dental associateships: what to consider before you accept
DESCRIPTION
What you need to know and questions you should ask before you decide to accept the position.TRANSCRIPT
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Associateship Due DiligenceBy Amber Banks, Consultant
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Why Consider an Associateship?• Not ready for practice ownership• Waiting for the right opportunity• Time to improve skills/hand speed• No initial financial risk• Immediate income• Share patient coverage• Learn from the senior dentist
- How to be a clinician and a business owner
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Where to Start: Identify your needs• Map out a long-term plan
- Where do you want to live?- Do you want to be an owner?- What kind of patients do you want to see?- What type of dentistry do you want to do?
• Select your “team”- Accountant - Other- Attorney
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Your Approach to Due Diligence• Weighing available opportunities with the level
of due diligence you would perform• Fewer opportunities = Less Leverage• Requesting items to perform your due diligence: when is the right time?
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Due Diligence: Identify your long-term objective
• What do you want to accomplish out of your Associateship?
• How long do you want to be an Associate?
• What type of compensation do you need to make based on your personal budget? How long will you be okay with making that salary?
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Due Diligence: Know the Senior Dentist• Why do they want to bring in an Associate?• When do they plan on retiring?• Are they a dentist you foresee yourself working with long-term?• Do you feel you will be able to learn from him/her?• What is his/her style of patient care and treatment?• Do all of these items match up with you and how you foresee yourself in practice?
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Due Diligence: Know the practice
• How does the current team feel about an Associate coming in?• Has the practice had other Associates in the past?
- If yes, what happened?
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Understanding the Entire Contract • Contract should be reviewed and negotiated prior to the Associate starting at the practice
• There is no such thing as a “standard” contract- “Entire Agreement”
• Start Date
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Due Diligence: The Contract
Employee vs. Independent Contractor- Who determines what you are?- Tax implications – W2 vs. 1099- Legal implications – Employment vs. I/C Contract- Benefits- Expenses to be covered- Paid time off
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Due Diligence: The Contract
• How will new patients and recall patients be allocated?• Compensation
- How frequently will you be paid?- Daily base pay- Bonus incentives- % of production vs. collections- Lab Fees
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Formula without Lab FeesAssociate Production: $40,000Associate Collections: $38,000Associate Lab Fees: - 0 -Net Collections: $38,000Collection %: 30%Monthly Salary: $11,400
Associate Compensation Formulas
Formula with Lab Fees #1
Associate Production: $40,000Associate Collections: $38,000Associate Lab Fees: (2,600)Net Collections: $35,400Collection %: 35%Monthly Salary: $12,390
Formula with Lab Fees #2Associate Production: $40,000Associate Collections: $38,000Collection %: 35%Net Collections: $13,300Associate Lab Fees: (2,600)Monthly Salary: $10,700
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Understand Your Contract
Non-competition/Non-solicitation/Non-disclosure
Duties and Extent of Services
Representations
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Understand Your Contract
Liability insurance and indemnification
Allowance for uniforms
Expected work hours
Exclusivity- Are you able to work at another practice while Associating with the current practice?
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Understand Your Contract
Expenses to be covered (uniforms, dues, malpractice, licenses, continuing education, etc.)
Term and Termination of Contract
Right-of-first-refusal to purchase the practice
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Understand Your Contract: Buy-In Opportunity
Is there a buy-in provision in the contract? Do you want the opportunity to buy-in?
Understand the expectations of both parties- What % will you be buying in? - When will you have the opportunity to
buy-in?
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Understand Your Contract: Buy-In Opportunity
Will you be financially ready to buy-in down the road?
Will the senior dentist provide seller financing?
Are you emotionally ready to be a practice owner?
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Buy-In Opportunity: Additional Items to Consider
Do you foresee yourself making mutual decisions with this doctor?
Similar treatment philosophies?
How long before you own 100%?
Staff open to the idea of working with a multi-doctor practice?
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Understanding the Buy-In ProcessVERY DETAILED!Process to expect...
Value of practiceCash flow projectionsFuture compensation structure – senior Dr. and new Dr.Assignment of patientsHow will profit be split?Discretionary costs – how will this be handled?Structure of buy-in (asset vs. stock sale)
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Questions?
Contact: Amber Banks, Consultant [email protected]
317-452-4580 ext. 762
For more tips visit our blog at:www.verosdental.com/news-blog/