How it began and how you can do it too!
by Joseph P. Graskemper, DDS, JD
With the economy in slow mode, many practitioners have turned to expanding the services they offer by bringing a specialist into the office as an associate. Having one of the first truly fee-for-service multispecialty practices in southern California for almost 20 years (1979 to 1996), I can attest that it is a remarkable way to practice, but is not for everyone.
The practice in which I was the sole owner had 10 chairs. My specialist associates consisted of a periodontist/implantologist, endodontist, orthodontist/pedodontist, an oral surgeon/orthodontist, and a prosthodontist. I was the only general dentist. This allowed complete all-phase dentistry to be completed in one office. Many times two specialists and I would provide treatment for one patient at the same visit due to the complexity of the case and the distance traveled for some patients. But let’s start at the beginning and see how to morph a general practice into a premier multispecialty practice, where approximately 30% of the patients come from other countries for treatment.
As my general practice grew, I did a wider range of treatment, after which most treatment was performed within the office and little referred to specialists. Over a period of several years, I employed several general dentists who came and left for many different reasons. After several years I grew tired of the rotation of general dentists and I decided to find a new practice model in 1984. There was no role model or practice/business model to guide me through my situation. The solo group model did not fit since I was not interested in having practices within a practice. So through many trials, a new concept was born — the multispecialty practice. I began with a periodontist and added specialists as the practice could support each addition. Along with each specialist, staff had to become more proficient in the needs of the various specialties. This also brought new problems that needed to be addressed. With the addition of the associate-specialist, careful attention was given to IRS independent contractor status. (To be discussed later)
General dentist is team leader
Before I get too far, first and foremost, the general dentist is the team leader in that he or she must have great technical, diagnostic, and communication skills. To begin, the general dentist, usually the owner in such a situation, needs to have the office space to accommodate a multispecialty practice. Also needed are the patients to fill the schedules of all the dentists involved. So where does one begin to bring life to such an endeavor? Through the right location.
The ideal location would be on a major roadway or other location that has easy access and visibility. Being hidden in the fourth floor in a large office complex to start a multispecialty practice is a large hurdle to overcome. The next step is to have the space for growth. Having 10 chairs may be a little much while a minimum would be six, with one to two for hygienists, one to two for general practice, and the rest for specialists. However, if you plan on having orthodontics or a large pedodontic patient load, then a minimum of a two to three chair open bay is needed to accommodate it. One of the specialty rooms should be large enough to allow for sedation equipment and additional personnel for general anesthesia in the event an oral surgeon is added. The actual design to facilitate proper staff and patient flow throughout the office is beyond the scope of this article.
Now that the office is open in a great location, proper professional and ethical marketing should be initiated. If you are the creative type, think of some ideas that would be marketable, write them, draw them, and take them to where you plan to promote your practice. Most magazines and newspapers have great staff able to put the finishing touches on your ad.
Hiring the specialists
As the practice grows, the first specialist to incorporate is the periodontist because most adult patients will have a need for periodontics and/or implants. With the periodontist, there should an increase in hygiene appointments due to the need for three-month periodontal maintenance visits following scaling and root planning or periodontal surgery.
The next specialist to join the group would be an orthodontist or endodontist. Again, if an orthodontist is added, be sure you have the physical layout for him or her to make that part of the practice efficient. The endodontist will need a large enough room to accommodate an intraoral microscope. He or she will most likely only need one room to meet patient load. Many general dentists are fairly proficient in endodontics. However, if you incorporate an endodontist, I highly recommend that even if you are well within you abilities to treat some endodontic problems, refer all endodontics to the specialist except procedures to alleviate pain. Then temporize and refer. The endodontist’s schedule will become filled quickly and you may be able to give more time to the procedures you prefer.
As the practice grows, the addition of an oral surgeon may well benefit the group. With oral surgery, certain upgrades are needed due to general anesthesia now being used within your group practice, such as the recovery area, crash cart, and state licensure. When I added the oral surgeon and other specialists, there was always discussion of who would be doing the procedures that cross over to other specialties, such as implant placement/restoration, minor tooth movement, and more. For continuity of treatment and a mutual practice philosophy, I have found it is best that those crossover procedures be openly discussed and delegated to one or the other specialist.
Depending on the interests of the general dentist, a prosthodontist may also join the group. However, remember that patients are very aware of fees. If two dentists, one being a specialist and charging significantly more, are providing the same procedures, some patients will gravitate to the less costly. This undermines the effectiveness and potential of having the specialist.
Some of the specialists that joined my group practice also had their own practices and used my office as a satellite office. Others worked in several offices. All associate specialists were part-time in accordance with the IRS criteria at that time. All the specialists were required to have a contract so as to not have any misunderstanding of what each party was responsible for. I found after much trial that it is best for each specialist to provide those instruments particular to his or her specialty. This helps fulfill the IRS criteria, as will be pointed out. Otherwise the owner dentist will become a dental supply house as specialists come and go and have different instrument needs to provide the same specialty procedures. I once had an orthodontist, a dental school faculty member, who when he left provided a graduating orthodontist to take his place. To my surprise he had different instrument needs than the faculty member that taught him!
Also, I highly recommend that you employ specialist associates directly and not simply with another specialty group or practice. Again, continuity and practice philosophy may differ greatly, even among partners of the same practice. The original composition of the practice will change every time a new specialist is added or replaced. One specialist may recommend to the patient to save the tooth, while the other specialist may recommend it be extracted. The patient is then confused as to whose recommendation to follow. This type of situation does not occur often but when it does the owner/general dentist has a lot of communicating to do with the patient. Even when employing the dentist directly and not just from a specialty service group, these types of situations occur. But it is much easier to deal with as an owner since there will be a better understanding of the practice’s philosophy with an individual than with a group.
What to include in the contract
Besides the normal verbage, the contract should also mention the non-compete/restrictive covenant, the manner of payment, and what is the specialist is expected to provide. A complete discussion of the contractual issues is beyond the scope of this article. Nevertheless, some mention is needed to understand the need of such a contract. Non-compete or restrictive covenants are not a major concern, but things can go sour when the specialist opens an office one block away, and all the orthodontic or periodontic patients leave the group practice. The non-compete/restrictive covenant needs to be reasonable in distance and length of time and abide by current state laws. I have found payment is best if based on collections. To base such payment on production is very difficult for the owner dentist because it is hard to pay the specialist on production when full payment has not been paid due to numerous appointments for a procedure (this can obviously be broken down to each appointment), delayed insurance payments, patient payment plans, credit card programs such as M/C, Amex, CareCredit, and their discount rates, etc. Payment should be made bi-weekly or monthly and contain a printout of treatment rendered and payment applied. There will be patient cases that see all the dentists on several appointments. In these cases I suggest that payment be based on first in time treatment in deciding who gets paid first.
The big question from every associate I have hired is how much am I going to get paid. There are many formulas and ways to compensate an associate — per diem/hourly, production, and collections, to name a few. I found through trial and error by both parties that a 45% to 55% works well. The exact percentage depends on the overhead of the practice. However, good people do not work for free. The owner dentist supplies all bookkeeping, charting materials, reception/scheduling, fully equipped operatory, and treatment incidental such as cotton 2x2, cotton swabs, anesthetic, etc. It is highly advisable not to get into a “cotton roll counting” mentality, but to keep in mind the bigger picture — added specialty services, the ability to do procedures not able to be done via separate offices, and added profit. The specialist supplies all instruments that pertain to his or her specialty, and covers the cost of an assistant. In this way both parties are supporting approximately half of the auxiliary staff, essential equipment, and instruments/supplies. There are also certain costs incurred with implants and lab procedures. These are split according to the percentage agreed upon or a separate arrangement to accommodate the high overhead procedures. Many state dental laws do not allow fee splitting. Obtain proper legal advice in order to avoid a claim of fee- splitting.
Due to the IRS guidelines on status and state statues and laws, the specialist may have to be an employee. In Dental Economics 1995, Vol. 85, I discussed the IRS independent criteria in place at that time. This has changed. Previously, there was a 20-item list that indicated an associate’s status as an independent contractor or employee. Now there is an 11-part assessment divided into three categories: behavior control, financial control, and type of relationship.
How much control do you have over the behavior of the associate? Is the choice of equipment, supplies, assistants, treatment, and sequence of treatment the associate’s or the owner’s? The more the owner has control over these choices, the more the associate will be treated as an employee in the view of the IRS.
How much financial control do you have over the associate? To be an independent contractor the associate must have made an investment, have expenses that are not reimbursed by the owner, and realize profit and risk loss from his or her undertakings. The more independent the costs, fee structure, risk of profit/loss involved in performing the associate’s treatment, the better chance the associate will be found to be an independent contractor.
The third category is where the biggest change took place. Previously, there was no interest in the contractual relationship of the owner and associate. Now the contractual relationship is the third area of the IRS three-prong approach. Within this area, the IRS will most likely view the actual written contract and its relation to employee-like benefits provided, the long-term intentions of the relationship, and the importance of the services the associate provides in relation to the practice. Of course this is not a full discussion and has legalities, so be sure to check with your attorney for proper advice.
Specialist compensation and auxiliary personnel
It is highly advisable for the specialist/associate to maintain proper records of treatment rendered and accounts receivable. Those records should be checked against the office data to ensure proper compensation on a quarterly basis. Even though I became computerized in 1984, sometimes an entry would make it into the wrong doctor’s ledger and need to be adjusted accordingly. With today’s dental management software, it is relatively easy to maintain proper data from which to work.
Another hurdle is the use of auxiliary personnel. To be most efficient, allowing the specialist to use one of the general dentist’s assistants may be fine when starting out. However, rarely does it happen that you throw a dentist and an assistant together, hoping for the best, that the true potential of the specialist is met. Also, again to help meet the IRS criteria, I had specialists either bring their own assistant or train one of mine, if it the assistant and I both agreed. If two people want to work together, there is a synergy that comes about that allows the associate specialist to meet his or her potential.
At the beginning, the reception personnel were able to fulfill the needs of all the dentists. However, as my practice and my new concept of multispecialty grew, assigning a certain receptionist to certain dentists/specialists led to a better understanding of the specialist’s scheduling needs and the financial needs of the different type of patients. Being a fee-for-service without any PPOs or HMOs, I had to have a very secure financial policy in place for the entire practice. The financial agreements of an orthodontic practice are different than an oral surgery or general practice. Hence, by matching up the interest of each assistant and receptionist, the true potential of the practice was met both in patient treatment and patient financing and practice profit.
Another area you should be made aware of is the referral from outside the office, and those referred to specialists within the practice. It is obvious that referrals from outside the practice directly to the specialist must be referred back to the referring dentist to maintain a professional relationship. However, those being referred within the practice fall into an ethical situation of financial interests/gain of the owner by only referring to specialists within his or her practice. The autonomy of the patient must not be undermined by referring all patients to your specialists without giving the option to see another outside specialist due to contractual financial gain. The patient must be informed of all information that a reasonable person would need to make an informed decision. Patients are trusting in most cases and follow their doctor’s recommendations, hence, this blinding trust of being referred to a competent specialist must not be taken advantage of by the owner doctor’s financial gain. There is also liability for a referred-to doctor’s treatment when the referring doctor should have known about the referred-to doctor’s shortcomings. This leads to the ethical concept of non-malfeasance — to do no harm. So as a caveat, be sure your specialists are very competent and your malpractice insurance company is informed of your addition of specialists to your practice.
With the specialist most likely charging slightly higher fees than the general dentist, patients will many times rather pay less and not want to go the specialist. Therefore, if you, the general dentist, prefer to treat some of the possibly specialty-referred treatment, maintain the same fees schedule. Patients will opt to have the specialist do it and that way his or her schedule will be more productive. As a side note, no matter whether the general or specialist treats the patient, both are held to the same standard of care. So refer the patients to the specialists to allow you, the general dentist, to concentrate on those procedures you prefer to do and the specialist to be useful and productive to the practice. In that manner the practice, owner, associate specialists, and your new multi-specialty practice will fulfill and surpass their potential. So even though there was no practice model available to develop the multispecialty practice in 1979, hopefully this article will give you insight to develop your own multispecialty practice.
Dr. Joseph P. Graskemper has numerous fellowships and a law degree. He is an associate clinical professor at Stonybrook School of Dental Medicine and maintains a full-time practice in Bellport, NY. He has lectured and been widely published nationally and internationally, and provides practice management consulting. He may be reached at [email protected].