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Top 3 Ways Associates Get Paid

“In business as in life, you don’t get what you deserve, you get what you negotiate.” –  Chester L. Karrass

There is no rule book on how you should get paid as an independent contractor or employee dentist.  When you enter a business arrangement with an owner, you must evaluate the financial package being offered objectively.

It’s not all about the money.  There are other features of a practice that may be attractive (check out this post for more info).  But let’s be honest, perhaps the most important feature is how you will get paid.

For a deeper discussion on negotiations and what to expect in your first year, check out this post here.

Here are the top 3 ways owners can pay you for your time and hard work:

(1) Straight Salary

Regardless of how much dentistry you do, you get paid a flat fee by the hour or day.  This can work well for orthodontists since there is a high volume of patients and the procedures are similar.  However I don’t recommend this approach for other branches of dentistry since you won’t be rewarded for working harder or doing bigger cases.  I don’t see this form of payment very often.

(2) Production/Collection Percentage

This is a more common way to get paid.  The harder you work, the more you earn.  That’s an incentive that will keep you interested in the long run.

It’s hard to find a practice that will pay you on production these days.  As long as there is a high collection ratio, you should be fine.  If you are going to be on some insurance plans, keep in mind that there will be a lag of a few months between preforming a procedure and getting paid, even if the office has a high collection ratio.

What should the percentage be?  That depends on what you negotiate.  Typically the range is 30-40% with most numbers falling around 30%.  See below for additional factors that may raise or lower your percentage.

A potential pitfall is that you will be hurting more on slow days.  If the office isn’t that busy for a while, you may have legitimate reasons to start worrying about paying your bills.

Hmm… the office seems a little slow today…

(3) Base Pay with Bonus

In my opinion, this is the best way to get paid.  It combines the benefits of both Options 1 and 2 with none of the drawbacks.

There are a few variations, but basically you get a daily flat rate plus a monthly bonus based upon your production/collection.  A common structure for this option is to use a “draw” rather than a pure bonus.  What do I mean?  Here’s an example of a draw:

You worked 8 days in July being paid $300 per day for a total of $2400 The office collected $5000 in collections in July. 30% of $5000 = $1500 $1500 – $2400 = -900

You make your $2400 in base pay and you do not make a bonus draw.

Now let’s pretend the office collected $10,000 in July. 30% of $10,000 = $3000 $3000 – $2400 = $600

You make your $2400 in base pay and you get a $600 bonus.

Your bonus draw is based upon the difference between what you produced/collected and what you were already paid in base pay.  This is fair to both you and your employer.

Additional questions to ask:

(a) Do I get medical benefits?  The Americans who read my blog will agree that it is very expensive for employers to provide health insurance to their employees in our country.  My international readers may not have to worry about this!

(b) Who pays for the lab costs?  It is more common for the practice to pay for the lab costs.  If you have to pay your own lab bill, you should be receiving better compensation in other areas of the deal (e.g. higher production/collection percentage).

(c) Who supplies the patients?  If you have to supply all your own patients and will start from scratch, you should either get some sort of base pay or a high production/collection percentage.

(d) What is the collection ratio? This is an essential question to ask if you will be paid on collection.  Don’t just get a verbal answer; ask to look at the books.  Some practices have lower than average collection ratios and they may not be honest with you about it.

(e) Who keeps the books? If the office has practice management software, you’ll have a much easier time checking your numbers.  If you’re working off of paper, you’ll have to keep track of your own production and collection and verify with the office numbers.


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