A common issue that all dental practices must address involves how to effectively organize and maintain their records and files. One of the most efficient solutions is for the practice to develop and implement a formal policy for record retention. A record retention policy can help a dental practice streamline business, employee, and patient procedures, as well as alleviate stress in the event of any litigation or an IRS tax audit. Furthermore, having a formal record retention policy can improve the overall efficiency of a practice, helping to ensure compliance with pertinent federal and state law. This article is intended to provide a broad overview of effective record retention policies and to answer some common questions that a dental practice may have.

What is Record Retention?

One of the keys to running a successful business or dental practice, as well as avoiding any potential liabilities, is records management. In the past, businesses would either ship obsolete documents and records to an offsite storage facility or simply destroy them. Today, smart businesses recognize the importance of managing a record from the moment it is created, which helps improve overall efficiency and can be the saving grace should the business undergo an audit or litigation. A proper record retention policy should cover everything from business and financial records, to employment and patient records.  Having a consistent and reliable method of retaining your records can both strengthen your dental practice and prevent future headaches. This is where a formal record retention policy can help.

From a practical standpoint, a record retention policy makes sense. Organized business records can help determine the effectiveness and efficiency of your dental practice, ensuring the practice is not overspending or being wasteful. Further, even though no one likes to think about being examined by the IRS, an audit is always a possibility. Having a record retention policy can alleviate stress and reduce the burden involved with the examination process. Finally, in the event of litigation, detailed employment and patient records will help protect you, your dental practice, and your patients.

When starting to think about implementing a formal records retention policy for your business or practice, you may have some questions. Common questions we receive regarding record retention deal with why, what, and how long records should be kept.

Why Keep Records?

Whether or not your practice has adopted a formal records retention policy, federal law may compel your practice to comply with certain regulations. Additionally, there are a multitude of practical reasons why you should maintain your records, such as to help prepare your tax returns, protect your dental practice from litigation, and to protect your patients’ confidences.

Nardone Limited Comment: The proper retention of a document can save a dental practice and a particular dentist from much heartache when it comes to a potential dental board investigation, IRS or state taxing authority audit or examination, litigation, or some other form of controversy. It is always better to rely on written documentation, versus your memory or the oral representation of a third party. Neither a court or a third party is going to care what someone orally communicated to you five years ago, if you do not have written documentation to back it up.

What Records Should I Keep?

When it comes to developing a records retention policy, Nardone Limited takes a broad, conservative approach. With the readily available technology of today, almost every piece of paper can be reduced to an electronic record. Therefore, we feel that there is nothing to prohibit a dental practice from effectively organizing and retaining all of its business records.

We do realize, however, that it may not be feasible for you or your dental practice to retain every single document indefinitely, so we encourage our clients to create a customized records retention policy, tailored to the needs and circumstances of each practice. We have adopted an approach for creating an efficient policy by organizing frequently encountered records into four categories. The categories are: (i) Business Records, (ii) Tax and Financial Records, (iii) Employment Records, and (iv) Patient Records. Since the law does not require that all records be retained permanently, these categories provide the shortest periods allowable by current state and federal law, and serve as the foundation for a customized policy for your practice.

With that being said, determining what to keep, and for how long, will depend on how your particular dental practice operates, as well as a variety of other factors. In many instances, the facts and circumstances of a particular dental practice will cause records to be maintained for different amounts of time.

How Long Must I Retain My Records?

We generally recommend that all records be retained permanently. If permanent record retention is not feasible for your dental practice, however, our dental attorneys will work closely with you to create a customized record retention policy that provides acceptable minimum periods of retention. The length of time you should keep a document often depends on the action, expense, or event that the document records. In implementing a records retention policy, it is also important that a dental practice conduct an annual (or more frequent) file clean-up to dispose of expired or unnecessary documents, as well as to organize the existing records and files.

Implementing a formal record retention policy will streamline your dental practice’s day-to-day operations and ensure that you are avoiding potential liabilities. Every file, record, and document should be accounted for, from the moment it is created and until it becomes obsolete. Following this formula will improve the overall efficiency and success of your dental practice, while preventing future headaches.

About the Author

Will Gutmann is a Tax Clerk at Nardone Limited. He is currently a JD candidate at Moritz College of Law at The Ohio State University in Columbus, Ohio.