Dental Contracts: What's Fair & What's not

[DodgeCaravan]

I'm fresh out of dental school and have been offered a contract from a dentist who lives close to me. I saw his office between 3rd and 4th year and it looked like a good fit. Now as I look at the contract he presented to me, it seems so one-sided (in his favor) and very restrictive. I don't feel good about signing it, but I'm not sure what is reasonable. He had never had an associate before.

Here's a summary:
12 month contract
40% commission for work I do
first 3 months both parties have option to leave with 90 days notice.
Leaving after the first 3 months will incur a penalty of 17% gross billings.
Working within 3 miles of the clinic or soliciting patients after leaving will incur a penalty of 17% gross billings.
No guarantee of patients mentioned.
Hours set forth in schedule can only be modified if both parties agree.
Can't work at another clinic without his permission.
Work mainly evening and weekends.

My biggest concern is that I'll be sitting around for the next year doing the odd scaling and simple filling and build up his practice for someone else. I've never worked commission and the idea of signing on for 1 year is concerning.

Just curious if others have had similar experiences.
Thanks

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[Rubber Dam Man]

I'm fresh out of dental school and have been offered a contract from a dentist who lives close to me. I saw his office between 3rd and 4th year and it looked like a good fit. Now as I look at the contract he presented to me, it seems so one-sided (in his favor) and very restrictive. I don't feel good about signing it, but I'm not sure what is reasonable. He had never had an associate before.

Here's a summary:
12 month contract
40% commission for work I do
first 3 months both parties have option to leave with 90 days notice.
Leaving after the first 3 months will incur a penalty of 17% gross billings.
Working within 3 miles of the clinic or soliciting patients after leaving will incur a penalty of 17% gross billings.
No guarantee of patients mentioned.
Hours set forth in schedule can only be modified if both parties agree.
Can't work at another clinic without his permission.
Work mainly evening and weekends.

My biggest concern is that I'll be sitting around for the next year doing the odd scaling and simple filling and build up his practice for someone else. I've never worked commission and the idea of signing on for 1 year is concerning.

Just curious if others have had similar experiences.
Thanks

I cannot provide any advice as I am only beginning dental school. However, I HIGHLY recommend that you read this thread by The Hammer considering that you are out of dental school...

http://forums.studentdoctor.net/showthread.php?t=739665

 

[polkadds]

I'm sure you will get other comments from people with real experience. But I know, at least in my area 40% of production would be really good. On average new associates are making 20-25%. Is he paying you based on production or collection? It is important that he pay you on production because if not you will have to make sure the patients pay. Do you supply your own patients, or will they be his patients? From the little detail you mentioned it doesn't sound like a bad deal as long as the 2 of you mesh.

my .02 cents

 

[Noble6]

Don't most of these associate contracts have a base pay OR % of production, whichever is higher? I don't think I'd feel comfortable with this contract either to be honest...

 

[dentalWorks]

I'm fresh out of dental school and have been offered a contract from a dentist who lives close to me. I saw his office between 3rd and 4th year and it looked like a good fit. Now as I look at the contract he presented to me, it seems so one-sided (in his favor) and very restrictive. I don't feel good about signing it, but I'm not sure what is reasonable. He had never had an associate before.

Here's a summary:
12 month contract
40% commission for work I do
first 3 months both parties have option to leave with 90 days notice.
Leaving after the first 3 months will incur a penalty of 17% gross billings.
Working within 3 miles of the clinic or soliciting patients after leaving will incur a penalty of 17% gross billings.
No guarantee of patients mentioned.
Hours set forth in schedule can only be modified if both parties agree.
Can't work at another clinic without his permission.
Work mainly evening and weekends.

My biggest concern is that I'll be sitting around for the next year doing the odd scaling and simple filling and build up his practice for someone else. I've never worked commission and the idea of signing on for 1 year is concerning.

Just curious if others have had similar experiences.
Thanks

you need to be careful of what happens AFTER the 12 month period. Some contracts I've seen usually specify the associate not able to get a job within a 5-mile radius for 5 years....

Also, is that 40% of what is collected or what is billed? This will make a big difference. How are lab fees handled for procedures you work?

I would get in touch with an older dentist (family member / friend) who is familiar with these types of contracts and have him/her read over it. See what they recommend

 

[DodgeCaravan]

It's 40% of net collected billings. He pays the lab fees. This is common in this city.
There is a restrictive covenent, 3 miles for 2 years.
I'm responsible for advertising costs.
I'm responsible for bringing in patients, though, he says he will try to send work my way as much as he can.

Thanks Rubber Dam Man for the link. It was pretty helpful.

 

[OceanDMD]

It's 40% of net collected billings. He pays the lab fees. This is common in this city.
There is a restrictive covenent, 3 miles for 2 years.
I'm responsible for advertising costs.
I'm responsible for bringing in patients, though, he says he will try to send work my way as much as he can.

Thanks Rubber Dam Man for the link. It was pretty helpful.

GO to dentaltown practice transitions thread and present this. Dentists rather than students can give you an answer. My suggestions:

1- make sure you have a minimum salary. Depending on where you live this could range from 75k - 125k. Either this guy is busy enough to bring on an associate and pay you this, or he isn't and beware.
2- I imagine if you leave within the first 3 months he would have a hard time enforcing a non-compete. You might want to make this part of your negotiations.
3- Get rid of this 17% penalty if you leave. Hes nickel and diming you. If you do the work you should get paid for the work.

Couple other things to consider, who pays malpractice, CE benefits, Health insurance benefits, etc.... Have much more to take into consideration than whats in this contract.

 

[monreal]

It's 40% of net collected billings. He pays the lab fees. This is common in this city.
There is a restrictive covenent, 3 miles for 2 years.
I'm responsible for advertising costs.
I'm responsible for bringing in patients, though, he says he will try to send work my way as much as he can.

Thanks Rubber Dam Man for the link. It was pretty helpful.

So basically he is extending hours and wants someone to cover his evenings/weekends and build the practice for him. Don't walk away. RUN! Because it's gonna go so slow for you. This is too much risk for an associate. If I am gonna have down time and advertise to bring in patients then I'd rather be doing this in my own office.

Keep looking. And the first thing I would look for in an associate position is being busy, you should NOT worry about bringing in patient. Look at the active patients counts and hygiene numbers; a practice with 2000 active patients and one hygienist will not support another dentist. Also percentage means nothing alone. What does his fee schedule look like? Are you gonna work out of two chairs using help of two assistants or just one. How far ahead is he booked? Are you replacing a departing associate? If yes, why are they leaving? I'd rather the 25% seeing 10 patients/day than 50% doing two fillings/day.

 

[DodgeCaravan]

Thanks for the advice. At this stage of negotiations it would be awkward and risky to walk away. I've heard of associates getting sued successfully for breaking verbal contracts. I will however ask for a reasonable guaranteed monthly income to be added to give me some peace of mind.

I pay for malpractice, disability, life insurance, continuing ed. In Canada, the health insurance comes out of our taxes (public health). Very few Medicare patients at this practice (called "social assistance" in Canada, we get quite a few at the dental school).

If there's one thing I've learned from all this is that when negotiating the contract, go for what you want and don't assume the other party will put into the contract anything that would be beneficial to you.

Alternatively I've known some who just go into it on a handshake (just be sure to document any verbal agreement made in case things go nasty later).

 

[txlonghorn]

you need to be careful of what happens AFTER the 12 month period. Some contracts I've seen usually specify the associate not able to get a job within a 5-mile radius for 5 years....

Depends on the state. I know that non-competes don't really hold up in Texas, unless the owner provides confidential information that the employee uses when they leave the practice. I would guess they can say patients contacts are confidential, but I don't think that would hold up.

 

[DodgeCaravan]

Depends on the state. I know that non-competes don't really hold up in Texas, unless the owner provides confidential information that the employee uses when they leave the practice. I would guess they can say patients contacts are confidential, but I don't think that would hold up.

I've been told the same for Canada as well, however I've heard that the legal process to prove that can still be expensive and time consuming.

 

[Demeter]

Thanks for the advice. At this stage of negotiations it would be awkward and risky to walk away. I've heard of associates getting sued successfully for breaking verbal contracts. I will however ask for a reasonable guaranteed monthly income to be added to give me some peace of mind.

Dodge- why would do you feel that it would be awkward and risky to walk away. You don't have to work for this guy if you don't think it is a fair deal. I don't think this practice is busy enough to support two dentist. When an associate is expected to generate their own new patients w/ marketing etc is a sign that there won't be much work for the new guy.
How do you plan on getting patients?

 

[DrJeff]

Gotta find out what the historical collection percentage of that practice is. 40% is a good number, but if they only collect on average say 75% of production - then you need to do about 350k of production to have about 100k come home to you.

Secondly, why if after 90 days if you leave should you pay a penalty if you leave?? You're leaving, and isn't that penalty enough??

The 3 mile restrictive covenant sound reasonable.

No guarentee of patients could be an issue. You might want to see if you can get a reasonable daily per diem guarentee, so that if the patient load is small, you'll atleast be getting a set income. That would also show that the practice owner both 1) thinks that their is sufficient business for you and 2) is motivated to make sure that your schedule is sufficiently full that you're producing/collecting enough to cover that daily per diem (which also makes the practice owner a few extra $$$ off of you too)

 

[dwoo]

That is a nightmare contract. Run away.
I have quite a few friends that have gone through this same scenario. They guarantee you no work because they don't have much extra. When you realize that you don't like sitting around doing nothing (and making no money since you are paid on commission), you will owe them money to leave the practice. This will only end in disaster.

 

[browncrack]

Things you can do:

-Run. This is a bad contract.
-Run. Feeling obligated based on a negotiation only means more phychologic abuse down the road.
-Ask for a guarateed 90 day and 1 year payment as a guaranteed minimum dollar target.
-Ask for a mixed dollar payout with % for collections in excess of a specific target for total office production.
-Ask where you can get patients to acheive a first year salary of $35,000 under the existing contract. Will the dentist help to get more patients?
-Take the offer as presented and prepare to be unhappy.

More ideas, short on time.

 

[dentstd]

I'm fresh out of dental school and have been offered a contract from a dentist who lives close to me. I saw his office between 3rd and 4th year and it looked like a good fit. Now as I look at the contract he presented to me, it seems so one-sided (in his favor) and very restrictive. I don't feel good about signing it, but I'm not sure what is reasonable. He had never had an associate before.

Here's a summary:
12 month contract
40% commission for work I do
first 3 months both parties have option to leave with 90 days notice.
Leaving after the first 3 months will incur a penalty of 17% gross billings.
Working within 3 miles of the clinic or soliciting patients after leaving will incur a penalty of 17% gross billings.
No guarantee of patients mentioned.
Hours set forth in schedule can only be modified if both parties agree.
Can't work at another clinic without his permission.
Work mainly evening and weekends.

My biggest concern is that I'll be sitting around for the next year doing the odd scaling and simple filling and build up his practice for someone else. I've never worked commission and the idea of signing on for 1 year is concerning.

Just curious if others have had similar experiences.
Thanks

Something you should be aware of...

The contract specified that you cannot work afterwards within a certain distance, for a certain amount of time. This is termed a Covenant to Not Compete (legal term). Covenants to Not Compete are typically not enforcable by law. If you terminate employment and opened a clinic right next to his, you're well within your legal rights to do so. Employers include Covenants to Not Compete as a threat, hoping that it'll deter the employee from competing. It has no legal value, because it's against public policy. The courts will ignore that clause.

Second, there are several Liquidation Clauses in that contract. (such and such penalty if you do this) Again, these can be unenforcible, depending on how it's written. If it's a straight up penalty, then it may be unenforcible.

The contract itself doesn't look all that bad, if you know your law. Most of what the contract states cannot be enforced by law. You have to know your rights.

 

[dentstd]

I'm fresh out of dental school and have been offered a contract from a dentist who lives close to me. I saw his office between 3rd and 4th year and it looked like a good fit. Now as I look at the contract he presented to me, it seems so one-sided (in his favor) and very restrictive. I don't feel good about signing it, but I'm not sure what is reasonable. He had never had an associate before.

Here's a summary:
12 month contract
40% commission for work I do
first 3 months both parties have option to leave with 90 days notice.
Leaving after the first 3 months will incur a penalty of 17% gross billings.
Working within 3 miles of the clinic or soliciting patients after leaving will incur a penalty of 17% gross billings.
No guarantee of patients mentioned.
Hours set forth in schedule can only be modified if both parties agree.
Can't work at another clinic without his permission.
Work mainly evening and weekends.

My biggest concern is that I'll be sitting around for the next year doing the odd scaling and simple filling and build up his practice for someone else. I've never worked commission and the idea of signing on for 1 year is concerning.

Just curious if others have had similar experiences.
Thanks

You know what? You should run for it. This is not the job you want, if these are the contract terms.

He's under no obligation to ensure your survival (give you enough procedures to ensure you can pay your bills) but he wants the power to dictate whether you can get another job and where you work. This puts you in a situation where, if you can't make ends meet, you can't do anything about it (except to terminate the contract and work elsewhere). This is a lawsuit waiting to happen. You'll likely win the law suit, because there are so many problematic clauses in the contract, but you don't want to enter a lawsuit in the first place.

 

[monreal]

Something you should be aware of...

The contract specified that you cannot work afterwards within a certain distance, for a certain amount of time. This is termed a Covenant to Not Compete (legal term). Covenants to Not Compete are typically not enforcable by law. If you terminate employment and opened a clinic right next to his, you're well within your legal rights to do so. Employers include Covenants to Not Compete as a threat, hoping that it'll deter the employee from competing. It has no legal value, because it's against public policy. The courts will ignore that clause.

If I were you I wouldn't give a legal advice when I have no clue. Covenant not to compete is enforceable; Unreasonable covenant not to compete is not. This is completely based on the location and its demographics.

 

[gryffindor]

Work mostly evenings and weekends AND need permission to work elsewhere AND no guaranteed salary AND you have to bring in your own patients AND pay advertising costs? NO!!! This is not an associateship! This is a really awful deal. Don't do it! You have nothing to lose if you walk away. Don't be afraid. Make up an excuse if you have to. Do associates get sued regularly in Canada for breaking contracts? In the city where I work, almost every dentist works by handshake and leaves with a two week notice, all done verbally.

With the terms you outlined, you're basically building his practice for him and he's letting you keep a measly percent of any profit there might be. You'd be better off doing all this non-dental work (finding patients, advertising, etc.) and just paying him some rent for the use of his office space & supplies - that would be financially better for you.

And yes, you've learned correctly. No one is looking out for you in dentistry. You have to watch your own back, be alert at all times, and be willing to stand up for yourself or else get walked all over and end up with an empty wallet.

 

[yappy]

OP: You should return with your own contract stating that your base salary shall be 100k with medical/vision benifits for you and your family. He will also pay malpractice, lab fees, and gas costs for traveling to his office. Also state that there will be no restriction for your employment at any other offices or locations. Lastly, 401K: 100% matching.

This way he will refuse to hire you and you dont have to back out of anything.

Work mostly evenings and weekends AND need permission to work elsewhere AND no guaranteed salary AND you have to bring in your own patients AND pay advertising costs? NO!!!

 

[smb411]

I live in the NYC area, I'm a recent dental school graduate (2011), and just completed my residency training. I have been given a position 3 days a week in a MIdtown Manhattan office which is very cutting edge, accepts only high paying PPO insurances etc. I feel that the office can foster the skills which I want to grow as a clinician, that being said the owner has given me contract to sign and I am unfamiliar with the norm in NYC and it seems this might not be in my best interest and additionally I'm unsure if our personalities will mesh well.
In brief the owner is hiring me as an independent contractor to start out Wednesday, Friday, and Sunday, she wants a one year commitment, opportunity to buy in after 5 years, covenant not to compete, $300 co-op fee per month for the office rent, compensation of 30% collection with no base pay, she says she will give me some patients but I responsible for bringing in my own as well (the office does not seem to be able to support two new associates), $3000 zoc doc membership and I am responsible for helping her advertise our business . There are no benefits mentioned.
The owner has never hired associates before, worked alone for 10 years, and now is adding 2 new associates. I feel there are not enough patients to be hiring two new associates. Additionally I feel I am not treated with respect and she is very demeaning. I am concerned mostly about signing on for a full year, when I approached her about this she was very opposed to a "trail period" prior to a one year commitment and made it seem like I don't know how good I have it (with the opportunity to buy in after 5 years). I explained to her I was hesitant about the one year commitment as I have no guaranteed salary and bills to pay.
That being said, I see that most of my colleagues are having a hard time finding a job and no one wants to hire someone fresh out of residency unless it's working in a medicaid mill outside of Manhattan. I'm torn and don't want to pass up this opportunity later to find I will not find anything better.
Any help or input especially from someone in the NYC area would be greatly appreciated. Thanks!

 

[Shnurek]

Typical NYC scumbag doctor. 5 years buy in? Fridays and Sundays? No base salary? 1 year commitment minimum? Can it get any worse? Walk out immediately. Sometimes it is better to wait a month or a few for a better opportunity. Or just stop trying to work in the mecca of unethical practitioners that is NYC.

 

[Shnurek]

Here's the key word: "opportunity to buy in after 5 years"

That could mean in 5 years, "Hey, can I buy in now? -- Uhh, let's wait a little bit until you get a few more patients. I want you to get really good at <insert procedure here>. There were 1 or 2 patients that complained about you. Or <insert random excuse to not let you buy in>.

Unless of course it explicitly states in the contract that you can buy in after 5 years but then she can be a scumbag and quote an astronomical price. Don't get dragged along by crap like this. You can't even contact a former associate to see how it was because there were none.

 

[beannaithe]

I live in the NYC area, I'm a recent dental school graduate (2011), and just completed my residency training. I have been given a position 3 days a week in a MIdtown Manhattan office which is very cutting edge, accepts only high paying PPO insurances etc. I feel that the office can foster the skills which I want to grow as a clinician, that being said the owner has given me contract to sign and I am unfamiliar with the norm in NYC and it seems this might not be in my best interest and additionally I'm unsure if our personalities will mesh well.
In brief the owner is hiring me as an independent contractor to start out Wednesday, Friday, and Sunday, she wants a one year commitment, opportunity to buy in after 5 years, covenant not to compete, $300 co-op fee per month for the office rent, compensation of 30% collection with no base pay, she says she will give me some patients but I responsible for bringing in my own as well (the office does not seem to be able to support two new associates), $3000 zoc doc membership and I am responsible for helping her advertise our business . There are no benefits mentioned.
The owner has never hired associates before, worked alone for 10 years, and now is adding 2 new associates. I feel there are not enough patients to be hiring two new associates. Additionally I feel I am not treated with respect and she is very demeaning. I am concerned mostly about signing on for a full year, when I approached her about this she was very opposed to a "trail period" prior to a one year commitment and made it seem like I don't know how good I have it (with the opportunity to buy in after 5 years). I explained to her I was hesitant about the one year commitment as I have no guaranteed salary and bills to pay.
That being said, I see that most of my colleagues are having a hard time finding a job and no one wants to hire someone fresh out of residency unless it's working in a medicaid mill outside of Manhattan. I'm torn and don't want to pass up this opportunity later to find I will not find anything better.
Any help or input especially from someone in the NYC area would be greatly appreciated. Thanks!

Run, don't walk from this offer. You're expected to act like a partner (money for rent, memberships, no base salary, advertising) by putting money up for the business with no guarantee of how long you'll be there or recoup of hygiene collections. Fact is that it's not "your business", it's "her business" and it's in her interest to advertise it to bring in patients for you. She's merely trying to push her costs onto you and her new associate.

If you're apprehensive about the contract and she appears demeaning now, it will only get worse in the future. You are absolutely right about being nervous about starting a job with no guarantee for salary and that expects you to put money upfront. It's not good. You should also not be leasing space from her unless you're doing a space-sharing agreement.

Something just seems fishy. Listen to your gut, get out and find somewhere you'll hone your skills and make money too.

 

[theleatherwalle]

This is a pretty awful contract. If you can find chain, they usually offer 30% of collections or 450 a day whichever is higher. I suggest grabbing some sort of base salary. Reaching collection goals is next to impossible from what I've heard on sdn and around my school.

 

[jay47]

I live in the NYC area, I'm a recent dental school graduate (2011), and just completed my residency training. I have been given a position 3 days a week in a MIdtown Manhattan office which is very cutting edge, accepts only high paying PPO insurances etc. I feel that the office can foster the skills which I want to grow as a clinician, that being said the owner has given me contract to sign and I am unfamiliar with the norm in NYC and it seems this might not be in my best interest and additionally I'm unsure if our personalities will mesh well.
In brief the owner is hiring me as an independent contractor to start out Wednesday, Friday, and Sunday, she wants a one year commitment, opportunity to buy in after 5 years, covenant not to compete, $300 co-op fee per month for the office rent, compensation of 30% collection with no base pay, she says she will give me some patients but I responsible for bringing in my own as well (the office does not seem to be able to support two new associates), $3000 zoc doc membership and I am responsible for helping her advertise our business . There are no benefits mentioned.
The owner has never hired associates before, worked alone for 10 years, and now is adding 2 new associates. I feel there are not enough patients to be hiring two new associates. Additionally I feel I am not treated with respect and she is very demeaning. I am concerned mostly about signing on for a full year, when I approached her about this she was very opposed to a "trail period" prior to a one year commitment and made it seem like I don't know how good I have it (with the opportunity to buy in after 5 years). I explained to her I was hesitant about the one year commitment as I have no guaranteed salary and bills to pay.
That being said, I see that most of my colleagues are having a hard time finding a job and no one wants to hire someone fresh out of residency unless it's working in a medicaid mill outside of Manhattan. I'm torn and don't want to pass up this opportunity later to find I will not find anything better.
Any help or input especially from someone in the NYC area would be greatly appreciated. Thanks!

I see lots of problems, if you really do want to work here, remember everything is negotiable, just make sure you bring leverage to the table when you do negotiate.

#1. The "opportunity to buy in" after 5 years is BS. You need to get a fair and equitable price for the practice NOW, or a formula to calculate the price of the practice in 5 years to buy in. This is how this usually works, doctor takes you on, you work hard for 5 years, value of the practice goes up by 50%, then they want you to buy it for the increased value that YOU added to the practice. Get something negotiated NOW. On a more important note, 5 years is WAY WAY too long for my liking. Negotiate down to 2-3 years. You'll know after the first 6 months to the first year if you wanna stay there or not, 5 years might as well be an eternity.

#2. If you are responsible for advertising part of the business, then why the HELL aren't you getting guaranteed patients? Simple as that. Get in writing how many patients will be distributed to you (either a % that call in, or a minimum weekly rate, etc...)

#3. Way too many doctors hire an associate or two without actually assessing their own situation first. Why does she want to bring you on? If you feel that she is not treating you with respect now, then why would she treat you with respect later? Why in the world is she taking on 2 new associates if you think she can't support 1 new associate? Ask her how many new patients a month she is seeing. Ask yourself, if I work here a year, bring on 200-500 new patients, and they she fires me and I am locked out with a noncompete (and in NY, I doubt patients will drive very far to see a dentist), why did you waste your time gaining all those patients to increase the value of a practice that isn't even yours?

The biggest scare for me is that it seems like she is very wishy washy- if you aren't sure TELL HER TO PUT IT IN WRITING!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! It means nothing if its not in writing. In addition, does she really seem like the type of person that you want to work for? Sure seems a little fishy to me.

 

[uthscsaalum]

I would avoid any contract that does not offer some sort of daily or monthly compensation guarantee. Places that leave that out do it for a reason, because they don't have the patients to keep you busy and hope you will grow their practice. If you take a deal like that, you run the risk of making a fraction of the average for a new dentist and get zero reward for the growth of the practice if it happens since it is their business, not yours.

I would expand the areas you are willing to work and find something with a more mutually beneficial contract. Also, remember that the contract they present to you is an offer and you can always counter by asking for a higher guarantee or a higher percent. If they go through the trouble of presenting you a contract they want to hire you and might just be trying to get you at the lowest price they think you'll go for. I asked for 2% more on my percentage on my first contract and was given what I wanted.

 

[OhioDMD]

My associates contract was 30% production or a minimum guarantee of 450 per day for the first six months. He was a recent grad therefore I covered malpractice, association dues and provided CE for the first year. Associate was responsible for 30% of lab fees incurred. It had a 90 day termination clause and a two year (enforceable in Ohio) restrictive covenant that would reasonably insure he did not work in my draw area for a reasonable period of time. Verbal assurances were made that all new patients would be assigned him unless they specifically requested me. All treatment he diagnosed he did (ie no cherry picking by me) and he got the credit for any hygiene checks he did..

 

[theleatherwalle]

damn ohio...got any spaces opening up for an associate in 3 years?

 

[SoulPower]

My associates contract was 30% production or a minimum guarantee of 450 per day for the first six months. He was a recent grad therefore I covered malpractice, association dues and provided CE for the first year. Associate was responsible for 30% of lab fees incurred. It had a 90 day termination clause and a two year (enforceable in Ohio) restrictive covenant that would reasonably insure he did not work in my draw area for a reasonable period of time. Verbal assurances were made that all new patients would be assigned him unless they specifically requested me. All treatment he diagnosed he did (ie no cherry picking by me) and he got the credit for any hygiene checks he did..

How do you decide hygiene checks? Is it a 1 for 1 kinda deal between doctors or is it more like I'm busy you do it kind of thing?

 

[OhioDMD]

How do you decide hygiene checks? Is it a 1 for 1 kinda deal between doctors or is it more like I'm busy you do it kind of thing?

I have two busy full-time hygienists. He may see them when I am busy or out of the office and all new patients or old (haven't seen in a couple of years) periodic returns.

 

[Azieb]

Hi everyone,

I need help writing a letter breaking my contract---



The contract was daily minimum $650 or 30% collection

With No befits



I been here for six month now for some reason their collectionis short by $15-$20grand per month from production that puts my % at negativeeach month&#8230;



Been complaining about this bt not seen any results


I signed a contract for one year and I just feel thatthere some kind of scamming going on and I want to give them one month noticeand leave&#8230;.

 

[Cold Front]

Hi everyone,

I need help writing a letter breaking my contract---



The contract was daily minimum $650 or 30% collection

With No befits



I been here for six month now for some reason their collectionis short by $15-$20grand per month from production that puts my % at negativeeach month…



Been complaining about this bt not seen any results


I signed a contract for one year and I just feel thatthere some kind of scamming going on and I want to give them one month noticeand leave….

First of all... check if you state is "at will" state.

Next... Never give 30 days notice, 90 days is ideal. Why? Because it takes a lot longer to replace an associate than to find a job as an associate. Yes I know you hate the office, but you future employer can call your office and your current boss can spill some beans that may or may not be true.

Finally, tell the current boss EYE TO EYE... and tell him/her that it's over, and specify you exit terms. Don't be beating around the bush to resolve this issue.

 

[Frank22]

I see lots of problems, if you really do want to work here, remember everything is negotiable, just make sure you bring leverage to the table when you do negotiate.

#1. The "opportunity to buy in" after 5 years is BS. You need to get a fair and equitable price for the practice NOW, or a formula to calculate the price of the practice in 5 years to buy in. This is how this usually works, doctor takes you on, you work hard for 5 years, value of the practice goes up by 50%, then they want you to buy it for the increased value that YOU added to the practice. Get something negotiated NOW. On a more important note, 5 years is WAY WAY too long for my liking. Negotiate down to 2-3 years. You'll know after the first 6 months to the first year if you wanna stay there or not, 5 years might as well be an eternity..

I don't think it's unethical to charge an associate for the value of the practice that they added on; a practice that's large enough to allow for two doctors to work in it should be valued for more. Furthermore when a dentist buys into a practice they are paying for the size of the practice, not the owner's clinical production.

 

[DrJeff]

I don't think it's unethical to charge an associate for the value of the practice that they added on; a practice that's large enough to allow for two doctors to work in it should be valued for more. Furthermore when a dentist buys into a practice they are paying for the size of the practice, not the owner's clinical production.

There's a distinction though between the actual value involved with a practice that the second doc added (i.e. more tangible items such as operatories, dental chairs, handpieces, computers, etc) and the implied value (i.e. the intangible items such as an increase in the practices production, etc - since it's not like the original doc under most circumstances could have added the amount to the practice production solo that the new doc did). Most practice transition attorneys/experts will tell you that this "goodwill" value is worthless in contract negotiations. Buyers love to hear this, sellers hate to hear this

 

[Frank22]

Dr. Jeff, but if the original doctor built the patient base than the associate is merely capitalizing on the doctor's goodwill. Yes, the solo doctor couldn't produce that much by himself, but that's only because his patient base is too large for him to handle efficiently alone. On the other hand if the associate works on increasing the patient base through his own marketing efforts and increases production in that manner than he shouldn't be charged for the adjusted practice appraisal. I think the same rules that apply to hygienists also apply to associates, only hygienists can't sell or buy practices as associates can.

 

[DrJeff]

Dr. Jeff, but if the original doctor built the patient base than the associate is merely capitalizing on the doctor's goodwill. Yes, the solo doctor couldn't produce that much by himself, but that's only because his patient base is too large for him to handle efficiently alone. On the other hand if the associate works on increasing the patient base through his own marketing efforts and increases production in that manner than he shouldn't be charged for the adjusted practice appraisal. I think the same rules that apply to hygienists also apply to associates, only hygienists can't sell or buy practices as associates can.

All that I'm trying to convey is that "goodwill" is a concpet that in reality isn't worth nearly as much (if anything at all) as some many in this profession would like to believe. If an associate looking to buy in wants to pay for it, them let them. If a seller is looking to pad the price of a practice, above and beyond what it's valued at and attribute that extra $$ to goodwill, then as the person looking to buy into the practice, i'd be fighting against it.

Take for an example the scenario where unexpectedly a solo practitioner is either killed in an acccident or has to quickly because of some reason close/leave their practice. The price of that practice very quickly goes to just market value for what the facility and instruments/equipment are worth. Have any patients technically left the practice in that scenario, no, all the charts are still there, but there is essentially very little/no value to the purchaser for those charts, since just because those charts were patients of record in the past is no indication that they'll be patients of record in the future. That's a bit of a harsh view of things for sure, but sometimes business is a harsh reality and not all "warm and fuzzy".

I know when I was involved with the negotiations for my buy in contract with my business partner, what the practice was valued at vs. what the practice was grossing were 2 very different numbers, and while there was some monetary value placed on the charts/patients it was a very small amount, since as my attorney told me bluntly, "a chart when looking to buy a practice isn't worth much more than the paper it's made from"

 

[gryffindor]

I live in the NYC area, I'm a recent dental school graduate (2011), and just completed my residency training. I have been given a position 3 days a week in a MIdtown Manhattan office which is very cutting edge, accepts only high paying PPO insurances etc. I feel that the office can foster the skills which I want to grow as a clinician, that being said the owner has given me contract to sign and I am unfamiliar with the norm in NYC and it seems this might not be in my best interest and additionally I'm unsure if our personalities will mesh well.
In brief the owner is hiring me as an independent contractor to start out Wednesday, Friday, and Sunday, she wants a one year commitment, opportunity to buy in after 5 years, covenant not to compete, $300 co-op fee per month for the office rent, compensation of 30% collection with no base pay, she says she will give me some patients but I responsible for bringing in my own as well (the office does not seem to be able to support two new associates), $3000 zoc doc membership and I am responsible for helping her advertise our business . There are no benefits mentioned.
The owner has never hired associates before, worked alone for 10 years, and now is adding 2 new associates. I feel there are not enough patients to be hiring two new associates. Additionally I feel I am not treated with respect and she is very demeaning. I am concerned mostly about signing on for a full year, when I approached her about this she was very opposed to a "trail period" prior to a one year commitment and made it seem like I don't know how good I have it (with the opportunity to buy in after 5 years). I explained to her I was hesitant about the one year commitment as I have no guaranteed salary and bills to pay.
That being said, I see that most of my colleagues are having a hard time finding a job and no one wants to hire someone fresh out of residency unless it's working in a medicaid mill outside of Manhattan. I'm torn and don't want to pass up this opportunity later to find I will not find anything better.
Any help or input especially from someone in the NYC area would be greatly appreciated. Thanks!

Co-op fee and zocdoc memberships? Those are new ones. This is a very bad deal. She won't let you buy after 5 years, I will bet you money on that. It's just a line she put in there to lure unfortunate newbies in. This is going to be a miserable experience which you already suspected. Unless you are a go-getter, you will have a hard time bringing in new patients. And if you do bring them in, she'll probably skim them off you with some line like "this one is too complex for your newbie skills." With no minimum guarantee, you are better off with going to the medicaid mills while you search for something better. At least there you can walk away much more easily and be making some kind of paycheck.

I say this as a doc who lives in NYC but doesn't practice here. Look for something else, be willing to commute to the other boroughs, Long Island, NJ or CT.

 

[Frank22]

All that I'm trying to convey is that "goodwill" is a concpet that in reality isn't worth nearly as much (if anything at all) as some many in this profession would like to believe. If an associate looking to buy in wants to pay for it, them let them. If a seller is looking to pad the price of a practice, above and beyond what it's valued at and attribute that extra $$ to goodwill, then as the person looking to buy into the practice, i'd be fighting against it.

Take for an example the scenario where unexpectedly a solo practitioner is either killed in an acccident or has to quickly because of some reason close/leave their practice. The price of that practice very quickly goes to just market value for what the facility and instruments/equipment are worth. Have any patients technically left the practice in that scenario, no, all the charts are still there, but there is essentially very little/no value to the purchaser for those charts, since just because those charts were patients of record in the past is no indication that they'll be patients of record in the future. That's a bit of a harsh view of things for sure, but sometimes business is a harsh reality and not all "warm and fuzzy".

I know when I was involved with the negotiations for my buy in contract with my business partner, what the practice was valued at vs. what the practice was grossing were 2 very different numbers, and while there was some monetary value placed on the charts/patients it was a very small amount, since as my attorney told me bluntly, "a chart when looking to buy a practice isn't worth much more than the paper it's made from"

I appreciate your input Dr. Jeff and understand the point that you're making, I just happen to respectfully disagree with you in this discussion. I think that the relationship between doctor and patient (goodwill) is very important: if a dentist relocates to an area nearby his or her previous location, do his or her patients go to another dentist in the same office? No--that is because there is a strong relationship between patient and doctor, and this relationship only increases over time. Dentists and medical doctors don't sell toilets and candy bars--the service that they will provide and the trust their patients have in them is more important than pricing and location convienance. Consider, for example, how people will travel thousands of miles (usually via airplane) to see a prestigious cosmetic or oncological surgeon and pay multiples of what they would have to from local physicians. When a dentist dies before selling their practice the goodwill is compromised which explains the discounted price.

That being said, I recognize that you are a dentist with field experience and I'm only a predental student, and that you know much more than I about dentistry.

 

[DrJeff]

I appreciate your input Dr. Jeff and understand the point that you're making, I just happen to respectfully disagree with you in this discussion. I think that the relationship between doctor and patient (goodwill) is very important: if a dentist relocates to an area nearby his or her previous location, do his or her patients go to another dentist in the same office? No--that is because there is a strong relationship between patient and doctor, and this relationship only increases over time. Dentists and medical doctors don't sell toilets and candy bars--the service that they will provide and the trust their patients have in them is more important than pricing and location convienance. Consider, for example, how people will travel thousands of miles (usually via airplane) to see a prestigious cosmetic or oncological surgeon and pay multiples of what they would have to from local physicians. When a dentist dies before selling their practice the goodwill is compromised which explains the discounted price.

That being said, I recognize that you are a dentist with field experience and I'm only a predental student, and that you know much more than I about dentistry.

So based on your statement. If you join a practice as an associate and then say 5yrs down the road decide to buy in as a partner and you're negotiating the buy-in price. Why would YOU want to pay your future partner for the "goodwill" that he/she has with his/her patients?? You've spent that say 5yrs building up the rapport with YOUR patients, not your future partner's patients. The physical office itself, the instruments, the dental chairs, etc, those are tangible items that you share. The patients are something that typically other than an occasional emergency and/or hygiene check while you or your partner are out of the office on vacation or at a continuing education course, you don't share. Why should you then pay extra for something that you added to the practice?? That is the "goodwill" that I am referring too.

From what you describe as "goodwill" that sounds more like what from a business perspective (since afterall dentistry IS a business and that's 110% fine that it's a business!!) is considered the "Doctor patient relationship" or "patient rapport" or "chairside manner" and that's an intrinsic value that you and you only bring to a practice and as such you shouldn't need to pay "extra" for it if and when you buy into a practice.

 

[Frank22]

Edit

 

[Frank22]

So based on your statement. If you join a practice as an associate and then say 5yrs down the road decide to buy in as a partner and you're negotiating the buy-in price. Why would YOU want to pay your future partner for the "goodwill" that he/she has with his/her patients?? You've spent that say 5yrs building up the rapport with YOUR patients, not your future partner's patients. The physical office itself, the instruments, the dental chairs, etc, those are tangible items that you share. The patients are something that typically other than an occasional emergency and/or hygiene check while you or your partner are out of the office on vacation or at a continuing education course, you don't share. Why should you then pay extra for something that you added to the practice?? That is the "goodwill" that I am referring too.

From what you describe as "goodwill" that sounds more like what from a business perspective (since afterall dentistry IS a business and that's 110% fine that it's a business!!) is considered the "Doctor patient relationship" or "patient rapport" or "chairside manner" and that's an intrinsic value that you and you only bring to a practice and as such you shouldn't need to pay "extra" for it if and when you buy into a practice.

Let's consider the following example: Doctor A had an extremely busy practice with about 2500 patients. The practice was primarily PPO/FFO but was only producing an average of about $350 per active patient, which provided an annual gross income of $875,000. Doctor A's practice was appraised at 75% valuation or $656,250. Rather than selling, Doctor A, decided to hire an associate, doctor B. They had a written contract that the associate would buy into the practice for 50% of the practice's full market value on the selling doctor's patient base. Let's say that after five years, hypothetically, the practice experienced no patient growth. However, let's say that the average production per patient increased at a rate of 15% each year for five years. On the fifth year the practice still had 2500 patients, but the average annual production per patient was about $705. The associate would than have to pay for half the full market value of the practice or $6609375.5. Any production growth due to patient growth due to the associate, however, should NOT be factored into the selling price. I think these terms are very fair; all that's changed is how efficiently the practice is running due the adequate number of doctors relative to the patient base; an increase in efficiency doesnt mean an increase in practice size. The number of patients and the number of patients only determines the size of the practice, not the gross production nor the operatories nor the number of staff.

 

[DrJeff]

Let's consider the following example: Doctor A had an extremely busy practice with about 2500 patients. The practice was primarily PPO/FFO but was only producing an average of about $350 per active patient, which provided an annual gross income of $875,000. Doctor A's practice was appraised at 75% valuation or $656,250. Rather than selling, Doctor A, decided to hire an associate, doctor B. They had a written contract that the associate would buy into the practice for 50% of the practice's full market value on the selling doctor's patient base. Let's say that after five years, hypothetically, the practice experienced no patient growth. However, let's say that the average production per patient increased at a rate of 15% each year for five years. On the fifth year the practice still had 2500 patients, but the average annual production per patient was about $705. The associate would than have to pay for half the full market value of the practice or $6609375.5. Any production growth due to patient growth due to the associate, however, should NOT be factored into the selling price. I think these terms are very fair; all that's changed is how efficiently the practice is running due the adequate number of doctors relative to the patient base; an increase in efficiency doesnt mean an increase in practice size. The number of patients and the number of patients only determines the size of the practice, not the gross production nor the operatories nor the number of staff.

In THEORY, your scenario sounds great. The problem with it is can you make THEORY and REALITY work.

I'll give you that over the course of a year, an average per patient production of $350 is reasonable. The problem though IMHO is in your 5 year increase that at 15% per year to the point where that amount per patient per year almost doubles. That, from my perspective of 13 years in private practice seems quite a bit optomistic, especially with the asumption that your practice demographic as a whole isn't likely to change too much. I fully understand that you always have new patients (which often translates into more potential work to be done) coming into a practice and existing patients leaving - heck, my practice over the last decade has averaged 45 new patients per month, but yet on average per year we tend to see our overall practice base increase 200-250 patients per year. New patients come into a practice and existing patients leave a practice, thats life.

We also track the average amount billed per patient per visit, and over the last 10 years, that amount hasn't changed more than $20, even though the fees in my office have seen multiple increases over that time frame (some fees have gone up maybe $10 over that time - i.e. periapical films, flouride treatments, etc, whereas other have gone up hundreds over that time - molar endo, crowns, dentures), but the average amount billed per patient per visit hasn't changed all that much. To basically double the annual amount billed per patient per year over 5 years, well that's going to take either an incredible amount of emergency visits - broken teeth needing crowns and/or endo's to augment that figure or a dramatic increase in fees and/or treatment planning philosophy over what the existing Doc had, and that often creates issues with the existing patient base. Can it be done, sure. But it's not as easy as just increasing one's fees and making the asumption that all the patients will just except that semi paradigm shift as the status quo.

Lastly, especially right now with Obamacare looming - we have no clue really how and if this will affect dentistry as we know it. The best analogy I heard is that dentistry right now is moving full speed ahead into a fog bank (Obamacare) where we don't know how dense the fog is, how wide the fog bank is, and if we'll still be on the same "road" when we emerge from the otherside of the fog bank.

In a straight business perspective angle from a dental contract. Hypothetically speaking, when your done with d-school and if your looking for a practice to work for, if you as the buyer want to pay a premium above and beyond for the patient base, then come look me up, because me as the seller will gladly pocket the extra amount of $$ The reality is though that the amount of money that gets figured into the purchase price of a practice is less than the seller would like and also that the buyer would expect in most contracts that are signed. The purchase price more often than not has way more to do with the hard assets (equipment, buildings, etc) than the soft assets (patients, staff, etc) since that dental chair in an operatory is going to be there in the practice years from now, but that warm body who's in that dental chair today has no guarentee that they will still be coming to the practice years from now

 

[Frank22]

In THEORY, your scenario sounds great. The problem with it is can you make THEORY and REALITY work.

I'll give you that over the course of a year, an average per patient production of $350 is reasonable. The problem though IMHO is in your 5 year increase that at 15% per year to the point where that amount per patient per year almost doubles. That, from my perspective of 13 years in private practice seems quite a bit optomistic, especially with the asumption that your practice demographic as a whole isn't likely to change too much. I fully understand that you always have new patients (which often translates into more potential work to be done) coming into a practice and existing patients leaving - heck, my practice over the last decade has averaged 45 new patients per month, but yet on average per year we tend to see our overall practice base increase 200-250 patients per year. New patients come into a practice and existing patients leave a practice, thats life.

We also track the average amount billed per patient per visit, and over the last 10 years, that amount hasn't changed more than $20, even though the fees in my office have seen multiple increases over that time frame (some fees have gone up maybe $10 over that time - i.e. periapical films, flouride treatments, etc, whereas other have gone up hundreds over that time - molar endo, crowns, dentures), but the average amount billed per patient per visit hasn't changed all that much. To basically double the annual amount billed per patient per year over 5 years, well that's going to take either an incredible amount of emergency visits - broken teeth needing crowns and/or endo's to augment that figure or a dramatic increase in fees and/or treatment planning philosophy over what the existing Doc had, and that often creates issues with the existing patient base. Can it be done, sure. But it's not as easy as just increasing one's fees and making the asumption that all the patients will just except that semi paradigm shift as the status quo.

Lastly, especially right now with Obamacare looming - we have no clue really how and if this will affect dentistry as we know it. The best analogy I heard is that dentistry right now is moving full speed ahead into a fog bank (Obamacare) where we don't know how dense the fog is, how wide the fog bank is, and if we'll still be on the same "road" when we emerge from the otherside of the fog bank.

In a straight business perspective angle from a dental contract. Hypothetically speaking, when your done with d-school and if your looking for a practice to work for, if you as the buyer want to pay a premium above and beyond for the patient base, then come look me up, because me as the seller will gladly pocket the extra amount of $$ The reality is though that the amount of money that gets figured into the purchase price of a practice is less than the seller would like and also that the buyer would expect in most contracts that are signed. The purchase price more often than not has way more to do with the hard assets (equipment, buildings, etc) than the soft assets (patients, staff, etc) since that dental chair in an operatory is going to be there in the practice years from now, but that warm body who's in that dental chair today has no guarentee that they will still be coming to the practice years from now

My example was simply to illustrate my point of the associate dentist capitalizing on the patient base as I understand that 0% growth in number of patients is unlikely. I would like to note, however, that the more patients a dentist attempts to treat than he is capable of handling, the lower the billings per patient. In fact, you'll find often that gross production decreases the greater the number of patients the doctor has: that is to say that comprehensive dentistry is put off in the attempt to see more patients in the same amount of time. A hygienist with one hygiene assistant working under them can see 12 patients a day. If the dentist works a five day work week and sees all their patients once every 24 weeks, than there should be 1440 patients to support a full time doctor (or 288 patients for every doctor work day). You can round these numbers to 1500 patients or 300 patients per doctor work day, respectively. A fee-for-service practice should have gross billings of $700 to $1000 per patient depending on demographics, but in general it will be about $750 and that applies to most areas in the United States.

Of course, the associate benefits in that if they buy in before the patient base is capitalized on the practice experiences growth, which makes their monthly note fairly minimal relative to the income provided. If the doctor sells while his practice while it is overproducing (over $750 per year per active fee-for-service patient) he benefits in that he recieves the maximum amount of money relative to the size of his practice. A smart dentist buys low and sells high. I plan on purchasing such a "goldmine" practice (that is to say one that is exceedingly underproducing) and selling it later to an associate(s) while its producing over $750 per active patient. Note that this isn't being unfair: a dentist that sells their practice for its full potential demonstrates good business acumen.