Thinking about Hiring an Associate?
When you bring an associate doctor into your practice, it is important to establish expectations and execute a written agreement to prevent misunderstandings.
The Hiring Doctor’s Perspective
There are many reasons why you, as an established chiropractor, might bring on an associate doctor. These include:
- Expanding the chiropractic services offered.
- Maximizing use of the facility, equipment and any staff.
- Increasing income.
- Extending office hours to attract prospective patients.
- Relieving a heavy patient load.
- Enabling your patients to receive treatment in the event of your illness or disability.
- Establishing a trial period before an eventual buy-out.
Bringing another doctor into the practice will have ramifications for you and your office staff. It is essential to recognize that having another doctor in the practice will require compromise and additional flexibility on your part.
Asking yourself the following questions can help you assess if you’re ready to take this step:
- Does your patient base justify hiring another doctor?
- Are you ready to support the associate doctor who will be treating some of your established patients?
- Are you willing to share your office and staff?
- Will you eventually be willing to share management responsibilities and decisions?
- Are you able to accept suggestions or comments concerning patient treatment?
- Are there adequate treatment areas, equipment, staff and other resources available to support both doctors?
If you’re like many doctors, you may wish to include a noncompete clause in the employment contract for when the associate doctor decides to leave your employment. After all, you trained the person, and you shouldn’t have to compete for patients if the doctor starts up his or her own practice in your geographic area.
However, be aware that the enforceability of noncompete clauses varies, and you should discuss this matter with an attorney who has experience in this area of contract law. For instance, the mile radius used will vary. In smaller communities, it is not unusual to see radius distances discussed in the 20-, 30- and even 50-mile range. In larger urban areas, the distance discussed might be in the one-to-five mile range. And, some jurisdictions won’t recognize any distance range whatsoever.
Often, a contract is more enforceable with a specific monetary amount to be paid if the associate doctor opens a practice within a certain radius.
Considering the Associate Doctor’s Perspective
The saying “walk a mile in my shoes” is one that certainly applies to practice owners who are looking to hire associate doctors. A good fit is more apt to take place if you understand why the doctor is looking to become an associate rather than a practice owner. For example, a doctor may wish to work as an associate to:
- Gain technical and practice management experience.
- Earn money while determining the needs and compatibility of the location for a potential future practice.
- Assist with the transition from the school environment to private practice.
- Earn money without the financial risk of owning a practice.
- Learn from the senior doctor as a mentor before the associate doctor transitions to private practice.
- Take the first step toward the buy-in of a practice.
- Move toward a less comprehensive and time-consuming role, e.g., to spend more time with a growing family.
Compensation Is a Tricky Issue
As often is the case, compensation tends to be a sticking point in the associate/owner relationship, and misunderstandings can occur when the topic is not dealt with initially in a forthright manner.
The associate chiropractor needs to keep in mind that normally he or she will not be required to make any financial investment and will not assume the business risk of the practice.
What’s more, the owner typically will be paying for advertising, additional staff and other expenses. Consequently, the associate chiropractor should not expect to be compensated at the same level as the owner or to enjoy the benefits that normally accompany ownership. But, the owner needs to understand that the associate has the right to a fair compensation arrangement that adequately rewards the associate’s efforts.
There are a variety of ways to compensate an associate doctor. For example, owners may consider offering a flat salary; a base level salary plus a negotiated percentage of the collected income on new patients generated for the office; or a combination of the above.
Some practice owners prefer to bring on doctors as independent contractors, rather than hire them as associates to avoid paying the employer’s portion of the Social Security taxes, unemployment taxes, workers’ compensation insurance premiums and employee benefits.
However, if the IRS determines your “independent contractor” is really an employee, the practice could be held liable for uncollected employment taxes—and benefits—for that worker, plus a penalty for not having adequate workers’ compensation coverage.
Reasons Arrangements Go Awry
While compensation is one reason why the owner/associate arrangement may fail, other factors include:
- There is no written agreement between the doctors, such as an employment contract.
- The practice is not capable of supporting an additional doctor, or the owner isn’t willing to market the practice sufficiently to bring in more patients.
- The associate is not able or not willing to spend time growing the practice.
- The owner isn’t willing to provide the associate doctor with the opportunity to generate a fair rate of referrals.
- There is a lack of communication between the owner and the associate doctor, a culture clash.
The Employment Contract
From duties to benefits, both parties need to understand their roles and responsibilities for the relationship to be successful. To this end, a formal employment contract should be designed, fully understood, agreed upon and signed by both parties. This agreement needs to be a fair and equitable arrangement for each party if the arrangement is to succeed.