Associate Pay: Collections vs Production

This debate will exist forever. Associates want to be paid on production. Practices want to pay associates on collections. Associates say “Not my responsibility to collect money on production” or “I don’t manage the front office staff.” Practices say “can’t pay what we don’t collect” or “What if associate over-produces in order to make more money?”

It’s simple to understand and agree with either side of the argument. I have this same conversation with prospective associates and practice owners daily.

Collections pay is my preference in most cases involving FFS, PPO, and some Medicaid practices. I prefer to avoid DHMO practices since associates are better off being paid a salary rather than a percentage in those models.

Why Use Collections Based Pay?

1. It is in the best business interest of the practice to collect all co-pays up front and bill insurance immediately. If the practice doesn’t do this effectively, the associate relationship will fail regardless of compensation method. Practices can’t keep paying bills if they don’t have the cash to do it.
   
2. Production pay in most cases is “Adjusted Production.” Adjusted production is pay based on what the practice anticipates it will collect on a procedure based on the patient’s insurance plan. 
   1. UCR may be $1,000 for that crown, but since patient x is an ABC PPO patient, the crown production is actually $800. Production $800. At 30% associate earns $240.
      
   2. Let’s assume that crown doesn’t get covered, and the practice has to attempt to collect from the patient. After 90 or 120 days the crown fee is written off. A lot of practices will come back and deduct that $240 from a future paycheck.
      
3. Based on the above, I would rather know that I am paid with money I keep and don’t have a chance of losing at a future date.
   
4. Using a base guaranteed salary or a minimum draw will help with the initial employment period of 3 to 6 months to get the associate started. If the collections are not above the draw in that timeframe, there are problems with the practice systems, and likely not a place an associate will want to work. 
   
   
   Side By Side Comparisons

Collections	Production
Associate paid when practice is paid	Associate is paid at time of completed procedure regardless if practice collects patient/insurance payment
Practice can cash flow collections with payroll	Practice likely has a deficit for a period of time between payroll and insurance/patient payment
Adjustments are made before associate is paid therefore greatly limiting future payroll adjustments	Associate is paid up front, but the practice will adjust future payroll for uncollected payments ( isn’t this “collections” pay, just delayed for the practice?)
Associate often questions or wants proof that money is being collected by practice	Associate feels more secure in knowing he/she is paid for work when it is done
Simple accounting cash in, cash out	Accounting more challenging. Adjusted production usually means the practice will want to recoup payroll paid on uncollected procedures at a later date. Lots of tracking involved.
If practice collection percentage drops too low then associate will leave	Theoretically, associate should be paid regardless if the practice is paid. If practice can’t collect practice would wind up terminating associate because it couldn’t afford associate
Collections based pay will better prepare associate for future ownership or partnership where he/she will live or die by cash flow	Production based pay can build an unrealistic view of associates abilities in actual revenue

Stats and Red Flags

• In most cases looking for collections percentage above 97%; anything out of the 90’s is no good
  
• Practice has to open the books to the associate so he/she can see production/collection numbers. If practice is not willing to do this then the associate should move on
  
• As in everything, communication is vital to everyone's success. Without communication all is lost
  
• Associate needs to be educated and understand dental insurance, collection policies, timeline of collections, write-offs, etc
  
• Practice should been willing to give an initial base minimum to build a mutual commitment
  

Written by Carl Guthrie, Senior Account Executive/Dental Recruiter at ETS Dental. For more information, contact Carl directly at 540-491-9104 or cguthrie@etsdental.com

What Does a Graduating Pediatric Dentist Earn?

So you have done well in college and were accepted into dental school. During this time you have realized that you have a special talent and interest in working with kids. You apply and are accepted into a pediatric residency and spend a couple of more years earning your pediatric dental certification.

Finally, after many years of study and devotion, you are a pediatric dentist! You are now ready to enter the market and find that first job and wonder what is fair and what you can expect to earn. You probably have heard figures from your residency director, co-residents and others in the specialty and the numbers may vary widely. Who is right? They are probably all correct in what they are telling you and the differences can be explained by understanding what they have experienced.

I am an independent recruiter who works exclusively with dental specialists and I spend most of my time with private pediatric dental practices and those looking to hire a pediatric dentist. I work nationally and see daily what practices are offering and new graduates are getting in different areas around the country.

What am I seeing? Nationally, on average, I see base guarantee of around $200,000 which is vs. a % of collections. Most practices pay on a % of collections rather than production since most are participating in a few PPO’s or discounted plans.

To break this down further, the daily guarantee averages between $800 and $1,200. The daily guarantee should become a moot point after one is up and running with a practice and it is there as a floor. With the guarantee, the practice is saying that they are going to have a schedule that will allow you to be productive and, if they do not for a particular day, you will still be paid for your time.

What % are practices paying? Typically it will be between 35% and 45%. A % approach is recommended rather than a flat salary because it allows the associate to be in control of their destiny and they know what they need to produce and then collect in order to reach a certain earnings level. With the % approach vs. a salary, practice owners are not wondering if they are overpaying and associates are not wondering if they are being underpaid and are incentivized to work rather than surfing the internet or other non productive distractions.

Why would one work for 35% when others are getting 45%? I see a good number of graduating pediatric dentists who evaluate a practice opportunity based on the % alone and anything less than 40% or 45% are not of interest to them. What they really need to look at is the nature of the practice to include the patient flow, whether they will be doing a good amount of restorative and the ability to do hospital dentistry and sedations etc. A pediatric dentist can do much better financially in a busy practice paying a lower % vs. a higher end, slower practice paying 45% where they are relegated to hygiene checks and little restorative dentistry. 

Location, Location, Location: That said, the biggest factor in what a new graduate pediatric dentist can and will earn is where they decide to live and practice. This is a simple supply and demand economics equation with some of the best earnings opportunities being in areas that you and I may have never heard of.

What I see is that most of the major metropolitan areas across the country tend to be fairly saturated with pediatric dentists and it can be more challenging for the new graduates to find truly good private practice opportunities. I recommend looking at areas where people are not going and take a position there for a couple of years. You can earn a great deal, gain very valuable experience and make yourself much more marketable and you will find it much easier to get into the market where you really want to be for the long term.

If you have any questions about earnings or the state of pediatric dentistry in certain areas of the country feel free to call me. I will be happy to share with you what I know.

 

Gary Harris is a nationwide Recruiter for Dental Specialists at ETS Dental. He can be reached at gharris@etsdental.com or 540-491-9115. ETS Dental is a Dental Recruiting firm specializing in finding and placing General Dentists, Dental Specialists, and Dental Staff throughout the United States. www.etsdental.com