When entering practice, make your first choice the right choice
What issues do you need to consider when entering practice? How can you make significant lifestyle changes with a minimum of stress? In general, your practice entry choices come down to the following options, each of which has advantages and disadvantages:
- Purchase a practice immediately
- Become an associate, followed by purchasing the practice in 1 to 3 years
- Become an associate and later be elevated to a co-owner
- Become an associate and enter into a solo group arrangement
- Become a permanent associate
- Establish a practice
Purchasing a practice
Purchasing an existing dental practice allows you to practice immediately and provides you with an immediate patient base, staff, and practice facility. The economic cost, and associated benefit, of purchasing a practice would typically be weighed, prior to the purchase, against other options such as establishing a new practice.
Associating with a practice
The benefits of associating with an existing practice are that you are employed and have the opportunity to learn and grow professionally; however, you do not own the practice. Hopefully, your association will lead to practice ownership, in whole or in part, by way of a solo group format, co-ownership arrangement, or complete acquisition.
Although there are generally no promises of practice ownership during the associate period, there can and should be a detailed discussion, prior to employment, of the potential for future ownership. The potential for ownership discussion should be memorialized through a nonbinding letter that outlines the general parameters, terms, and conditions of both the associate arrangement and future ownership in the practice.
In recent years we have seen an increase in corporate practices with multiple locations. Key things to keep in mind are:
Unless you are willing to accept the long-term proposition of working for someone else, make sure that your restrictive covenant is only for the location where you primarily work.
- Be very cautious of employment contract clauses that make it difficult for you to terminate.
- Ensure that your employment agreement provides that you will continue to be paid any commissions after you leave, with a written monthly accounting.
Establishing your own practice
As long as you are able to successfully establish a new practice, you have no need to consider other options, such as purchasing an existing practice. However, you may choose to establish a practice and also work as an associate elsewhere, on a part time basis, in order to support your family. In such a case, you would be analyzing two options. Should you chose this combination, again, be aware of any employment contract clauses that impact where else you may practice.
When considering your various options, prepare an analysis in light of your personal goals and financial situation. A little planning ahead of time can go a long way to mitigating stress and difficulty in the long term.
The above has been adapted from Joining and Leaving the Dental Practice (3rd ed.)—a free ebook from the ADA Center for Professional Success. Click here to download your free copy.
Interested in this topic? Check out ADA Practice Transitions — a new ADA pilot program designed to foster relationships between dentists at key points in their careers.