Hard Questions About Dental Compensation

Recently, Jared Duckett and Bill Ladd spoke with Dr. Michael Abernathy about a number of important issues surrounding dentists reopening their practices following COVID-19 restrictions. Chief among them, how do you approach reinstating employees and compensating them? 

While some practices were able to resume operations as normal, not all doctors had this luxury available. Especially for small practices serving more suburban and rural communities, these complications were magnified. 

Dr. Abernathy doesn’t pull punches when he addresses optimizing your dental practice. As each business recovers and reopens, there are hard questions to answer and more difficult decisions to be made. 

Here are some highlights from Jared and Bill’s discussion with Dr. Abernathy: 

Compensation Should Only be 25% of Your Expenses 

Running a dental practice involves managing high volumes of money coming into your business as well as leaving it. From payroll to liability insurance, day-to-day office upkeep, equipment expenses, utilities, and a laundry list of other financial obligations, maintaining an optimized budget is essential. 

For a dental practice to operate in good financial health, Dr. Abernathy advises that compensation should only account for 25-28% of your total expenses. Anything approaching 30% or beyond, and you are likely overpaying at an unsustainable rate. 

Compensation Decisions When Buying or Reopening a Practice

Whether you are buying or reopening your own practice, there are a number of decisions to make surrounding compensation. Are your team members performing at a rate that justifies your expenses? When revenue is limited or nonexistent, you need to have your business staffed with true rockstar talent rather than passengers who are phoning in their work. 

If You Are Buying and Reopening a Practice

When you are buying a dental practice from another doctor, you are also inheriting their staff and company culture. However, there isn’t a guarantee that culture will align with your own values and standards as a business owner. 

Take the time to examine your new team. Who should you keep? Who can be let go? To identify true high-performers for that practice, you should consult with the previous practice owner for their insights and opinions. 

Reopening Your Current Practice(s)

If you are recently fully reopening your current practice or have been operating for some time, you are restarting almost as if you just opened for the first time. Appointments are low or nonexistent, and revenue is not there to replenish what you’ve spent to cover essential costs when you were not open. 

This raises an important question: Is it sensible to bring everyone back at full capacity right away? 

For many, the honest answer will be “no.” Without the revenue to draw from and pay staff at their previous rate, this could not be entirely feasible. However, Dr. Abernathy does offer a few options for dentists to consider. 

3 Options for Compensation After Reopening

1: Full Reinstatement 

For some dentists who have the existing funds to float the practice until revenue catches up, full reinstatement of your staff may be both preferable and doable. This option, though the most expensive, would also provide the added benefit of being able to fully resume your operations pre-pandemic. 

However, in the context of smaller practices, this will often not be the most feasible option. The expenses could easily outweigh the benefits and end up harming the health of the business to dangerous levels .

2: An “As-Needed” Model 

As the volume of appointments increases over time, you can also choose to reinstate employees as business needs dictate. You could also consider bringing back some staff on a part-time or per-diem basis with the intent of working toward full reinstatement as the practice’s workload recovers. 

During this time, doctors will likely have to take on more roles with their limited staff. This could include obligations like calling patients personally to confirm appointments, handling some office tasks like billing and bookkeeping, and other similar actions. 

If you choose to adopt the “as-needed” approach for your practice, Dr. Abernathy notes that appointment confirmation will be essential. While it may look like you have a full calendar, not every patient will honor it. A day or two before each appointment, calling and confirming can help you create a more accurate picture of your expected revenue and capacity. 

3: A Hybrid Model 

Some practices may prefer to opt for a hybrid approach to reopening their practice and compensating their team. This could include a mix of full-time and as-needed staff and open creative opportunities for compensation such as profit sharing until revenue allows for regular payroll to resume. 

The Importance of Leadership in Navigating Compensation

As leaders of a practice, dentists no longer have the luxury for absentee or passive leadership. While you’re looking to reopen and fairly compensate employees, having a clear and consistent set of expectations for your staff will help you curate an excellent team of high-performing professionals. This could require some difficult decisions, such as letting a likable person go, but it will benefit the health of the practice overall in the long-term. 

Get More Insights for Compensation and Other Essential Management Best Practices for Your Dental Practice

At Duckett Ladd, our team of consultants are dedicated to serving the dental industry and helping doctors optimize the business operations of their practices. As you continue providing excellent patient care, we can help you create a strategy to ensure that your other obligations are met so you can enjoy doing what you love with complete peace of mind. 

To learn more about how we can help you, contact us today to speak with someone from our team. 


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