Our healthcare team have worked with a number of dental associates recently who have reached that crucial stage in their careers where they have had to consider the option of remaining an associate or seeking an opportunity to acquire their own practice.
Fee sharing arrangements between practice owners and associates are changing - evidence is now emerging that suggests that the market will no longer support fee sharing arrangements where the associate would receive a 50 to 55% share of fees, with the trend being downwards to a sharing arrangement where the associate only receives a 40 to 45% share of fees.
Why have the goalposts moved? One explanation is that we could be about to reach an over-supply of dentists and this fact, combined with the ever increasing desire on the part of the practice owner to reduce costs, is leading to reduced contracts being offered by practice owners to associates.
So what are the options? If you are considering starting your own practice, there are a number of things to consider carefully, including:
- The preparation of a business plan to outline objectives, financials, resources and timescales.
- Property - consider location very carefully – do your financials allow you to purchase or would leasing be better for you?
- Find trusted advisors – getting good corporate law, employment law, property and tax advice is important for any business, no matter what size.
Associates who do not have the financial muscle to take a foray into practice ownership (let’s also remember that loan funding, whilst available in this part of the healthcare sector is subject to ever greater scrutiny with significantly reduced repayment periods) are therefore faced with the difficult decision to stay put or look for new opportunities, but they are likely to find that the percentage share on offer is no different from that being offered by their current practice owner.
Whether you are considering becoming a practice owner or an associate looking to make the move or negotiate a better deal, make sure that you take legal advice on all your contractual arrangements.