How a Dentist Should Negotiate a Contract: Dental Agreement Negotiation
How should you negotiate a dental associate contract? I will give some tips and tricks on how to get a better dental associate employment contract. First, there is a difference between negotiating a contract with somebody just coming out of training versus someone who’s been established in a community for a while. You simply have more leverage if you are in any community and either your practice is being brought out by a corporate practice or another group wants you to join them, and you have an established patient base. Let’s first talk about those coming out of training. What do you need to do to put yourself in the best position to negotiate a contract? Well, you need to know what’s important.
Negotiating an Employment Contract for a Dentist
For most dentists, the most important things are obviously compensation, is it a base salary? Is it a daily rate? Is it net collection? How do you terminate the contract? Are you able to get out of it with a certain amount of notice or the benefits, do they pay for your license, DEA registration, credentialing, any kind of continuing education, and then are there signing bonuses, and relocation assistance? Do you have to pay them back if you leave within a certain amount of time? And then probably the two highest priorities are who pays for malpractice insurance, who must pay for tail insurance after the contract terminates, if it’s claims made policy, and then lastly, the non-compete. For some people, this is the absolute, most important thing in the contract. If they’re tied to a community, kids in school, family, they absolutely can’t leave, then you need a reasonable non-compete that’s not going to make you must move completely out of the area.
Alright, those are the things that are most important to most dental associates. Now, you’re coming on training, you have a job offer, they’re giving you a certain amount. How do you know what’s reasonable and what’s not? Well, the best place to find out that information is to talk to your classmates. What are the offers they’re getting? How much are they getting? How are they structured? Where is the job offers coming from? That’s the best and most, I would say, accurate means of finding out what the going rate is at that time. The compensation is going to vary wildly. As I said before, is it a base salary? Is at a daily rate. Is there some kind of net collection involved? Is it a hybrid? Could it be half base, half net collections?
Many times, compensation for a job may look great, but then the benefits are bad or they’re not paying for your tail insurance or the non-compete is terrible. So, you can’t just take compensation as the number one factor in determining what is a good opportunity, but it certainly is important. Knowing whether a non-compete is fair or not is something you probably must talk to a professional about. For the most part, anywhere between one to two years, and then maybe 5 to 15 miles from your primary practice location would be considered reasonable. If you’re in a non-compete that’s more than two years or it knocks out like multiple counties or maybe they’ve attached the non-compete radius to, let’s say, it’s a corporate practice in a big city and they have 10 locations.
Non Compete Law for Dentists
And they’re saying, well, you can’t work within 10 miles of every location we own. That’s not a reasonable non-compete. The actual negotiation will depend on two things. One, do they give you an offer letter, or do they just give you the employment agreement? If they give you an offer letter, they’re going to expect that those terms are going to be negotiated in advance and then incorporated into the employment agreement. And then, they’re going to give you the employment agreement. I find sometimes it’s difficult to come to terms with the main parts of an offer letter without seeing the full employment agreement. I mean, if I had a perfect scenario, there would be no offer letter. They would just give the employment agreement. Then you’d have kind of a full understanding of what the job entails and what the expectations are for both parties.
You could agree to a salary, you could agree to the length of the term, that there is a non-compete, that the things they’ll pay for, but when you see the specific language in the contract, it could greatly change the way you look at the value of the contract. Just because you’ve signed an offer letter doesn’t mean that you can’t renegotiate those terms if you provide proper context to the employer. Alright, I was okay with making $110,000 a year and base salary, not knowing that the non-compete effectively knocks me out of the entire state. If you want me to sign this contract with that non-compete, then I need 130,000 or something like that. There are many ways of going back and forth. Some employers will just simply say, this is a take-it or leave-it. I would be wary of signing a contract with an organization that’s unwilling to make any changes at all in the contract.
It usually means they’re difficult to work with down the road or a very rigid and kind of unprofessional environment. So, if you find that someone just says, take it or leave it, I would leave it and move on and try to find a better opportunity. I’m just telling you, if they take the mindset that they’re not going to change anything in the contract, like nothing at all, no change at signing bonus, relocation assistance, benefits, anything like that, it is a bad sign moving forward. And then one more thing to think about and absolutely should be top of mind when you’re signing a contract or negotiating the terms of an agreement: every employment contract should have what’s called without cause termination. Either party should have the ability to terminate the agreement at any time with a certain amount of notice to the other party.
Red Flags in Dental Associate Contracts
Usually, somewhere between 30 to 90 days. If your contract does not have without cause termination, meaning, you must fulfill the entire initial term of the agreement somewhere between one to three years, normally, it is an enormous red flag. You absolutely should not sign that contract for this reason. If they have excluded without cause termination, which is essentially standard across all healthcare professions, it usually means they’ve had a ton of turnover or they’ve had some very dissatisfied dentists that have wanted to leave. So, they’ve removed that ability and made sure that they must stay there for a three-year period or a two-year period or whatever. If it’s not in the contract, that’s why it’s normally not in there because they’ve had a ton of turnover and the turnover is normally due to bad management. It’s either it’s a toxic work environment, or the compensation is not worth the amount of time or effort you’ve, you’ve had to put into it.
Absolutely makes sense there’s always without cause termination and the employment agreement. Don’t feel bad about asking for things. If you’re negotiating the terms of employment, most smart employers expect there’s going to be some back and forth. Ask for a little more salary, a little more bonus, and a little less non-compete radius. Like incremental things that you can get changed in the agreement can make kind of a big change in the value of an opportunity. So, don’t feel bad. Now, obviously, if they’re offering a hundred and you ask for 300 or some crazy amount, they’re going to just think that you have no idea what’s going on. They’ll probably move on. When you ask for something, it needs to be reasonable. How do you find out what’s reasonable or not? Once again, talk to your classmates, talk to any mentors, talk to attorneys who understand what they’re doing, and deal with these contracts every day. That’s where you need to get in. But if you go in and ask for these ridiculous changes to an agreement, most places will either just pull the offer just to say, no, we’re not doing any of that. So, that’s how you negotiate a dental associate contract.
Negotiating Dental Associate Salary
There’s no great resource that aggregates all the data for salaries across the country that I find that is accurate for the dentist. So, talking to colleagues, mentors, people you were in training with, I think is usually the most accurate way of finding out kind of what’s the going rate. And sometimes, some of the dental associations can provide, I guess, some data that’s okay, but I wouldn’t completely rely upon it. When you get an initial offer, let’s just say it’s for 120,000. Most employers expect at least some kind of back and forth as far as compensation is concerned. So, don’t feel bad asking for more. Now, how much more depends, but you need to be reasonable. If 120 is kind of the average for a, let’s just say, you’re right out of training, you have no experience in building up a practice and you say, you know what, I don’t want 120, I want 240.
Well, that is very likely going to be laughed off by the employer. And it’s going to put you kind of or at least start you on the wrong foot. If you’re going to ask for a bigger amount, it needs to be reasonable and then it needs to be as informed as you can be. One good way of doing it is if you’ve identified an area that you want to practice in, reach out to multiple practices and try to get an average of what all of them are offering you. And then, that way you can determine if one place is kind of lowballing you or not. Beyond salary, you also need to consider all the ancillary benefits. The actual benefits like health, vision, dental, life, disability, retirement, but then are there potential bonuses?
Are they paying for your malpractice insurance and tail? What are the restrictive covenants? When I find people that are just basing a job on the baseline number for their salary and not anything else, I think that’s shortsighted. One job that pays $20,000 less could be much better when you consider all the different bonuses and benefits, and maybe a kind of a lesser restrictive covenant, like with the non-compete, for instance, versus another one that pays 20,000 more but doesn’t offer all of those other good things. Another tip: when you’re searching for your first job out of training, you want to go into an environment that you can learn from. There should be other experienced dentists around you in a professional environment. I mean, you obviously need to interview and go out and look at the practice and see how they operate. Is there proper staffing? Are you going to be efficient? If you’re paid on productivity, are they going to do everything necessary to make you as efficient as possible? Because if they don’t, then your production is going to be less and you’re going to make less. Now, as far as the other kind of compensation models, a daily rate is pretty simple.
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