15 Milestones You Need to Hit Before Hiring an Associate

June 19, 2018
Dr. Michael Abernathy, DDS

Getting the timing right is critical to the successful execution of any business transition; and adding an associate dentist to the staff is not the time to wing it. Here is a list of 15 essential benchmarks to meet before bringing on a new dentist.

Transitioning to the multi-doctor arena will reveal the systems, staff members, and protocols that are no longer sufficient for continued growth.

Like most things, success is in the details. Most practice owners want to grow their practice to the point of needing a new doctor. Getting the timing right is critical to the successful execution of any business transition; and adding an associate is not the time to wing it. There are solid reasons, benchmarks, and systems to make any transition work.

Determine When the Practice is Really Ready for a New Associate Dentist

The new dental economy of the modern day is a great time to make the transition to a multi-doctor practice. We are seeing solo dental practices decrease in numbers by 7% per year, while multi-doctor offices are increasing by 20% a year. The evolution of managed care, the competition of corporate offices and a more educated consumer are driving these changes.

John Gardener said it best: “Most organizations have developed a functional blindness to their own defects. They are not suffering because they cannot resolve their problems but because they cannot see their problems.” It is the myths and miscalculations that destroy any chance for a successful transition. Self-reflection as well as having a committed doctor and staff are essential to the process. Take note that adding an associate or partner never eliminates problems. This addition most often creates, or points out, the problems that already exist but were not dealt with when the practice functioned with a solo practitioner. Transitioning to the multi-doctor arena will reveal the systems, staff members, and protocols that are no longer sufficient for continued growth.

Practice owners must take the time to look at the pre-qualifying benchmarks that have the greatest chance of success in a transition. What follows is a concise list of things needed prior to hiring a new doctor.

When Should an Associate, or Partner, Be Considered

  • When the senior doctor is ready to grow the practice or cut back hours. These are the only two viable situations for consideration.
  • When the schedule is too full, not when the staff is struggling to fill it.
  • When the senior doctor is tired and busy but poised for growth. This means a commitment to do whatever it takes to make it work without coasting. Offices that succeed in transitions are engaged thoroughly in the process and the results.
  • When there is a 15% growth rate per year. This indicates positive change and constant improvement in the office.
  • When there is a committed team that shares a unified vision for a multi-doctor office. They are on board and willing to pitch in to make it happen. There is a huge difference in a committed team and just a group of workers that are compliant. The number one reason transitions fail is that the senior doctor does not involve and take the council of his staff. Taking the time to involve the staff creates a “staff ownership” mentality.
  • An overhead of 63% or less. Any higher begs the question of sound financial policies in the business. All inclusive costs for staff compensation (pay, taxes, uniforms, benefits, etc.) should fall around 25%. Marketing should be at 3%-5%, Lab at 8%-10%, dental supplies at 6%, office supplies at less than 2%, and facility costs at 7-9%.
  • New patients should be 40-70 new patients per dentist per month. Hiring another doctor can ramp up that number. Looking at it from a hygiene perspective, there needs to be about 32 new patients a month per hygienist. This is not a benchmark that can be compensated for by checking the boxes on other areas. The number of new patients directly affects the practice’s bottom line and ability to consistently grow.
  • Recall should be at least 70% and hopefully higher. The average practice has a recall percentage of about 42%, meaning average practices are not candidates for associates or partners. According to ADA statistics, the average practice has about 25-30 new patients a month, 1 hygienist, a total of 4 staff members, 67%-75% overhead, recall at or below 42%, and a direct referral rate of less than 40%.
  • When there are at least 2000 active patients, or patients who have been in during the last 12 months.
  • When there is an adjusted net production and/or collection amount of at least $120,000-$140,000 per month. Struggling or failing to hit these numbers indicate a lack of understanding and implementation of sound business acumen. Falling short here will assure a poor overhead when the new doctor comes on board. Doctors who produce at these levels understand consumerism, key practice indicators, marketing, systems and protocols.
  • When there is an exisiting referral rate of 50% or greater. This indicates the overall practice health and competence in the market place. Do not attempt to bring on a new associate until this benchmark is achieved. People have to like the existing doctor, the office systems and staff to sustain enough growth to add another doctor.
  • There must be at least twice the number of hygiene hours as doctor’s hours; in other words, two full time hygienists per doctor. Keep in mind that the hiring of another doctor should quickly mean an increase in new patients as well as the need to hire another hygienist to service them.
  • Production should be at, or close to, $25,000-$30,000 per month per op. Six operatories must bring in $150,000-$180,000 per month. Production per op is a great way of looking at capacity even if these numbers are not met. Assuming there will be overlap in scheduling with the new doctor, about 2 rooms per dentist and one per hygienist are needed, with at least one extra room available for overflow. Coming close to these production benchmarks will necessitate the need to consider if the facility is up to the task of housing more hygienists, assistants and operatories.
  • Production per employee must be $20,000-$25,000 per employee per month to be able to effectively integrate an associate. The average practice will produce about $14,000 per month per employee.
  • Debt structure: Assume no debt! Do not bring in an associate or partner to bail out the senior doctor.

With lots of boxes to check, the list includes the “not so small things” that make transitions work. Start with a cold, harsh and unimpassioned look at where the practice actually is as well as where you are emotionally and financially before bringing in a new associate. A new associate can yield a 15%-20% growth rate every year as well as provide the practice owner with a long-term business partner and strategist.

Michael Abernathy, DDS, is the author of “The Super General Dental Practice” and the owner and founder of Summit Practice Solutions. He can be reached at abernathy2004@yahoo.com or 972-523-4660

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