associateship
FOUNDATIONAL GUIDELINES FOR
Incorporating an Associate
by Bethany Petty
Many practice owners reach a point in their career where an associate either becomes necessary or desired . The driving force behind hiring an associate varies widely . In many cases , the practice simply grows unmanageable for one doctor . In other scenarios , the owning doctor has physical , emotional , or logistic constraints that require them to work less . Other practice owners reach a point where they simply desire to share the load with another provider to have the freedom to pursue new interests , hobbies , or to grow a new side of the practice . At times , practice owners bring in a specialist to serve the referral needs of their patient base .
For the sake of brevity , this article will focus on the two most popular reasons for bringing on an associate – unmanageable practice growth and the need to work less or share the workload . In most cases , associates are considered when the practice owner has fully maximized their schedule . They have maximized the physical space and added all of the chairs or operatories possible . They have maximized their schedule , often working five to six days per week to accommodate their patient base . For general practitioners , when it becomes necessary to add a third hygienist , the load of hygiene exams often becomes too difficult to manage . When a practice is showing predictable growth in both production and number of patients , an associate can be considered .
Some foundational markers that a practice needs to accommodate an associate are :
n Predictable and controlled overhead expenses . n Minimum ( consistent ) collections of $ 80- $ 90K monthly n Enough operatories to accommodate all providers
Based on the dental specialty , total overhead expenses should range between 60-70 % of total collections , excluding practice owner pay . In order to decide how much budget is available for an associate , a detailed conversation should occur with a financial advisor or CPA who is familiar with the ongoing health of the practice .
A simple math example for available associate budget is : n Average monthly collections of $ 90,000 n Monthly overhead ( 60 %) $ 54,000 n Practice owner pay $ 20,000 n Available net profit $ 16,000
Depending on the parameters set by the CPA , the full $ 16,000 net profit may not be truly available if savings or investments are pulled from this category . For the sake of this article , let ’ s assume that $ 8,000 per month is set aside for savings , taxes , or investments . The remaining $ 8,000 would be the budget for the associate .
Current associate pay , depending on the specialty , ranges on average daily from $ 700 to $ 1500 . With $ 8,000 in allowable monthly budget , the practice could likely afford a one day per week associate . Factors like independent contractor status or W-4 status , benefits , and paid insurance premiums would impact the total anticipated budget for the associate .
For practice owners struggling to manage their current patient load , bringing on an associate could positively impact the practice , patient care , and practice owner quality of life . In order to get the proverbial ball rolling , the following steps would be wise :
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Pull the last six months of dental software reports to determine monthly practice production , monthly collections , total new patients , and active patient base . Monthly numbers should show predictable growth in both production and patient base . If the practice production vacillates , it is important to stabilize the schedule and the production to be predictable each month . A solid , growing foundation is important before bringing on an associate .
Schedule time with your CPA and / or financial advisor to determine the available budget for an associate . The information gleaned in this conversation will give the practice owner the direction on how many days a week an
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