Reader question: I have had an associate for 19 months. It’s not working out. I am working longer and harder. The staff is upset. I’m about to lose one key staff person. I’m losing patients and money. And I’m losing sleep.
I went to a transition seminar four years ago. The entire plan sounded great. “Optimize your assets” was the ticket. Sell half your practice now and the other half later. I followed the formula. Worked like a dog to build the practice so I could have the associate busy when he started. Went from four days to five days. More staff, more stress, and less time off.
Found an associate I thought would be good for the practice and the community. Local kid. Same church. Married, two small kids. Graduated high in his class. Interviewed great. The way the deal was set up by the transition consultant is I paid him a very good salary for the first year. Got him plenty of patients to work on — nearly all from my column. Introduced him to all the patients in recall so he could complete their treatment. Took him to meetings and study clubs. Introduced him at social events at our church.
Paid the transition consultants their $40K and for the first six months, it looked like it was going to work out great. I had the incentive plan in place so when he hit $30,000 he’d get paid on a percent of collections, he’d be able to pay off some of the note, and he’d also be contributing to the bottom line.
To date, he hasn’t generated very many new patients and he doesn’t do a great job of selling his dentistry. And I’m still paying his salary. Besides his salary, overhead is up another 11% with additional staff, supplies and other variable costs. Right now it looks as though it will cost me around $300,000 by the end of the second year.
Where did it go wrong? What should I do? I’ve got a lot of money sunk into this kid.
— T.
Dear T:
The more downside risk an associate is willing to bear on the front-end, the greater chance of success in the long run. An associate who wants to reduce their downside risk so there is no risk at all rarely — if ever — succeeds in a partnership. In fact, in my experience, “never succeeds” would be more accurate.
Let me give you an example. Scott, a recent USC graduate, wanted to practice in Orange County. He did his research and found that Dr. Ed had the type of practice, the location, and the reputation Scott wanted for himself. He approached Ed and asked to come into his practice. Ed had just turned 60 and was highly successful, with a new facility, and was beginning to consider his transition.
Scott was willing to assume as much of the risk as possible. If he didn’t make it, he wouldn’t stay. No guarantees, no big salary. He wouldn’t be fed a ton of patients. He’d get a second job to make ends meet. He’d put himself squarely on the hook. He basically would make it on his own.
How Can the Partnership Succeed?
When an associate is willing to take on risk like Scott, it actually inspires the senior dentist to want to make it work. He wants the associate to succeed in the worst way. In actuality, the context of a partnership is generated because the associate, in essence, is putting everything on the line to make it work. What more of a commitment do you want than that?
Then you have the opposite side of the coin. A great orthodontist in the Northwest, Dr. Mark, was seeking an associate. He is a 20-year practitioner with a two-location ortho practice. A recent graduate applied. She wanted a $250,000 salary, a maximum of three days a week, and didn’t intend to live in the community where the practice was located. This interaction didn’t last long — but you get the point.
A senior doc has fought the wars, been in many battles. They’ve matriculated from the school of hard knocks. They started out with huge downside risks. It’s the tension and urgency created by being inside this risk that promotes effective action, hard work and ultimately hard-won results. It’s confronting and overcoming this risk of failure, the risk of the unknown, and the risk of loss that builds a demanding owner, a compassionate leader and a rigorous manager. I’ve said this before: “steel gets forged in the fire.”
Consider the Journey
If you study Joseph Campbell’s work, you would recognize that every great dentist has followed the “hero’s journey.” The archetype is classic. The mythology proves unerringly valid. A hero must face his or her demise, go through a sort of rebirth, and when they do, they come out on the other side stronger, tougher, and fearless. Who they are now is a “hero” able to fulfill their mission.
Unfortunately, the way most transition consultants are setting up these transitions is to try to reduce the downside risk for both parties. My view is they should be ramping up the risk, not toning it down. New graduates are getting indoctrinated into the “easy-come” model, because senior dentists are being convinced it will work out in the long run. Younger dentists are coming into the practice with an “I deserve, I expect” attitude. They don’t have to prove themselves. They act as though they won the election and they didn’t even have to run for office.
When you come from “I deserve,” you come with an attitude of entitlement. Entitlement is expressed as “I have a right to ask for this.” So what you end up with is an associate who feels entitled to the ownership of the practice, an unsubstantiated high salary, and the attitude that they shouldn’t have to work hard to get it.
What’s the Outcome?
At the end of 17 months, you have the typical outcome: You are working harder than ever. You have been forced to generate the work for two dentists, not just one. Your staff is up in arms with someone who is acting like royalty. You are into the transition for about $200K-$300K, and, therefore, you probably don’t want to end it because you’ll lose all this money as well as a significant investment of time. Your transition consultant is long gone. And you are left thinking, “Maybe it will get better next year.”
“Here, let me pay you a great big salary for the first year. You can use my patients. You can go into my recall and get what you can out of it. I’ll keep on generating new patients and I’ll give most to you. You won’t have to take on any other responsibilities. Basically, you won’t have to risk anything.”
This is NOT a great place to start an associate.
What to do now? Give your associate his 90-day notice. Start over. But this time, put your associate at risk — and if you can’t find someone willing to play at risk, you’re better off being by yourself. The definition of a partner is someone willing to share the downside risk. Might as well find out from the get-go if they can handle it.
— Marc
