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Negotiating on your own terms: What new grads need to know about contracts – Part 1

Editor’s note: This blog post, republished with permission, originally appeared in IgniteDDS on Jan. 25, 2017.

There it is.

A block of legal jargon, intimidation at its finest, sitting there adorning your desk, looking you smack dab in the eye.

Hello 27 pages of traps and worry and signing over my life. Nice to meet you.

Dr. Singh

Dr. Singh

That is what signing my first dental contract felt like. I sat there thinking “I can prep a Class II like a boss. I even mastered the misery of the art of dentures. But no one told me that I needed an MBA and then a law degree to finally be a dentist! We never learned this!”

And then along came hours of research and asking mentors and some painstaking work and I finally had an idea of what I was getting into… just enough to get into trouble… deep, deep trouble. I was scared. I did not know what to do. And then I found Chuck.

There he was, Chuck Mastin of Mastin Bergstrom LLC, standing in front of a study club for the Colorado Dental Association’s New Dentist Committee, giving away information on contracts. Breaks were punctuated with whispers all around the room about how fantastic he was. Every single NDC board member was giving him a gold star review to anyone that would listen. To this date I cannot mention Chuck’s name in any dental setting without getting an enthusiastic “Chuck Mastin is the BEST!” in return. I heartily concur.

THANK GOODNESS FOR CHUCK. At a time when I was concerned about signing on the wrong dotted line, Chuck swooped in and helped me navigate a dental contract, helped me understand the implications of what I was signing, helped me gauge what was fair, and helped me negotiate that which was not.

So today I am going to talk about the key components of dental contracts and give you some advice. And my first piece of advice: LET THE PROFESSIONALS DO THEIR JOB. Find a professional, sit down with them, and let them help you. You have to have a foundation (this is where this blog comes in) but then, you need someone who does this for a living to help you navigate the details. This will be worth every single penny! Check out the ADA resource, Dentist Employment Agreements: A Guide to Key Legal Provisions, here.

Dental contracts and their pieces and parts:

1. Money, money, money

Typically an associate will be getting paid one of three ways: A flat hourly or daily amount (this can also be presented as a monthly salary); a percent of some variation of production; or a daily guarantee (with the ability to product more).

Flat Compensation

Flat rates are usually the easiest to navigate. This is familiar territory. You have most likely done this before. The things to be concerned with here include:

  • Ensuring that they will not be overworking you (typically places which pay you in this manner have a volume based practice and they are doing this because they know it will be worth it for them) and
  • Are there any protections for you if there are not enough patients? (Do you get sent home for the day with a mandatory unpaid day off?)

Daily Guarantee

Daily or monthly guarantees are a little more complex. Typically a daily guarantee drops to $0 after 3-6 months. This arrangement is intended for you to take the first 3-6 months in a practice, build rapport, learn the ropes and ramp your production up. Some things to consider:

  • Is the daily guarantee a true guarantee or a “draw?” – If it is a true guarantee, you will be paid this money and it is yours to keep. If it is a “draw,” you will be expected to pay back the guaranteed money (or it will be cut from a second paycheck) if you do not produce enough to “earn” it. Big difference.
  • If you are “lucky” enough to find a position where the daily guarantee never goes to $0, buyer beware! – My first job out of school I worked for a company where my daily guarantee dropped by about $2000 after the first 6 months but never went away completely. I was elated! A protective safety net for life?! This was music to my Type A, risk aversion ears. Well, it turns out that due to very low reimbursement rate insurance contracts (HMOs, capitation, etc), it was almost impossible for me to produce enough to earn more than my guarantee. I was then stuck in a very low paying job, working very hard and not earning a representative amount. If you find yourself in a similar situation, just know, there is usually a reason. Find out why.
  • If you do not have a daily guarantee, you may be able to negotiate one in. A guarantee is a protection for you. It helps to ensure that the owning entity will fill your schedule and give you an opportunity to produce. It can also provide some financial stability while you get acclimated to your surroundings.

Percent of Production

Percentage of production is, by far, the most common method of getting paid and goes hand in hand with daily guarantees. Every time you have a daily guarantee, you will also have an opportunity to exceed it by producing more. Some considerations here:

  • A percentage of what? Okay, I lied. “Already, Amisha?” you ask. Yes, I already lied to you. Percentage of productions really doesn’t exist. Some definitions for you to understand before we delve deeper to explain this:
  • Productions = Gross Productions: What a dentist produces as based on their UCR (usual, customary, and reasonable fees). The sum value of all dentistry done. The sticker price, if you will. What I did not know as a new graduate: NO ONE pays UCR. If a patient has insurance, even if their insurance pays nothing, they get an automatic discount for having insurance (Confusing? I have a future blog coming up on insurances… Subscribe so you do not miss it). From UCR, we must deduct money which our contracts with insurances discount. From then, we must write off the people who do not pay and therefore go to collections.
  • Net production: Gross production minus adjustments and insurance writeoffs. A percent of adjusted net productions is what you will most likely get paid off of.
  • What percent? 30 percent of adjusted net productions is a pretty standard average. I have seen as low as 25 percent and as high as 35 percent around the nation. These numbers are all realistic expectations.

Dr. Amisha Singh is a Denver native and loves living in beautiful Colorado. While in dental school, she was the founder of the first diversity oriented, nationally based organization in the school and she currently is a member of the ADA, CDA, and MSCD and serves on the CDA New Dentist Committee as Social Chair. She is also a blogger, writer and speaker who works with IgniteDDS and Ignite DA to inspire other dental professionals and provide them resources to be the best clinicians possible. She is the AVID Healthcare Liaison for Denver Public Schools and teaches a success series integrated into the curriculum of underprivileged middle school youth to aspire them to careers in healthcare. She is also a founder/ board member for Colorado’s first South Asian Chamber of Commerce. Her passion is encouraging entrepreneurial spirit, inspiring others and she wants to dedicate her life to helping make dentists be better, healthier, more empowered people.  When not practicing dentistry she loves to get lost in a good book, cook, and do all things creative.

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