Adding a dental associateship to your office is probably something you’ve thought about at one time or another. The real question isn’t really whether to add an associate. Its how to know when to add a dental associate. From your point of view, this might seem like an unanswerable question. But for those with experience in adding associates, it really all comes down to your numbers and knowing what they say about the capacity of your practice. The problem is that many dentists don’t know what indicators to look for or how to bring an associate on properly. This creates a lot of problems in a lot of offices.
How Busy is Your Practice?
First, the key driver is, how busy is your practice? If your practice is so busy that you can’t handle the patient load on your own, then you may be ready for an associate. If that is not the case, then you are definitely not ready to add an associate. If you are intent on growing your practice, but aren’t yet that busy, your focus should be on new patient growth, not adding an associate. Get your practice to where you literally cannot do any more, then reconsider a dental associateship.
Dentists add associates for all kinds of dubious reasons: your peers are adding associates; to have a colleague in the office; to cover patients while the dentist goes on vacations; to impress your dental classmates at your ten year reunion; so a male doctor will have another male team member. These are all unsound reasons, because none of them indicate whether the practice can support an associate, which is the only reason to start the process.
Indicators of When to Add a Dental Associate
First, your practice must be so busy that you cannot physically handle your patient load. Once you reach that point, you need to carefully review your practice records and look for the indicators that your practice can support another doctor in the office. These include your number of active patients, your office production, your referrals, and your case acceptance rates. Taken together, these numbers will give you a good idea of the health of your practice and whether it can bear a second doctor.
Number of Patients
The number of patients will tell you if your practice is busy enough to keep an associate occupied (and producing). The generally accepted rule is that a general dental practice needs to have a minimum of 2,000 patients before considering an associate. This can vary depending on the practice—pediatric practices should have 4,000; orthodontic practices only need about 250 active cases.
Also, look at your schedule. Patients and hygiene should be booked out four-to-six weeks. Importantly, when looking at your booking schedule, you are considering next appointments only, not booked treatment plans.
Finally, look at the number of new patients you are adding each month. The new patients are largely what will feed your new associate. If you are planning to continue working full time, you should be adding 30 to 40 new patients per month.
As you can see, this is a fairly straightforward assessment of numbers. It’s not about what you feel like your practice ought to do, it’s a clear-eyed view of what it is in fact doing as a business.
The office production will tell you if your practice is earning enough to pay for a new associate (and additional hygienists). What you are looking for is a consistent total production at least $140,000 each month. While this may vary by market, keep in mind that this is a floor, not a ceiling. It basically works out to about $90,000 for the new doctor and $50,000 for the hygienists.
Another way to come at this is to consider what is produced in each of your treatment rooms. If you are producing at least $25,000 to $30,000 each month in each room, you are likely hitting your capacity. This is a good indicator of when to add a dental associate.
Your referral rates are an indicator of your cost per new patient. Strong referral numbers, in the 40-50% range, mean that you are doing well at keeping patients and their satisfaction with the quality of care and service is bringing in new patients by word of mouth. If your referral numbers are low, it may mean that you have other systemic problems that need to be solved before you think too much about a dental associateship. If you adding another doctor while your referral numbers are low, you could make the problem worse.
Case Acceptance Rates
Your case acceptance rates are an indicator of what percentage of your patients are completing their recommended treatments. It’s related to your referral numbers, in that it’s an indicator of the strength of your patient base. It may also show whether your practice is providing a consistent satisfactory level of care and service (although pricing and other factors may also impact these numbers). Your case acceptance rate should be at least 80%.
Low acceptance rates reduce your profitability. Given that associate case acceptance rates tend to be lower than those of the senior doctor, bringing on an associate when your case acceptance rates are not where they should be will likely only make the problem worse. If you are under 80%, take a look at why its happening and focus on resolving those issues.
Capital Sufficient to Carry You Through Until You Get a Return on Investment
If you have 2,000 patients, are booked six weeks out, have a 45% referral rate, and an 80% case acceptance rate, you are well on your way to a strong associateship strategy. However, you have one more question to answer: do you have the capital to pay the dental associate’s salary until they are producing enough to cover it themselves?
There are two facts that you need to know in order to answer this question. First, most practices can expect to take a financial hit after hiring an associate. After all, you have to pay them regardless of what they are producing in those first days, weeks, and months. Second, an associate typically will need to produce about three times their salary before your practice breaks even on the compensation package you’re offering.
You need to carefully consider what the costs will be—not just in salary, but in benefits and other overhead costs—and whether your practice can bear those costs for six-to-twelve months. If not, adding an associate should be a disaster for you, for the associate, and for your practice.
If you don’t think your practice can bear the financial burden of a dental associateship, then step back from the idea and consider what you can do to resolve this issue. Most dental practices need to ramp up, both in terms of patients and cash, before they are really ready to take that next step.
Even if your practice is busy and financially healthy enough to bring on an associate, you still have to consider a few things about your office in order to make sure you’re really ready. The first is whether you have the physical space for another doctor. You should have at least five doctor chairs (two for each doctor and one for shared overflow) and four hygiene chairs (two for each doctor). If you can’t fit this number of treatment rooms in your office space, you can consider other options such as keeping the office for longer hours, allowing for split shifts (e.g. the office is open for 12 hours, with each doctor working six hour shifts). This might be a better option than immediately taking on the expense of extensive remodels or expansions.
You also need to look at your office procedures. Are they smooth? Or do you have problems with things not be done properly or staff not being clear on what the procedures are? The best case for success in a dental associateship is to have well-defined office systems and procedures, ideally, written out in an employee manual, that is being consistently followed. If you lack any of these qualities, take the time to build them up before bringing in a new employee. Again, if your office doesn’t run smoothly, a new associate will likely only make it worse.
Don’t Be Discouraged!
If you’ve read this far and are feeling like adding a dental associateship is too daunting, don’t be discouraged! What you have now is an opportunity to improve your practice and avoid common pitfalls that have ensnared too many other dentists.
Adding an associate sounds like a great idea because it can be a great addition to your office, both in terms of profitability, and to have a colleague that can improve and expand your practice. But it requires a lot of thought, planning, and work. That’s where most of the mistakes are made. Take the time to properly consider your choices, carefully make a plan, and put in the work, and you will come out much better than you would have otherwise. Also, remember, you don’t have to do this all by yourself.
DDSmatch Southwest Can Help You Know When to Add a Dental Associate
As a dental broker, DDSmatch Southwest specializes in dental practice transitions, whether buying, selling, or adding a dental associateship. If you are thinking about adding a dental associate, you can take advantage of our Associate Intelligence Quotient (AIQ). This service involves the experts at DDSmatch Southwest, along with their dental CPA affiliates at Blue & Co., examining your practice and providing a detailed report that will show the impacts of hiring an associate. Why guess when you can know?