Class 7: Associateship and Practice Ownership
Introductions
Dr. Rodriguez is a general dentist from the clear lake area. He found an opportunity where a general dentist in his area was moving their whole practice to a new location, yet wanted someone to pick up their lease. He bought into the practice without any patients yet had the equipment and "shell of a practice". His office has been in business for 17 years.
Dr. Abbassi is a general dentist practicing in the greater Houston area. She started a practice and sold her practice to a prosthodontist after the area became saturated. She has had multiple experiences as an associate in private practice as well as group practices.
Qualities of an Associate
Qualities of a good associate:
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Aligning practice philosophy
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Flexibility
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Self-starter
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Initiative
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Life-long learner
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Engaged in patients
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Quality personality
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Easy to work with
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Capable clinician
Leisure Time?
Leisure time of a practice owner depends on the type of owner you are. Setting up your office as a hands-on versus hands-off owner will affect your leisure time. There are benefits to learning each facet of the business like Quickbooks, dental insurance, payroll, marketing, scheduling, software, etc. Ultimately knowing the specifics of the business and improving your clinical skills are important particularly in the first 5-7 years of owning a dental office.
As an associate leisure time is easier to schedule, however treating patients as your own is important. Time off can be easier to schedule and more flexible, yet making sure that you are considerate of the treatment of your patient and their needs in a timely manner are important.
Daily Stressors / Challenges
In general staff issues / staff relations remain as a top daily challenge/stressor for practice owners as well as associates.
As a practice owner keeping the schedule full is a priority and can cause a daily challenge. This challenge is mitigated by motivating the schedulers of the office to decrease no shows / cancellations and increase recall. As an associate production (or take home pay) is affected by the schedule, yet there is less control as an associate to alter the schedule. Although as an associate improving patient interactions, communication, and ensuring that a next appointment is scheduled can be ways that an associate can have more control over their schedule.
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Taxes Exemptions
Tax exemptions can vastly affect your take home pay particularly if you are high net income earner (most dentists). Approximately one-third of your income can go to taxes, so this in general will be a large expense.
As a practice owner many expenses can reduce your net income (therefore reduce taxes). Some are professional education classes, association professional dues, leased cars, cell phones, hotels, or products purchased at CE exhibit halls as examples. An accountant can provide insight as to which purchases are recommended for your specific tax situation. They can also assess your level of risk and provide recommendations particularly since the tax code changes constantly.
As an associate employees with a W2 will have very limited tax benefits. An associate that is an independent contractor (1099) will have more tax benefits, yet will be required to pay increased taxes since the employer will not be paying that portion for the associate. General understanding of the tax code is important and a CPA/accountant can help with this.
Debt Management
Debt management is important to be aware of, yet should not prevent dentists from their goals. Debts can be managed through budgeting and financial awareness. Assessing your situation then enacting a financial strategy can be beneficial to achieve your personal and professional goals. One strategy is to increase payment towards the student loan debt - or "paying down the loan". For this strategy, when additional payment is applied this should go towards the principal if possible instead of posting as a normal payment that goes towards the principal and interest.
In general, to have financial stability you can either increase revenue or decrease expenses. As an associate and practice owner you will have more control over expenses than revenue. Therefore, it is prudent to consider costs of house and practice loan amounts. When purchasing an office it is important to consider what the cash flow will be when purchasing office space and new equipment.
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Practice of Dentistry
Being an owner or associate, the focus remains on the patient and their dental needs/care. An associate is more likely and has more potential to leave the practice. Therefore, while the focus remains on the patient it might be that a practice owner will have a longer-term view of the patient's oral health.
Employee Benefits
There are multiple employee benefits that can be offered at a business. These entice quality employees to join the practice and stay working in the practice year after year. However, not all small businesses can compete with larger companies on providing these benefits. Small businesses many times are not required to offer particular benefits.
Some benefits that can be offered are:
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Health insurance
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401k match program
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Disability insurance compensation
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Malpractice insurance compensation
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Health programs
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Dependent care programs
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Vacation / sick policies
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Etc.
Benefits offered can affect your decision to work at a particular dental office. As an associate if you are an independent contractor (1099), typically it is beneficial to start a business entity anyways in this situation and there are benefits that can be used through this entity. In addition, regardless of the benefits offered you should have some means for retirement savings as early as possible.
Adding Services
When implementing a cheaper new product this can be fairly easy as an associate or practice owner. Although associates should be mindful of the products available to them prior to asking for different products that can already be used in the office. New products like CAD/CAM or other large purchases can be difficult for associates and practice owners due to workflow changes and possible staff barriers.
When implementing a new service that is not already offered can be difficult for associates and practice owners. It is possible that the owners will be happy that another service can be offered - this decreases lost revenue from referred services. Yet can be difficult to start if the initial costs (like implants) are high to begin the new service.
As an associate requesting different products or services it might depend on the situation and the practice owner. Ultimately it is the decision of the practice owner to have the control and flexibility to choose which products and services are provided in their business.
Dental Team
The main professionals that are used by practice owners and associates are:
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Accountant
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Financial advisor
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Lawyer
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Consultant
There are a multitude of other professionals that dentists use as part of the dental team to provide dental care and business expertise to make the dental office run smoothly.
It is important to keep in mind the value that the other dental team professionals provide versus the cost that you pay. Asking other dentists can help to avoid pitfalls of possibly hiring the wrong person for the job.
General Advice
Benefits of practice ownership are the flexibility in scheduling and ability to control aspects of the work environment. Owners build a dental practice and therefore build equity in the business. At some point when these owners are ready to sell this could be a part of the overall retirement plan. The effort of running the practice and building the business over many years can be converted to financial gain after selling the business. Also, pride of being a business owner contributes to the benefits of owning a dental office.
Also, it is important to have personal goals. Just as we speak about having a business mission and vision - the same is true in your personal life. What are the goals you would like to accomplish in the next 5, 10, 30, 50 years of your life? Write these down and work backwards to understand which steps you will need to do next and what financial obligations you will be required to complete.
Self-Assessment
Please use this self-assessment tool to see your understanding of the material. Click on the answer that you feel is the best. If you choose the incorrect answer you can use the arrow on the upper left or click "try again" to go back to the question.
