This question has bugged me the day ever since I entered the world of dentistry, and is a question I get often asked by principal dentists: should they employ associates in their practices…and if so, at what percentage?
The easy answer for me is “It depends.”
In the last few weeks, I have met with many private clients of mine who are typically paying 50% of the net fees generated to their associates, and so I thought I would write my own view of associates, the market rate (if there is such a thing) and where the percentages are going.
Obviously my comments are very general, and the circumstances do differ from practice to practice, but they provide a view of where associate costs will go as the market moves further private.
From the Old NHS to the New Private Sector
From what I can understand, and forgive me if I am wrong, the 50% paid to associates appears to be a legacy of the NHS from yester year. The new contract in 1992 was perhaps the impetus for a small change in the percentage paid to associates, but now I personally feel as more dental practices move to the private sector this percentage will fall.
Why? You may ask.
Traditionally, if you put NHS on the window of your practice, 8 times out of 10 your marketing has been done for you. Patients will come as they perceive NHS treatment as free, and therefore will visit the practice.
In a private world, things do differ, people are looking for “what’s in it for them?” hence the marketing message they are seeking for must tune into their frequency. Therefore, under NHS, the marketing attraction was typically cheap dentistry, however, when people have to start paying for dentistry, they are looking for “what’s in it for me? (commonly known as WIIFM).
But in order to get your marketing message right and get the right customers through the door does incur a marketing expense. Hence in a private world of dentistry, we will increasingly see practices having to spend a larger proportion of their money on marketing related activities and also on new equipment to deliver the expectations of patients. This investment in marketing and new equipment has to come from somewhere. It is unlikely to come from staff pay, and also unlikely to come from purely practice profits, therefore, some of the investment required will have to come from associate pay – like it or not.
Investment in marketing and equipment
Of course, in a purely private scenario, things vary enormously. Money has to be spent on marketing and advertising (although I’m not a big fan of advertising myself), team training, team development and customer care, CPD training…to name a few. The money that previously could have been allocated to associates may now have to be re-allocated to get more bums on seats and more people through the door.
For a start up practice, marketing expenses would no doubt be higher than for an established practice, but once a sizeable patient list has been developed, greater effort will have to be expended on internal marketing, getting existing patients to come back and spend more.
Now you may argue that no associate would work at your practice at a lower percentage. My argument is that if they want the latest and best equipment, top notch support staff and a more inspirational working environment then they will have to consider reducing the percentage they demand. Rather than cutting the percentage and not re-investing, I would suggest that the money you save from associate costs is re-directed into the practice and used for marketing, development and training and also the equipment in the practice.
I believe if you present an associate with a well equipped surgery with the latest equipment they would be happy to reduce the percentage payable to them. Reliable UK industry sources have told Samera Ltd that they have seen a big drop in the level of take up of their budget range of equipment, whilst they have seen strong growth in their premier, high end equipment. I think this is an early indication of principals re-investing in their practices, but have they considered where the funds will come from? My opinion is that some element of this will have to come from associate pay.
Associates – are they right for your practice?
For the right practice, associates can be a great practice builder. However, it is imperative that it is a two way thing, that is, associates are working in line with the practice aims, but also that they are considered as an integral part of the practice team.
I have seen some practices where associates actually cost the principal money, others where they make the practice nice profits. The ones that do well are the ones that have identified the right percentage to be paid to their associates.
Let’s look at an example whereby the net fees (after lab costs) for an associate are £150,000.
Under 50%, the amount payable to the associate is £75,000
Under 45%, the amount payable to the associate is £67,500
Under 40%, the amount payable to the associate is £60,000
Under 35%, the amount payable to the associate is £52,500
So in this example, we can see that a drop in 10% (from 50% to 40%) has a net effect of £15,000 in this example. Not a small amount.
So where’s it all going?
I think the new NHS contract is really the beginning of a whole new era in dentistry. I believe there will be more dentists leaving the NHS to enter the private market over the next 2-3 years, but I would also highlight that being private does bring a whole range of different issues…especially getting the right patients in the chair who will spend their hard earned cash with you.
So you will need to appeal to these patient needs, and the only way to do this is to understand their needs and design a service that meets or even exceeds their needs, which will mean investing in marketing systems and surgery equipment.
Over the next 3 years, I think the private market will inevitably start to follow what has happened in the US market, whereby associates are paid something in the range of 35% to 40%, to make it more effective for dental principals.
Industry sources in the US cite that there are around 140,000 dentists in the USA, utilising around 500,000 chairs, which equates to around 3.5 chairs per dentist. By contrast, in the UK industry sources cite there being around 26,500 chairs, similar in scale to the number of dentists in the UK.
I have spoken to various equipment manufacturers who believe that we are at the real beginning of change in how dentistry will be conducted in the future, whereby dental assistants will have expanded duties. This is something obviously the GDC will need to address in their own time, but this may mean more UK dentists working more than one chair, something that they may not have even considered previously.
No doubt one dentist working a multi chair practice can be the most profitable option for a practice, but this is only the case if the practice has sufficient systems, procedures and team personnel to help a sole practitioner manage and run a multi chair practice. Of course this is wholly dependent on one dentist working in the practice full time, which of course may raise a work/life balance issue!
Who said it was meant to be easy?
The future of UK dentistry, like it or not, could mean greater profits for dentists, but at the same time adoption of new clinical and business techniques for UK dentists will be required. Interesting times ahead…
Article by Arun Mehra of Samera Ltd
About Ray Prince
