Adding an associate dentist is the single most productive activity in which you as an owner will engage. Nothing else comes close. In this issue of the Profitable Dentist Magazine, let’s examine three reasons why this is true and why this strategy is foundational in your plan to finish well.
Capacity to Produce
The first reason is that four hands can produce more than two hands. If you double your capacity from one production line in your dental factory to two lines, you increase production. Many fixed costs stay the same, while variable costs are less proportionately than being a solo dentist, and the owner will retain larger profits once the associate is properly intertwined into the practice.
The ramp up for a new associate dentist is approximately one year. By the end of that year, they can be quite productive. When successfully marketed, they have traditionally in our office produced 70-80K per month by the end of their first year. New graduates may be a bit lower on this scale and top out at 50-60K but experienced docs will easily be over 100K per month. This is what I’ve experienced in hiring 18 associates over 30+ years as an owner. As an owner, I enjoyed earning a 100-200K profit per year for each associate I hired, trained, and retained. Many stayed on for seven to eight years before moving on to do their own thing.
Some will say hiring associates takes away income from the practice owner. That only happens when the owner fails to plan well. A proactive marketing action plan (MAP) should begin months prior to a new associate entering the practice. Of the 18 associates I added to my practices during my career, I didn’t hire because I was too busy and needed help. I never waited that long. I brought them in to increase revenue and to create more time off myself. Ramping up in all areas of the practice (social media output, print ads, blog posts, community events, hygiene hours, talking the new addition up to the current patient base, asking for referrals, and hiring of additional new auxiliary team members) before the day the associate is scheduled to see patients is critical.
The new associate should have an orientation and on-boarding process like any other new team member. Time spent observing the senior dentist working, communicating, and leading the team will be invaluable. Going through and fully reading the office business manual, the dental assistant manual, and the dental hygiene manual, in addition to the dental associate manual, are important. A new dental associate should know and understand each practice system before starting to work.
More Free Time
The second reason associates are profitable is that they free you, the owner, to do more lucrative procedures. If you could delegate non-productive, or less lucrative procedures to an associate dentist you could spend your time more wisely. For instance, I.V. sedation cases can’t be left alone while you check dental hygiene patients. Having an associate allows for this kind of highly productive, advanced dental care without suspending all hygiene production.
More time off, split shifts to include more patient-friendly hours, and longer personal vacations are additional benefits of having the additional dentist on board. It’s a win-win for the team with more profits in the practice bringing bonus potential to the table as well as total hours of work being more available with the second dental provider expanding practice hours.
The first associate I hired talked his way into my practice because he wanted to work with a progressive TMJ dentist. His name was Dr. Bill Gelfond and he was recommended by his advisor, Dr. Joe Konzelman, at Emory University School of Dentistry. We worked together for five great years.
In my new practice in Suwanee, GA, the one that I speak of in my book, Marketing the Million Dollar Practice, I hired my first associate there so that I could go on a two-week mission trip to Kenya. We were able to continue growing the practice at a rate of $500,000 per year for ten straight years
Practice Value
Finally, the third benefit of hiring associates to work in your practice – the net value of the practice rises significantly. As the EBITDA increases your practice transition value increases. Large net production practices are typically more valued than smaller practices. They sell for closer to or over one year’s gross production when they have excellent profitability. The economy of scale does translate into a big win as you eventually sell your practice. The difference can be realized by this figure: for every dentist you employ, the value of the practice increases by one million dollars. Those are numbers you can take to the bank. And, it should entice you to consider expansion if you wish to maximize your practice value prior to transition and eventual retirement.
To summarize, the three benefits that dental associates provide the owner are (1) increased capacity to increase daily revenues, (2) a deeper decathlon dentistry capability to do advanced procedures as the range of skills in the practice widens between having two providers (a side benefit of this also increases revenue when fewer procedures like orthodontics, implants, and endodontics are, by necessity, referred out to other providers), and (3) a far more valuable asset to sell upon transition.
As we’ve been digging into the work of practice leadership, coach and business consultant, Jeff Olson, I like the following quote “There is a natural progression to everything in life: plant, cultivate, harvest.” Say your practice with just you running it is an open field. Growth requires planting. If you plant one tree, you have a tree. If you plant several trees, you have a forest. The forest is more valuable than the single tree. For everything, there is a season to paraphrase Ecclesiastes 3:1. One dentist, in this case the owner, may grow tired, bored, burned out, or die early and the practice suffers. Adding an associate is an insurance policy. Bringing in multiple dental producers is an investment in your future. A group of dentists can carry on no matter the storms of life. The life you are planning for is not just your own but your family’s, too. Doing the right thing means planning for the best possible future for all.
The prescription for success: Establish your blueprint for growth early by future-focused facility planning, establishing solid team training, excellent systems documentation and implementation, having a strong marketing plan, and developing a vision, mission, and culture that from the start will attract the right associate dentist.
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