Our thoughts… 03-09-07

Associateships 101, Part 1

This is the time of year when we get plenty of questions about associates and associate employment. Certainly we understand the need for the new grads to find employment, and there is just something about springtime that brings out the ambition in long-term practitioners to kick it up a notch. (Sorry, Emeril) Although it’s not the largest portion of our business, we get a fair share of calls and visits from both parties and can’t help but form some opinions about what works in associate agreements. While statistically the success rate of associateships is poor, they are certainly doomed if certain guidelines are not established up front.  Let me suggest a few things to consider before anyone makes any commitment.

Compensation: It seems the range falls between 25 and 35% of collections depending on who’s paying for what. Costs to consider include malpractice insurance, lab, continuing education, travel costs, health and disability insurances and sometimes even additional staff costs. Will the associate get credit for all of the hygiene activity on their watch or just for the exams? In addition, the new doctor is probably going to need a base salary draw to live on until collections start to come in. We normally suggest the new associate be paid on net production if the term of employment is expected to be less than 6 months.

Term of Contract: The majority of arrangements we see are for one year with 30 days notice by either party to terminate. Interestingly, when we ask the parties how long they think the agreement is in force, we normally hear 12 months, but from a practical standpoint, the contract is month to month. In recent months, I’ve noticed that some agreements did not have a clear renewal option if in fact they made it past the first year. Be very careful of boilerplate forms as they may not address your specific needs. Even with the best of planning, we find very little security in “Associate World” for either party.

Covenants: We find restrictive covenants to be as varied as the parties involved, but there are certain trends to be aware of. The circle will most certainly be larger in rural areas than in the Metros. If you go to a small town, you may find the covenant includes not only the town but sometimes the entire county. Metro practices are more likely to be for two or three years and up to five miles. Both parties need to be very careful with this issue as an unenforceable covenant can be a hard lesson. New associates would be advised to NEVER sign a covenant for the first 90 days or so. Too many of those five-mile circles and you have to move to another city! By the same token, employers should NEVER let an associate stay indefinitely without a covenant. We have numerous cases on file where the associate ended up with the value and patients of the practice and moved it down the street.

Opportunity: A careful and objective analysis of the practice needs to be done to assure the new doctor that there is adequate need for the additional production capacity. A tired, older doctor at the end of a busy week may think he needs help but by Monday morning is wondering why he ever made the call. While there are lots of factors to consider, if the practice has more than 1,500 active patients, the schedule is chock full for four to six weeks and new patients are being turned away, then maybe the time is right. In addition, if the host doctor is referring out procedures that the new doctor would gladly perform (endo, pedo, ortho or implants), then additional revenue is available for that associate.

We are always happy to assist in the search for and placement of associate doctors along with the necessary agreements. Next month I will discuss some of the factors to consider if there is a possibility that the new associate may eventually become the owner of the practice.

Steve Wolff, DDS
UMKC Class 1977