Dental Associateships: What to Consider Before You Accept
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Associateship Due Diligence By Amber Banks, Consultant
description
What you need to know and questions you should ask before you decide to accept the position.
Transcript of Dental Associateships: What to Consider Before You Accept
Associateship Due DiligenceBy Amber Banks, Consultant
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
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
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?
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?
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?
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?
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
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
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
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
Understand Your Contract
Non-competition/Non-solicitation/Non-disclosure
Duties and Extent of Services
Representations
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?
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
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?
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?
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?
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)
Questions?
Contact: Amber Banks, Consultant [email protected]
317-452-4580 ext. 762
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