year with ongoing annual renewals if both parties agreed. DSOs and public health clinics increasingly offer multi-year agreements with longer notice required prior to termination. This is driven by the difficulty in finding quality doctor replacements and the current trend for associates to move from posi- tion to position instead of staying in a practice for extended periods.


COMPENSATION


TYPICAL CONTRACT ESSENTIALS AMONG VARIOUS EMPLOYMENT MODELS The table below summarizes some typical preferences found in dental employment contracts for the three most common employment categories.


Private Practice Contract length (term?)


1-year with annual extensions or at-will


Compensation (payment calculations?) 28-35 percent of net production or collections


Benefits


Laboratory costs/supplies (employee requirement?)


Covenant not-to-compete


Compensation packages typically include a combination of salary/ wages and additional tangible bene- fits. We’ll look at these components individually. Dental associates may receive either guaranteed salaries, commission-based pay or a blend of both.


Mentoring/continuing education


Varies from full package to none


None or some percent of lab cost/parts total


Almost universal with a 2-10 mile radius for 2-5 years


Some or none


Termination (employee consequences?) None or specified number of days or penalty


Guaranteed salaries are generally limited to the early months of employment in the private sector and DSOs (to get a new associ- ate started) and are the standard method of paying a dentist in public health facilities. Salaries for new graduates range from about $120,000 to more than $225,000 annually to start in various health centers. If the salary is truly guaranteed and not simply a draw allowance that is later adjusted based on col- lections or production percentages, it is often expressed as a per diem, or daily guaranteed rate ($600 to $900 for an eight-hour day or prorated for partial days is typical). In some private practices, a daily rate is guaranteed for an initial period of 3-6 months and then transitions to the commonly used calculation of a fixed or tiered percentage of collections or production.


Compensation will always be specifically defined in the employment agreement and is usually the most problematic section for both parties. DSOs often spell out complex and difficult-to-replicate formulas to determine periodic associate payments. Such equa- tions are not deliberate attempts to deceive anyone, but it would be notably more palat- able if one’s paycheck were easier to confirm. The private sector normally provides simpler formulas based on a certain percentage of the associate’s direct production and/or eventual collections. I’d estimate that about 25 percent of offers are based on net production and the


remainder on associate collections. A range of between 28-35 percent of either adjusted production or collections is what I see most often. A caveat to contracts based on collec- tions is that the office collecting the produc- tion should be able to confirm a collection ratio of 98 percent or better. Otherwise, far too much production is left on the table, in my opinion. Another personal bias is that the agreement should specifically identify what is included in an associate’s production column. Procedures such as periodic exams done with hygiene patients and radiographs ordered by the associate that their assistant takes and the doctor interprets should also be added to the doctor’s production totals.


BENEFITS


Benefits are additional perks (i.e. anything of value) beyond the employee’s salary/wages. In today’s market, benefits often begin with a fi- nancial bonus at signing, often referred to as a retention bonus or moving allowance. Such sign-on bonuses are found more commonly with DSOs and public health facilities. They can range from about $5,000 to perhaps as high as $50,000 in facilities that are hav- ing a difficult time recruiting a new dentist. DSOs frequently offer periodic productivity bonuses based on overall office profitability and/or patient satisfaction scores. DSOs and many public health clinics include a full benefit package in addition to their wage/sal- ary calculations. The most common benefits I see are health insurance, disability insur- ance, retirement plan, continuing education,


DSO


1-3 years with annual extensions


Guaranteed salary or per- cent of production + bonus formula + retention bonus


Full benefit package None


None or sometimes similar to private practice


Significant help and continued training


No penalties except retention bonus


Public Health


1-2 years with annual extensions


Guaranteed salary + retention bonus


Full benefit package None


Usually none except for other public health facilities


Significant help and continued training


No penalties except retention bonus


dental license, DEA license, association dues, paid time off and/or uniforms/scrubs. In pri- vate dental practices, the number/amount of benefits is generally inversely proportional to the percentage of production/collections of- fered to an associate. The higher the payment percentage, the fewer the additional benefits. Few private sector practices can match the benefit packages of DSOs and public health centers. To compensate for this, the potential for future equity ownership or full buy-out of the private practice is often included in the contract.


LABORATORY COSTS/SUPPLIES


DSOs and all public health clinics com- monly cover the lab costs for their employees (assuming they use the preferred labs). The private sector varies in this regard. Deter- mining what, if any, lab fees and implant/ restorative parts the employee will be re- sponsible for allows one to calculate a rough estimate of their net production/collection percentage. Because the real cost of lab fees and restorative parts frequently comprises between six to 10 percent (or more) of a GP provider’s production, any portion of that expense required of the employee will need to be deducted from their stated production/ collections percentage. For example, if a contract agrees to pay an associate 33 percent of collections less their lab fees, the true net earnings would likely be reduced to around 30 percent of collections.


CONTINUED NEXT PAGE


ISSUE 1 | SPRING 2024 | focus 25


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32