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Dentist needing encouragement with pay expectations, asset allocation

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  • Avatar Flapper 
    Participant
    Status: Dentist
    Posts: 34
    Joined: 12/13/2018

    So I have several updates and feeling a bit overwhelmed with work so I need advise on being an associate dentist and what to expect as normal in this private office world of business,pay negotiations, and asset allocation.

    First, for you dentists out there please fill me in, as I feel disconnected from the outside dental world. My situation is that I am currently a GP who sees mostly pedo, but also adults in a more rural area in the southeast seeing about 80% medicaid, 10% cash, and 10% insurance.  I have been at this job for 4 years (6 years out of school and age 36) and was looking for a simple small pay increase as I have brought more value to the practice. The older practice (not in high value real estate location) does from 1.3 to 1.5 million per year and has 2 docs total, 2 hygienists, 6 assistants/pedo hygiene, and 3 front desk.  I was getting the greater of 35% adjusted gross production or $900 per day with a $4K yearly bonus. After about 6 months of negotiations, now I am getting a flat 37% adjusted gross production plus paying half lab fees.  I am a contract dentist 1099, so I have to pay health insurance, disability, life, 401k, IRA, SS, medicare, etc. all on my own.  When I calculated the actual final take home numbers, it was not a pay raise.  Yet the owner is complaining that I am getting paid way too much, more than anyone in the industry, and that he is taking the moral high road by getting paid less than me and he never asked for a raise while he was an employee, and that his income has been level for the last 11 years.  I make about a steady $200 k per year before taxes and this is working as hard as I can.  He will not show me any numbers about the practice, despite me asking for years to see this as we have been talking about me buying in from the beginning, yet to date he has not let me do this.  When I think of 1.5 million per year and I am only eating 200k yet producing over 600k, why is he so disgruntled?  Am I not making money for him?  Is he fibbing about his pay?  I know he has the practice debt, but when he sells he will get some equity back, while I will have nothing if I walk away (yet I have increased the value of the practice).  Why is he making me feel like I am so greedy and just getting paid way too much and that the ship could sink paying me?

    Secondly, does anyone else feel behind when they see so many docs claiming a 300-500k income?  I am working as hard as I can and seem maxed out at 200k, so how do the rest of you do it?  What am I missing?  Evidently being an owner does not pay more according to my indoctrination at work.

    Married, 2 kids under 4 years old, wife is homemaker.  I am a “big saver” in my own mind and I only have:

    Solo 401k traditional: 6K

    Solo 401k Roth: 25K

    Roth IRA: 1.American Funds- 23K

    2.Vanguard 2050 Retirement fund- 22K

    3. M1 Finance VTI- 12K

    529 Plan- 10K

    Deffered Annuity 11K

    Taxable- 1.Managed Brinker Fund- 10K

    2. VTI- 8K

    3. Money Market at 2.35%- 110K

    Mortgage is 169K on 492K value house (we have been debt averse and paid off student loans first, and now working at this hard, but I would rather put this money in tax deferred investments if that’s possible).

    So big question is how can I invest in more tax deferred accounts like IRA, etc without killing my backdoor Roth IRA option?  I have mine maxed out now to what the law allows as far as I know. I do not qualify for a HSA as I have medishare.  Do I just keep dumping into taxable VTI account?  Retirement seems so far away with my numbers…. Any help is appreciated!

    #219250 Reply
    Avatar ticker 
    Participant
    Status: Physician
    Posts: 165
    Joined: 08/14/2016

    Yet the owner is complaining that I am getting paid way too much, more than anyone in the industry

    he is taking the moral high road by getting paid less than me and he never asked for a raise while he was an employee

    He will not show me any numbers about the practice, despite me asking for years to see this as we have been talking about me buying in from the beginning, yet to date he has not let me do this.

    Is he fibbing about his pay?

    Why is he making me feel like I am so greedy and just getting paid way too much and that the ship could sink paying me?

    Evidently being an owner does not pay more according to my indoctrination at work.

     

     

    Click to expand…

    My vision isn’t great, but I’m pretty sure those flags are red.

    Posting here is a fine start, but I think the best way to know where you stand is to talk to local peers and (best of all) interview for a few jobs and see what the offers are.

    Sounds frustrating.  I’m sorry. Best of luck.

    #219254 Reply
    Avatar angeladiaz99 
    Participant
    Status: Physician
    Posts: 83
    Joined: 09/30/2018
    He will not show me any numbers about the practice, despite me asking for years to see this as we have been talking about me buying in from the beginning, yet to date he has not let me do this.

    Click to expand…

    That says it all.

    You need to leave, it’s as simple as that. You will never get paid fairly and will never get ahead financially at this current job.

    #219255 Reply
    Liked by ddswifey, CM, wonka31
    CordMcNally CordMcNally 
    Participant
    Status: Physician
    Posts: 2844
    Joined: 01/03/2017

    News flash: the owner isn’t making less than you.

    “But investing isn’t about beating others at their game. It’s about controlling yourself at your own game.”
    ― Benjamin Graham, The Intelligent Investor

    #219258 Reply
    Avatar orthodds 
    Participant
    Status: Dentist
    Posts: 147
    Joined: 11/07/2017

    200k for an associate 6 years out?  That’s on the low side.  Unless you absolutely love this job you should shop around.  Let’s assume your overhead is around 60%.  If that’s the case and you are getting paid 200k then that leaves the rest for the owner:  350-400K.  If the owner is telling you he is making less money than you then he is not honest which is another reason to look elsewhere.  On the other hand you are only producing 600k, so even if you were an owner producing this amount your take home would probably only be about 240k (60 percent overhead).  The low production is likely due in part to low reimbursement from medicaid.  Look around.  Your current job is about a 2 on a scale of 1-10.  You would earn much more and likely be much happier if you could at least upgrade to a level 4 or 5 practice situation.  Choose an opportunity that will guarantee you ownership either right off the bat or at least within 12-24 months.

     

    #219259 Reply
    Liked by ddswifey
    Avatar ZZZ 
    Participant
    Status: Spouse
    Posts: 702
    Joined: 06/18/2018

    “rural area in the southeast seeing about 80% medicaid, 10% cash, and 10% insurance”

    “What am I missing?”

    So, in your state, is Medicaid considered a good payer? I suspect you’re not making $ because:
    1. Your payer mix is terrible
    2. The other guy is hosing you.

    Update your resume and see what else is out there.

    #219266 Reply
    Liked by Hank, CM
    triad triad 
    Participant
    Status: Dentist, Small Business Owner
    Posts: 276
    Joined: 04/29/2016

    he needs you more then you need him.  i bet it would be tough to find an associate to replace you.  though 37% production is awfully high.  when I was out of school I got 25% but was seeing FFS or PPO’s.  hard to ethically make money on medicaid.

    #219269 Reply
    Liked by MFC
    Avatar uteomfs 
    Participant
    Status: Dentist
    Posts: 14
    Joined: 05/30/2019

    The problem is your patient payer mix. 80% Medicaid? That is extremely high. If you could cut that in half, you would see a significant raise. He is not making less than you unless he has extremely high overhead, which would be unusual for a Medicaid Practice. Medicaid Dental Practices benefit one person, the owner. I am a specialist, and have quite a few relationships with GP’s. The ones who own large Medicaid Practices generally are not looking for partners, they are looking for associates willing to work long enough to pay off their student debt, then on to the next fresh grad. My recommendation would be to find an associate opportunity, possibly Friday if you are not working, and improve your skills with adult patients. Hopefully that will lead to a better opportunity for you.

    #219298 Reply
    Liked by Hank
    ddswifey ddswifey 
    Participant
    Status: Spouse
    Posts: 74
    Joined: 04/17/2019

    4 years at this job and he won’t let you see numbers ….. much less buy in?.?.?.  Please don’t consider buying in with this dude. All kinds of red flags here.   I am reading ZERO respect in this situation (he doesn’t respect you enough to share numbers…..)     Owners DO MAKE MORE.   He’s not being honest in that. OR he has crazy high debt himself. Which I’ve definitely seen too.    My husband is very small town dentistry as well (he takes Medicaid) however it is no where near the percentage of what you are describing.   Good job for having student loans paid off. I think you are close to making a big jump (you’ve been very financially responsible with what you’re working with) but you need income to go up.     Kids are going to get expensive.    Are you willing to move?

    I'm here to learn

    #219301 Reply
    Avatar Tim 
    Participant
    Status: Accountant
    Posts: 3059
    Joined: 09/18/2018

    You owner is cherry picking the numbers.
    You bill $600k and make $200k. He might only be clearing $175 on your book. After all he needs you to not see that the office staff and overhead is basically fixed. He makes $375 on his share of the revenues. He takes home $550 as the owner. Not quite a partner, since he only makes less only in your work.
    You see red flags, he sees green. Get the picture? Why would he change? He likes $550. Just don’t plan on any changes, unless you find a partnership opportunity.
    Transparency on his part would be fatal.

    #219310 Reply
    Avatar Flapper 
    Participant
    Status: Dentist
    Posts: 34
    Joined: 12/13/2018

    Thank you guys for all the help here.  It is much appreciated.

    “The ones who own large Medicaid Practices generally are not looking for partners, they are looking for associates willing to work long enough to pay off their student debt, then on to the next fresh grad.”

    Wow… this opens my eyes and makes sense.  Plus although I am a GP, the job description has been to see all the pedo, with a few hard adults that he does not want to deal with.  So I am getting bad stuff that gets his BP up.  Since I am laid back, it has been just something I deal with. It makes sense that he does not want to pay me anymore than I get, as there are a pool of fresh grads and others like me who will work for less (or so he says they are lining up out the door, so its easy to replace me).  But he knows me, likes the stability, and likes that I don’t ever complain much and just keep pumping the revenue out for him.  Yet he says things like “I think you’d be happier in a high end cosmetic office where you can make more.”  Almost like he’s enticing me to leave, so he can get a cheaper new grad (but I am not sure about this).

    “You see red flags, he sees green. Get the picture? Why would he change? He likes $550.”

    Yeh, but I guess I am naive as to why someone would lie to my face.  Why would he complain about my pay if I am helping him so much?  I guess it gets back to the cheaper new grad.  If he gets a new grad at 32% then that’s just more and more money in his pocket (if they produce).  And he claims I am greedy…

    On a side note, according to the veteran part owner, I am the hardest negotiation he has had in 20 years.  Odd, seeing on how when we “renewed” the contract with the different pay scale he was the one who tried to pull it over on me by changing all the fine print in the contract to benefit him (non-compete increase, increase notice period before leaving, etc).  When I called him out on it to have it stay the way it’s always been (minus the pay schedule that was really a wash), I am the one being a “hard” negotiator.

    I can’t move unfortunately, but the non compete clause I got back down to 10 miles instead of 20, so I could look elsewhere.  I guess it’s fear and inertia that says this office is the best office of the 3 offices I have worked in (in terms of stress, pay, etc).  So I fear that if I look around and can’t find anything better, then word will get around and it will really close the job option I have now.  I have the confidence that I could do good as a partial owner, and that my clinical skills are there (was top in dental class for ‘hand skills’), so I guess I just need to buckle up and jump out of my comfort zone.

    Any other thoughts on the asset allocation?  What are my options for the tax deferred bucket?

    Thanks again!

    #219360 Reply
    Avatar ZZZ 
    Participant
    Status: Spouse
    Posts: 702
    Joined: 06/18/2018

    “Yeh, but I guess I am naive as to why someone would lie to my face. Why would he complain about my pay if I am helping him so much?”
    – You sort of answered your own question there, didn’t you. Your naivete and his lies put more money in his pocket. Not the first time that’s happened in the world.

    “On a side note, according to the veteran part owner, I am the hardest negotiation he has had in 20 years”
    – Naivete strikes again. Hoe much does it cost them to tell you that you were a ‘hard negotiator’? But, if you believe it and you think you got yourself a deal, your less likely to to critically question the deal. Sort of like the car salesman who acts like you really got over on him so you tell your friends what a great deal you got.

    “I can’t move unfortunately”
    – You’re choosing not to move. Being close to family is presumably part of your calculus. That’s your choice, and it may very well be the right one for you. But then don’t bemoan how lots of dentists make more than you, you, too, could pursue more lucrative opportunities, but have chosen not to.

    “Any other thoughts on the asset allocation?”
    – Your AA matters less than the fact that you’re making half-ish your earning potential. Your AA is far too conservative for how young you are. That annuity and managed fund are probably expensive boondoggles. Your idea of using VTI is a good one.

    #219364 Reply
    ddswifey ddswifey 
    Participant
    Status: Spouse
    Posts: 74
    Joined: 04/17/2019
    Splash Refinancing Bonus

    This guy has issues. To be partner with anyone, you literally better get along with them like a spouse, transparency like you would a spouse. You can not get into a partnership with an untrustworthy person. And not being honest ab the numbers is ridiculous. Furthermore it’s like he’s a mean parent (hello guilt trips) instead of a partner who wants to groom a younger dentist. Giving you all the Patients he doesn’t want to deal with….ummmm no. Not ok.

    Stop doubting your skills and your abilities and that fixed mindset that you are somehow lacking with adult care. Go get what you’re worth! Check out Dental Nachos FB group, or The Dentist Advisors FB group and their podcasts. Their dental-specific podcasts are a great resource.

    You said rural and I’m not sure how many opportunities there are outside your non-compete radius, but without becoming part owner in the future, I’m not sure how you’ll bust through that income ceiling.

    I'm here to learn

    #219377 Reply
    Avatar Flapper 
    Participant
    Status: Dentist
    Posts: 34
    Joined: 12/13/2018

    Points well taken.  Thank you for helping me grow up a bit.

    I am getting rid of the managed fund and putting into VTI.  Not really sure what the annuity was when I got it years ago.  I need to study up more on this and what’s the best action to take with it. Any suggestions?

    #219378 Reply
    Avatar Flapper 
    Participant
    Status: Dentist
    Posts: 34
    Joined: 12/13/2018

    Thank you ddswifey for the suggestions.  I will check those guys out.

     

    #219380 Reply

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