Should you Add an Associate to Your Dental Practice?

Adding an associate to your practice is a big decision. If it’s successful it can bring huge benefits to the practice, but if it’s not successful it can add stress and potentially damage the practice. Along with added pressure, there is a potential for a decline in your income if things don’t go well.

Problems can come up when Dentists add associates without thinking through all of the issues first and taking time to plan for success. You make treatment plans for your patients every day, do you have a treatment plan for adding an associate to your practice?

We suggest that you create an Associate Plan prior to bringing on an associate. We have created some questions and suggestions to shape your thinking about adding an associate with the thought that this dialogue can lead to increasing the probability of success. This can serve as the start of your Associate Plan:

Are you tracking referrals?
You should know the potential annual collections you might keep in-house with the right Associate. Your dental software will allow you to post referrals and types of referrals. This can be a source of valuable data as you consider the right time to bring on an Associate.

Is your schedule full?
If not, how do you expect to keep another dentist busy? Will you do more internal and external marketing? Do you have a clear path to adding new patients?

How many hygienists do you have and what is your patient retention percentage?
We like to see retention at a minimum of 85%. So, if you have 1,500 active patients, you should complete 2,550 of codes 1110, 1120, and 4910 per year. This is usually an area of opportunity to recapture patients.

Do you have adequate space? Or will you need to drop hours or extend hours?
As part of your Associate Plan, you may wish to contact your dental lender if you need to add ops or equipment to accommodate the associate. Also, once you have found and trained the right associate under your guidance, consider having them work extended hours and days.

How soon might you potentially offer the associate to buy in or buy 100%, if it’s the right fit?
Many associates are planning for their future, they will want to know what their options will be. This part of the agreement can be included in the contracts by your dental attorney.

How will new patients be divided?
You won’t retain your associate if they feel they aren’t given enough work. They must feel that new patients are divided fairly, or at least as agreed upon in the contract.

Will the associate perform all treatment plans that they diagnose?
Make it clear if you will be allowing them to only complete limited services. Have your dental specific attorney include this in the contract.

How much responsibility do you want the associate to have regarding on-call, team management, materials and lab selection, etc.?
Another item to consider and include in your contract.

Have you included the total costs of an associate? Will you provide benefits?
Be sure to budget for the total costs including any payroll tax and benefit costs.

How will you compensate the associate?
If the associate isn’t slipping into the practice of an existing dentist, you may need to provide a daily guarantee for a few months before moving to a percentage of their collections. We often see $500-$800 per day for GPs and then 25-28% of adjusted production or collections. Your attorney will help put together the details of the compensation package.

Will they be an independent contractor or employee?
There are clear IRS criteria of both scenarios, so check with your dental specific CPA on the appropriate structure and method of compensation and roles.

What if the associate leaves or I want to terminate them?
Talk with your attorney about a potential non-compete, notice requirements, and conditions of termination. This should be well documented in the contract.

How do I find the right associate?
Contact your Dental Broker, she may have a dentist wanting to ultimately purchase a practice, one that may be interested in associating. Ask the right questions! Too many times we hear, “oh, they’re great, we don’t need a real interview,” yet very little is really known about this new team member. What is their philosophy of patient care? Observe what they do at a new patient appointment and how they urge patients to complete treatment, etc.

Adding an Associate to your practice can be a strategic way to grow your business and may serve as an important exit strategy as you consider retirement options. It’s not without risk, but careful planning and consideration of all the implications will increase your probability of success.