Preparing for the hire

Is your practice interesting to associates?

Finding the right associate dentist to join your practice can be stressful. Use our worksheet to better understand what the 'typical' associate finds exciting about a practice - and how your opportunity stacks up against the competition.

To-do: Download the practice assessment worksheet (XLS) to determine how associate dentists might see your practice.

practice assessment worksheet (XLS)

Understanding Your Score

Remember that this is not a comprehensive assessment of your unique practice situation. There are many things that come into play when hiring an associate for your practice and this is meant to be a simple tool to be used to provide a high-level overview of how your practice measures up against what we have found the typical dentist is looking for in an associateship.

Evaluation Results

Your score is 52-36

Your practice financials and location appear to be in great shape for an associate to come right in! Make sure you have thought through the employment contract so the process can go smoothly once you find your perfect match.

Your score is 35-26

Things are overall very attractive to associates, maybe your location is not ideal or there is something in your practice that could be tweaked. Depending on which categories were impacted, you may or may not be able to increase your score – no need to worry though, we have very high hopes! Make sure you have thought through the employment contract so the process can go smoothly once you connect with your best match.

Your score is 25-18

You may want to evaluate your less than ideal scores and see if there are changes you could implement immediately to improve the overall total. You will want to do what you can to increase the attractiveness of the practice while balancing the cost of implementation. This does not mean you will be unable to find a great associate, but it may take a bit more time to find the right person.

Your score is 17-0

Remember that this worksheet was created based on looking at the practice from the typical associate's point of view – and is not representative of all associates. We encourage you to take a good look at where you may want to try and improve your score (adjust your collection policies and fee schedules for example) and weigh the pros and cons of doing so – often you can find the right person regardless, but it may take time.

With so many options to expand your practice, you have some choices to make!
Think about your ideal situation. Talk to colleagues or friends who have gone through similar scenarios and ask what they would do differently if they had the chance. A word of caution, however, what worked (or did not work) for a trusted colleague, may not be best for you - only you understand your unique situation so be sure to take the time to define your goals.

Envision Your Ideal Transition

There are many good ways to bring an additional dentist into your practice. Your preferences will guide your next steps and help you find the right dentist for your practice. By finding someone who shares your vision and goals, you will choose a path that leads to a successful, mutually satisfying relationship long after the initial meeting. Plus, your patients benefit when everyone in the practice is working towards the same goals with a similar approach.

Considerations for hiring

Why are you bringing on an additional dentist?

First, think about the overarching reasons for your practice transition.

Expand services or hours

Look at your current patients’ treatment needs. Is there a service that you currently refer to a specialist that you would prefer to keep in house? If so, consider bringing in a dentist with that skill set. If you want to deliver those services yourself, but you don’t have the time, bringing in an additional dentist could free you to do these procedures or invest in CE to expand your skills and deliver the care yourself.

Alternatively, if your patients are asking for evening or weekend hours, another dentist can allow you to expand your business without taking on the hours yourself. Just make sure that you are open about these requirements with any potential candidates.

Gain a trusted second opinion

You might want another experienced dentist in-house to share decision making or business responsibilities. Another dentist could also be a valuable consultative resource to discuss treatment planning, new materials, techniques or goals. Bringing another professional into the practice can expose you to new methods or ideas – and maybe even reignite your passion for dentistry.

Reduce your own hours

Maybe you want more time for your family, or you are beginning a gradual transition towards retirement. Perhaps you simply want to work fewer hours without compromising the practice’s production. Or you might be experiencing some burnout and want time for yourself away from the practice.

Honesty about your underlying motivations can help attract the right dentist to carry on your practice.

What are your options?

A new dentist can enter your practice in several ways. Consider your goals and long-term plans when deciding which method might be best for your practice. The ADA eBook, Joining and Leaving the Dental Practice, is free for members and explores these options in detail. Here is a quick overview:

An Associate

An associate will be an employee of the practice. The associate is usually 100 percent focused on practicing dentistry rather than managing the practice.

As the practice owner, you would set the associate’s schedule, establish their vacation time, pay for their benefits package and ensure that their work meets the quality of care that you expect. Practice owners often act as a mentor to associates, particularly if the associate is less experienced. This can be very rewarding for both sides.

An Independent Contractor

An independent contractor is contracted to provide care for some of the owner dentist’s patients. The contractor maintains control over all treatment decisions and acts as a business owner by managing their own schedule, fees, appointments and treatment planning. The contractor has responsibility for staffing, supply and maintenance costs, while paying their own salary, taxes and benefits. Be sure to understand the federal laws and penalties for incorrectly classifying independent contractors vs employees.

A Partner

Partners share ownership of the practice and of all the patient records. A partner could own a small share, an equal share or a majority share – and that ratio may change over time, particularly in a long-term buy-out scenario. Partners are generally compensated based on their ownership percentage, and although partners typically make decisions jointly, the majority owner is ultimately responsible for final decisions.

A partnership allows for ongoing consultation and can split the on-call burden. Since the patients are shared, partners often have more flexibility to take vacation or other time off.

Hire an Associate with a Later Sale

If you are looking ahead to retiring within seven years, you may want to hire an associate who agrees to a complete sale at some predetermined point in the future. There are a variety of ways these transitions may be structured with the key being to establish all the terms and conditions at the onset of the relationship, with attorneys who can outline every condition. Here are some conditions to consider:

1. You must determine how the purchase price will be calculated and when it will be determined.
2. Decide what happens if you change your mind, or if the associate either cannot or will not complete the purchase.
3. What happens if you terminate the associate—or if they terminate you after the sale? Think through these eventualities and protect your interests by getting everything in writing.

Who Should You Bring In?

Now that you have considered your options, who would be the ideal person to bring into your practice?

Do you want an experienced dentist who can eventually (or immediately) buy into the practice, or would you prefer a less experienced dentist who you can mentor as they learn to manage a full schedule? Are you looking for someone you can consult with, or someone who can operate independently? How will the new dentist get patients?

Is a new graduate right for your practice?

You might only be considering well-established candidates with the means to purchase a practice and the experience to be a true peer. But if you are planning for the long term, you might want to consider an associate who recently graduated. Bringing in a relatively new graduate might give you the opportunity to mentor and train the perfect collaborative dentist for you.

Recent graduates will not be as fast as you are, and there will certainly be a learning curve as they transition out of “student” mode. They may lack exposure to the business side of dentistry and will require a certain amount of handholding at first. But if you are willing to give a new dentist the time and guidance they need, you have an opportunity to shape the way they deliver care.

If you are considering retiring or slowing down over the next few years, it may be comforting to know that the dentist taking over has similar values and treatment styles as your own – after all, you trained them! Your patients will appreciate the continuity of care and your staff will be on board if they have been watching the incoming dentist grow their skills with your guidance.

Just as the incoming dentist can learn from you, think about the knowledge and energy that a recent graduate can bring to your office! They will have a fresh perspective and the most up-to-date knowledge to share with you and your staff. Be open to new ideas and you may find that your passion for dentistry returns with a vengeance.

What is your best-case scenario?

If you are looking to add a dentist to your practice, think about your ideal outcome:

1. Do you want to share the costs and decisions (and liability) 50/50?
2. Would you prefer to maintain total control of the practice finances and major decisions?
3. Or something in between?

Identify your ideal scenario and work back from there. You need to understand what your ideal looks like to make it happen! Once you have the vision, allow that to drive your decisions.

Regardless of your decision, start mentioning your plans to staff so they are not surprised or blindsided by an announcement. Long-term staff may ultimately work with the new dentist, and their input can be extraordinarily helpful during the interview process.

Valuable Resources

Free to ADA members

Implications of hiring a contractor

Building Your Integration Plan

When adding an associate to your practice, regardless of whether your intention is to eventually sell the practice to the new dentist, it is a good idea to evaluate your practice’s financial situation. Knowing the value of your practice will prepare you for salary negotiations as well as making any improvements or expansions needed to the practice, like purchasing new equipment.

Fair Market Value
Fair market value is usually defined as the cash, or cash equivalent price, for which property would change hands between a willing buyer and a willing seller, both being adequately informed, and neither being compelled to buy or sell. Fair market value also assumes prevailing economic and market conditions. Fair market value can also be thought of as the most likely price upon which a typical and rational buyer and seller will agree. Most dental practice valuations that are done in preparation for a sale strive to determine fair market value as the outcome.

Valuation Service Providers
The cost for a professional valuation can range from $500 to $10,000 and can be conducted by CPAs, banks offering dental loans, dental brokerage firms, or dental consulting firms.

The Bottom Line
Understanding your practice’s value is vital and gives you the information you need to make strategic financial decisions. That is why a practice valuation should be conducted annually, whether you are looking for a transition, or simply to understand the trends and how those may affect your financial future. If you are looking to make a significant change to your business, like bringing in a new dentist, you need to know your baseline so you can look back to ensure the new hire is having the financial impact you desired.

What You Need for a Valuation

If you hire a professional firm to determine the practice value, you will need to have certain documents available. If your goal is to sell all or part of the practice to the associate, you will want to agree on a professional appraisal method today and have the same method used at the time of the sale.

Practice Financials

• Tax returns (last five years)
• Financial statements (last five years and YTD)
• Current fee schedule, accounts receivable, and collection rate

Practice Expenses

• Employee list with compensation, dates of hire, and job descriptions
• New patients per month, with referral source data
• Case acceptance rate
• Dentist and hygiene production and monthly hours worked
• Description of services offered and those referred
• Recare percentage
• Ratio of fee-for-service to managed care

Practice Space and Assets

• Copy of current lease and renewal amendments, or mortgage
• List of all dental equipment with age and condition
• List of all office equipment and furnishings to include in the sale
• Floor plan of current facility and photos
• Liability and insurance policies

Understanding your valuation:

Valuators typically use multiple valuation methods and then weight them differently based on the practice to help them determine fair market value. The most common are:

• Market approach: much like ‘comps’ when buying a home, the market value is determined largely by finding sale prices of similar practices in similar locations.
• Asset approach: consider the equipment, supplies on hand, and the furnishings. The asset approach determines the value of the things you can touch and see.
• Discounted cash approach: uses formulas to project future earnings based on historical performance. This is the approach that the banks are very interested in seeing in a business plan, and why showing growth over the last 5 years is a huge selling point for buyers.

Valuable Resources

Free to ADA members

Prepare for an associate

Before you consider hiring an associate, make sure the practice is ready for another dentist. Remember that the dentist coming in will be more invested in making the practice successful if they feel like an integral part of the practice from day one.

How will the associate get patients

Will you expect the dentist to go out into the community and recruit patients, or are you so busy that you will be able to get patients to them immediately? Look at your treatment wait time, if you are booked out more than 4 weeks, you may be losing patients due to an inability to get them in, and this is a great opportunity to transfer them to the associate. A word of caution: Be very open with yourself about your ability to cede treatment of your existing patients to another dentist. If you are not, you need to develop a plan for recruiting new patients BEFORE you hire someone.

Space considerations

Consider the number of operatories you will have available to the associate and their ability to achieve the production goals that you desire in the given configuration. In addition, many associate dentists like to have space to call their own to concentrate on treatment planning or decompress after a long procedure – look around and see if you can carve out some square footage.

Staffing

Who will be assisting the associate? Make sure you have a plan for the associate to have the appropriate help as they are doing their work. No dentist wants to work without a trained assistant and the quality may be compromised without the help. Figure this out before you begin talking to candidates and have a plan already in place so there is no confusion on the associate first day. In addition, if you expect the associate to hire or train a new staff person, make sure to discuss this with them during the interview.

Schedule

If you are planning on extending hours to evenings or weekends, make sure you communicate this early in the interview process. Many dentists are happy to work later if they have mornings to themselves; and some are morning people who do their best work at the crack of dawn. Know what you want the new schedule to be and how you will staff it, before interviewing, so you can communicate clearly.

Evaluate your collection policies

Production is great but collection is what really matters. Take a good look at your accounts receivable and see if 90% of your fees due are paid within 30 days and the remaining 10% within 60 days. If not, look at your current systems for collection of fees owed – are you submitting claims electronically? Do you have a policy in place for collecting fees that are over 60 days in arrears from patients? What is your current collection percentage? If it is less than 98%, you should take a hard look at the procedures you have in place in the office – especially if you plan on paying the associate based on a percentage of collections.

Create your ideal employment contract

Work with your accountant and review the Associate Contracting Toolkit to know what you are able to offer a dentist. Dentists today are often saddled with student loan payments that can be as high as $4,000-$5,000 per month. Make sure you understand what your situation offers the dentist as compensation and communicate that to the potential associate.

Your staff can be your greatest asset if they are on board with the transition plan. They will encourage the new dentist, help them navigate the particulars of the practice, and help foster trust between patients and the new dentist. Staff continuity can help retain patients through a transition, especially in a long-established practice.

But if your staff is not on board, they can sour or even sabotage the relationship. This may happen when long-time staff members are uncertain about the future and try to protect the status quo.

Sow the seeds of your decision early

Especially if this is your first associate hire, talk to staff about your long-term plans early in the process. You may want to share with them your future goals and vision. They are intimately involved in the business so it is often valuable to get their input - this is particularly important when discussing how the change will affect patient care and procedures in the office.

Consider asking staff for input about how the practice will be able to accommodate an additional dentist and how to best arrange the schedule to ensure both dentists stay productive - will additional staff be required? This is the time to make that decision. Where will the associate go for a bit of 'breathing room'? What if the staff has concerns about the associate? Planning now and ensuring everyone understands the reasons for the change will make the integration of the associate easier and less stressful.

Your long-term staff may feel like family and likely have a vested interest in the practice’s success. Involve them in the decision-making process to bolster this feeling – and gain their support throughout the transition.

Get staff on board

Getting staff buy-in right from the start is key to achieving a stress-free first day. Involving them in decision making early, particularly during interviews, allows them to get a feel as to whether the potential candidate “fits” the practice.

Once the associate is onboard, make sure you and your team are not unconsciously undermining the associate. This can be tricky because the staff knows and trusts you and your way of doing things. The staff needs to recognize that the associate will have their own way of doing procedures or will conduct treatment planning differently from what they are accustomed to under your leadership. Staff may not understand that there are multiple ways to achieve excellent outcomes. Be upfront with staff about how their roles may change. Will they be expected to take on additional responsibilities or learn new materials or techniques? How will the workload change? Be transparent about the process, but do not make promises that the associate may not wish to keep.

Prior to the associate’s first day, consider reviewing some complex charts with the new dentist and staff members. The associate should review the exam information and discuss how they would examine and create a treatment plan for the patient with your staff and you. Consider this an opportunity for the entire office to see that although the approach varies, the incoming dentist has the patient’s best interests at heart.

The last thing you want is for the staff to question the associate’s decisions in front of the patients. This is certain to create tension and foster mistrust between the staff and the associate.

Be sure to watch for signs that the staff is not accepting the associate's decisions. Some ‘red flags’ may be:

• Not scheduling the associate appropriately
• Not conveying trust in the associate to patients, saying things like, “Let’s just check with Dr. Owner before scheduling that procedure” or “I know you love Dr. Owner; I will put you with him.”
• Not taking the associate’s decisions as final
• Actively making harmful statements about the associate to patients or via social media

Communicate

Once you have found the perfect person to join your practice, communicate your news in several ways to make sure it reaches everyone.

• Write a letter to existing patients introducing the associate
• Post the information in the waiting room
• Use your social media channels
• Introduce the associate at community functions and social events
• Introduce the associate to any specialists you work with
• If you do any community outreach, be sure to include the associate

When possible, introduce the associate in person to each patient. It takes less than a minute and can quickly build confidence and trust.

You need to make sure the associate is signed up with any dental plans that your office wants to continue to accept. Tell patients that you have done so. They will appreciate the continuity.

Valuable Resources

Free to ADA members

Build Your Integration Plan

Meeting the Doctor

Be sure to consider your employment agreement before you initiate conversations with prospective associates. Use the Associate Contracting Toolkit as a guide to ensure you have all the tough conversations before your new hire’s first day to mitigate misunderstandings and set expectations.

To-Do: Download the Associate Contracting Toolkit (pdf) and use it as you start creating contracts for your incoming associate.

Employment Agreements

An employment agreement typically has several key elements, which the Dentist Employment Agreements: Key Legal Provisions guide covers in great detail. The Guide (free to ADA members) includes samples you can use to structure your own agreements. At the bare minimum you will want to address the following:

Elements of an employment agreement

Employee vs. Independent Contractor

Consider whether you prefer your new position to be an employee (who follows the owner’s direction and is paid by the owner) or an independent contractor (a self-employed dentist who operates relatively autonomously and handles their own management and finances). This choice has major tax implications, and should be made thoughtfully and with an understanding of the laws, and penalties, surrounding the difference.

Employee Duties

The Duties section sets expectations for both sides. It clarifies the technical requirements of the role (licensure, legal compliance, etc.), the hours to be worked, hours on call, and any collection responsibilities or administrative duties. This section ensures that all the things you may have discussed during negotiation are written down and agreed upon. Since this provision establishes responsibilities, a breach could be grounds for termination – so it is essential to make sure you are both aware of, and completely satisfied with its contents.

Compensation

No matter how much someone enjoys dentistry, they work to get paid. Again, this provision ensures that both parties agree to everything that may have been discussed during negotiation, which may include:

Salary: Salary is a fixed monetary amount paid annually, per month, per week or per diem.

Commission: Commission is based on the employee-dentist’s production, which could be gross billings or net collections. Commission can also vary depending on whether the patient is pre-existing or brought in by the dentist.

• Methods of calculation: Compensation can be computed as straight commission (a flat percentage of the revenue generated, patients treated, or procedures performed) or salary plus (a salary plus, for example, 10% of the commission-base).
• Commission base: Commission can be determined by production (amount billed for an employee-dentist’s work), collection (the gross amount collected) or net profit (the collected amount less delineated expenses, such as lab fees or overhead).

Compensation provisions may also include advances, caps or bonuses. Benefits: Benefits include all the non-wage compensation an employer provides, which can include health insurance, life insurance, disability insurance, paid vacation, sick days, 401k contributions, holiday pay, jury duty pay, family leave, uniforms and bonuses. An employee might also negotiate for benefits such as professional liability insurance, tuition reimbursement, profit sharing or continuing education. Salary and benefits combine into a total compensation package.

Term and Termination

Most states are “at will” states, meaning that either the employer or employee may terminate the employment at any time. The employment agreement typically establishes these terms by providing a fixed employment term. Rather than the “at will” designation, the employment agreement will only allow termination for certain reasons, generally “for cause.” “Term” states the employment period – which may be indefinite with no end date unless certain events occur. These should be clearly spelled out. “Termination” establishes when an agreement may be ended, whether for cause (such as failure to perform duties) or without cause (which might require the employer to pay out the rest of the contract).

Malpractice Insurance

This provision dictates which party is responsible for securing insurance, along with the types and amounts of dental professional liability insurance.

Dispute Resolution

It is much easier to define how you will resolve disputes at the beginning of a relationship rather than after something has gone wrong. This clause may establish your preferences for arbitration, mediation or mediation before arbitration.

Liquidation Damages

This clause establishes what might be required to pay if a party breaches the contract.

Valuable Resources

Free to ADA members

Dentist Employment Agreements: Key Legal Provisions

Am I an Employee or an Independent Contractor?