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How to know if your dental practice can add an associate

June 12, 2017
Adding an associate dentist to your dental practice is a big move in your career. Is your practice ready? Here are some guidelines and tips to see if you're on the right track for adding an associate.


Adding an associate dentist to your dental practice is a big move in your career. Is your practice ready? Here are some guidelines and tips to see if you're on the right track for adding an associate.

Adding an associate dentist to your practice
might be appealing because of the potential upside in business. But 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 up front that any new associate requires considerable investment of 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

• A minimum of 2,000 active patients,
• Hygiene booked four to six weeks ahead, and
• The financial ability to subsidize six to 12 months of associate salary.

Know up front that practices typically take a financial dip after hiring an associate. 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 break even after adding an associate requires three times his or her salary in production. Expenses (increased overhead and 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 and 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. Make sure the person has 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 on 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 and provides each of you with the opportunity to see how things work, and provides a professional way out if they don’t work. It also provides peace of mind and reassurance before you both agree to a long-term employment contract.

Know associate employment options
After careful review of your finances, and 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 to 15 more 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.

2. Buy-in partner—This is employment with transition into gradual buy-out of your practice. The associate can 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. Be sure to carefully review associate’s financials up front to ensure any buy-out terms can be met when transition your practice.

3. 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. You want to be careful in this scenario to clearly establish a contract agreement that guarantees time commitment, shared expenses and rent, plus financial terms.

Know associate terms and compensation
Make sure you establish an associate agreement (contract) that clearly outlines his or her duties, responsibilities, and compensation. Some associate compensation agreements are based on new patient collections or profitability. Other agreements provide a guaranteed salary with bonus based on 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 on 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, and 60 to 90 days is industry standard. Make sure you also have a termination clause that protects you and your practice.

Protect your practice
Your practice is based on your reputation and goodwill with your patients. 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 do not 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 equals ability and 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, whatever. 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.

This article originally appeared on on November 3, 2015.
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Silvestre Gonzalez is the Director of Operations at Benevis Practice Services, an Atlanta-based DSO. He evaluates practices prior to affiliation and partners with affiliated practices to optimize current operations with best practices, coaching, and advice to help each practice fulfill its goals. He can be reached at [email protected] or (844) 879-0087.