Tips and traps when associating: What do you need to know before signing an associate agreement?
I had the pleasure to host David Chong Yen and Eugene Chu, Chartered Accountants from DCY Professional Corporation in Toronto. They have kindly agreed to record a series of videos that offer advice to new graduates and practicing dentists on the most common accounting and tax questions they are likely to face early in their career.
I hope that you benefit from the information provided. Please share your thoughts, questions, and suggestions at firstname.lastname@example.org
Until next time!
Many new dental grads are anxious to start working and paying down debt, do you have any tips for helping new grads find a good associate position?
One should determine their destination first and then work backwards. If your dream is to live and own a practice in a particular town, you may not look for an associate position in that town because the non-compete clause may prevent you from owning a practice there in the future.
In addition, new graduates should consider what they want to get out of an associate position. For many it boils down to a few items:
- Clinical experience – Variety of work, is a lot of work referred out? How busy is the clinic? How many patients?
- Mentorship – Is the principal dentist going to be around to teach and provide guidance? Ask the previous associate what they thought of the principal dentist. Look up any regulatory authority related issues.
- Money – Typical remuneration is 40% of collections after lab. The issue is whether the clinic is busy and has patients for you to treat. Ask to see the day sheets, are there large gaps? How far in advance are patients booked?
What type of associate position should you avoid?
Many new graduates get an offer to join a growing dental practice that was started a year or 2 ago, where they get hands-on experience to run a practice and the opportunity to grow it; and potentially at the end, a possibility to buy the practice. The principal dentist likely has 1 or more other dental practices and would like them to take the lead on this practice. This is what would be called a “baby-sitter position”, you babysit the practice until it grows. You may have huge gaps in your schedule, patients will be mainly walk-ins or emergencies. You won’t get any clinical experience or mentorship.
In a worse case scenario, the principal dentist doesn’t end up selling the practice to you but will keep telling you it will happen in a couple of years. In a best case scenario, the principal does decide to sell to you after you built the practice and your success ends up increasing the purchase price.
In other words, focus on your goals: Clinical experience and mentorship. If an opportunity to buy surfaces, it is a “bonus.”
Do you have any tips for new grads before they actually sign an associate agreement?
Have your accountant and lawyer review the agreement. Your advisors should be familiar with the dental profession and with associate agreements. As such, they can tell you what’s normal and what’s not.
- Non-solicitation and non-competition, distance and time.
- Fee sharing arrangement, not employer/employee otherwise you face adverse tax consequences.
- Remuneration, who gets paid for x-rays and hygiene checks? What rate of remuneration? 40% common, but could be more in rural areas where demand for associates is higher.
- Do you get base remuneration (i.e. higher of $X per day or 40% of collections)?
Full Interview (11.57″)