IS IT TIME FOR AN ASSOCIATE?
DEBRA MILLER, Director of Coaching
If an associate is made busy and productive only by transferring case flow from the owner doctor, then all you have done is add a significant new cost to current practice revenues. That’s a good thing for growing practices where the owner doctor is already busy with little or no downtime. However, associates come at a cost (typically 40% to 45% of their collections depending on whether they are employees or independent contractors, and other compensation or local factors).
If an associate is made busy and productive simply by transferring case flow already being done by the owner doctor, then all you have accomplished is add a significant overhead cost to current practice revenues. As a result, practice profitability will decrease. If your goal was to increase profitability, then you have failed to achieve that.
If an owner doctor is going to continue practicing full-time or nearly full-time, there is a fairly clear benchmark the practice needs to meet before Endo Mastery considers it “ready” for an associate. That benchmark is simply this: annual revenues in excess of $1.4 million. Based on a 200-day year, that’s around $7000 per day on average (depending on your fees and collections). Here’s why:
- Associates do add a certain level of complexity to practice operations. You may need to add a team member, which adds another overhead cost. You have to allocate treatment rooms and days scheduled. You have to work out rules for the team to follow about which cases to schedule with which doctor. All of these are very doable, but if you are not currently completing 6 cases per day personally, there much faster and easier ways to increase profitability by improving your personal clinical productivity.
- If you are already at that $1.4 million level, your current level of profitability is likely enough that you are debt-free and saving a significant portion of your income each year. That gives you the financial flexibility at the beginning of an associate expansion for a temporary (and limited) reduction in personal income. You will need to keep the associate minimally productive until marketing systems kick in.
- Speaking of marketing systems, the $1.4M benchmark is also an indication that you have built up a sufficiently broad-based referral network to begin supporting an associate. If the associate lets you expand the opening hours of the practice, that can stimulate additional case flow from existing referrers. Other marketing strategies are important too, including the associate participating to reach out to potential new referrers. As marketing continues and case flow rises, you’ll have enough incrementally new cases to support the associate so that your own case flow can continue at previous levels.
- Finally, associates require treatment room time. Depending on your facility, you may need to reduce your days by one per week to accommodate the associate as they get busy (or you have a goal to work one less day per week). At Endo Mastery, we know that if you are doing 6 cases per day now, we can get you up to 8 or 9 cases daily in fewer days. So, after the initial integration period with the associate, your personal productivity will be at 100% even if you are working less days. From that point on, everything the associate produces is gravy.
Once the associate is in place, a lot more options and advantages open up to you. You now have the clinical capacity between you and the associate to keep the practice open at least 50 weeks a year, regardless of how much vacation time you choose to take. Before, you worried about your referrers when you had to take a day off, and you never wanted to take a vacation that was “too long”. Now you have freedom in your life to take an extended vacation two, three or four times a year. It’s a whole new world!
Further possibilities open up in the future when you are financially set for life. That’s when you can “retire-in-practice”, just working six to eight days a month for fun in a semi-retired mode. And beyond that, when you’re ready to retire out of practice, bring in another associate. Let your associates keep the practice going and provide you a continuous passive business income while you remain the practice owner. Go in one day a month for meetings and review, and the rest of your time just live your best life.