Dr Phillip Palmer, September 2006 - Practically all dentists work as employee dentists at some stage of their career. For some, there is no desire ever to own their own practice; for others, it’s a short- term arrangement while they either get the necessary clinical and management skills or save the money to be able to get into their own practice.

A declining number of dental graduates in Australia coupled with the Baby Boomer generation nearing retirement has set the stage in Australia where there are currently many more practices looking for employee dentists than there are employee dentists available to fill the positions. There are also more practices within a few years of selling than there will be dentists looking to buy.

As a result, new dentists in Australia looking for employment or to buy are going to have an increasingly easier time, and dentists attempting to hire new dentists or sell their practices are not going to be able to pick and choose as much as in the past. A practice owner wanting to employ a dentist now needs to put some serious thought into what is going to make Dr Right choose your practice above the others on offer. Make no mistake; you are in competition with each other.

The first thing you need to do to work this out, is to shed some light on who would be Dr Right for you and your practice. If you are looking for an employee dentist to:

• use the excess capacity in your practice,
• give you the flexibility of holidays, time off, other services you can offer,
• take care of your patients when you are sick,
• add additional skills and services to your practice (perio, endo, implants additional languages), and
• give you some passive income.

…and you don’t envisage ever wanting to sell them equity in the practice, your arrangements will be a fairly simple commercial negotiation. The employee dentist will be looking for:

1. Pay - As most employee dentists have discovered, there is no point in chasing the higher percentage commissions - rather they should consider what the bottom-line would amount do on their pay cheque. Many a young naive dentist has been tempted by offers of higher percentages—up to and over 45% has been reported in some situations (including super and holiday pay). But they will very soon realise that 45% of $250,000 is of course not as good a pay as 35% of $400,000.
2. Conditions - chair, equipment. Many employee dentists are attracted by the latest ‘toys’ that are available these days. These include access to cerec machines, digital x-rays, lasers, etc
3. Quality management and leadership. There is nothing more frustrating than working for a badly managed practice. Staff are constantly bickering or leaving, materials often run out, protocols are poor for patient retention, many patients leave without paying, and generally morale is poor. Wouldn’t you be looking around for something else?
4. Staff. No dentist minds helping train junior staff on occasions. But to constantly be training a new 16-17 year old team member, and never have continuity of trained, educated and motivated staff will end up with a sense of hopelessness and be dispiriting and depressing. The new employee dentist should be told that he will be getting the most experienced nurse in the practice so that they become integrated and oriented into the systems and patients of the practice as quickly and effectively as possible. If the new dentist works with a junior nurse it’s often a case of ‘the blind leading the blind.’ In addition having your experienced staff member in with the new dentist allows you to get feedback from the nurse about the dentist’s clinical skills and patient management.
5. Continuing education in clinical and management skills. This will almost certainly involve you in some coaching and mentoring (especially for graduates), and possibly also offering to pay for or contribute towards some continuing education courses in clinical &/or management skills.
6. Lifestyle. Employee Dentists may be looking for flexibility of hours due to family commitments,

It is important to realise that if you are looking for an employee dentist without the possibility of a ‘buy-in’, there’s a reasonably high chance that the arrangement you come to will be a fairly temporary and therefore risky one. The longer you have an employee dentist in your practice the greater the goodwill that the employee is developing with your patients. The greater the goodwill the employee is developing with you patients the more patients your practice can lose by losing the dentist.

It’s a catch 22 when you think about it. Most Practices will say that they are looking for an employee dentist with good clinical and producing skills in Dentistry. These skills are usually a reflection of good leadership and rapport with their patients and Dentists who have reasonable leadership skills in one area of their life usually want to exert it in other areas and will probably want to run their own practice one day. When that day comes they will potentially take some of your practice with them.

How do you protect yourself from this happening? There are two ways. The first is a non-competition clause in an employment agreement with the dentist. A clause like this will say that if the dentist ever leaves your employ they agree not to practice dentistry in the surrounding area for a period of time (the size of the area depends upon where the practice is). These clauses sound great in theory but in my understanding have limited enforceability. The second way that you can protect yourself from this happening is to offer the employee dentist some sort of ‘buy-in’ structure for the future. This often attracts an altogether different dentist, or at the very least an altogether different attitude from the employee dentist as they have an ownership mentality in your practice from day one.

The ‘ownership mentality’ dentist tends to build up their side of the practice more solidly than one who feels they are just putting in time to earn day-to-day dollars.
They care more about:

• his/her patients returning for maintenance/hygiene
• the longevity of the work they perform on the patients
• his/her relationship with the patients
• his/her relationship with the staff
• his/her relationships with the local community
• his/her relationship with the other dentists

So how do you go about attracting the dentist with that mentality?
Is it just a matter of advertising for “Dentist wanted-with view to buy-in”, or “with view to partnership”?

Employee dentists are starting to become wary of these terms and rightly so. Most “with view” relationships start without a solid understanding as to exactly what the “with view” means other than at some stage there will be an opportunity for the employee dentist to buy in. With the amount of variables involved in an arrangement like this and the number of possible points of contention this ambiguity is like a time bomb.

What points of contention? How about:

• When is the ‘with view’ going to happen?
• At what stage are we going to value the practice for buy in?
• How are we going to value the practice
• What is the relationship going to look like afterwards?

The list goes on and on…

Can you really afford to leave so many points of possible contention for a later date when any one of them can cause conflict and the breakdown of what could have been a wonderful arrangement?

What should happen, of course, is that the ‘with view’ should be discussed from day one. Both parties need to agree upon the timelines, approximately how much will be involved and share a common goal of what the practice and their relationship will look like afterwards. In other words, negotiate the end result up- front, before even commencing work as an employee dentist.

In our experience Employee Dentists looking for future ownership will be attracted to a practice where the ‘with view’ isn’t ambiguous but structured, predictable and assured. In the meantime the practice owner gets a relatively risk free employee dentist with view.

[Published in Australasian Dentist, September /October 2006]