Compensation for Staff at Recently Purchased Dental Practice Questions

First, let this post help those with staff compensation issues as well as those that are or will purchase a dental practice. So some of these comments are not about what should have been done, it’ll be a teaching moment for those that MIGHT be buying a practice in the future:

Hello, I just purchased a practice from a retiring dentist. The employees are hounding me to give them a handbook. I am trying to decide on their benefits. As of now I have two hygienists who make $36/hr and an office manager that makes $28/hr.

What are the market rates for the area?

The previous owner also gave 20, yes 20 vacation days to the hygienists paid and he paid 100% of their health insurance.
OK. How long have they been employed to “earn” the vacation days? Did he give them to every new employee? Big difference. I would agree that the 100% of health insurance is generous this day and age, depending on how their hourly rates compare to the market.

… I plan to keep salaries where they are. However what should I do concerning health insurance? I do not want to pay 100%.
You need to consider their entire compensation package as a whole though…

…How about if I would agree to pay max of $300 month to any full time employee that wishes to sign up and employee is responsible for the rest?
That’s not a bad idea and one that is very typical today.

Also when dentist sold he paid all their accrued vacation. I think that now they should be in a 90 day trial period and paid vacation should start accruing over.
You could do that; however, in most cases the buyer will “assume” the vacation days policy for existing employees meaning, these employees will continue to get their 20 days per year, new employees will have to earn them and if these employees are truly “overpaid” in total compensation and benefits you’ll simply need to “freeze” their compensation.

Paying them 20 days vacation and hiring a temp would break me.
Why? Wasn’t this factored into your due diligence analysis before settling? Didn’t the “high” compensation impact the purchase price? I don’t see why continuing for these employees would break you if you were careful to consider them during the due diligence phase.

With respect to changing them now, again, you would have known this before settling on the practice and could have requested that the seller make some changes BEFORE you took over or at least informed them that the very generous ways of the past will need to change under new ownership since a new owner will also have debt service.

Tim I have no idea what the going rate is for area or how to even go about getting this information. As for due diligence, it’s easy to be on the outside looking in telling others what they should have done. I can tell you it was very difficult going to this office and seeing the owner show up and become emotional each time I pulled a chart or asked a question. It was a very difficult situation.

If you read my opening comments I did not want my post to be about what YOU could have done, but what others should do going forward, that was the intent. I think I’ve also given you some advice on what you can do now and I know it’s not much, as they say, it is what it is and you’ll learn from this as you progress in your career.

Your post will certainly help others .

You’re right but I don’t know what could have been done different anyways. It may have caused me to start off with no employees on day 1.

Maybe, maybe not.

I just had a buyer that settled on a practice within the past two weeks. The employees were treated VERY well: hygienist was being paid 45% of their revenue, almost unheard of. The seller and employees BOTH knew he was being WAY generous.

The buyer asked seller to talk to the employees and he did and they understood. Tthe staff knew they couldn’t get what they were getting anywhere else. These employees knew their compensation was going to be reduced as soon as the buyer took over. What they also knew is that their revised compensation was still very fair for the area.

Again, not much you can do now unless the employees know they have it great, if they do, still others can learn from this. 

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