Adding a dental associate is a decision most solo practitioners will consider in their career. You may be wondering when is the right time to add an associate or what an associate can offer. To answer these questions, we asked Matt Howard, a dental CPA, accredited business valuator, and certified valuation analyst from Blue & Co. for help.
Adding a Dental Associate: Costs and Benefits
Your practice can benefit greatly from adding an associate at the right time. Remember that by adding an associate you are redirecting some of your revenue stream, which may impact your take-home pay. Matt explains “there’s a lot of variables at play here, typically we like to see over a million dollar collection practice, in general, that way that there’s plenty of room from associate to come in and inherit some of that revenue stream.” (See the full webinar below on this page.) Dentists who want to scale back their hours or take care of patient backlog before it becomes a customer service issue should consider adding a dental associate to keep their revenue steady and grow the practice. An associate can fill in the gaps and allow the owner to either take a step back or focus on other parts of the practice. Meet with a professional dental CPA and a dental broker to talk over your specific numbers and decide if you and your practice will benefit from an associate.
How an Associate Figures Into Retirement
As a solo practitioner, you have spent years building your practice and should be able to sell it for an amount that reflects that work. When retirement is five or more years away, adding a dental associate can be a right decision. According to Matt Howard, “A decreasing revenue stream in the valuation world is not exactly ideal. What we like to see is [the practice] either consistently growing by inflation or at least steady in the collection perspective.” This means growing your practice in the years before retirement is a good strategy and will allow you to sell your practice for a higher price. But what if you want to ease out of practice and into retirement by cutting back on your hours now? That is where adding an associate can benefit you. Your associate can keep up with current patients and even bring in new business while you scale back. Another option we often see is to bring in a new doctor as an associate a few years before you plan to sell the practice to them. Dental Economics posted an article explaining that these few years will provide “time to increase the associate doctor’s productivity and practice management skills necessary for a successful transition.” If you are nearing retirement, especially if it is five or more years away, talk to a DDSmatch Southwest broker now so you can decide which path to choose and start planning now.
How Much Will an Associate Cost?
It goes without saying that bringing in an associate will redirect your revenue stream. As a business owner, you need to decide where that will come from. Matt Howard suggests collections of over $1 million, so you have plenty of revenue to work with before hiring an associate. Compensation can vary, but Matt explains that commonly, “[the associate] might get some sort of guarantee the first year [then] move into some sort of production or collection-based compensation after the first couple of months or even maybe after a year at the most.” A dental CPA can help you look at your practice’s finances and decide if you are ready to add an associate and what type of compensation deal is right.
Adding a Dental Associate for Customer Service
Dentists who have built a thriving practice and as a result have patients booked out months in advance should consider the customer service implications of how long a patient has to wait for their appointment. If your practice is booked for weeks or months, your patients might not be willing to wait around and instead will choose another practice. According to Matt, “if you’re booked two to three months out that’s not very good patient service quality for your patient, so you need to come up with a constructive way to service them quicker” which will result in a better experience. An associate can help address a backlog of patients and shorten wait time for new patients wanting to make their first appointment.
How to Find an Associate
If you’re thinking about adding a dental associate, whether you need to address the backlog, reduce your hours, or are preparing for retirement, talk to the professional dental brokers at DDSmatch Southwest. We can help you decide what is the best path forward for your specific needs and wants. When you’re ready to add someone to your practice, we will find you the perfect match and ensure a smooth transition. DDSmatch Southwest specializes in dental practice transitions including buying, selling, and adding an associate, so schedule your consultation today.