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Preparing to Hire an Associate Dentist During the COVID-19 Recovery

Many practice owners are considering bringing in new associates as they plan for the future of their business amid the “new normal”. This could be to support business growth, to have more free time, or to begin preparing to transition ownership of the practice. There are of course many factors to consider before making this move.

Benefits of adding an associate

  • Increasing practice revenue. The new associate can provide additional hygiene checks while they work to bring new patients into the practice. This does require an active patient count. “There should be a minimum of 1,500 active patients treated over the past 12-18 months,” recommends Cindy Bickers, manager of Nationwide Dental Opportunities with Henry Schein Dental. “If you’re bringing in an average of 20-25 new patients per month, this can allow for a second dentist. An associate will need approximately 800 patients of their own if they’re paid based on a percentage of their production.”

In a well-established practice, many patients will want to continue to see their current dentist. It may be a good idea to implement a marketing plan to generate enough active patients for the new associate, instead of exclusively relying on the associate to build their own patient base. Personally introducing patients to the new associate can also help them feel more comfortable with the change.

  • Reactivate patients. “If you’re booked out too far, your patients may not be able to visit the practice as often as they should, which can cause a patient retention issue,” Bickers said. “Bringing in a new associate is an opportunity to keep patients coming in as they should.”
  • Having a profitable exit strategy. “With a partnership or deferred sale, the associate is paying money towards ownership over time,” Bickers said. “As the practice owner, you may realize the profits of the sale of the practice today, as opposed to sometime in the distant future. A deferred sale can be beneficial to the associate as well since it’s an easier path for them to become an owner.”

Below is an example of the potential profitability of adding a new associate to your practice.

Chart of Benefits of Adding an Associate

In this example, the associate is bringing in roughly $350,000 in collections in a year. Once you account for expenses and salary, that would be estimated at $238,371. That results in a net profit of $111,629, which is 32 percent.

Deciding if you are ready for a new associate

The first question to ask is whether your practice will support an additional dentist. “If you’re booked out three weeks or more, you may need an extra provider now,” said Bickers. “Business demand may be difficult to determine after the COVID shut down, but you should be able to tell rather quickly after reopening.”

Additional considerations may include:

  • Whether your equipment needs updating
  • If your current space can accommodate another dentist
  • If you have the staff to support a new associate
  • What dentistry would you want the new associate to focus on
  • Whether you have enough PPE for a new associate
  • How many dental assistants you have and if you plan to pair one with your new associate “You may want to provide an experienced dental assistant for your new associate, said Bickers. “This will help the associate learn your policies and procedures – and give your dental assistant an opportunity to observe the new associate’s interaction and treatment of their patient.”
  • How many treatment rooms a new associate might need “For a new dentist starting out, one treatment room may be sufficient, but after about six months, they should need to add an additional chair to increase production,” Bickers said. “You will be able to realize the practice profitability sooner if you do that.”

Understanding the associate’s expectations

Be candid with the potential associate about what you expect of them, including:

  • How you intend to grow your business (For example, providing more pediatric dentistry, more cosmetic dentistry, etc.)
  • Whether they will be required to manage staff while you are out
  • The procedures they will be expected to perform
  • Which location(s) they will work out of and if travel is required
  • What hours are expected now and if you anticipate that changing in the future (For example, some practice owners are hiring associates to work part-time until the practice is performing at a level it was before COVID-19.)

Compensation discussions. “As a practice owner recruiting an associate, you must be competitive with the offer,” said Bickers. “The typical guarantee right now is around $100,000-$150,000 per year for a general dentist and around $120,000-$175,000 per year for specialists. And with student loan debt and the high cost of health insurance, benefits are more important to candidates than ever. Many corporate dental practices offer benefits, so you may want to consider making the offer more attractive with student loan assistance, health insurance, relocation assistance, and/or continuing education reimbursements.”

Document and explain all aspects of the associate’s compensation, including:

  • Whether they will be paid a draw or guaranteed salary
  • If they will be paid a percentage of collections, collectable production, or production
  • If and how collections will impact their earnings
  • What deductions will come from compensation (For example, will lab fees be deducted from the associate’s gross collections or production or net collections or production?)
  • What benefits are included and how much is paid by the practice
  • How paid time off is calculated

Non-compete agreements. “To protect your practice, you may want to consider having your new associate sign a non-compete agreement,” Bickers said. “The non-compete, non-solicitation restrictions should be for a reasonable distance and/or duration. The distance is usually based on your drawing area of the practice, and the duration is typically one to two years after the associate leaves the practice.”

Making your relationship with your associate thrive

The first step is to ensure that your interests are well aligned with your potential new hire. “If they accept the position purely due to compensation or location, they may not stay,” cautions Bickers. “Be sure you are compatible with one another.” Some steps to consider include:

  • Understanding what the associate is looking to gain from the experience (such as training, mentorship, etc.) and what their goals for the future are
  • Letting the candidate spend time with your staff and patients so you can evaluate their skills and personal interactions
  • Involving your staff in the hiring process to help find the right match

Negotiating buyouts. If you are bringing in an associate to ultimately buy the practice, it’s important to agree on how to determine the purchase price before employment starts “It’s imperative that both parties agree on the value of the practice. That may prevent any dispute later on,” said Bickers.  Also, decide how the income and profits will be split among partners. “Ideally, find an attorney with experience working with dental practices. And above all, get it in writing.”

Communicating with your associate. Have a regular dialogue with your new associate throughout the process. For example, after preparing an employment agreement, agree on a deadline for the time to accept, and keep the potential associate in the loop if there are delays due to issues such as legal reviews. Once they are hired, have regularly scheduled meetings to check-in. Keeping open lines of communication from the start and throughout the process is crucial – particularly at this time of uncertainty.