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:

• Is your offer reasonable?
  
• What do associates earn?
  
• Negotiating an offer
  
• What to know before you accept a position
  
• Comparing Offers
  
  
  Written by Morgan Pace, Vice President and Senior Account Executive/Dental Recruiter at ETS Dental (www.etsdental.com). For more information, contact Morgan directly at 540-491-9102 or mpace@etsdental.com
  

Dental Associate Agreement and Employment Contract: Is it In line With What I Should Expect, and Is it Reasonable?

This time of year is prime time for employment changes across the dental industry.  May through August is always the busy time.  Dentists are completing residency programs, dental students are graduating, and they are all going to be reviewing employment agreements now or very soon.

Here are a few things to consider:

1)      What is the commitment?  1 year; 3 years; can you give reasonable notice if you are unhappy or dissatisfied in the practice

a.       Most are 1 year

b.      If you receive a sign-on bonus or relocation incentive expect to commit to 2+ years.  Typically, if you leave before your commitment you will need to pay back any bonus money you receive

c.       Notice periods across the nation have grown beyond the normal 2 week courtesy.  Many agreements now require 30, 60, or 90 day of resignation notice

2)      Want to associate in your home town and eventually own a practice in your home town?  Be cautious of non-competes and restrictive covenants that would cause significant headaches in the future.  Especially if your hometown is a small town. 

·         Resource:  You Can’t Compete With Me – The Legality of Non-Compete Agreements

3)      Are you an Employee (W-2) or an Independent Contractor (1099)?  Associate positions throughout the dental industry vary greatly.  W-2 employment is most likely what you truly are. That means the employer takes your tax withholding and takes responsibility of the daily operations of the practice.  1099 contractors are simply paid for services rendered.  If this is your status, you are required to fulfill the entire tax obligation of your income. 

·         Resource: IRS website: Employee versus Independent Contractor

4)      Production versus collections-based compensation:  You need to understand which way you are getting paid, when it is calculated, and what is included and not included

a.       Is it calculated daily, weekly, bi-weekly, monthly, and quarterly? Many dentist don’t know when I ask them

b.      Are x-rays or hygiene exams included? Many times there are not

c.       Lab Expenses:  are you responsible for all, some, or none of the lab expense?

5)      Base compensation questions:

a.       Is it permanent or does it sunset after x number of months?

b.      Is it a draw on future commission or is it a salary?

·         Resources:  Dentist Contract Negotiations - Compensation Considerations

6)      Be Realistic!  Associate offerings on the East Coast are vastly different than those on the West Coast.  Make sure to understand the compensation trends and models that are common in your market.  Don’t compare offers to your friends, especially if you’re only talking % versus %.  That completely depends on the production potential based on a combination of what the practice can provide and the abilities of the associate dentist.

·         Resource: What Can An Associate Dentist Earn in Different Parts of the U.S.

Other articles to explore:

·         Associate Agreements

·         Dentists – What to Know Before You Accept an Associate Position

 Posted by Carl Guthrie, Senior Dentist Recruitment Consultant with ETS Dental. To find out more, call Carl at (540) 491-9104 or email at cguthrie@etsdental.com.

Associate Agreements

Associate Agreements (contracts) can suffocate us at a time we should be reveling in a new opportunity.  However, many dentists don’t understand what is in their contracts, in turn complicating the process and turning this joy of new opportunity into a whirlwind of anxiety and trepidation.

This article is not intended to be legal advice.  ALWAYS consult an attorney or legal expert in your jurisdiction.

Here are a few points to pay attention to when reviewing your Associate Agreement:

1. Employee or Independent Contractor:  Regardless of the debate on what is technically legal or acceptable by the IRS, make sure you know which status you are agreeing to.  If taxes on income are not paid correctly, it could come back to bite both the associate and the practice.   Consult a CPA or Attorney on what is correct for your situation.

2. Compensation: Are you going to be paid on collections or on production?  These two do vary, but don’t get stuck in the mindset that production-based income is the only way you will accept to be paid.  Keep in mind that even if you are paid on production, many practices will adjust your future paycheck if there are any unpaid patient balances or write-offs.  In essence, you are being paid on collections anyway.

3. Notice Period: The length of termination periods are widely becoming 30 or more days long.  We’re seeing more and more asking for 60 to 90 days notice.  Understand what is required of you to terminate your employment with a practice. 

4. Restrictive Covenants and Non-Compete Clauses: Dental practices will protect their interest by requiring you to agree to some sort of restrictions upon the termination of your employment.  They will restrict you from practicing dentistry in any capacity within a certain distance for a specified length of time.  There will be other language that restricts you from soliciting patients or staff for a specified time period.   Distance varies upon geography.  For example, rural areas can have 20 miles or more of a restricted zone, while a metro area will be 2 to 5 miles.

5. Lab Expenses:  Most practices are paying these costs; however, make sure to ask if you will be paying for any lab expenses.  There is no real standard on this in the industry.  Practices will have associates pay for half or an amount equal to the Associate’s percentage of pay.  Also, make sure you understand the formula for calculating your pay with lab expenses.  You want the lab expense to be deducted from the total production prior to calculating your percent of pay.  {Pay = % of production * (Production – Lab expense)}

These are just a few of the “biggies” that develop in contract negotiations.  Again, refer to your attorney for precise legal advice.

Posted by Carl Guthrie, Senior Dentist Recruitment Consultant with ETS Dental. To find out more, call Carl at (540) 491-9104 or email at cguthrie@etsdental.com.

Financial Planning for a Better Future with Glen Weaver

Time and again we speak with dentists whose careers were significantly impacted by financial decisions outside of the practice. Many were impacted for the worse, but those with a clear plan and the guidance of financial planners are significantly better off for having done so. With that in mind, we recently invited Glen Weaver of Capital Financial Partners to contribute. Glen has experience advising dentists and dental practice owners and so has a good perspective on the questions dentists should be asking themselves and their advisors.

Here is his summary of the important questions dentists need to be asking:

 

Every business professional generally thinks about the following:

• How can I grow and protect my business?
• How can I take care of and provide a rewarding future for my employees?
• How can I build wealth and protect my assets so I retire on my terms and leave a legacy for my family?
• How can I protect my principal from the volatility of the market?
• What financial strategies can I implement so when the market crashes again I don’t lose any money?
• How can I get guaranteed tax-free income for life?
• Did you know that over 450 banks across the US have failed since 2008?  How is that possible?
• Do you know who the best financial managers in the world are and have proven it through various depression eras over the last century?
• Do you have a Variable Life product?

If you do not have these answers then you need to speak with someone who does.

Keep in mind, rising inflation and tax rates can quickly erode retirement savings. You will need more money during retirement to purchase the same things you buy today. Tax rates are rising with plans in Washington to raise them even further. Do you have a plan that allows you to pay current tax rates, grow your money tax-deferred, and then enjoy tax-free income for life?

I am frequently asked, “How can I plan for my kid’s college that does not involve poor performing 529's? With higher education tuition rising at nearly 9% every year, how can I get more aid/grants/scholarships from colleges/universities for my kids education simply by moving assessed assets to non-assessed buckets?”

Did you know with the right plan your kids could attend a private school at or better than the price of a state school?

Regardless where you are in your practice and career if you fail to plan, you plan to fail.  One of the greatest motto's for success is: Plan Your Work and Work Your Plan!  You have objectives and goals for the future that fosters the professional, personal and economic growth of your business and staff members, but do you have a defined plan to get there?  Don’t kid yourself. Most people don’t.

Henry Ford had an 8th grade education. He also had an incredible belief that an 8 cylinder car was possible. He surrounded himself with a team of engineers, advisors, and together went to work on their plan. As we all know and see everyday on the roads, Ford created enormous wealth and legacy for generations.

Consider adding a financial planner to your team. We have the skill, experience, and resources to weather any market situation to keep you on the path of financial growth and prosperity for generations to come. With good people, like Morgan Pace at ETS Dental, we can plan a very rewarding future together. A simple no obligation phone call, email, or connection on Linkedin is all it takes to continue the journey.

For more information, contact:

Glen Weaver

Financial Services/College Planning Advisor
Capitol Financial Partners
703-222-1960
weagl01@gmail.com
http://www.linkedin.com/profile/view?id=22383898&trk=tab_pro

Are you ready to add an Associate Dentist

All to often I speak with practice owners that say they would like to add an associate dentist, but after speaking to them I find that they lack the revenues, patient base, or planning to really make this happen. First and foremost, as a practice owner, you have to ask the question, "Why do I want/need an associate?"

Reasons I often hear are: "I am much to busy to keep up with the demand on my practice." "It is time I start transitioning ownership over the next 3+ years." "I want to work less." These are decent starts, but you have to take a look at several other factors.

Is the practice productive enough with one doctor?

You need to determine the number of truly active patients in the practice. A single practitioner needs at least 1500 active patients over 12 to 18 months. You also need to be grossing at a minimum $750,000 annually. Also, considers the types of cases. If your cases are generally very large producers then you patient count may be lower. Bringing on an associate dentist if you practice is doing less than the following will most likely cost you, the practice owner, money. Not make more.

Do you have enough patients for a new doctor?

You need to plan on several things in order to ensure your new associate will be busy and productive. You need to have at an excellent new patient flow. You are most likely not willing to give up your own active patients. That cost you. Marketing, is going to have to be addressed. If you only get 15 to 20 new patients per month you will have to step up the efforts to get more so your associate can work. Take a look at inactive patient records as well, and see what you can do to reach out to them, and get them back.

What do you normally refer out?

If you are referring out molar endo, oral surgery, or implants you should target associates that can add more value to your practice. Associates with the ability to do these procedures in your practice simply adds to your bottom line. More and more practices are taking this approach. NOTE: if you are looking to add an associate with these skills then you will have to be willing to invest in the necessary instruments and equipment required.

Is this your exit strategy?

If you are hiring an associate with the goal of transitioning out then you need a detailed, written plan for what will happen and when. Talk about these thing up front with candidates. Show them the plan. This allows the potential associate to know what is expected. Let the associate have input, and expect negotiation.

Do you know what Associate Dentist expect to be paid?

You have been in practice for 20+ years. You were paid $70,000 a year as an associate when you first graduated Dental School. Associates candidates now making around $120,000 in a good private practice associateship.

All in all you have to plan well ahead and make sure this will benefit you, your practice, and your associate.

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