THE MILLIONAIRE DENTIST PODCAST

EPISODE 146: ARE YOU READY TO HIRE AN ASSOCIATE?

 

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EPISODE 146: IS IT TIME TO HIRE AN ASSOCIATE?

Hiring an associate sounds like a good idea. It's a sign that you're successful. Problem is that it doesn't always work out. Casey and Jarrod discuss what to consider before hiring an associate and the snowball effect of not doing it correctly.

 

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EPISODE 146 TRANSCRIPTION

Announcer:
Hello everyone. Welcome to the Millionaire Dentist Podcast, brought to you by Four Quadrants Advisory. On this podcast, we break down the world of dentistry finances and business practices to help you become the millionaire dentist you deserve to be. Please be advised, we do speak with an honest tongue and may not be safe for work.

Casey Hiers:
Hello and welcome, this is Casey Hiers back at the Millionaire Dentist Podcast in studio with co-host Jarrod Bridgeman.

Jarrod Bridgeman:
Casey, how are you?

Casey Hiers:
Good. Thanks for asking. Just watched the Rick Flair documentary that came out. Yeah, I'm just ready to do that all.

Jarrod Bridgeman:
 You're ready to wrestle?

Casey Hiers:
Yeah, that's it, let's do this.

Jarrod Bridgeman:
Casey, tomorrow you're heading out to Tucson, Arizona for an event for practice owners. Are you pretty stoked about it?

Casey Hiers:
Yeah, I love the desert. Getting in and out of Phoenix, Sky Harbor, a little hour and 45 minute drive down to Tucson.

Jarrod Bridgeman:
I'd love to go at some point. I've never been out that out that way.

Casey Hiers:
It's nice. Looking forward to meeting some good practice owners, have a little fun and educate on the business side of dentistry.

Jarrod Bridgeman:
That's awesome. When you speak on these events, do you ever touch upon associates, like the need or the want they may have, or is it appropriate?

Casey Hiers:
Interesting. So on our events, like Topgolf, sometimes yes, sometimes no. Depends on the crowd. I like the event to be custom. What do they want to hear about? We can touch on a variety of topics. On some of the academic ones that we do if they're larger, I know in that room that associate question looms large, so there's a lot of times that I'll dip my toe into that.

Jarrod Bridgeman:
I know you've been asked before, is there a certain threshold-ish area where it might be a good idea to start thinking like, "Hey, I can afford to do this, I can make it happen?"

Casey Hiers:
That's a good question, and it's do I want an associate? Can I afford an associate? When to get it, how to do it, and then how to make that associate profitable. There's a whole bunch in there, no doubt about it. And here's the stat that we've said before. 80% of associates do not become partners, so we already know before I answer this question, most of the time mistakes are made on this topic, and this is a robust topic and that's why sometimes I don't get into it. I was actually at a dental society where this did get brought up, but I'll unwrap your question one at a time. Is there a range? Is that what you asked?

Jarrod Bridgeman:
Yeah.

Casey Hiers:
So yes, and I'm going to answer that in two ways. By the numbers, if somebody wants to be profitable, absolutely. That being said, not all clinicians, not all dentists and specialists are created equal. Some people produce 4,000 a day. We know people who produce $10,000 a day in dentistry. So just from that point of view, not everybody's created equal. Just by the numbers and profitability. I would say between 1.3 and 1.7 in collections. 1.3 is probably on the low end, 1.7, you're probably on skates.

Jarrod Bridgeman:
1.3 might be the area where you're thinking, "I could start contemplating this and looking into it."

Casey Hiers:
Yes. Now there's also those that will push back because they have a $900,000 practice with an associate, and emotionally they go, "Well, hold on." The second component is, and especially at this firm, everyone we talk to, it's a custom plan. What do you want out of your practice? What do you want out of your personal life? Some people want an associate because they want to potentially practice dentistry, but also be a mother or a father.

Jarrod Bridgeman:
So kind of a work life balance goal instead of monetary.

Casey Hiers:
Bingo. Yeah, and I think that sometimes can go overlooked. Sometimes people understand, "Listen, under the numbers might not add up. I may be missing out on money, but I only want to work three days a week. I want an associate, I want work life balance. I want to be there." so then those goals are different. Maybe then if there's a million dollar practice, an associate makes sense, but from profitability and a numbers perspective, if you're be under 1.3... And again, this is generally speaking.

Jarrod Bridgeman:
And you're trying your hardest to be as rich as possible.

Casey Hiers:
If profitability is your goal in retiring with a lot of money, if you're looking at it and you're less than 1.3, it's probably not the best move unless you have other circumstances that are in part of that equation.

Jarrod Bridgeman:
What's a negative thing that can come from hiring an associate too early? I'm not talking about they may not end up buying the practice from becoming a partner, but what's just a couple of negative things that can happen from making this happen too early?

Casey Hiers:
Some of the hiccups we hear from practice owners who bring on associates, first of all, it's how do you practice? What is your vision of dentistry and helping patients? Some are reluctant to propose cases, case acceptance. Some do preventative dentistry, others don't. So really making sure that you align from a theoretical perspective on dentistry, that's really important, because you may have one dentist who is maybe more aggressive with cases and case treatment and acceptance where they say, "Listen, this is going to be a problem in three years. Let's fix it now." Or somebody else might say, "Let's just wait till it hurts." So I think that's really important. And then general goals. Some people just want to be an associate. That's okay. And others want to be a practice owner. What's that timing? So many aren't on the same page because they haven't had that conversation. Put your big boy and girl pants on and have those tough conversations before jumping into the associate potential partner-

Jarrod Bridgeman:
Into the partnership bed.

Casey Hiers:
Bingo.

Jarrod Bridgeman:
Well, that's a really good point, Casey. Is there more than just that one thing?

Casey Hiers:
Let's say that aligns. First of all, there's an affinity, that you like each other, you don't mind being around each other, working with each other, the staff, everybody's kumbaya. You view dentistry in the same light. The numbers have to match up at some point, so you have to look at how far each person is booked out, patients per day, production per day, making sure that overhead can withstand it, making sure that the incomes are where people want it. There's a lot of... It's like a minefield. There's a lot that can go wrong and that does go wrong, but boy, if you can get it right, it can be fantastic. We're not saying don't have an associate. It's great to have partners and it's great to have associated, it's great to pour into younger people and there's lots of practices that'll have two owners, but always have an associate in kind of a feeder system. And those business models are great. We help with that all the time. What I try to make people aware of is be very cautious because the majority of the time it does not work out well.

Jarrod Bridgeman:
Is there a case, any cases you've seen or have heard of where having an associate on board costs them more money than they actually get from the procedures the associate's been doing?

Casey Hiers:
I mentioned it, sometimes the older original owner will pay a dollar 10 to get a dollar back, and that comes back to the numbers support it. And if you have, again, you're looking at a lot of metrics, simply staff size and operatories and how far booked out, insurance situation. If you have a ton of insurances and you're booked out and you're super busy and you're bringing on associates and you have partners, that business model can be brutal. We've seen it before where the two partners with an associate who are super busy with a lot of insurances, they would need to produce $6 million in dentistry to be profitable.
But they're not looking at it. They're looking at the trees, they're not looking at the forest. so we've seen a lot of those come across, but then you have to be willing to look at it through an honest lens. Are you open to cutting insurance plans? So a lot of times people get excited about getting an associate or being on that track for a partner, but you also have to have, again, tough conversations if... Are you willing to potentially evolve that business model? That might mean dropping insurances.

Jarrod Bridgeman:
What's a major fear people can get about dropping insurances?

Casey Hiers:
Nobody's going to come see me. Am I going to be busy? Nobody likes me. It's like that junior high psychological emotion. What if? It's the boogeyman. What if I drop insurances and then I'm not busy and nobody comes, and then I'm embarrassed and then my feelings get hurt a little bit. And again, that's why your external team should help walk you through all of that where there are no surprises. You've stacked ranked your insurances, you know how far people are booked out, patients per day, production per day, profitability of associate, all these metrics have to line up. Then the decision's easy. The problem is it's wrong so many times because data is not used on insurance or associates. It's emotionally driven.

Jarrod Bridgeman:
And when we talk about dropping insurance, you're going to obviously look at the numbers and hopefully pick the worst one. The one that's worse for you.

Casey Hiers:
That's right. And we talked about this previously, but if you bill expect to collect and you don't even know your own fee schedule and you don't know if you're in the 80th percentile within your zip code, it's really hard for you to have a true feeling of those numbers. Here's the domino effect. That's why we're comprehensive. Then your tax situation gets goofy. QuickBooks are behind, you're filing extensions. It's all connected in this weird way.

Jarrod Bridgeman:
Which is crazy because a lot of times in our conversations on this podcast and everything like that, we talk about how we're comprehensive and that we do all these things, but we always tackle one subject, and this is one of those times where we're really kind of showing, "No, no, no, all this adds together. One thing's not going to fix the whole ship."

Casey Hiers:
And then this is just a clinical side, and there's 18 things we didn't touch on, but you're right, we're starting to dip our toe in that. Then that connects to what? Your personal financial planning, your cash flow at home. Is your spouse happy or not? Can you retire? Can you go on that vacation? Can you get the house you want? All of that is connected.

Jarrod Bridgeman:
If your spouse isn't happy, well, you're kind of screwed.

Casey Hiers:
Oh boy. I was going to make a joke, but no.

Jarrod Bridgeman:
My wife listens to this sometimes. No, I'm good. I love you.

Casey Hiers:
But it's absolutely all connected, and unfortunately, if you don't stand your ground with all of these things, what ends up happening is, as a high-achieving practice owner, the tail's wagging the dog. Everybody is either... They're happy or they're frustrated with you and unfortunately-

Jarrod Bridgeman:
So you give an inch, they'll take a mile.

Casey Hiers:
Dropping quotes on us.

Jarrod Bridgeman:
That's right.

Casey Hiers:
Dentistry is a beautiful thing and being a practice owner is a beautiful thing, but it is a bonus job and as the CEO, you are not only the CEO and calling those shots and making those decisions, but you are the primary producer of your business. In the United States, most CEOs aren't the primary producer. They have teams for that. So that's the hard part. And not being open and aware that you have to get these things right, or most of them, it's unfortunate in dentistry, and that's why too many folks practice too long, they have uncertainty, they have stress. They can't turn their mind off. They feel like that's their dirty little secret with their friends in their study club or their spouse and they just want to keep living that good life, but it's a bit of a house of cards, and again, it's tough for us because we see it so many times. We know the formulas and recipes and business models. It depends on what everybody wants, but so much time, pride, and ego gets in the way.

Jarrod Bridgeman:
Well, Casey, thank you for helping me better understand such an interesting topic. If you are interested in hearing more about topics like these and maybe even in person, you could always come to an event that we are hosting or will be at. Again, I mentioned we'll be in Tucson, Arizona, at Topgolf this Friday. This weekend we will also be at the Rocky Mountain Dental Convention with some of our people hanging out there. That'll be a great time. In February we're going to be in both Nashville and Atlanta for Topgolf events, visit fourquadrantsadvisory.com/careers. If you really want to come and see us, registrations for those are free and feel free to bring an entire booklet of questions and just rapid-fire at Casey. Just really dig into them.

Casey Hiers:
I try to leave some time for stump the chump.

Jarrod Bridgeman:
Thanks, Casey.

Announcer:
That's all the time we have today. Thank you to our guests for their insight and for sharing some really great information, and thank you to you, the listener, for tuning in. The Millionaire Dentist Podcast is brought to you by Four Quadrants Advisory. To see if they might be a good fit for you and your practice, go on over to fourquadrantsadvisory.com and see why year after year they retain over 95% of their clients. Thank you again for joining us and we'll see you next time.