up to the maximum $100,000 per year, can be included when calculating the maximum PPP loan amount. The owners’ W-2 wages are readily available for practices that operate as S-corporations and C-Corporations. Section 1102(a)(2)(A)(viii)(I)(bb) states that “the term ‘payroll costs’ means the sum of payments of any compensation to or income of a sole proprietor or independent contractor that is a wage, commission, income, net earnings from self-employment, or similar compensation and that is in an amount that is not more than $100,000 in 1 year…” The language does not specifically mention partnerships or limited liability companies (LLCs), although the language “net earnings from self-employment” may cover these types of entities. Thus, it appears that owners’ compensation can be included in the calculation of the maximum PPP loan amount for all types of operating entities, but this must be clarified and verified by your personal CPA or attorney.

Also, we have many clients that operate as a partnership of professional corporations. This is where the operating entity is a partnership or LLC (it collects the patient fees, employs the staff, pays expenses), and this partnership is owned by the individual doctor’s S-corporations. The partnership’s profits are distributed to the doctor’s S-corporations, and the doctors are then paid W-2 wages from their own S-corporations. Our understanding is that the multiple entities will be viewed as affiliated entities for purposes of calculating the payroll costs and the amount of the PPP loan. Thus, the payroll costs for the partnership and the owners’ S-corporations will be aggregated and used in the amount of the PPP loan the operating entity will receive. As with all of these examples, consult with your own tax advisor on your specific situation.

FAQ #6: Can the owners’ compensation be part of ‘payroll costs’ and considered an allowable use of the PPP loan proceeds that will be forgiven?
A: Similar to above, this is a bit of a gray area that needs additional clarification. ‘Payroll costs’ in section 1106-Loan Forgiveness has the same definition as ‘payroll costs’ in section 1102- Paycheck Protection Program. Thus, earnings for owners operating as partnerships and LLCs are not clearly included in payroll costs as allowable use of the PPP loan proceeds.

FAQ #7: I am an S-corporation orthodontist working as an independent contractor for another practice. Do I apply for the PPP Loan or does the practice for which I work apply for the PPP Loan?
A: This is a bit of a gray area in respect to the employer doctor paying the associate’s S-corporation. Our current position is that 1099s issued to a company are likely not includable in ‘payroll costs’ as defined, but that 1099s issued to individuals likely are includable. As noted above, section 1102(a)(2)(A)(viii)(I)(bb) defines payroll costs to include “the sum of payments of any compensation to or income of a sole proprietor or independent contractor that is a wage, commission, income…that is not more than $100,000 in 1 year…” Thus, the amount paid by an orthodontic practice to an independent contractor can be included in the calculation of the loan amount the orthodontic practice receives. Whether an independent contractor that is a company and an independent contractor that is an individual are treated the same remains to be seen.

The employee-entity (i.e. the S-corporation working as an associate through an independent contractor agreement) is likely to qualify for a PPP loan for the wages paid to the owner doctor (i.e. the associate). Section 1102(a)(2)(D)(ii) states: “Inclusion of sole proprietors, independent contractors, and eligible self-employed individuals – (I) In general – During the covered period, individuals who operate under a sole proprietorship or as an independent contractor and eligible self-employed individuals shall be eligible to receive a covered loan.”

Thus, it appears that the S-corporation working as an associate orthodontist should apply for the PPP loan and include the owner’s wages in payroll costs when calculating the maximum amount of the PPP loan. However, in the event the practice for which the S-corporation independent contractor works include such 1099 amounts in the calculation of its PPP loan (and such amount is allowed), it is clear that this amount should not be double-counted so the associate receives the benefit twice (once from its own S-corporation and once from the employer practice). Section 1102(a)(2)(G)(i)(III) & (IV) states: “that the eligible recipient does not have an application pending for a loan under this subsection for the same purpose and duplicative amounts applied for or received under a covered loan; and (IV) during the period beginning on February 15, 2020 and ending on December 31, 2020, that the eligible recipient has not received amounts under this subsection for the same purpose and duplicative amounts applied for or received under a covered loan.”

FAQ #8: I still have student loans outstanding. Can I defer my monthly student loan payments?
A: Section 3513 of the CARES Act includes temporary suspension of payments for federal student loans until September 30, 2020. During this time, interest will not accrue on the outstanding balance. In addition, the payments owed during this period of suspension are deemed paid, which reduces your outstanding loan balance. Involuntary collections related to the loan are also suspended during this time (e.g. wage garnishment). However, these provisions relate only to Direct Loans and Federal Family Education Loans (FFEL loans) that are currently owed by the U.S. Department of Education (i.e. federal loans). It does not apply to private loans. Regardless, loan borrowers should call their lender to verify eligibility.

For dentists who are currently paying down student loans, it’s possible that a private lender may offer the option to refinance your loans at a lower interest rate, providing that you qualify. Since only private lenders offer student loan refinancing, the decision to refinance and move any federal loans will make those obligations private loans. Be aware that those with private loans may miss out on the benefits in the CARES Act outlined above.

Transition Related FAQs:

FAQ #9: How will the Coronavirus pandemic and the mandated closure of my office affect the value of my practice?
A: This depends on many factors. There is no clear answer because it depends entirely on how much longer the pandemic causes practices to be closed and when you plan to sell your practice. If it passes quickly and offices are re-opened in mid to late April (unlikely), it is much more likely that the practice returns to normal, patient flow returns to normal, and thus, the practice value returns to normal. This is particularly true if you do not plan to sell your practice in the near term. However, if the crisis continues and practices are closed for several more months, it could affect patient behavior as more patients may not be able to afford discretionary orthodontic care or they may not be comfortable from a health perspective to have elective dental procedures performed. In any event, we feel time will correct this unprecedented anomaly, and practices will return to normal. How long that takes will obviously depend on the length of the crisis. If you need to sell your practice in the very near term (say, for health reasons), it is very likely that the value will be re-assessed and the purchase price reduced.

We have heard of some sellers wanting to sell in the very near future and are agreeable to a price reduction, but want to include an earn-out provision where the price can be increased to the original value if patient flow and production return to normal. In our opinion, it is unlikely that a buyer who is an individual orthodontist that plans to own and operate the practice him or herself will agree to such a model. They are not willing to include an earn-out that increases the price while they are taking on the risk of ownership and debt in such uncertain times and working harder than normal to rebuild the practice. However, such incentives or earn-outs may be likely in sales to DSO-type buyers or other orthodontic practices where the seller will continue to work for the buyer as an associate and take part in rebuilding and increasing production post-sale.

FAQ #10: If I am a younger doctor and planned to purchase a practice in the near future, what do I do?
A: The short answer is that you must delay the transaction, or consider renegotiating the purchase terms. The fact is that unless you are already approved for the loan and planned to close very soon, you likely cannot obtain financing for a purchase in the current environment (see FAQ on what lenders are saying below). However, in this environment, it is also nearly impossible to find an employment opportunity until practices throughout the country re-open. It is not an ideal situation (understatement of the century, I know!).

FAQ #11: If I planned to bring on an associate or younger partner into my practice in the near future, what should I do?
A: Again, the answer depends somewhat on timing. Many of the partnership transactions we are involved in typically have the younger orthodontist joining the practice as an associate in the summer. The associate will work in the practice as an associate for a year or so and then start buying into the practice. This situation is at least a 2-part question:

First, do you still have the orthodontist join the practice as an associate this summer? Depending on the size of your practice prior to the mandated closures (bigger practices can obviously handle a downturn and still take on an associate), your relationship with the planned associate (e.g. family member or great friend whose joining has been planned for a long time, vs. a casual relationship where each party wanted to test the possibility of a partnership), and your individual situation (Do you need a partner? Are you adding an associate to slow down and provide more flexibility? Can you take an income hit while the practice rebounds?), your decision to add the associate will vary greatly, and it will ultimately be up to you as to whether you want to proceed with the association period or not. We can only prompt you to contemplate the questions you need to consider to help you make your decision.

Some of our clients are proceeding with adding the associate, but at a reduced schedule and reduced pay until the practice rebounds. Also, the promise of a partnership is dependent almost entirely on the practice returning to its former production levels. This is because a partnership plan may not work if the practice declines rather than grows. One of the primary reasons our clients add a partner is because their practice is growing too much for them to handle by themselves. If growth is questionable, the partnership plan may no longer be viable purely from a financial and business standpoint.

The second part of the question is whether the partnership plan needs to be altered, or practice value decreased based on the current crises and temporary office closure. In general, our opinion in a partnership transaction is that the plan that has been created and agreed upon by the parties (or what the seller has been expecting if the plan has not yet been presented to the future partner) should not be altered materially. It may be best to delay the start of the buy-in/partnership rather than materially alter the terms. This is because, as stated above, most owners only entertain partnership transactions for specific reasons – most often that the practice is growing and adding a partner will allow the practice to continue to grow. If the Coronavirus crises causes the practice to decline and creates concern for future growth, the current owner will most likely only delay the plans rather than accept a materially lower price or enter into a partnership that simply decreases their compensation. By definition, when selling an ownership interest, the owner is giving up a portion of the future profits. If future profits are expected to be less than historical levels, the current owner is much less likely to want to give up the future profits. Time should allow the practice to return to normal, and a seller is not willing to accept a lower price or agree to concessions based on a short-term, once-in-a-lifetime anomaly that temporarily affects the practice’s operations and value.

We can discuss your individual transactions at your convenience as your specific situation and goals for considering the partnership in the first place will help guide us in deciding what to do.

FAQ #12: If both parties want to proceed with a transaction (whether a 100% buy-out or a partial buy-in and partnership arrangement), are banks still lending in the current environment?
A: We have spoken with several large dental lenders, and they are very cautious at the moment. They are still accepting applications for acquisition loans for future transactions, but most have halted closings that were planned to occur in April and May. They want to see when practices are allowed to re-open and see if patient flow returns to normal. Most lenders are also allowing current clients (e.g. a borrower who purchased a practice in the past and still has an outstanding acquisition loan) interest-free 90-day deferral on loan payments. New buyers would also need 90-day payment deferrals. Thus, it makes more sense to delay the transaction rather than close on the deal in the current environment. The lenders will also likely become stricter on borrower liquidity requirements, meaning the borrowers will need more savings, possibly up to 10% or more of the requested loan amount, and less credit card liabilities to qualify for future loans. The current crises may also mean that smaller, local banks are less aggressive in pursuing dental transactions going forward.

FAQ #13: I am a non-owner associate in an orthodontic practice and have been furloughed with no pay. What do I do?
A: The reality is that you are an employee (or independent contractor) just like every other practice employee. And, just like every other practice employee, when the office is closed, there is no work to do and you will most likely not be paid unless the owner makes a personal and discretionary decision to try to pay employees as future revenues dry up. Many associates have made the point that orthodontic practices are still collecting monthly revenue through automatic drafting of patient’s monthly fees. This may be true, but you have to realize that the offices are required to be closed per ADA guidelines and often state mandates. New case starts are not occurring, and it’s unclear when normal operations will resume or if monthly revenues will continue. Orthodontic practices, like any other business suffering from this crisis, must make a business decision on how to allocate resources and stretch their remaining cash balances to pay bills and ensure they can survive this crisis and eventually re-open. As an employee, you are eligible to file for unemployment to receive unemployment compensation (see summary above re: Section 2104 of the CARES Act) that will provide you some financial relief until the crises is over.

If you are an independent contractor rather than an employee, you may still be able to file for unemployment benefits under the expanded unemployment laws per the CARES Act.

Finally, the practice for which you work may be able to obtain the forgivable PPP loan and use a portion of the proceeds pay a portion of your salary and benefits once obtained. Also, see FAQ #7 above.

FAQ #14: What if I have accepted a job that starts this fall but I still need to take a licensure exam?
A: Due to state’s actions to slow the spread of COVID-19 many examinations are not being administered, and most testing agencies have postponed all school-based examinations starting March 16th until May 1st. At this time, the schedules of examinations for most agencies outside of the affected date window will not be impacted unless requested by the schools.

Most agencies will continue to monitor developments during this time and will continue to maintain flexibility for candidates with patient cancellations, and candidates will not be penalized or charged for patient cancellations during this time. Additionally, if testing sites are required to cancel or postpone examinations, most agencies will work with programs and candidates to provide an opportunity for the affected candidates to reschedule.

Most testing agencies are providing updates on their websites stating that information is subject to change at any time.

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Doug Copple, CVA is a Parter at Bentson Copple & Associates, LLC. Doug is a member of the National Association of Certified Valuation Analysts (NACVA). He ensures the firm’s practice valuations are properly performed and adhere to generally accepted valuation standards. Doug is also integral in structuring and negotiating orthodontic partnerships and purchase transactions and the related tax and structural issues between buyers and sellers.

What Are the Steps to Land the Perfect Orthodontic Career Opportunity?

Step to Find the Perfect Orthodontic Career Opportunity or Orthodontic JobBy: Shannon Patterson, CPR, CMSR
Kolbe Certified™ Consultant
Director of Practice Opportunities

I am very fortunate to have the opportunity to speak with hundreds of orthodontic residents every year who are looking for the right opportunity after their graduation. One of my first questions is, “Why did you want to become an Orthodontist?” I hear various answers every day as a recruiter but many times I hear this one, “Because I had an amazing experience with my Orthodontist.” So, you’re telling me that your experience with your childhood orthodontist was so awesome that it inspired you to travel this long, difficult academic path? Wow, it gets me right in the heart every time. And it’s that connection that as future practitioners you all want and desire to have with future patients whether it is in a private practice, group practice, or corporate model.

My next question is usually, “Where do you want to land and where do you see yourself in five years?” I don’t usually hear as much excitement, and often I hear confusion and concern. The answer to this question often sounds something like this: “I don’t really know I just know I want a good job to start paying off my debt.” I don’t blame you for not knowing the answer. After all, how can you know if you’ll be happy in your future job five years from now?

Well, lucky for you, I absolutely love what I do, and when you love what you do you have a passion for helping others. Most of you have identified your passion, now you are looking for a place to combine your passion and a career. Every day, I counsel candidates on what factors they should consider when seeking an opportunity. Through trial and error and knowledge gained from many candidates through the years, I have found these steps to be helpful as you narrow down your job search.

1) Know Who You Are!
We all want to get paid for doing what we love, but be sure to understand who you are and the must-haves before deciding on a job opportunity. What are your beliefs and values? Does this opportunity and community align with them and will you be able to fit into the practice and community cultures? Identify your practice values, your personal values, your interests, your “must-haves” in a community, your passions, and last- your financial needs. Yes, I said consider money last because, believe it or not, most people do not leave their current job due to money but often due to “it’s just not a good fit for me.”

2) Identify the Right Practice.
As residents, you might often hear “beggars can’t be choosers,” and with the debt load most residents carry, who can blame them? However, be sure to do your homework on a potential employer, as this person will be tied to your career forever. Be sure to spend a day with a potential practice or employer and witness the practice culture, sit in on new patient exams, watch how the reception area greets patients and watch the clinical team working with patients. I can assure you that all of these, and I mean every single one, will have a huge impact on your success. If a potential employer has an issue with you spending a day in the office, this could be considered a red flag, especially if you are being paid on a production incentive.

3) Find a Good Mentor.
First, do not ask a stranger or someone who does not know you well! A great mentor should be someone who inspires you and who already knows you. This person has seen your potential and hard work, they know how you think, how you communicate, how you tackle tasks and how you contribute to those around you. It should be someone who trusts you and believes in you, but, most importantly, it should be someone who is not afraid to give you input and feedback! Identify and join social media groups and blogs with other young orthodontists to hear their perspectives and voices as a resource in your career; Ortho 101 is a great one.

4) Practice Perseverance.
What is the definition of perseverance? Perseverance is commitment, hard work, patience, and endurance. There is an old saying, “do what you love and you’ll never work another a day in your life.” Is that really true? Probably not, but if you do what you love, it will never feel like a job. Success takes hard work, commitment, and persistence. All of you are talented and skilled clinicians, and with connections and a little luck you might find a good opportunity, but persistence will ultimately be what makes you successful in your career and is what will set you apart from others. Identify your vision and know that it will take stamina and endurance to get there!

A job search requires commitment and dedication. Making a career plan requires you to outline clear expectations and objectives. It means going back to the basics, discovering your likes/dislikes, values and beliefs and taking them all into account for a job opportunity. Even if you don’t land your dream job and you have a short-term opportunity, stay committed to your long-term career goals.

It will take time and effort but in the end, it will be worth it. And for those of you who are looking for that new key phrase “work-life balance,” I believe it is important to understand that your job will ultimately take up most of your time; it financially supports your dreams and it is a core part of your identity. If you simply live your life, love what you do and do your very best at it, ultimately you will achieve great success!