This is the million dollar question . Actually the $1.75 million dollar question. Most dentists will consider this question at some point in their careers. Why do I say, the $1.75 million dollar question. This is the minimum gross production required today for a solo dentist before they should even consider bringing on another dentist.
Let’s get into the weeds! Let’s assume you work a 16 day month or 192 days per year . Your daily production would be $9115 per day . Doctor production of $5000/ day with two hygienists producing $2000 each gets you there. Hopefully you are primarily a fee for service practice. If you choose to be a PPO practice and accept the average 25% reduction in fees your net collections will be $1,312,500 . That is a $437,500 write down and a lot of wear and tear on the doctor and staff. I can’t imagine accepting that kind of writeoff, especially after covid and the increase in overhead costs dentists are experiencing.
What will your staffing look like if you are producing $1.75 Million ? You will have 7 staff members. The benchmark is $250,000 per full time equivalent staff person. Two hygienists, three assistants, and two front office personnel.
Your clinic would consist of 6-7 operatories. The benchmark production is $250,000- $300,000 per op.
Your collections should be running 97%-98%. New patients should be approaching 50 per month. Active patients should total 2400. Two recalls per year with two hygienists per day treating patients will have you checking approximately 20- 24 hygiene patients per day. The doctor will provide direct operative care to between 8-12 patients, depending on procedures of course.
Consider that 24 periodic exams will yield approximately $1200- $1600 per day . With today’s fees , total production will be approximately $9000 with $5000 produced by the doctor and $2000 per hygienist x 2 hygienists or $4000 total hygiene production. This is hard work to be sure. You must have an outstanding staff and be a dentist who can provide quality care efficiently while maintaining a great chairside manner. You will need to be a leader, be able to delegate and have good systems. This is readily achievable for the general dentist.
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Once you are producing at this level of production you need to decide if you are prepared to bring on another dentist. Are you prepared emotionally to share your patients , staff, and facility? Consider that patients come to your office for you . You are their dentist. How will they feel when they have to see another dentist? You must be prepared to lose some patients because you will.
The Statistics
Did you know that approximately 90% of associateships /partnerships fail. You heard it right. Most practice management consultants will tell you that you must leverage the work of others and that your ticket to a bigger practice and more money is adding dentists to your staff. This failure rate is a sobering statistic. How many of these experts had successful practices?
Practice Growth Years
Most dentists, after practicing 5-10 years, start to get the itch for hiring an associate.They are growing. Their production numbers are up, yet they are tired . They want more time off. They want someone to help manage the staff issues. They want more revenue coming in. They want a partner to buy in so they can tap their equity and spread capital equipment costs over a couple of dentists. They want a colleague to confide in. These are all well and good but they come with a price.
Today I am seeing dentists coming right out of school attempting to build and manage multiple location practices. This is before they have developed the clinical and management skills necessary to run a successful solo practice. These entrepreneurial doctors grace the cover of many publications. Their peers read the articles and wonder why they are not measuring up to the success of their colleagues. Dentists are so competitive ,always comparing themselves to colleagues. Remember that every practice looks perfect from a distance. Many of these dentists are struggling as well. They are battling huge debt levels. I have spoken to them and their advisors. They struggle with the same issues all dentists do and are trying to get to where they want to be.
Bigger Isn’t Always Better
I had several patients who were owners of large manufacturing businesses. They would always say a bigger business means bigger problems and headaches. Be careful what you wish for.
Before you consider bringing on an associate you must have your house in order from a management and financial standpoint. Do you possess good clinical and treatment planning skills? Do you consider yourself a strong leader? Are you able to effectively manage staff and deal with conflict? Are you good at training and mentoring? Are you ok with relinquishing control? Are you going to be ok with redoing some dentistry? Do you effectively delegate? Are you an outstanding listener and communicator? Are you prepared to make less money for the first 12- 18 months? Your answer to all of these questions had better be an unequivocal YES!
The Associate What are they looking for?
Associates want a job ! They want a steady patient flow of patients who say yes to their treatment. They want to perform higher dollar treatment. They want to earn an income that allows them to service their debt load and reward them with a standard of living commensurate with that of a high income earner. After all, they deserve that much after 8 years of sacrifice. Who can blame them ! They want to use supplies and laboratories they choose. They would like freedom in their schedule. They want to take some vacations. They soon learn that when they are away from the office, they are not treatment planning ,so production and pay drops off.. They want experienced staff and a doctor to mentor them. They want to develop their clinical experience and not be micromanaged.
Remember they are inexperienced clinically. Dental schools are finding it difficult to get students adequate treatment experiences compared to decades ago . I have spoken to numerous faculty across the country and the students are not getting sufficient repetitions in the various disciplines. This is a shame considering the debt these students incur. I spoke with a dean of a prominent dental school who shared with me that two recent graduates of a dental class, upon graduating , returned to their previous profession. Dentistry wasn’t what they had hoped. I have always said that students should have a better idea of what dentistry is all about before investing the 8 years and all the capital to become a practicing dentist, but that is an article for another day.
You had better be prepared to give these young dentists what they want or they will become disillusioned and leave .
What Associates Don’t Want
Associates don’t want the burden or responsibility of managing staff, however they soon find out that this is required of them whether they are the owner or the associate. They don’t want to have to market themselves ,however they soon learn that to continue to have a steady patient flow, they have to market themselves in the community. Young doctors don’t want the owner looking over their shoulder micromanaging them. They don’t want a long term commitment to making money for their boss.
The Ideal Associate
There are some excellent self starters . Good clinicians who are independent and hard working, eager to learn, and want to produce. The problem is the owner signs them up for the PPO treadmill and dumps the barber shop dentistry on them . They are required to check 2-3 hygienists and are still expected to produce dentistry by their hands . They want to learn the ropes. These are outstanding prospects but the owner lacks the skill to manage these doctors. If you are fortunate to land one of these , give them the freedom and support them. I had several associates in my career . I offered to sit down and share the financials with every one of them but none took me up on this . I gave them the freedom to produce. My top associate loved oral surgery as did I. He diagnosed and treatment planned 4 full bony impactions , and while I personally would not have performed the case , I allowed him the freedom and he did well. He was a great producer . He went on to become an outstanding oral surgeon.
The Owners! Oh The Owners!
Some owners don’t want to mentor . They just want the profits. I know owners who appoint the treatment diagnosed by the associate to their chair, effectively stealing the patient . This is terrible! This is often because the owner is finding it difficult to pay the high producing doctor. I have seen this over and over again! I know it’s your practice , your staff , your patients , your equipment. You have a great candidate and because of your greed and management inexperience you squander the opportunity. The neglected associate feels taken advantage of, and becomes resentful. This is far from what they envisioned when they signed on. There was no effective communication regarding expectations for either party .
All the time and effort ! All the expense. All the turmoil for the staff. Some staff actually leave the practice because of the chaos. The revolving door of associateships has begun! The owner goes on to repeat this costly mistake over and over again. Many for the remainder of their careers. Each time you lose an associate, it will cost you between $50,000- $75,000 .
Consider what happens when all the above occurs in a partnership. I’ve witnessed this too many times. It’s like a marriage . A business divorce is devastating. The emotional and financial toll is enormous. There can only be one captain of the ship ! There will always be one of the partners who feels they are being taken advantage of or slighted. My mentoring advice. DO NOTPARTNER. When the time for transition arrives it becomes difficult to sell your interest.
The Solution
The most you will net from an associate will fall in the $70,000 range if you are lucky. That is a doctor producing $1 million and netting $750,000 after insurance discounts. The owner will realize a 10-15% if lucky. Most owners break even or lose money . Why not consider hiring another hygienist. The average net from a commissioned hygienist is $125,000. More profitable with less headache. Just remember , three hygienists are the most a dentist can check comfortably and still produce on their side. There comes a time when you must be happy with your income level after reaching the maximum production . Anything more comes at too great a price. The choice is yours!
If you need help getting to the next level , I’m happy to help and I’m just a phone call away. Contact me here!