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Associate – To Hire or Not to Hire?

Summer is associate hiring season. It’s that time of year when a newly minted crop of dentists are graduating and those one or two years out of school have contracts coming up for renewal. It’s no surprise to see the searching and shuffling that goes on as the thermometer pushes to record highs. Have you received any calls, letters or emails?

If so, or if you’re just considering the possibilities, the reasons for adding an associate should be clearly defined and should provide clear benefits to you and your practice. We are often asked by practice owners to find associate dentists, and we now have extensive and dedicated resources to do so. Most of the time, the reasons and rationale for the addition of an associate have not been clearly defined or evaluated and can prove detrimental to the practice. Here are some things to consider..

Do you have a facility that will support an associate?
If you don’t have at least six operatories, you don’t have enough room. Creative scheduling works in some cases but is rarely opportune – plan for normal hours, so there is enough room for both of you unless you plan to take considerable time off.

Do you have a healthy single doctor practice? 
Go to your patient files and count the number of patients who regularly have come to the office over the last 18 months (“active patients”). Generally, a healthy single doctor general practice will have 1200 to 1800. Practices that specialize in larger cases will have less. If you’re below these ranges, you likely don’t have adequate patient base for an associate. Additionally, if your gross production is less than about $1,200,000, the practice will likely not produce enough net income for all of the producers (doctors). Therefore, the senior doctor will experience a loss of net income for any period of time that it takes to build the practice to the required level.

Do you have enough patients of record to support a second doctor’s production?
Now, count the number of inactive patients, those that have not been in the office in the last 18 months. You will need about 200-250 “inactive” patients per day of planned associate employment to keep that associate busy. For example, for two days per week of an associate, you should have 400-500 inactive patients. Overall, if you can identify 500-600 patients who can be reactivated, in excess of your normal schedule, plus two or more new patients per day (on average) you might be able to hire a full-time associate. Less? Think part-time or no-time, more likely the latter. We emphasize that you are looking for patients who are not regularly seen in your practice now. If you include patients that you are seeing, you are cannibalizing your own production.

What about your staff expenses?
Associates are generally paid 30%-40% of their collections, and many are now demanding salary guarantees. You must be able to further support them with staff. Do you have enough assistant time available to accommodate a new associate? If no, consider that the highest single expense of any office is staff. Hiring another assistant or more administrative staff will result in increased overhead which will extend a break-even or create a lower bottom line. Despite what the rumors may say, usually, associates do not build practices. They do not go out to promote themselves or the practice, even if it is a stipulation in their employment agreement.

Do you plan to have the associate as your exit strategy?
If bringing an associate to your office is a transition or exit strategy, you need to carefully evaluate the true economic benefit. If you intend to work for 1-2 years with a defined exit date, then it may work. If the time frame for exit is 3-5 years, the cost of the associate may not result in any economic benefit at all. If it’s a “buy-in” type arrangement you’re seeking, know that it’s at least a 5-10 year process.

When an associate does specialty work that is normally referred out of the office to specialists, the practice will indeed keep part of those revenues. However, when the associate treats patients of the practice that the senior doctor normally treats, the practice only keeps the difference between the actual net income of the practice and the total cost of the associate. This percentage may approximate 5% to 10% of gross associate collections!

Many doctors are under the impression that associates are ‘money-makers’ for the practice. Unfortunately, in most cases, an associate will either be a break-even or losing proposition for an office, and unless a longer range strategy is meant to be implemented, the drain will only cost you, the senior doctor, money.

If you are considering the addition of an associate to your practice or planning your exit strategy, please call us and our local representative will schedule an appointment with you to assist you in preparing for your transition.

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