31. Decoding dental contracts: What to look for before you say “yes” to an associateship

That’s just kind of a rule of thumb in negotiating. If you get a contract and there’s like ten things wrong with it, I would pick the top three. Because if you go in there and you want to change the entire contract, the other side might get a little fatigued with that. So I think it’s important to pick and choose what’s the most important to you. 

Thank you for having me.

Well, I still… every once in a while speak at a conference and we'll go to Hawaii and you know, I have to bring my husband along too and maybe my kids and you know, so I feel like I'm like carrying on that tradition of and now with legal it's a little we have to do CEs too. But Minnesota tends to be a little tricky when it comes to allowing us to, you know, take CEs outside the state. So I'm trying, I'm trying to find some of those CEs where I can go to like Orlando or you know, whatever. No, with small kids, I mean, yeah, it's always Orlando or some place like that for now. So yeah.

So I mean, they look where everyone else looks. You know, there's Indeed, there's Glassdoor. Most dental schools will have their own career page where employers can post job openings. 
And then I know some, like the Minnesota Dental Association has what's called Hesse-Ray. It's similar to your marketplace, but it also has equipment for sale and job openings for both associates and allied staff. And then also just reaching out to your local transition company. If you have someone that, you know, in the state that's known to broker practice sales, chances are they also find associate jobs. There's also a few, staffing companies that specialize in dentistry in the state. And then I think the number one thing is just network.
You know, when I was in law school, I remember they just pounded that in her head. Network, network, network is the best way to find a job. And I was super skeptical. I was like, ah, you know, and maybe it was just laziness too. But I realized that, no, you need to network. You need to get out there. You need to go to the meetings, go to join ASDA, go out there and network with people because I tell you a huge chunk of the D fours that I review contracts for found their job because. They knew someone that knew someone that was looking or they called up their childhood dentist and was like hey like looking for an associate you know. So just get out there and get your name out there and someone should know someone that is looking for someone.

Yes, in general they are especially rural.

If you can go rural, oh my gosh, like the sky's the limit. Not only do you usually get paid more, but you usually get a pretty sizable signing bonus. I had a client that, it was a large DSO looking in the middle of nowhere, I think, southeast coast, and he ended up negotiating a $100,000 signing bonus.

And all he had to do was stay for a year. Yeah. So and he's like, I'm like, you can do anything for a year. He's like, yeah, I can. For one hundred thousand dollars. Yeah, you can. I'm like, yes, you can live in middle nowhere because they have been looking for two years. Same with like northern Minnesota is a classic underserved area. So anywhere that's underserved, man, huge demand. 

I'd say it's at least around here, it's still 80%, I'd say. Private practice, 75%, 80%. And there's pros and cons to all of it, right? And I'll maybe just go over the pros, Private practice, you're generally, you actually usually get paid more in private practice.
You don't work as much. Usually you're working four days a week, sometimes less, sometimes a little bit more, right? Usually better hours, usually don't get as many benefits as say a DSO, but sometimes you do, right? There's usually more of a potential to own in the future or buy in, which is really nice, but definitely seeing a lot of private practice. And in terms of the contract, you have a much better chance of negotiating your terms with a private practice. If I get a DSO contract, especially a larger one, now sometimes smaller ones are a little bit more flexible, but the larger DSOs, it's basically, this is what you get. There's some terms you can maybe talk about and negotiate like a signing bonus or maybe a comp, but for the most part, they're basically like, this is what we're signing up for. And if I review a contract, I'm like... you're not going to be able to negotiate really anything, but I want you to know what you're signing up for. Right. 

So I would say going to DSOs, you're definitely gonna work more. Almost every DSO contract I've seen, you're gonna work five days a week, which in the normal world is normal. In the real world is normal, but in the dental world is a lot, right? Most dental practices aren't open on Fridays or aren't open on Wednesdays or whatever. So you're definitely gonna be working full time. The benefit of that is... that you will become very productive. I think DSOs can be really good when you're first starting out because they will work you and they will teach you how to be very efficient and productive which, if you decide to become an owner someday, that can really benefit you moving forward. They also, I'd say their number one benefit is CEs. They'll offer all the CEs, right? So I always tell my clients, hey, you're probably not gonna get paid a whole lot. It definitely is on the lower end of pay. I'd say DSOs I've seen anywhere from 25 to 30% adjusted gross production or collections. 
Which for the private practice, it's more like 30 to 32. But holy moly, they have CEs. So I always tell them, like, take advantage, take all the classes, take the implant stuff, take the expensive stuff. Implant classes are really expensive. But if you're working for a DSO, take those free implant classes, take the ortho classes. Like, learn new skills while you're there, because then, again, if you decide to buy a practice someday, you can take those skills with you when you go. 

Community clinics are same kind of concept in that you'll probably work more, you'll get paid less.
But you will also learn to become very, very efficient, and you will end up doing a lot of dentistry that most private practices don't wanna do, right? Like you'll be doing a lot of extractions, and you'll be doing very probably complicated cases. Usually people that are in community clinics don't keep up with their dentistry, right? There's also Native American reservation clinics are a really good option. The VA…
And then the nice thing about those places is that you get like state benefits or federal benefits, which are awesome usually. So really good benefits, lower pay, but really good experience. And just from an altruistic perspective, you know, you're serving the underserved too. And they're always looking to so.

So I don't really know about legal terms, but I think just terms in general of sort of, here's the main terms that you're gonna see in a contract, and here are the main terms that you wanna watch out for. So obviously, and a lot of it's kind of self-explanatory, right, like start date, right? Make sure you get a start date. Make sure you're designated as full-time versus part-time, because that could affect your benefits, right? Like a lot of times, benefits aren't offered to part-time employees, because in the dental world, fulltime can mean 30 hours a week, not 40, right? So you wanna make sure that if you are working quote unquote full time, but you're only working four days a week, you make sure you're designated as full time. Obviously compensation, make sure that's very clear. I would say the biggest associate contract disputes that I see after you start there or even after you leave is in regards to compensation. Because either it wasn't outlined very clearly or... 
That's usually what it is. It's just not outlined clearly. It's not clarified. One person thinks they're getting paid this way and one person thinks they're getting paid another way. I just had a client recently that is working for a kind of smaller DSO and the recruiting manager told her she was going to be paid this way. But then in the contract, it was totally different and she didn't notice. She didn't have anyone review it. She just thought, oh, this is what we talked about. She signed this back in February.
She started working in August and she's like, wait a minute. No, I was supposed to be paid, you know, gross collections, not adjusted collections. Right. Like that's what I was told. And wait a minute, my base salary is supposed to be this, not this. So making sure that is very clear, you guys are on the same page is important. Also, you know, benefits, obviously.
The term, is it going to be kind of an open-ended term? Are you going to have to work for a year or two years? I would say it's really rare to have an actual, you have to work for a year, you have to work for two years. It's usually pretty open-ended. You can terminate it any time. Notice period is probably one of the most important terms I think people don't realize. I always tell my clients, go into this as if you know you're going to leave, right? Because... Nine times out of 10, you're not gonna stay at your first job forever, right? So you're probably gonna end up leaving at some point in time, and so you gotta think of the end game. Like, what if I end up leaving? What's gonna happen? And notice periods can really affect you, I think, more than non-competes, because, you know, I would say the standard is under 90 days notice period.
So if you have anything over that, you're really gonna be at a disadvantage, not only finding another job, because most other people have a 90-day notice period, so they can start sooner. But also if you're gonna buy a practice, a lot of sellers don't wanna wait four months or six months. They wanna be able to buy it within that three-month period, because that's more normal. So it can really have an effect. I had one client that... she missed out on two practices because her notice period was six months. So finally she had, we had to like work something out with her boss because we're like, this is hindering her from getting a practice, right? So really important. And then of course, non-compete clauses, which vary by state. Minnesota just, July 1st just passed a partial ban on non-competes for associates.
So that's been very exciting and weird and I don't know. I don't really know how I feel about it. Like I'm kind of excited for it, but at the same time, I'm like, I don't know. I've had some employer clients that have really benefited from that. So.

I think it can be both. And I think it also depends on if you want to be a partner or solo practitioner. If you want to be a partner, then I think definitely working for a private practice that has a buy-in option is probably the way to go.
Because then you can possibly buy into that practice and become a partner. If you want to be a solo, I think you could really go both ways. But also working for a private practice is nice because then you get to know what it's like to be at a private practice. So I've actually had lots of clients that have done both, just to kind of see what it's like, you know? 

So definitely, unfortunately, most associates are paid based on production or collection. So typically, associates don't have paid time off.
From a legal standpoint, there are essentially three types of employees. There's hourly employees, salaried employees, and commissioned employees. Associates tend to fall under that commissioned employees, and so a lot of times they're not entitled to pay time off, even via laws too. We just, again, Minnesota had its whole employment law overhaul this summer, so a lot of our employment laws changed. It's been kind of crazy. Minnesota's implemented a sick and safe leave law that basically says you have to give paid sick leave, but it doesn't apply to commissioned employees. So I think it's important to outline how much time off you get just because of expectations, right? Because a lot of times employers are like, well, just, you know, tell us how much time off you're going to get and we'll give it to you. Right.

You don't know what their expectations are. What if they expect you to take off two weeks per year, but you're thinking, no, I like to travel. I want to take six weeks off per year. I think having that expectation and then that entitlement too, because if they don't outline it, you're not entitled to it. And unfortunately, us as Americans, we are horrible at taking time off. I feel like we always feel bad for doing it. So I think we need that, like, well, I'm entitled to this, right?
I shouldn’t feel bad for taking time off because I'm entitled to it. So I think there's a mentality thing there too but I think having actual outlining the time off is important. But it probably won't be paid so keep that in mind.

Sure, well, so first I'm gonna bore you with the history of compensation models, because I feel like you have to see the background. So before COVID it was very common to have s   ort of a hybrid model where you would get a guaranteed salary, and then you would get a percentage of either, you know, just a gross percent of production or collections. And then if you went above and beyond your salary, you would get sort of that difference as a bonus, right? 
Then COVID hit and employers were freaking out because they had these guaranteed salaries, but they had their this contracted guaranteed salary. But then they had their associate on furlough. And so there was just a lot of like, what do we do? Like, I can't pay them. You know, they're not here. They're not working. And so basically they just like did away with guaranteed salaries. Like I would say there was a local DSO here and it was like the Monday before things were going to open up again or the Sunday before things were going to open up again. And I got like, I don't know, like eight emails from associates at the DSO because they had this mass, email saying, we're amending your contracts, we're taking away guaranteed salaries, like if you wanna work here, you gotta agree to it basically, you know? And so it was just crazy. Like they totally did away with it. And I didn't see a guaranteed salary for at least a year. And then they started to slowly start coming back sort of in the form of temporary guaranteed salaries. So an associate would get a guaranteed salary for maybe six months to a year, sometimes three months. And then after that, they would just purely switch over to a percentage of production or collections.

Exactly. And it really does help.
Especially if you're in addition to someone, right? Like the practice is growing, they need another associate coming in. And typically in that situation, you're not gonna be that busy, right? Because it's not like you're replacing someone where you're taking over this person's patiens. It's, we're growing and we need someone to kind of help us out, but they're not gonna have a ton of patients for you right away. It's gonna take a while to sort of build that up. And so it really is important to have some kind of a temporary guaranteed salary, especially if you are in addition to the other doctors. So that's kind of where we're stuck right now. I've started to see, every once in a while I'll see just a straight up guaranteed salary plus, you know, percentage of production or collections, but it's slowly kind of coming back. But right now we're kind of stuck in that mode of just a temporary one. Which in my mind is great, you know. Quite frankly, after a year you should get your production up enough so where you could have a good salary. And if you can't…
I always say try to get a year, because that's usually enough time to determine whether or not you're gonna be busy enough. I had a client once that was the only doctor at a satellite practice, and she had a guaranteed salary for a year. And after about month seven, and she was an experienced dentist too, and after about month seven, she's like, "'Yeah, I'm not doing enough production for my salary. "'Like there's no way I can stay here, cause my salary is gonna drop by 20% once I switched over to just purely production and collection.” And it wasn't anything she was doing, that clinic was really slow, you know? So she found another job basically.

I would ask, yeah, definitely ask. Ask to see if you can at least get, I mean, I think minimum should be six months, but sometimes you see three, but I think you should at least have a couple months of guaranteed salary. Now, if you're replacing someone, so say a doctor's retiring, or they had an associate in there and they lost one, you might be okay, but I think especially if you are, again, in addition to, you really need that guaranteed salary upfront.

So I would say for sure DSOs, it's much more common with DSOs to get a signing bonus. Now, of course, there's a lot of strings attached, so just be aware of that, right? You're required to stay a year and if you don't, you have to pay it back. So I always tell my clients, stick it in a high yield savings account for that year and then once you actually earn it, then spend it, right? So it's much more common with DSOs, much more common, again, in rural areas where they're really desperate, and that's both private and DSO.

I don't see it as much in private practices like in a more competitive area. Like in the cities or suburbs and stuff like that. You don't see it as much. Yeah. It's basically there to entice you to come, right?

Oh yeah, don't spend it right when you get it. Yeah.

Oh yeah. Basically the only one that's really different for is orthos. The reason being is because most orthos take payment upfront, right? So usually you get a treatment or in installments or you know, they bill a lot differently than generals or other specialists. So I'm definitely seeing with orthos, it's more of a per diem.
So they'll usually get, you know, $1,200 a day or something like that, right? Simply because it's just, it's too difficult to sit there and try to figure out production and collections, right? Say you did on collections, well, what if they prepaid for, half of it, but then you only worked on that patient for a third of it. You know what I mean? It just gets too hard. So with orthos, it's more of a per diem. Specialists definitely get paid more. So, I mean, I'm seeing, high 30s, low to mid 40s percentage wise. So you definitely make not only more percentage wise, but it's just more expensive procedures, too. So you just make a lot of money. 

Yeah, of course. What's the worst they can say? No, I mean.

I do think that you should have help picking and choosing which ones you really want to go after. And that's just kind of a rule of thumb in negotiating, right? So if you get into a contract and there's like 10 things wrong with it, I would pick the top three to really go after and then kind of take the other ones that are like, okay, I can kind of live with this, right? Because if you go in there and you want to change basically the entire contract, then the other side might get a little fatigued with that, right?
So I think it’s important to pick and choose what's the most important to you and really go after that. And keep in mind too, if they could say no and then at that point you think, well, can I work for these people? And I've had plenty of times where associates have backed out because they're like, they had some crazy terms in there or the pay was really bad or whatever and they try to negotiate and...
the practice they were gonna work for was just stonewalling them, right? And this is kind of a litmus test too of how this place is gonna be when you work there. If they seem very open, if they seem very flexible, that's probably how it's gonna be working there. If they basically are like, nope, take it or leave it, then that's probably what they're gonna be like when you work there. If you have to ask for time off, no. So I've had some associates who have actually kind of realized during negotiations, like, I don't know if I wanna work here.

So almost every clinic will have a retirement plan. I mean, that really is because by law, if the owners have a retirement plan, they have to offer it to their employees. So that is almost always on the table. Any kind of a match, right? Like a 3% match or 2% match, sometimes, but I wouldn't expect it. If you are working somewhere full-time, they should pay for your malpractice insurance. I know one of the larger DSOs does not, which is shocking to me, but typically elsewhere, if you are working for someone full-time, they should pay for your malpractice.
They should also give you money, a stipend for CEs, licensing fees and dues. I'd say the average right now is about $3,000 a year, is what I'm seeing. 

I think it's like, it's a little over a thousand, I think usually. Because sometimes I'll see like, we won't get your malpractice for you, but we'll pay for it. We'll reimburse you. And I usually see like up to $1,200 a year or something. So I think it must be around there. But again, I think it depends on the provider. So, now health insurance ironically is usually not available unless you are working for a larger DSO.

I always found that funny that you guys work in health care, you don't have health insurance, but it's expensive. So I get it, right? But I have to say, I have been seeing it more and more in private practice. So it might be there. Or they might not have an actual plan, but they'll give you like $300 a year for an HSA, something or other. So yeah, those are the main ones, I'd say. Yeah.

So non-competes are tricky because it's state by state.
There's no federal guidelines or anything like that. There's really not even usually statutes. So it really comes down to court precedents. And then it's industry by industry. That's why it's really important to have a dental-specific attorney look this over for you, because they can tell you, OK, our industry, this is standard in this area, blah, blah. Now.
It's hard because it's a balancing act. You know, like, so on one hand, and this is what the courts actually look at and decide on is, the rights of an employee to be able to find work elsewhere versus the rights of a business to protect their business interest. Right. So having an employee who's been there for five years and knows their patients and staff opening up a shop next door is probably going to be pretty detrimental to their business. Not only that, but being able to solicit patients, solicit employees.
You know, probably not a great thing, right? And so on one hand, I can see the argument of having at least a nominal non-compete, especially solicitation clauses, but.
I've also had a lot of clients who've had to lose out on very good opportunities, like buying a practice or a really good job they wanted to work at because they were, they had this non-compete that was, in my mind, probably too restrictive, right? And so, it's hard because I can see both sides. 

So there's three parts of a non-compete, right? There's the mile radius restriction, there's the non-solicitation of patients and the non-solicitation of employees and sometimes referral sources for specialists. So with the mile radius, it really depends on population. That's what it kind of comes down to if you're gonna break it down. How many dentists can this community hold, right? And so if you're a much more populated area like, you know, cities, it’s anywhere from one to five miles, you know, but the farther out you go, the farther out that radius. I would say a more industry standard is about 10 miles. And then, of course, there's the how long does that last? The max in almost every state is two years. But, you know, sometimes you can negotiate down to one year.

But in my opinion, the most important part is the mile radius piece. I literally have like a mile radius map that I can zoom in and out, right? Like, okay, this takes out this city, this is, you know, like, can you live with that? Are you okay with that? And then there's a non-solicitation clauses. So obviously, you're not solicitation of patients. Some states allow you to go even further and even say you can't solicit or treat patients. In Minnesota, you can't do that. You can't restrict treatment.

Because in Minnesota the courts have found that patients have rights to see the healthcare provider their choice. So if they go find you of their own volition that's okay but you just can't solicit them. And that used to be the thing that they cared about that employers cared about the most but now it's employees. So that's the big one you can't solicit or hire employees for two years after you leave. That's the one that everyone cares about right now because I don't know about where everyone else is but I know up here we have a staffing shortage. So it's pretty competitive to get good staff.

Yeah, but then also look at your state and see if you even have one. I know, I mean, again, we just passed a ban… You can no longer have mile radius restrictions as in you can work next door and that's okay. You can still have solicitation clauses, but you can no longer restrict, you can't work five miles away. North Dakota has a statutory, they basically completely ban them. So, just depends on your state too. Which is why it's good to have a lawyer look it over.

Making sure everything is clarified and you guys are on the same page. That's really what it comes down to. The worst enemy of a contract is vague and ambiguous language, right? If you guys aren't on the same page, if you guys don't know what you signed up for, then that's where you end up having problems. So the most important thing for me is to make sure everything makes sense, everything's clarified. Both sides are on the same page because you'd be surprised even the most well drafted contract by a lawyer can have language. You're like, what was that? How does that work? You know, like, I can't even understand what you're trying to say, right? I mean, I've gotten contracts that were drafted by the office manager and it's like one page, you know? So I'm just like, what? You know, so they kind of run the gamut or what is really super common.

What I see often is they use the contract that some lawyer drafted up years ago with their first associate and they've just been kind of using the same contract, making changes here and there. To the point where like, now you're contradicting your, you know, it's like just a mess, right? So just making sure that everyone, everyone knows what you are signing up for. 

Just go on PineLakeLaw.com. And that should have all my contact information, email's probably the best just because in that way we can set up a call. My sister is also an attorney working with me and she's licensed in Missouri and Kansas too. So if you're in those states, we can also help you out. And then my phone number is on the website.

Well, thank you for having me. This was fun.