Sink Your Teeth into This: Negotiating Associate Dentist Contracts
August 7, 2023
At a glance
- Main takeaway: Dental associate contracts are negotiable. Know what terms to look out for and where there’s room to ask for more.
- Impact on your practice: You’ve got your entire career ahead of you. The decisions you make now can influence your future financial and practice goals.
- Next steps: Contact Aprio’s National Dental Practice to review your associate contract. We’ll look at it from a business and financial perspective and help you evaluate your options.
If you’re a dentist preparing to sign an associate’s contract, the first thing you need to know is that everything can be negotiated. With the shortage of dentists right now, you are in a position of strength.
So while it’s helpful to understand certain industry standards or norms, you should feel comfortable advocating for yourself and asking for the contract terms that matter to you most.
1. Compensation structure: Understand how you will be compensated for your services. Will you receive a percentage of collections or production, a fixed salary, or a combination thereof? Clarify how often you’ll receive payments and how they’ll be calculated.
A base salary with a hybrid, production-based pay scale can provide some income security if you’re just starting out. Once you have a year or two under your belt, consider eliminating these minimums, especially if you know the procedure volume is there. As you increase your hand speed and build your skills, you may realize greater financial reward by taking that guaranteed income off the table.
One common compensation model is for the associate to be paid a percentage of net collections. This means you receive a portion of the fees actually collected from patients. Some associates receive a percentage of collections for both dental and hygiene procedures; others are compensated only on what they themselves produce.
If you’re unsure how a compensation formula will be applied, ask the practice to put a working example together as an attachment to the contract. This should show what you’d earn after insurance adjustments or discounts and how a refund would be handled.
2. Tiered compensation: If you’re committed to growing your skills and believe you can grow the practice, consider negotiating for a tiered compensation model that allows you to earn a greater percentage of revenue as you contribute more.
For example, we might see tiered plans that pay out 30% on your first $500,000 in collections, 33% for collections between $500,000 to $750,000, and 35% for any amount over that benchmark.
3. Benefits and perks: As with any job offer, you want to understand the benefits and perks offered by the practice, such as health insurance, retirement plans, vacation days, professional liability coverage, and reimbursement for licensing fees, dues, and professional memberships.
Some practices won’t pay for malpractice insurance. Just remember that you don’t have the ability to deduct that as a business expense when you are an employee receiving a W-2. As a negotiation point, you might ask the practice to pick up that cost after one year of service.
4. Continuing education: Inquire about opportunities for continuing education, professional development and mentorship within the practice. Discuss the practice’s support for your growth and advancement as a dentist.
For example, you might ask for a $5000 annual education budget, to be used at your discretion. It’s generally a good idea to protect your autonomy in choosing what you want to learn and how you’ll develop your skills.
5. Business development: Clarify your expected roles and responsibilities. Are you expected to help bring in new patients? Meet with referral sources? Lead staff development? If you’re expected to help grow the practice, ask for a budget.
Maybe the position comes with a country club membership, a state association membership, season tickets or some other networking perk. If you need the ability to entertain other parties, establish a budget for that up front.
6. Ownership opportunities: Discuss the potential for practice ownership and the path to achieving it. Understand if there is a formal buy-in arrangement or if it would be contingent on certain milestones or criteria, such as years of service, financial contributions (e.g., 50% growth) or patient retention.
Some associate contracts will outline buy-in criteria in detail. Alternately, we see contracts that are far more general with something along the lines of “At the one-year mark, the associate and owner will have a meaningful conversation about practice ownership opportunities.” Having the conversation up front with specifics makes future conversations much easier.
7. Non-compete and restrictive covenants: Review any non-compete or restrictive covenants. These clauses might limit your ability to practice dentistry in a particular geographic area or timeframe after leaving the practice.
The term of covenants and distance of covenants can vary greatly. Don’t assume what a colleague has in their employment contract is applicable to the contract terms you are considering. Talk to a dental practice attorney about what’s enforceable in your state and how to reasonably protect your own interests here.
8. Termination provisions: Familiarize yourself with the terms of termination, both from your end and the employer’s. Understand the notice period required, conditions for termination with- or without cause and any associated penalties or obligations. Clarify, for example, whether you’ll be compensated for yet-to-be-collected work after termination. Again, consult with an attorney who can ensure your rights and interests are protected.
Finally, there are certain aspects of any employment relationship that aren’t easily nailed down in a contract. Discuss the scope of practice, level of autonomy and procedures you’ll be allowed to perform independently versus those requiring supervision or consultation.
Try to get a feel for the practice owner’s values. Pay attention to how they talk about their spouse, team members and past associates. Gauge their commitment to education and mentorship. If your values don’t align, you won’t be happy.
The bottom line
Before signing an associate dentist contract, understand and negotiate key terms such as compensation, growth incentives, benefits and ownership potential to protect your interests and set yourself up for professional success.
Aprio’s National Dental Practice can help you make the most of your career—whether you’re a new graduate, an associate, or ready to build a practice of your own.