When new dentists join a practice as an associate, they should get used to signing their name. Associate contracts require careful review and often involve several provisions, like employment, compensation, time off, non-competes, and more. When you’re just starting your career, how do you know whether these items are in your favor? Read on for tips on how to understand the associate contract and what to negotiate for.

 

Compensation

Make sure you understand how you will be paid as an employee and whether you are ever terminated. You may see a few different formulas for compensation: dollar amount per month, percentage of adjusted production, percentage of collections, and for part-time associates, an hourly rate. Adjusted production compensation tends to be the best for associates, because it’s based off your production less any discounts, reduced fees or write-offs, lab fees, and uncollectible accounts. Essentially, the elements of the practice you cannot control.

 

According to Dental Economics, 30 percent is common for general dentists and 35 percent for specialists, not including any lab percentage discounts. If your compensation is based off a percentage of collections, ensure that you can still get paid for a specified time period after your employment ends. This is to allow time for fees to be collected based off work you did.

 

When it comes to bonuses, the formula can be based off production, productivity, or collections, and some will also include performance and/or the financial health of the practice. Make sure you clearly understand how bonuses and other discretionary income is calculated before you sign the associate contract.

 

Non-Compete

The non-compete, or restrictive covenant, is an important piece of the associate contract. When and if your employment ends with the practice, you want a non-compete that adequately protects the senior dentist and gives you enough freedom to move on with your career. To that end, make sure the non-compete excludes any of your direct referrals, friends, and family are excluded. The geographic location restriction should be reasonable, especially if you grew up in the same area, and you may want to negotiate for a six-month exclusion before the non-compete is enforced, insomuch as it concerns opening a new practice. Obviously, you will not be allowed to solicit your old patients during the exclusion period.

 

A non-compete typically lasts for one to three years after you leave the practice.

Other elements of an associate contract will typically include:

• Your schedule
• Benefits and direct expenses
• Who pays the liability insurance
• Paid and unpaid time off
• Continuing education
• Termination Clauses

 

Finally, if your associateship is going to lead to practice ownership someday, you should also expect to see (and sign) additional documents. These range from a valuation of the practice to future ownership agreements.

Know that nearly every part of the associate contract is negotiable, although you want to make sure it’s fair to the senior dentist, too. A dental consultant can help you sort through the various provisions, advise you which elements to negotiate, and help you understand what you’re signing. Our dental CPAs can help; email us to help you review your contract before you begin your associateship.