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Dentist needing encouragement with pay expectations, asset allocation

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  • Avatar dentistguy 
    Participant
    Status: Dentist
    Posts: 1
    Joined: 06/20/2017
    medical school scholarship sponsor

    If you are making 200k off of 600k production you are around the normal income for an associate general dentist.  I don’t want to discourage you but if you want to make the 300-500k you mention you are going to need to produce more or have ownership.   If I could offer a suggestion, I would recommend you evaluate if you are happy in your current situation, because changing your situation will require risks and not everyone is comfortable with risks.  You sound like a rockstar dentist and with 4 years there and 6 since dental school you could surely make more.  Making 300-500k is attainable, but it will require you to gather up your investments and invest in a dental practice of your own or join a different situation that allows you to have ownership.

     

    #219520 Reply
    Liked by ddswifey, Tim
    Avatar MrsIMDoc 
    Participant
    Status: Physician
    Posts: 200
    Joined: 01/09/2016

    Edited because it appears we missed the part about wanting to buy in.

    I am a dentist that owns a practice and posting on my wife’s profile.  37% of adj gross prod is really high.  Overhead on a practice is typically around 60%.  It is possible to get it down to 50%, but really difficult for a medicaid office.  If you want to keep more money from collections and want to know what the books look like after expenses, you need to buy a practice. If you want to buy in but owner will not allow it then move on and buy a different practice.

    #219585 Reply
    Liked by childay, Eye3md
    Avatar Tim 
    Participant
    Status: Accountant
    Posts: 2301
    Joined: 09/18/2018

    @mrsimdoc,
    “we have been talking about me buying in from the beginning, ”
    Curious if the owner said anything or just listened.

    #219589 Reply
    IntensiveCareBear IntensiveCareBear 
    Participant
    Status: Physician
    Posts: 160
    Joined: 12/22/2018

    There are only three ways to run a private practice (medical or otherwise): solo, partners, or associates.

    Welcome the world of associate vs owner. I’m surprised it took you 4 years.

    In business, one can do it themself, bring in people and let them have minority ownership in exchange for cash, or they can just have employees. This guy obviously runs an associate/employee style office and always will. All that “partners” really are is associates who bought their way out of slavery for a sizable fee and now get to eat what they kill (in terms of collections), have a minor seat at the decision making table, and might get piece of any other office revenue streams they might not have as an associate. No matter which way the pie is sliced in the business, the big man (owner / majority partner) wins since it’s his name on the sign and ultimately his final say in any dispute. Learn to love it or start your own office. This goes for law or CPA or MD or whatever.

    …You’re not getting screwed if you are producing 600k collections and getting paid 200k (assuming dent overhead is avg 50-60%). That 33.3% is about right for an associate (and 7-17% to the owner). A lot of partners wouldn’t get much more (maybe get 240k-300k off that 600k collections assuming 50-60% overhead…., but they’d have a partnership payment). Then again, you have no idea what your collections actually are if you aren’t allowed to see the books, right? Right.

    Partnership at your current office isn’t the panacea you are hoping for; you are probably better off just softly demanding a raise. If you could get partnership with 1-3 other docs in a place that has 10 associates docs or sells a bunch of OTC products or services or has a lab or imaging center, cool… you can make much passive income off the energy and productivity of others (although your buy-in will just usually be increased to reflect that potential). However, if you are offered partnership where every provider’s a partner or will be very soon after hiring, you are simply buying the right to eat what you kill. What you think you want probably isn’t going to solve your problems. The owner / majority partner wins 4000% of the time on partnership costs versus value… because they make the rules.

    As long as you are trading your time and work for money, there’s always a limit to how much you can make. The sooner you realize that, the better. Your boss is making some money off your efforts, and that’s why you are valuable to him. That doesn’t mean that you can’t be fantastically happy and in very good financial shape as a hospital employee, priv practice associate, group contractor, etc.

    Three factors will affect your long term financial success: earning level, RoR, and savings rate. You seem pretty focused on earnings here, but I think you are probably nearly maxed out in your area. You aren’t doing too bad for an associate dent in your area… you said yourself that yours is probably the best local office to work with! Therefore, it might be time to work on RoR if you enjoy investing and work on savings rate (cutting spending) by having a serious discussion with your wife before the kids and lifestyle get bigger and more expensive. Earnings is only one piece of the puzzle, and you always want to max it out if you can, but it’s not the only thing. Sometimes the 80/20 rule applies that pushing into the last 20% is not worth the efforts due to diminishing returns.

    Being realistic to your situ, you have three BIG ball and chains handcuffing you to that area (wife with no income, school age kids soon, house mortgage). Your boss surely knows this also, and if I were him, I wouldn’t give you a raise unless production can increase. You say you “can’t move unfortunately,” but this is actually the only time it would be easy… before the kids start school, wife gets a job or more of a social network in the town, or housing prices slump and it is no longer optimal for sellers. You could test the market for other jobs in town or out of town or out of state, but unless you can get a substantial earnings boost, it might be more logical to just work on the RoR and savings rate. Moving and job gaps aren’t free. So, figure it out within a year or so before you are locked there forever. Just don’t think that the grass will be a whole lot greener at the next associate job. They’re all pretty similar. Consider the benefits to not being an owner… they are many, once you give up the control quest and dream of living ultra-lavishly. GL

    "Hmm, that sounds risky." - motto of the middle class

    #219655 Reply
    Molar Mechanic Molar Mechanic 
    Participant
    Status: Dentist, Small Business Owner
    Posts: 366
    Joined: 10/29/2017

    My thoughts:

     

    Associateship.  You are doing better than most of your peers on both production and earning %.  37% as a general dentist associate is probably 90th percentile, even as a 1099 employee.  The fact that you are getting that percentage in a medicaid office is that much better.  The owner is playing with fire though by paying you 1099.  IF you really want to burn your bridge on the way out, file a labor board complaint and argue you were an employee.

     

    Partnership.  You need to have a sit down and hash out a detailed plan for the buy-in.  If it’s not offered now, then you need to both sign a MOU that includes penalties for not offering at an agreed upon future time.  You need to discuss price now, even if it’s only a range.  Once you’ve done that,  you need to have a hard think over this is somebody you want to be married to.  A partnership is a marriage.  Make sure any partnership agreement spells out how it will dissolve.

    Prediction:  You’ll be a partner someday in a dental practice.  It won’t be this one.

    #219686 Reply
    Liked by ddswifey, Tim
    Avatar Flapper 
    Participant
    Status: Dentist
    Posts: 26
    Joined: 12/13/2018

    Great stuff as usual!  Thanks a ton! Yeh Tim, it was my demand and their consent to buy in from the beginning.  It looks like they are in the business of the associateship making them money for 20 years, then I can buy in when they are ready to retire.

    Probably a safe prediction Molar Mechanic.  Are there good websites where you can see all the dental news of local practices that going up for sale, distress sales, partnership opportunities, etc?  I know I could learn of some of these things at the local dental meetings with other dentists, but it’s not my style and I don’t want word spreading too much till I know for sure what I want (I need to see the opportunities and weigh them against what I have).  I know dental reps do the same thing, but I am not comfortable with that route either.  And to be honest I may just stay where I am given my values and goals (more family time, less stress, just show up, etc).   It all just depends.

    Thanks again!

    #220668 Reply
    Avatar MrsIMDoc 
    Participant
    Status: Physician
    Posts: 200
    Joined: 01/09/2016
    Earnest refinancing bonus

    Great stuff as usual!  Thanks a ton! Yeh Tim, it was my demand and their consent to buy in from the beginning.  It looks like they are in the business of the associateship making them money for 20 years, then I can buy in when they are ready to retire.

    Probably a safe prediction Molar Mechanic.  Are there good websites where you can see all the dental news of local practices that going up for sale, distress sales, partnership opportunities, etc?  I know I could learn of some of these things at the local dental meetings with other dentists, but it’s not my style and I don’t want word spreading too much till I know for sure what I want (I need to see the opportunities and weigh them against what I have).  I know dental reps do the same thing, but I am not comfortable with that route either.  And to be honest I may just stay where I am given my values and goals (more family time, less stress, just show up, etc).   It all just depends.

    Thanks again!

    Click to expand…

    https://www.dentaltown.com/classifieds/category/2/for-sale-practice

     

    #220673 Reply
    Avatar MFC 
    Participant
    Status: Dentist
    Posts: 5
    Joined: 06/09/2019

    I agree, 37% is a very high percent, even 35% is on the high end. Not having transparency is a red flag. There is nothing wrong with interviewing and find out the industry standard in that area. It is tough to say when each geographic area can drastically change compensation.

    #220720 Reply

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