What Every Dentist Should Consider Before Hiring An Associate

Adding an associate dentist to your practice might be appealing because of the potential upside in business. Even before thinking about adding an associate, you need to do some careful financial due diligence and planning to make sure it works for both your practice and the associate. It’s important to understand upfront – any new associate requires considerable investment of both your time and resources. If you’re looking for an immediate reduction in work hours or a quick way to sell and transition your practice – this might not be your best option. You need to make sure your practice will grow and increase profitability by adding an associate. Here are some helpful tips to determine if your office is ready to support an associate dentist:

Know Your Numbers
The basic rule of thumb for a general dental practice to support an associate dentist requires –

  • Minimum of 2,000 active patients
  • Hygiene booked 4-6 weeks ahead
  • Financial ability to subsidize 6-12 months associate salary

Know upfront, practices typically take a financial dip after hiring an associate. And if your practice is not financially prepared to handle this addition, it will have a negative impact to the bottom line. Even experienced dentists need time to ramp-up and build their practice. Always carefully monitor and advise an associate during any trial period.

To breakeven after adding an associate requires three times their salary in production. Expenses (increased overhead & benefits) can quickly get out-of-hand if an associate doesn’t meet set production goals.

Know What You Want
It makes sense to find an associate who provides procedures that you can’t provide or consistently refer outside the practice. Keeping that business will help grow the practice. For example, if you’re not comfortable or highly skilled at endodontic procedures, find an associate who can serve both your endo & general patients. Carefully determine how many endo cases you refer each year. If it doesn’t mandate hiring an endodontic specialist, continue business as usual. But if you see a significant amount of business going out the door, it makes sense to bring on an endodontic specialist.

If you have at least two crown or endo equivalents per day, plus additional smaller procedures, your practice could handle an endodontic associate and make money.

Know If You Fit Together
Undoubtedly the most difficult part of hiring an associate is matching dental care philosophy and personality. Make sure you really consider how well an associate will interact and work with you, your staff, and your patients. Ask yourself if the prospective associate fits your practice “culture.” And, make sure they have the personality and drive to help you grow the practice – as this is why most patients remain loyal. Remember – you will be working closely with this doctor and financial success depends upon a successful working relationship.

Establish a Trial Period
Before committing to any associate employment agreement, negotiate a trial period of 60 to 90 days. This benefits both parties – providing each of you the opportunity to see how things work with a professional way out if they don’t. It also provides peace of mind and reassurance before agreeing to a long-term employment contract.

Know Associate Employment Options
After careful review of your finances, long-term practice and retirement goals, you need to determine how to structure your associate working relationship.

There are three basic structures –

  1. Employee – Hiring an associate, as an employee is a great choice if you want to stay in your practice for 10-15 years. It can help grow your practice without long-term commitments or partnership share of the profits. It’s important to have an employment agreement that outlines your expectations, perimeters and practice buy-in options.
  1. Buy-In Partner – Employment with transition into gradual buy-out of your practice. The associate could make a financial investment into the practice over an agreed period of time with a final buy-out upon your retirement. This could be a win-win for everyone if your associate helps grow the practice and has the necessary financial resources. Be sure to carefully review associate’s financials upfront to ensure any buy-out terms can be met upon transition of your practice.
  1. Independent Contractor – These dentists are looking to share office space and resources of your practice. They provide their own equipment, supplies, staff and patients. They pay you a fee to use your office space plus a mutually agreed upon percentage of their total revenue. Benefits and taxes are negotiable. In this scenario, you want to be careful to clearly establish a contract agreement that guarantees time commitment, shared expenses & rent, plus financial terms.

Know Associate Terms & Compensation
Make sure you establish an associate agreement (contract) that clearly outlines their duties, responsibilities, and compensation. Some associate compensation agreements are based upon new patient collections or profitability. Other agreements provide a guaranteed salary with bonus based upon new business. Either way – you need to clearly outline all employment terms and compensation in writing before the associate begins working full-time for your practice. Also, make sure your agreement has a negotiable renewal term based upon performance and mutual agreement. You don’t want to have a contract that goes on forever. For example, if an associate decides to leave, you want reasonable notice – 60-90 days is industry standard.  Make sure you also have a termination clause that protects both you and your practice.

Protect Your Practice
Your practice is based upon your reputation and goodwill with your patients in the community. Make sure you legally protect this asset by including a non-compete and non-solicitation stipulation in your associate employment agreement. If your associate decides to leave the practice, you need to make sure your patients are not solicited or stolen. Some states don’t allow non-compete restrictions. It’s important to makes sure the goodwill of your practice is legally protected. That’s allowable in all states.

Know How = Ability & Stability
Do your due diligence to determine whether your practice is financially able to support a second dentist. Then figure out how you want an associate to strategically fit into your practice, i.e. -maintain current patients, grow patient base, provide specialty services, community outreach, etc. This helps protect your practice and patient base because you’ve structured an agreement that ensures a win-win working relationship for all parties involved.

As seen on DentistryIQ