As a dental associate, understanding the nuances of different compensation structures is crucial for maximizing your earning potential and securing an employment agreement that aligns with your career goals. Building on the strategies outlined in our previous post, this article provides a more in-depth exploration of the key compensation models.
 

Percentage of Production

In this model, you earn a percentage of the amount the practice bills for the procedures you perform, regardless of if/when payments are collected. This offers more immediate payment for your services.  A practice may prefer to pay based on your collections, which is understandable.  But if practice collections are close to 100% of production, then it will be more convenient for the practice to pay based on production.  We like to see a percentage of between 32%-35% for general dentistry with the associate being responsible for a corresponding percentage lab costs (not 50% or more of lab costs).  The production percentage tends to be higher in pediatric dentistry (often 35%), periodontics (35%-40%) and endodontics (40%+).  Also thought should be given to what “your production” means.  Certainly this is operative work you perform, including hygiene exams, but occasionally it could include production you oversee, though perhaps at a reduced percentage.
 

Percentage of Collections

This compensation structure pays you a percentage of the revenue collected from the procedures you perform.  The percentages are comparable to pay based on production.  Expect your initial contract draft to offer pay that is based on collections.  Because your earnings are tied directly to the payments the practice receives for your work, your contract should clearly define how collections are calculated and reported. Be sure to ask the practice to share their historic collection rates and clarify any potential delays in collections that might affect your income.
 

Daily Minimum

A daily minimum guarantees a base level of income, providing financial stability, especially in the early going.  Compensation may be structured as a hybrid method where you are paid the greater of a percentage of your collections/production or a daily minimum. In this approach, if your earnings from collections or production fall below the minimum, you still receive the guaranteed amount. This hybrid approach is becoming more common because the guaranteed minimum incentivizes the employer to keep the associate busy while allowing the associate to earn more by producing more. It ensures a safety net during slower periods while enabling higher earnings during busier times. Daily minimum rates reflect your experience and the market in your area, typically ranging from as little as $800 to as much as $1,800 depending on the type of practice (general or specialty).
 

Annual Salary

An annual salary is most common in orthodontics where the doctors may be treating each other’s patients and the practice is not specifically keeping track of each person’s production.  Annual salaries for orthodontists have increased substantially over the past decade to as much as $250,000.  Alternatively, as an orthodontist, you may be offered a “per diem” in the range of $1,200 - $1,800 for a full day’s work.

 

Bonuses Based on Production or Collections

Bonuses offer additional compensation based on achieving certain production or collection targets. This incentivizes high performance and can significantly boost your overall earnings.  Such a structure is common for oral and maxillofacial surgeons.  They might receive an annual base of $350,000, but then be eligible for a bonus of 33% of production (or collections) in excess of $1,200,000.  On the first $1,200,000 of collections, the associate’s $350,000 base pay represents a collection percentage of 29%.  If bonus pay is 33% in excess of $1,200,000, then the associate is incentivized to exceed that collections threshold.

 

---

Maximizing Fringe Benefits

 

Continuing Education

Many practices offer to cover the cost of continuing education (CE) courses, which are essential for maintaining licensure and staying updated on the latest dental practices. Negotiate for a generous annual allowance for CE, typically around $2,000 to $3,000. This support helps you advance your skills without out-of-pocket expenses.

 

Dues and Subscriptions

Coverage for professional dues (e.g., ADA membership) and subscriptions to dental journals is common. Ensure these benefits are included to support your professional development and keep you informed about industry advancements.

 

Health Insurance Reimbursement

Some practices offer reimbursement for health insurance premiums, either partially or fully. Negotiate for full or partial reimbursement to reduce your out-of-pocket expenses, which can significantly enhance your overall compensation package.
 

Retirement Plans

Contributions to a retirement plan, such as a 401(k), help you build long-term financial security. Ensure the practice offers a matching contribution, typically around 3% to 5% of your salary, to maximize your retirement savings.
 

Signing Bonuses and Moving Allowances

These have become more popular over the past five years as practices compete with DSOs for associate talent.  It’s worth asking for, but don’t expect it all to be paid upfront with no strings attached.  Usually, the signing bonus is earned over the first couple of years in the practice, and if you leave before then, expect to pay part of it back.

 

By thoroughly understanding the various compensation structures available to dental associates, you can make an informed decision and negotiate an employment agreement that truly reflects your worth and supports your long-term professional growth. Remember, seeking the guidance of experienced dental attorneys can provide invaluable support in navigating this process. With the right approach, you can set the foundation for a rewarding and fulfilling career as a dental associate.