By Larry Chatterley and Randon Jenson, CTC Associates

The goal of any associate-type arrangement is to create and maintain a mutually rewarding personal and professional relationship between two or more doctors. Unfortunately, many associate arrangements do not address one of the most fundamental elements for a successful relationship, that is, does the dental practice have the capacity to sustain both doctors?

With that in mind, here are some key areas related to the dental practice financial capacity that need to be addressed before entering into an associate arrangement. The key questions are as follows:

1. How far is the current practice booked out? If the current practice is booked out only a week or two and has holes in the operative schedule, then the practice will likely struggle to fill in the gaps for a new associate. If the practice is seeing 15-20 new patients per month, which usually is just enough to keep one doctor busy, then it’s going to be difficult to keep an associate busy enough for him or her to want to stick around.
2. Does the dental practice have the sustaining power to subsidize the new doctor to up to $8,000 per month for the first six to twelve months while building the practice?
   If the answer is no, then the practice may not be in the position to bring on another doctor.
3. Does the dental practice have a lot of debt and/or is the overhead exceeding 65%?Practice debt can polarize the relationship by making it difficult for both parties to meet their financial obligations on a timely basis.
4. What form of marketing is in place to help increase patient flow? Unless this is addressed and in place before the associate starts, there might be difficulties having a successful associateship.

Most associates are paid a percentage of their respective gross production. In most markets and situations, this percentage for general practitioners is about thirty percent. (Specialty practices/specialist associates are often paid a higher percentage.) It is not uncommon, however, to see a flat wage or salary paid as well, or a variation of the two. In other words, the associate is paid a flat rate per day (i.e. $500) or 30% percentage of production, whichever is higher. This method is particularly effective in situations where it may take the associate several months to “ramp up.”

However, the host doctor should expect to see a consequential decline in income over the short term as he/she subsidizes the associate’s income via the draw. This will last until the associate’s percentage wage is sufficient enough to cover the minimum, at which point the host should expect to begin earning an override on the associate’s production. The question here is if the dental practice is in a financial position to subsidize the associate wages over a 6 to 12 month period. If not, then maybe step back and reassess the situation.

Years ago this was not the case. One could just add another doctor and more new patients would flow through the door. This has not been the case in the more popular and competitive areas of the country for more than a decade.

If you or your practice are experiencing greater patient flow than you can comfortably handle, then you might be good candidate to hire another pair of committed hands to handle the load. If not, and you still want to hire an associate, you must assess the potential and create an effective game plan to increase patients or reduce overhead.

You’re busy, you’re stressed and now you must dedicate time to hiring new staff to fill in the gaps left during your dental practice transition. So where do you start? There may be a great temptation to hire the first person who looks like he or she might fit the bill, but if you make a mistake, it’s going to cost you.

Prepare Yourself

No matter how excited or relieved you may feel, jumping into your new recruitment exercise without any thought will just hurt you in the long run. Ask yourself these important questions before you even place your first recruitment ad:

– What role will the new hire fill in the practice?

– How much help does the practice need?

– Will this need be long term or short term?

– What salary can you afford to pay?

Focus on Strategic Recruitment

You don’t want to hire the first person who comes along, you want to hire the best recruit for your practice. But how do you find the right candidate? It might sound obvious but start in places that offer the most help. Ask other employees for referrals, you’ve got the best chance of making a quality match through your current staff.

If that doesn’t work, check reputable job boards before branching out into social media.

Take Your Time

Sure, you might have needed the help three weeks ago, but making a rushed decision could mean hiring the wrong person and upsetting the well thought-out dynamic of your practice.

Go through the right procedures to ensure you attract the right recruit: conduct first and second interviews, conduct the relevant background checks, and make sure your next recruit is in it for the long haul.

Be Ready

On-boarding a new employee takes up precious time and effort. But if you’re not ready, it will waste even more of your precious time. Make sure you can tick all the boxes on this check-list:

– Is the new hire’s work-station ready?

– Do you have a standard operating procedures document for the tasks the new hire will complete?

– Have you introduced the new person to the rest of the team?

– Have you written out the new employee’s job description?

– Have you assigned another employee to assist the new hire?

Maintain realistic expectations for your new hires, and make it as easy as possible for the new person to ease into their new role.

Don’t Be Afraid to Let Someone Go

If a new person doesn’t perform well, don’t be afraid to fire them. You can’t afford to keep someone on board if he or she is not performing. Not only that, but what you let new employees get away with will be seen by the rest of the team. If it’s not working out, don’t keep the person on.

Building a quality team in your dental practice is crucial to your success.

We can not stress time and time again how important your lease situation is. Whether you are setting yourself up to sell in the near future or plan to drill for 20 more years. As a dental practice owner your two biggest expenses are payroll and your rent / mortgage payment and you have to manage this overhead to make your business as profitable and safe as possible.
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By Larry Chatterley and Randon Jenson, CTC Associates

The goal of any associate-type arrangement is to create and maintain a mutually rewarding personal and professional relationship between two or more doctors. Unfortunately, many associate arrangements do not address one of the most fundamental elements for a successful relationship, that is, does the dental practice have the capacity to sustain both doctors?

With that in mind, here are some key areas related to the dental practice financial capacity that need to be addressed before entering into an associate arrangement. The key questions are as follows:
Continue reading →