Associates – Hiring Do’s and Don’ts

 

There comes a time with almost all successful dentists when you will need to consider incorporating an Associate into your practice.  A common reaction from many dentists is that associates are too much trouble and there is no way they would have one in their office.  It is true, associates can be a lot of trouble especially if they are not correctly screened and integrated into the office however not having one is likely to be a bigger mistake that could cost you hundreds of thousands of dollars.

If your practice needs more “man” power, more energy, or more momentum, it probably needs an Associate, so let’s suppose you decide to get one – what next?

As a successful dentist, your earning potential should be somewhere between $500 to $1,000 an hour.  As a Dentist, you likely know very little about associate recruitment and placement into a practice.  There are a number of steps you can take that will help ensure the addition of an Associate into your practice is a positive experience.

Firstly, you need to find someone who is experienced with Associate recruitment and placement who can help you identify exactly what you want in an Associate. Secondly, once you have determined exactly what type of Associate you are looking for, you need help finding that person. Again, seek out the assistance of someone who has experience not only recruiting Associates but also integrating them into your practice (a crucial part of the process and often overlooked).

Finally, you will need a good associate agreement.  In the absence of an agreement, you run the risk of having CRA consider your Associate to be an employee.  If this happens, CRA could require you to remit an amount equal to all of the Income Tax, UIC, and CPP which you would have deducted from the Associate if you had treated them as an employee, retroactive from the time you engaged the Associate.  In addition to the payments noted above, you would also be charged penalties and interest.  You could also end up with CRA treating your relationship with your associate as being subject to HST.  We have had clients who were not only required to pay supposedly past due HST but were also required to make installments on potential future HST transactions.

Consider now the cost of professional assistance versus the cost of doing it yourself.  To begin with we need to eliminate the associate agreement.  If you are not a lawyer, you should not try to be one.  The cost of a bad or home-made associate agreement could be huge – there is no way you should do it on your own.  This includes getting an associate agreement from a friend, a colleague, or an advisor that is not a lawyer.

In addition to creating problems with the CRA, bad associate agreements can make it very difficult to sell your practice.  We had a client one time that made up his own Associate agreement.  At the time he had one Hygienist and 6,000 plus patients. He agreed to pay, in addition to a percentage of the dental services provided by the associate, 30% of all additional hygiene fees billed by the practice above and beyond those being billed by the sole hygienist.  Within three years the Associate was making over $200,000 just from his share of the additional hygiene fees.

Do Not Be Your Own Lawyer!!

Using a professional to recruit and place an Associate into your practice will take time, however, a professional firm should offer some sort of guarantee, usually six months.  If you are generating fees at the rate of an average of $700 per hour doing all of this yourself, it is going to cost you somewhere between $17,500 and $21,000 – easily twice what it would cost to hire an Associate recruitment professional.  You should be spending your time doing dentistry, not associate recruitment.

When you consider that at least one half of what an Associate produces, after lab, is profit, engaging an associate will help you grow your practice.  The key is to do it right.

If you would like to know more about how we can help you do it right, call me (dhill@hillkindy.com – 905-984-5816) and ask me about our “Associates on Demand” division.