Fresh out of dental school, you get a couple of offers and you are too nice to negotiate for your benefit and thereby undervalue your worth. Before you know it, you realize you are underpaid, overworked and wanting to get out of the contract! Depending on the contract, getting out may be harder than you thought – some actually require you to pay an exorbitant fine to break the contract. Most dentists are not taught on what to look for in a dental contract and hence learn by making mistakes. That’s a painful/costly way to learn! I wanted to discuss in this post the different terms in a dental employment contract and the key points to be aware of before signing on the dotted line.
A well-written contract should provide clarity and assurance to both the new dentist and the employer. I’ve compiled some of the most common contract terms and conditions to look out for. Share by commenting below if you know of any additional terms/conditions that one should keep in mind.
1. Employee (W2) or Independent Contractor (1099)
Whether you’re an employee or an independent contractor will make the difference in how you’re paid and how your employment taxes are filed. If you are an employee, your employer will pay your taxes for you and your portion will be deducted from your paycheck on a regular basis. If you are an independent contractor, you will be responsible for paying your own taxes and will need to keep aside the tax amount every month to pay them at the end of the fiscal year. Foreign dentists who are on work visas (e.g. H-1B) can only be employees. Once you get your Green card, you can be an independent contractor or start your own private practice.
2. Commission vs salary
There are two ways you can be paid by commission – based on production or collection. Dentists typically prefer to be paid based on a percentage of production which means you get paid the commission for work done regardless of whether the total money for the work was collected by the clinic or not. Most practice owners prefer to pay the dentist a percentage of money collected which means that you get paid a commission of what the clinic collects (from patient/insurance company/third party lender etc) which may be lower than the price quoted to the patient. This is because sometimes the patient’s insurance will not pay the amount you have submitted to them. The timing of your payments is also affected – payments based on collection take longer because it will depend on how long it takes for an insurance company to compensate for services performed. Since this delay can be problematic at the start for a new dentist, some dental offices will offer a guaranteed salary for the first few months. The percentage of commission quoted in the contract is usually higher when paid on collection than when paid on production. This makes sense as you would make less when paid on collections unless the commission percentage is higher. For example, 30% production might be equal to 35% collection depending on what the collection rate is like for the clinic. The rates for production vs collection varies nation-wide and is based on the type of procedures carried out and the mode of payment used by the patient. Ask around (your friends, dentists previously employed the clinic/similar clinics) and negotiate the best commission for you. Remember, anything is negotiable!
Some corporate or private clinics may offer a salary (daily guarantee) and pay either the salary or the commission percentage, whichever is higher. This means you are guaranteed a minimum regardless of how slow the clinic is. This is a great option and if possible, try to negotiate this into your contract.
3. Patient Volume
If your clinic accepts different kinds of insurances, you will need to be credentialed with them before you can see the patients under these insurance plans. This along with clinic size/reputation will influence your initial work volume and how patients are assigned to you. Clarify with the recruiter how many other dentists work in the practice, how patients are delegated and what is done to bring in new patients. Some clinics will have loads of patients and work you to the bone while some will be very slow resulting in a low paycheck at the end of the month (if you are paid on commission).
4. Charges to the dentist
Some clinics have the new dentist cover a portion of the total lab bill equal to the percentage of collections/productions that they receive as compensation. For instance, if an associate receives 35% of collections, he or she should expect to pay 35% of the lab bill. This might influence your treatment decisions regarding restoration material and lab chosen. If you work as an independent contractor, you might need to bring your own assistant and/or hygienist. Some employers may expect you to purchase malpractice/disability insurance using your income.
5. Additional benefits & time off
Some clinics may offer additional benefits like reimbursements for professional membership dues, CE courses, 401K, medical/dental insurance, liability/malpractice/disability/life insurance etc. as a way to incentivize employees. Clarify the policy on maternity/paternity leave, short and long term disability, vacation and paid time off. Some corporate clinics will offer some paid vacation after an initial period of time. Unpaid leave is most often allowed as long as there is sufficient notice for another dentist to cover your patients. Some clinics may also give sign-on bonuses (paid after a trial period) or relocation bonuses to encourage you to work for them.
6. Exit strategy
It is important to review the contract carefully and to note any stipulations around the length and renewal of the contract. Pay particular attention to any termination clauses such as non-compete or solicitation clauses since this can impact your long-term plans. Most clinics will have a one to two year 2 to 5-mile radius non-compete clause (you cannot practice within the specified radius for the specified time after you leave the clinic). How far this clause can be enforced is dependent on the state and the reasonableness of the clause. The solicitation clause prohibits you from persuading staff or patients from the clinic you are leaving to follow you to your new practice. Sometimes you may have to pay back your bonus sign on if you leave within a period or pay the dentist a certain fee if you break the contract without giving due notice of leaving.
7. Immigration
If you are a foreign dentist who needs a work visa and eventually plans to apply for a Green card through the employer, then this is a section you need to add to your dental contract. It is the employer’s responsibility to file for the work visa once you are employed but they are not obligated to file for your Green card. This is something you need to negotiate before you sign the contract. Most clinics will offer to submit for a Green card after a specified period of employment. The expenses associated with the immigration procedures may be paid by the employer or split with you (deducted from your paycheck).
These are some of the points to emphasize on your dental contract. If there are any additional points that must be kept in mind, feel free to share by leaving a comment below! Also, head over to the Forums page and start a discussion of your own or join an existing one.
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