Examine the Bottom Line When Considering a Hygienist and/or Associate
Editorial by Jim Du Molin
Have you ever wondered what your real profit is on your hygienists or dental associates? Have you ever wondered whether a hygienist can be more profitable to you than an associate? If you have an extra operatory available, would it be more profitable to hire a dental associate or another hygienist?
In last week’s column, I explained how you can earn a profit of $493 per day from a hygienist who produces $962. How much would an associate have to produce to yield the same profit? Here again, the Comparative Value Analysis is helpful.
Comparative Value of One Day’s Production
|Provider:||— Hygienists —||Associate|
|Less…variable costs (9%)||– 63||– 63||– 87||– 106|
|…commission (41%)||– 288||n/a||– 482|
|…salary||n/a||– 288||– 313||n/a|
|…employer taxes (10%)||– 29||– 29||– 31||– 48|
Let’s assume that you would pay the dental associate 41% of his or her production. (In reality, we normally recommend that the associate be paid a percentage of his collections. However, we will keep things simple here.)
Further assume that the associate would pay his or her own lab fees and assistant, and that you would not have to add any front desk staff to handle the associate’s patients and scheduling.
Your net profit rate on the associate would be as follows:
Net Profit Rate on Associate
|Less: variable costs||– 9%|
|Less: commission||– 41%|
|Less: payroll taxes||– 10%|
The associate would have to produce $1,176 per operatory used to give you the same profit as a hygienist. If the dental associate used two operatories, he or she would have to produce $2,352 per day to be as profitable as hygiene would be in those same operatories.
In our experience, it is easier to bring hygiene production up to $960 per day than it is to find a dental associate capable of consistently producing $1,176 in each operatory, or $2,352 in two operatories. Also, the associate must have a sufficient flow of patients to make this production level possible.
When structuring both hygiene and associate compensation, we advise that you compare what the hygienist or associate is earning on the relationship, compared to what the senior dentist is earning. The relative compensation levels should reflect a fair distribution based on the parties’ investments of time, energy, and financial risk.