Most practice owners and prospective associates want to find a fair compensation approach. The devil, of course, can be in the details and that ticklish word “fair”. What is fair for the practice owner is an associate providing the best care he or she can and participating with staff in the life of the practice, including marketing / social media or practice management. Regarding what is “fair” for the associate is a compensation format where the owner identifies the normalized practice overhead (adjusted to true expenses not including those that are discretionary or tax driven), any additional expenses related to bringing on the associate, and the profit hedge desired based on the associate’s anticipated collected gross. Associates should have an understanding of the process the owner used and can evaluate the offer against their own break-even analysis given their comfort level with the anticipated collected gross the owner has arrived at. Here at Berning & Affiliates we have applied all of the above and have well developed cash flow worksheet that assist owners and prospective associates to arrive at a fair associate compensation.
As a practice owner you may be thinking that now is the time to hire an associate. Assessing the option of adding an associate can originate in a wide set of situations from having a growing practice and wanting help to a semi-retired doctor with excess time on a schedule. No matter your situation the suggestion is to list
1) the personality, capability and maturity a candidate must have to successful fit into your practice. Way too many practice owners miss this thoughtful assessment and end up with a good looking or great qualification candidate that does not fit.
2) Write out your philosophy of care and put it in front of the candidate and ask, “Can you accept this and live it?” Remember, it is your attitude toward ethics, choice of treatment methods, and practice building that must rule. If you don’t tell it, then you may have a big disconnect later!
3) Determine if you want a “pair of hands” to do dentistry or need a candidate with an interest in management and practice administration.
A lot of practice owners have be smart building their practices. They need smart younger doctors to fit in and keep building. Quite different are the doctors that tell me they do not what anyone messing with how the practice runs, “so find me an extra pair of hands”. Take some time and reap the benefits of these three must do steps. Call if you want to schedule a Tackle It! Consulation to talk it through for your practice!
When looking at retirement doctors can be pleased or disappointed as they look back. I see it all the time when handling practice transitions and succession planning for doctors because inevitably we talk about how the practice started and what happened over the years. In the book Triumphs and Experience by George Vaillant, the good news is that people over many years continue to develop. They are increasingly refined is the way I look at. This book tracks the Harvard Grant Study that tracked 200 undergraduate men looking at their physical and emotional health. As one reviewer, Martin Seligman stated, "If you are preparing for the last quarter of your life, this is a MUST read." And I agree. In addition to the book you can check out a recent column A Way To Get Past Regrets by Diane Cole WSJ where she interviews Dr. Vaillant. Here is one excerpt, WSJ: Which of the participants in the study tend to have regrets later in life? Dr. Vaillant (provides an answer) then WSJ asks How did that compare with those people who tend to be more content? Dr. Vaillant: The latter had learned not to cry about spilled milk. The had learned to savor the things that had gone right." Which to me is great advice for any retiring doctor!
Most dentists are interested in how to have a successful practice relationship with another doctor. Yet when presented with a prospect too few have prepared ahead.
My view is that it is in the preparation that solid long term partnerships can be built. For the practice owner at the early point of considering a dental partnership here are a few tips: #1 consider your objective(s) is it to have one or several partners and for what reason (expand practice or open satellites etc.), or to plan an exit path for the founder or something else? #2 do you want to have control even with a partner(s)?, #3 what would your ideal candidate be like? Now seek out an advisor, practice transition consultant, accountant, attorney or your significant other and talk through these early considerations. If you are not clear on these you will have difficulty later when it comes time to structure the transaction.
Way to many practice owners who start looking for an associate jump the gun. What do I mean? In short they have not prepared. Here is a suggested preparation list to get
you thinking. First, have a clear statement of your philosophy of care. You can’t talk about what is important for you and your practice if you haven’t or worse can’t articulate your philosophy of care. Second, be prepared to discuss, to the degree you are comfortable, your practice performance, including new patient flow, type of procedures, demographics and need for an associate as it relates to each of those items. Third, lay out your vision for the practice and why you are looking for a compatible personality and character in a new associate to join with you. This format has worked wonders for us at Berning & Affiliates and will help you to build a successful relationship.
I’ve found that practice owners can be a picky lot, and perhaps one of the areas they are most picky about is choosing an associate. There is good reason, of course, to be cautious since the new associate will represent the owner and the practice to a wide range of people including current patients, new patients, staff, and community residents and businesses. Further, the associate is often a partner in the making, so it is a very important time to qualify the doctor. But perfect, sorry it does not exist, and some owners never seem to recognize it. So what can be done to come close to perfect? Perhaps the best approach I’ve seen work effectively is for the owner considering the associate / partner is to carefully determine the desired attributes the owner would like ahead of any interviewing process.
Taking time to think through and consider what aspects will give the best match
with the owner’s personality, staff make up, clinical skills desired and
practice demographics can be an excellent step toward finding a great match!
The Expert Series for Dentists™ publications, Tax Ramifications of Selling a Dental Practice, has been updated! The 11th edition of this valuable resource is now available at our webstore www.BerningAffiliates.biz. My friend and colleague, Allen M. Schiff, CPA, CFE, of Schiff & Associates, LLC is the author and has since 2002 provided the last seven editions to reflect the ever changing tax law as it applies to selling a dental practice. Thank you Allen!
In 1989 I started The Expert Series for Dentists™ to fill a need for narrow topic informative publications that were brief and to the point. These publications have helped many doctors and their advisors over the years. The Expert Series has expanded to include a group of Special Reports, Forms, Excel based Cash Flow analysis products and On-Line Seminars. Visit www.BerningAffiliates.biz to see all that we offer and please use the Promo Code SPRING20 (valid through June 2013) to receive at 20% discount on any of The Expert Series products.
Way too often Doctor CEOs and I talk about the sometimes clue less behavior of younger professionals seeking associateship, partnership or practice purchase opportunities. Here is an example. Practice owner pays for the airfare for a candidate to visit the practice, pays for the hotel, pays for two days of meals and takes time away from family to meet and interview the doctor. Many, many days after the visit the prospect texts, “Thanks again for the weekend visit! By the way could you help me out and send me some materials we discussed?” WOW! Anyone heard of a personal call as a follow up, or an email, or a note saying thank you? What about asking for a favor in the first communication? Anyone heard of building a relationship before asking for a favor? Maybe not. But I’m telling you to wise up. Your great clinical skills or the good program you came out of does not mean much if you lack basic courtesy. Remember, there are a lot of other candidates in line for a position!Consider reading this The Etiquette Advantage in Business: Personal Skills for Professional Success.
The Associateship publication is published by the ADA and is in revision! I am pleased to once again have the opportunity to help develop the updated text for the publication. I have been a co-author on the publication for each of the revisions, 1992, 1996, 2001, 2005 and now in 2013.This is a wonderful resource for both owners and those entering practice as an associate with discussion on important planning topics, compensation worksheets and illustration agreements. It is great to have the opportunity to revisit the material and update it! I’ll keep you posted!
Recently I received an inquiry from a doctor in practice for many years that was looking for a practice transition approach that was “easy to implement.” The doctor related that over the years he had developed a primary practice location, a satellite location, owned the building of the primary location, but had no lease for the satellite location. More discussion only emphasized the range of activities that the doctor was involved in. In my view, the start of any assessment of a practice transition should be a thorough understanding by both the doctor and the advisors of the goals of the practice owner and developing options that might fit with the goals. In many larger and involved practice cases the undertaking is often complex and expensive, especially given the tax issues involved. The suggestion to all doctors thinking about launching their transition planning especially when they have an involved practice format is to start sooner than later!