Embrace Progress: Decisions, Decisions by Daniel Grob, DDS, MS, Editorial Director

Nearly three decades ago, practicing orthodontics was simple. After a rigorous dental training period, you graduated in the top of the class, got accepted into orthodontic school and chose where you wanted to live.

Selecting brackets, bands and equipment was exciting. During your residency you were able to try different companies' products, and picking your own combination of systems was your prerogative. Once you had your own practice, you knew you wanted brackets from this company, molar bands from the other company, and auxiliaries from your friend the sales rep. (Never mind that several years into practice, those decisions would be undone by the latest and greatest new appliance that was once again going to make you a better orthodontist than the others.)

Taking insurance was the next hurdle or decision to make. The official AAO policy was that you were working for the patient, and the insurance company was an unnecessary burden on practicing orthodontists. It was your duty to educate the patient on how they should pay the practitioner and get reimbursed from the insurance company.

PPOs were even worse: Imagine being paid less than your fee for a service. The nerve of employers asking for a discount. After all, you never expected discounts for being connected to the ADA or AAO such as insurance, car rentals, supplies and the like. Not!

Advertising was unnecessary. Your mentors told you that building a practice was done with satisfied customers. Never mind the fact that it takes up to two years to get them.

Now, things have changed when it comes to decision making.

The era of new decisions
Lecturing at a dental school recently, I was confronted by the new reality. After a presentation by one of the major corporate orthodontic employers that had glossy packets for the residents, explaining the benefits of employment, I talked about TMJ, tip and torque, and more.

Questions were asked regarding 1099s, W2s, reimbursement for mileage, deducting expenses of being in practice; 401(k) plans and who pays for malpractice insurance were hot topics of discussion. Clearly, business was on their mind—and not in the same sense that it was 25 years ago.

As I worked my way through a lecture about general tips and techniques of private practice based on my experience, I realized that I was in a time warp. The modern resident or grad student is mostly concerned about paying off student loans and keeping the ball moving forward.

These students are plagued with deciding to become a corporate employee or an associate, or to buy or start their own practice. Dr. Tom Ziegler covered this topic in December's Orthotown in an article about transitioning your practice. (Ziegler assisted me with my practice sale on two occasions.)

Going corporate
I don't want to be cavalier about this, but the corporate decision is usually based on money or convenience. If an opportunity exists in an area that places the burden on a company to capture patients and allows you to treat them for a reasonable salary—which these days is most certainly some multiple of six figures and beyond—why not take it?

Issues that need to be taken into account may include questions such as:

• Are you on salary or percentage, and is there a bonus situation?
• How easily can you get out, and who's responsible for the patients at that point?
• How do you handle work in progress?
• Can you change treatment plans without penalty to your income or insurance clauses?
• What if cases go over?
• Who trains the assistants?
• How many will you supervise?
• What if one doesn't come to work?
• What if they keep adding them?
• Will you be paid more?

Lots of questions, for sure, but I've found that many smaller corporate entities don't think this through. For the most part they see the large fee and figure they can make a percentage off it, similar to hiring a specialist such as an endodontist. We know differently!

Becoming an associate
I have limited experience in this area, but some strong opinions. Soon after completing my orthodontic residency I was an "associate," with many of what Ziegler calls loose ends of employment. Quite honestly, I did well. I was paid a good percentage of collections, saw my own patients, and when I decided to move to Arizona I left the patients to the senior doctor.

This was good for me, bad for the doctor. He handled things well and it all worked out. We are still good friends, which is unlike many situations out there. Because of my personal experience, I vowed never to do this again as a party on either side. And as I have learned over the past 25 or so years, most of these open-ended situations don't work out.

The senior doctor is usually paying for an overpriced dental assistant who, when he or she feels ready to move on, leaves the senior doctor hanging with nothing to show for the time and money invested. These stages are usually called "transition" stages, which means the senior doctor is giving money to the new doctor to take over his patients.

Questions arise as to the valuation, who built the practice, and do you as the senior get to stay. Why would you want to? Yes, I know there may be advantages to renting your building to them, etc., but from a pure business and number-crunching type of thing, these arrangements don't pencil out.

The hard reality of today's marketplace is that there is rarely extra free cash flow to pay for two orthodontists in the same practice. Why not just hire an extra assistant—or better yet, a hygienist?

Buying or starting a practice
Short of the corporate decision, I think this choice offers the clearest path to success, and a real business choice with options to grow and expand. Starting a practice from scratch requires a unique situation regarding demographics, area growth and local competition. In the right situation and by keeping overhead in control, it can be done.

From my perspective, finding a small group of dentists or a small corporation and arranging to work within their framework provides the best chance at success. However, in my experience, talking with small dentists usually exposes their desire to capture a greater-than-reasonable percentage of the total collections.

What worked for me and many others, such as dental franchise owner Rick Kushner, is to buy a practice outright. But first you must decide if what you're purchasing is truly a business! That, plus a new perspective on practice development, will be the topic of next month's column. But for now, when it comes to decision-making after graduation, let me paraphrase Dr. Scott Frey and say, "Not everyone should or needs to be a sole practitioner."