Wednesday, January 7, 2015

Associate Dentist Jobs - Understanding the Numbers When Comparing Multiple Job Offers

It is always great to have options, but how does one job offer compare to another? We covered the typically negotiable elements of a job offer previously (read that blog post here). The purpose of this week’s blog is to share the observation that many dentists are leaving money on the table in search of a higher percentage.
Why not accept the bigger offer?
At the end of the day, a higher percentage of lesser production will often result in less income with a slower path to increased production.
My email contact list is filled with dentists who are financially dissatisfied yet unwilling to make a move because they would need to take a commission cut. While not always the case, there is a definite trend with the offices where these doctors are working. These offices typically:
  • Have not invested in modernization . They have older equipment and office systems
  • Have no marketing budget and get few new patients. They are long established patient bases that gradually grew to the point where the owner had more patients than he or she could comfortably treat.
  • Are not well situated. They are typically located in old building removed from the busier, higher rent part of town.
As a result, the practices had very low overhead expenses and could offer the associates a higher percentage. They also tend to be slower, less progressive and charge lower-than-average fees.
Associates in offices like this will make significantly less income on a higher percentage than their busier colleagues working for a smaller percentage in offices with higher overhead but a more progressive clinical and business approach.
Why wouldn’t a more successful office offer a higher percentage?
These offices are reinvesting in the practices and have lower per-procedure profit margins.
While associates are often tempted to conclude that the business’ overhead is not their concern, it is wiser to consider the bigger picture. By investing in the practice, these owners are providing a better environment for the associate to thrive. The associate can more easily provide a higher level of care using better facilities. In addition, the associate can more easily operate efficiently using better office systems and will have more opportunities for treatment in an office with a greater number of new patients.
How big a difference does this make in associate compensation?

Daily Production Annual income at 27% Annual income at 30% Annual income at 33%
$2,000 $108,000 $120,000 $132,000
$2,500 $135,000 $150,000 $165,000
$3,000 $162,000 $180,000 $198,000
As you can see, a small increase in daily production has a much larger impact on income than commission percentage
What should a potential associate look for when determining the income potential of an office?
  • Procedural Mix
  • New Patient Numbers
  • Scheduling procedures
  • Hygiene production
  • What procedures are being referred out of the office
  • Office equipment (business and clinical)
Other resources on associate dentist job offers: