Understanding and Evaluating Associateship Opportunities
Compensation Issues

Course Author(s): David G. Dunning, MA, PhD; Robert D. Madden, DDS, MBA

Compensation Issues

  1. How will the associate be paid: guaranteed base, base plus “bonus,” production vs. collections, etc.? Refer to the earlier section for more detailed information.
  2. Is there a history of clinical production available from previous associates? If so, does the information confirm that the income needs of the would-be associate will be met?
  3. What benefits will be offered, if any? Benefits required by law for employees include: employer’s portion of social security/Medicare tax (~7.65% of salary up to a threshold income cap), worker compensation (~2- 5% of salary), unemployment insurance (~2% of salary). Benefit packages vary widely in associateships. Associates sometimes receive malpractice insurance coverage and some vacation time. Disability coverage, health care and continuing education benefits are less common.
  4. Does the practice have an office policy/employment manual covering issues, such as asepsis, financial policies, safety training, benefits, etc.? If so, acquire and study the manual. If not, request that these be developed soon.
  5. Will the associate owe a portion of the laboratory bill? If so, how/when will this percentage be calculated? If responsible for a portion of the lab bill, ask that the laboratory portion be taken out of the total amount of generated collections/production before any collections/production percentage is applied, e.g.,
    $30,000 in monthly collections
    minus $3,000 in lab bills
    = $27,000 in collections
    $27,000 x .34 = $9,180 monthly income
    $30,000 in monthly collections
    X .34 = $10,200
    $10,200 minus $3,000 in lab bills = $7,200 monthly income
    The difference is significant, obviously.
  6. Will the associate receive any compensation for supervising dental hygiene? From the associate’s standpoint, it is reasonable to negotiate for at least the examination fee to be credited to your collection/production and perhaps for a percentage of certain procedures such as radiographs.
  7. Remember, an associate is to some extent a profit-center for the owner—it is his/her business, after all. Don’t be surprised if the owner realizes 20-25% of profit for each dollar generated for the practice.
  8. Consider the possibility of a guaranteed base salary to meet minimum monthly budget requirements including student loan payments. This assumes the associate has developed a detailed personal budget. With increasing student loans, an associate may need to realize a gross salary of $20,000 to $30,000 or more JUST to make student loan payments, depending on the schedule of payments.
  9. Consider the possibility of a stair-step compensation system in which the associate earns a higher percentage for higher levels of revenue (as previously reviewed in the compensation section earlier). An example based on monthly associate-generated collection/production might look like this:
    Up to $30,000 = 30%
    $30,000 - $35,000 = 32%
    $35,000 - $40,000 = 34%
    >$40,000 = 36%
  10. Will the associate have any continuing education benefit or allowance paid by the owner-dentist? If so, is this clearly defined?
  11. If the associate will be working as an independent contractor, s/he should receive a much higher percentage of collections/production in order to cover the additional taxes owed by independent contractors. In this case, it may be wise to consider establishing a corporation to mitigate the tax consequences of being an independent contractor. The corporation could act as an independent contractor, and the associate could be employed by his/her own corporation. Remember, independent contractors receive no employment benefits, not even unemployment insurance or workers compensation.