Base Salary (AKA Minimum Guarantee) for Associate Dentists

Over the past ten years, base salaries for General Dentists seeking associateships have become more commonplace in response to an increasingly competitive dental job market. Several factors have played into this change, including the ever-growing level of student debt and increased presence of Dental Service Organizations (DSOs) in the industry. From a practice owner’s perspective, the practice can use the guaranteed minimum to say “we have the patients and potential production available - can you produce?” As such, there is a perceived financial security with a base salary.
Below are some common ways we’ve seen dental practices pay base premiums to its associates.

Common Ways Dental Practices Pay Base Minimums

1. Daily/Monthly Draw on future commission : This structure is, by far, the most common method in dentistry. The practice will pay the associate dentist a fixed amount that will be deducted out of the associate’s future commission.
   
   1. Pro : the associate has greater security at the beginning because there is a cash flow.
      
   2. Con : if the associate does not produce/collect enough the practice cannot recoup the draw if the employment is terminated by either side.
      
   3. Most common example : $500 to $600 per day ($10,000 to $12,000 per month).
      
      
2. Salary + bonus : This structure offers both sides more of a win/win at the early part of the relationship. The practice and associate agree to a set salary that is paid regardless of the associate’s production. The bonus is a carrot for achieving a higher level of production.
   
   1. Pro : Practice can pay based on what it expects associate will/should produce while offering a bonus if goal/expectations are exceeded.
      
   2. Con : Such as the draw, if the associate is underperforming the practice will lose money on the arrangement.
      
   3. Example : $10,000 month; Associate can bonus by being paid 15% of collections on anything exceeding $35,000 per month. Calculate monthly or quarterly.
      
      
3. Salary only : As simple as it sounds. The Associate is paid a base salary. In most cases, a practice does this because it realizes there needs to be a lot of growth in the practice overall. It is more of an investment in the associate and potential of the practice. In many cases a practice and associate will agree at a future time to convert from salary to commission in order for the associate to be incentivized on their production.
   
   1. Pro : Great for a new grad that receives mentorship from a senior doctor. Allows the practice to secure an associate without making unrealistic claims to what an associate can earn on a commission plan.
      
   2. Con : if you don’t have an associate who sees the big picture, you can have an associate who doesn’t strive to grow in this position due to the lack of incentives, thus making a bonus option a great addition to the salary.
      
   3. Example : $120,000 per year.
      

Why should you offer a base minimum?

• Excellent way for practice to back up their claims of available production and income potential
  
• Offers initial short term security to associate by providing a minimum cash flow
  
• Helps while production and patient base is built up by associate
  
• Competition for talented dentists
  
• Security for your practice by limiting associate turnover
  

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