21 November 2016

Dentistry From One to Five Offices: Part 1 – Why?




Part 1: Why would anyone want five dental practices?

November 2016 – Q & A with Pete Newcomb

Is dentistry an art, science or business? At DTSpade, we’d argue that it is all three.

But every Client decides how much time they can allocate to each. Do you invest in getting better at your craft? Do you invest in the newest equipment or staff training? Do you invest in improving operations, speeding collections or negotiating with insurance?

At best, a single physician can do one or two well. Larger practices can invest in talent to delegate, but that brings another set of challenges. Single physician practices that maintain high standards of customer care are not at any more of a disadvantage than multiple practice operations that sacrifice personal attention.

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21 November 2016

Lease Satisfaction Scores Tougher than CMS’




How FASB and debt markets will grade healthcare organizations’ leases

  • Because of the prevalence of capital leasing for many companies, FASB and IASB have amended accounting guidance (ASC 842) to provide more reporting on lease transactions.
  • IASB and FASB differ on how operating leases will be disclosed and valued on the financial statements. For this purpose, we will focus on the FASB guidelines.
  • The new accounting standards require organizations to recognize all lease obligations (over 12-months) on their balance sheets, to ensure greater transparency in financial reporting.
  • Healthcare providers will need to begin monitoring the potential effect of these changes on their debt-to-capital ratio and related debt covenants.
  • Regulations take effect in 2019 and 2020, but back reporting begins in 2017 (for public companies) and 2018 (for private, non-profit and government organizations), so time is short to understand and manage implementation.
  • Hospitals and health systems will be particularly affected by the new reporting standards due to the capital-intensive nature of healthcare service delivery.
  • Missteps in managing this change can result in loan covenant defaults, souring investor sentiment and/or failure to meet benchmarks.
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21 November 2016

Public Works Can’t Clean up this Mess




How the leases you sign may affect bond ratings

  • FASB and IASB have amended accounting guidance (ASC 842) to provide more transparency for lease transactions.
  • Breaking with tradition of adopting FASB standards, GASB appears poised to adopt the IASB single-lease approach over the FASB method.
  • If that happens, the new accounting standards will require governments to recognize all lease obligations on their balance sheets and monitor the effect of these changes on their debt-to-capital ratio and related bond covenants.
  • GASB has not yet ruled, but evidence suggests that reporting will begin in 2020 (with back reporting beginning in 2018 for most private, government, non-profit agencies).
  • This change is an opportunity to better manage accounts payable for leases and communicate to the market a mastery of good financial governance, or a risk that could negatively affect debt ratings, cost of debt and the availability of credit.
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21 November 2016

No More Leases in the Junk Drawer




How FASB has changed lease accounting and performance bonuses at the same time

  • Because of the prevalence of leasing for many companies, FASB and IASB have amended accounting guidance (ASC 842) to provide more reporting on lease transactions.
  • The new accounting standards require organizations to recognize all lease obligations (over 12-months) on their balance sheets, to ensure greater transparency in financial reporting.
  • Companies will need to begin monitoring the potential effect of these changes on their debt-to-capital ratio and related debt covenants.
  • Regulations take effect in 2019 and 2020, but back reporting begins in 2017 (for public companies) and 2018 (for private, non-profit and government organizations), so time is short to understand and manage implementation.
  • This change is an opportunity to better manage accounts payable for leases and communicate to the market a mastery of good financial governance.
  • Missteps in managing this change can result in loan covenant defaults, souring investor sentiment and/or failure to meet benchmarks.
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1 September 2016

Who’s got a better multiple than Waze? Your Own City.




  • Technology, implementation of that technology and viable financial business models are beginning to align for governments to capitalize on new opportunities.
  • The influx of residents to city centers provides challenges to infrastructure, but also opportunities to mine and monetize data.
  • Traffic continues to be the greatest pain point for residents but also opportunity for relief by utilizing aggregated data.
  • Open Data has unlimited potential to improve cities, offering significant economic value to the community and private investors.
  • The current Achilles heel of Smart Cities is clarity around creation of a viable financial business model that balances the privacy of the citizenry, with an economic return to all parties.
  • Public-Private partnerships appear to be the clearest path forward.
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19 August 2016

Charity Begins at Home




What is the proper response to life-long lagniappe?

I’ve got family on my side and my wife’s side in rural America. When I tell them that my main business is representing healthcare organizations and governments in real estate lease negotiations, I can tell what they’re thinking: You really get paid for that?

We take it for granted, but commercial real estate brokerage is a great business. It isn’t very capital intensive. There’s rarely pressure on commissions, everyone (usually) understands the model and it is (almost) infinitely scalable.

As an SIOR, a leader in the market, and business owner, what is the proper response to that? One option is to be thankful to live in a time and place where this business is possible. Another is to milk all you can out of a good situation. A third is to look for opportunities to share some good fortune through charitable giving.

I’d like to propose a few other options that perhaps hadn’t occurred to you—at least initially. I’d like to propose using our gifts within the community, within our organizations and within our households.

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1 August 2016

Urbanization in Georgia: How it’s Changing Atlanta and Other Cities Across the State.




  • Real estate needs and decision-making are evolving in response to urbanization
  • The preference for more urban living among both millennials and baby boomers, combined with city-center gentrification, has stimulated demand for urbanized suburbs.
  • The generation of people that are embarking on their careers right now are the millennials who want to live close to work, and more employers are responding to these demands by providing work environments that are more walkable, vibrant and close to amenities.
  • Mixed-use is becoming the new standard in urban development.
  • Access to public transit is a strong driver of company relocations and new office developments.
  • People today spend less time working their desk, which has driven the square footage needed in office space down.
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18 July 2016

More Doctors Signing Fewer Checks




Georgia gains on shifts in physician employment models

  • Inelasticity in demand, an aging population and changes in healthcare policy have led to steady and continued growth in healthcare employment—outpacing total non-farm job numbers and wage growth through 2024 for most industries.
  • Georgia will be an acute winner due to availability of workforce and a growing population.
  • Physician demand is strong, but lack of supply will require technology implementation and improved employment models.
  • This will increase the need for physician assistants or nurse practitioners to fill the gap.
    Capital seeking healthcare consolidation provides physicians security of employment, if they want it.
  • Factors to watch carefully are:

1. Lifting of uncertainty within the market,
2. Flow of capital toward and away from healthcare consolidation,
3. Technologies that remove the complication from medical billing,
4. Compression of physician pay and/or improving hospital profitability.

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27 May 2016

Human Resource Planning for the Unplanned – How North Carolina Has Prepared for the Next Generation of Government




Best of Series – Part 1

  • Baby Boomers are reaching the age of retirement at record rates and by 2025 Millennials will make up three-quarters of the American workforce.
  • Because employees within Government positions are older on average, the public sector needs to have workforce planning in place to transfer vital knowledge before it is lost.
  • Millennials are looking for opportunities where they can make a difference, are motivated by empowerment and consistent feedback, and value a work-life balance.
  • Georgia has shown a 27% increase (year over year) in public sector retirements – significantly higher than other states in recent years.
  • In order to compete with the private sector, State and local agencies will need to look for effective ways to not only recruit, but develop and retain a new generation of young talent.
  • The State of North Carolina offers several best practices in many of these areas through enhanced postings on GovernmentJobs.com, their Young Employees Initiative (YEI) and the North Carolina Valuing Individual Performance (NCVIP) programs.
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16 May 2016

Warren Buffett Wants to Make You Better in 2016




What I learned from the Berkshire Hathaway 2015 Annual Report

  • Tenor of American politics diminishes great advances in the U.S.
  • Investment strategies of adding to existing business lines and underwriting risk based on actual default risk as opposed to competition still work and should be encouraged.
  • Accurate accounting shouldn’t disregard relevant charges in favor or EBITDA valuations.
  • Success comes from staying in your lane. For Berkshire, this means friendly acquisitions, large purchases and partnership with like-minded long term holders of companies.
  • Burlington Northern Santa Fe, Insurance and Clayton Homes business all improved in a diminishing market, but conditions for the insurance market look difficult in the next ten years.
  • The shareholder meeting will be simulcast for the first time this year. Details are below.

 

Executive Summary

Warren Buffett, inarguably one of the most successful investors in history, released his annual letter to the shareholders of Berkshire Hathaway in late February 2016.  The annual report he publishes through his conglomerate, Berkshire Hathaway, is one of the most highly anticipated and widely read in the financial world.

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