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Practice Transitions, Part Three - Hiring an Associate Thomas Giacobbi, DDS, FAGD, Editorial Director Dentaltown Magazine

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Practice Transitions, Part Three — Hiring an Associate

by Thomas Giacobbi, DDS, FAGD
Editorial Director,
Dentaltown Magazine

 Dentaltown Magazine is pleased to present the final part of our series on transitions. In July, we examined the buy/sell process and provided advice for dentists contemplating a career change, and last month we included three case studies of actual transactions along with our transition-specialist contributors' top tips for buying and selling a practice. For this final installment, Imtiaz Manji, co-owner and CEO of Mercer Advisors, Mastery and Transitions; Fred Heppner and Jeffrey J. Tonner, JD, of Tonner-Heppner Transitions, LLC; and Larry M. Chatterly of CTC Associates took the time to answer our questions on what to do when hiring an associate.

What advice do you have for dentists considering an associate and how should a dentist prepare?
Chatterly: Be fair, define your expectations, crunch the numbers, make the right match, do your homework and seek advice.
Start by asking yourself the following questions: What do I want to accomplish? Why am I bringing him on or why am I taking this position? What are my values? What is my work ethic, practice philosophy, leadership style and personality type? How do we proceed? How do I pay him? How do I want him to treat my staff and patients? How, where and when will this end? How can I keep him happy? How can I protect my interests but still be fair to him? What about a non-compete? What about malpractice? What about re-work? What expenses should I cover? How do I want him to treat my staff and patients? If things go wrong, how do I get out of it?
Respondent Bios
Larry M. Chatterly

Founder of
CTC Associates
Since 1988, he has specialized in transitioning dental practices and serving the business and transition needs of dentists throughout the West. Frequently lectures on the topics of practice transitions, practice management, empowered leadership, and practice promotion and is the author of several publications on practice transitions.
Jeffrey J. Tonner, JD

Attorney at Law for Tonner-Heppner Transitions, LLC
Has been practicing law since 1981. He has dedicated his practice to representing only dentists since 1988. He lectures frequently on risk management, dental practice transitions and dental law across the country. He also holds private seminars for small and large groups of dentists and their staff, as well as for dental organizations.
Fred Heppner

Business Management Advisor for
Tonner-Heppner Transitions, LLC
Has served the dental profession since 1983, and had enhanced dental offices across the country in the areas of patient retention, staff productivity, scheduling efficiencies, hygiene production, case presentation skills, facility utilization, marketing and increased profit.
Imtiaz Manji
Co-owner of Mercer Advisors, Mercer Mastery & Mercer Transitions, CEO of The Scottsdale Center for Dentistry
Has coached some of the most successful practices in dentistry with his educational programs that have raised the quality of life and practice for thousands of dentists.
Tonner & Heppner: When considering an associate, make sure there is enough dentistry to meet the needs of both doctors, and make sure there is enough physical space for two doctors or structure an alternating schedule that would accommodate both doctors.

How does the dentist know when it is time to hire an associate?
Manji: If you're looking for a good rule of thumb, take a look at the number of charts you have seen in the last 18 months and compare it with the number you have seen in the last 12 months. If your gap shows that there are 400 to 500 charts that you have not seen because you didn't have the time, manpower, or systems to accommodate them, it is a safe bet that with those charts, combined with some new patient marketing strategies, you have enough untapped value sitting in the practice to justify bringing in another pair of hands.

Tonner & Heppner: A senior doctor might want to practice fewer days and hire someone to work in his/her place to generate income; or a senior doctor might want to add more doctor days without him or herself working less thereby tapping into the unmet demand from patients.

What are the common mistakes in seeking/hiring an associate?
Chatterly: Associate arrangements usually fail because of this one simple reason: the parties have incongruent expectations. In other words, one of the parties is expecting something to happen or for things to happen a certain way, yet somehow those expectations are not met.

Some dentists seeking to hire an associate might want to spend less time in the office, yet he/she cannot afford to take home less than he/she is presently earning. Often, host dentists in this situation think their solution is as simple as hiring an associate to perform all of the "grunt work," i.e., the lower-end procedures, while they continue to perform all of the high-end procedures, thereby allowing them to earn just as much in fewer hours.

One the other hand, some dentists are simply not cut out to work in a close professional relationship with another dentist. We do not mean this in a derogatory sense, nor do we mean to disparage certain types of doctors. Frankly stated, some doctors are meant to be the "captains of their own ship." If you think you might be this type of doctor, don't feel bad, but don't kid yourself into thinking that an associateship will be right for you. Are you then doomed to sailing solo throughout your entire career? Not necessarily, since co-captain arrangements can often be successful and rewarding, provided that the associate is given a clearly defined opportunity to become an equity owner down the road.

Manji: It is vital to use all your resources in locating promising associate candidates, and when you talk to those candidates, make it a comprehensive interview. To do that you have to go in to the process with an idea of what your perfect candidate would be like. What level of experience are you looking for? What areas of specific clinical aptitude are important? Do you want a confident, driven leader or a quiet, reliable performer? What hours would this person need to work? What is your short-term and long-term vision for this person's role in your practice? Creating a profile of your ideal associate makes it easier to identify that person when you see him/her, and gives you a guideline for your interview process.

Take the right approach and you can avoid the biggest mistake I see, which is entering into an arrangement with mismatched expectations. Bringing in an associate is like getting married: compatibility on the big issues and a shared philosophy and vision go a long way to overcoming any other obstacles that might arise.

Tonner & Heppner:
  • Thinking that you'd like to work less and hire an associate to work a few days when the associate really wants to work more than you're willing to provide.
  • Not conducting proper background checks to make sure they will qualify for third party insurance plans accepted in the practice.
  • Not spending personal time with the candidate before the hire to ensure the person is a good match philosophically and personally.
What is the range of fees for transition consulting to hire an associate?
Chatterly: For a buy-in we typically charge a flat transition consulting fee of $22,500. Services include practice and financial analysis, help locating the associate, negotiating terms and contracts, staff and various closing details. We can also charge an hourly fee of $275 and provide whichever services are desired. Note that when the terms are either a flat fee or percentage, it is a fee-for-performance, meaning we don't get paid unless the deal closes.

Manji: In a way, that is like asking "how much does dentistry cost?" No two transitions are exactly alike, and the number of services available to address all the needs that could arise, make this a very vast range.

If you're just looking for a simple employment agreement for a new associate, you can have one drawn up for a couple of thousand dollars by an attorney who specializes in dental practice transactions. If you want to do a straightforward brokered sale, you can expect to pay about 10 percent of the selling price for the search, valuation and agreement.

But the way I see it, there is really no difference between hiring an associate and buying or selling – they are all part of a comprehensive transition process. Many dentists are surprised to discover that a complete transition strategy, supported by a qualified transition consultant, including all coaching and services – a practice appraisal, associate placement services, economic projections and a financial plan, advice on growing the practice to accommodate another dentist, tax planning, purchase and partnership agreements – is usually comparable to (and often less than) what it costs to go with a straight commission broker.

What is the best way to market for a new associate or a practice sale?
Chatterly: Online, local classifieds, letters to all new licensees in the dental schools and residency programs, brokers.

Manji: To target people locally, use the power of word of mouth. Your supply reps, for instance, who know you and your practice, are plugged into the dental community in your area, and they are adept at communicating value, making them valuable allies in getting the word out. Talk to your colleagues at your study clubs and at continuing education courses you attend. Get lists of recent grads from your state association and send out mailers. The dental community is, after all, a community – and you are probably not even six degrees of separation from your ideal associate or buyer.

At the same time, it's also important to realize that the ideal candidate might not come from your area, so you have to make sure you're drawing from a national pool. That means using Internet resources to extend your reach – both by listing and searching through a dental practice Web service, by participating in online communities like Dentaltown, and by having a professionally designed Web site of your own that showcases your practice in the best light to interested parties near and far.

Tonner & Heppner:
  • A professional broker who has personal contacts, sound reputation, proven track record, and knowledge of the marketplace.
  • Dentaltown.com.
  • Local ADA chapter.
  • Dental supply/equipment representatives.
  • Dental Professionals: CPAs, financial planners, consultants and attorneys.
  • Dental school placement programs/Web sites.
Tips on what to do before hiring an associate:
Chatterly:
  1. Be clear with yourself and potential associates about why you want an associate, usually either (a) you want to grow the practice to the next level and stay on, or (b) you want to cut back eventually leave the practice. Also, are you willing to share both the responsibility and rewards of the practice's growth, or do you just want an employee?
  2. Create a proforma statement based on historical income and expenses of the practice to determine the financial feasibility.
  3. Determine your personal and professional compatibility with a potential associate, you don't need to be, do or want the same things, but you do need to compliment each other's strengths.
Manji:
  1. Prepare the team. The transition from one to two dentists in the practice can pose challenges for the team. They have to adjust to a different workload and possibly different work hours. Ask your team to be patient, but emphasize that you are always interested in their concerns. Another possible issue with the team is authority and delegation. The owner dentist must impress on the team that the associate is a fully qualified dentist who understands and can serve client needs.
  2. Prepare your patients. Marketing and client management are absolutely fundamental during a transition, and yet it is remarkable how many practices do not introduce and promote an associate correctly. Reactivated and new patients are the foundation of success for any associateship, and are likely to be the focus for the new person, but it is vital that all patients be made comfortable with the associate and be confident of his or her abilities. Send letters to your patients announcing the new doctor's arrival and creating value for his or her skills. Place ads in the local papers. Update your Web site and brochure to include their profile. If you want people to support and believe in this person, you have to demonstrate your enthusiastic support first.
  3. Prepare your facility. Before your associate starts, you should carefully consider the adequacy of your facility to support another dentist. Are there enough operatories for the associate and owner to work the same or overlapping hours? What about when the productivity of the associate increases? Often, you can accommodate increased production by implementing a calendar plan that extends or alters the hours of the practice, but eventually you may need to equip an additional operatory. It is important that these capital requirements are built into your planning and budget.
  4. Prepare to be a mentor. Practice owners going through the process of bringing aboard an associate naturally worry about getting the right person, but it is just as important to think about creating the right environment that will allow that person to be successful. Be prepared to invest the time in mentoring the new hire, and making their assimilation as smooth as possible. That means working with them on case plan collaborations, overseeing their continuing education plans, and making sacrifices, such as pairing them with your best assistant. The right person, you'll find, is usually the one who has been given the best opportunities to succeed.
  5. Prepare to take the long view. From your perspective, you might see this as an opportunity to bring in a hired hand to help relieve some of your "busyness," but the fact is there are very few people who aspire to be career associates. Any good young dentist is going to be looking for a situation with a promising future – and that means a buy-in opportunity at some point. So if you want someone who will stay with the practice, and bring prosperity and stability over the long term, what you're really looking for is a partner.
Tonner & Heppner
  1. Make sure there is enough dentistry for both doctors.
  2. Have a contract in place with a restrictive covenant, two years and five miles.
  3. Match the personality and dental philosophy of the associate and owner doctor.
  4. Conduct a background check (dental examining board).
Dentaltown Magazine
September 2025
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