Article Date: 4/1/2001

Business Advisor
Hiring an Associate
The idea of bringing in an associate might seem exciting, but it's a bigger step than you may realize. Consider this advice.
By Jerry Hayes, O.D.

The day you bring in another doctor, your mode of practice is going to fundamentally change. Hopefully it'll be for the best and work out beautifully. But a lot of associate relationships fail either because the personal chemistry isn't there or because there are too many unmet expectations. No matter how enamored you are with the new person, keep in mind that even 50% of all marriages go bad.

Potential pitfalls

Here are some potential pitfalls that await you when you bring in a new associate and how I suggest you can overcome them:

Do it for the right reason. Merely being busy isn't a good reason to bring in an associate. I've spoken to a number of O.D.s grossing in the $300,000 to $400,000 range who claim to be booked weeks in advance and feel they need someone to help carry the load. A practice that small probably needs more staff, not another O.D.

Don't expect too much at the beginning. One of the frustrations a veteran practice owner may experience is the realization that his new young associate doesn't have an "owner" mentality. Optometrists fresh out of school are generally eager to do what they've been trained to do -- see patients.

However, the mundane stuff, such as becoming known in the community, in-house marketing and managing the staff, is what sets your practice apart from the competition.


Ensuring success

Here are two things you can do to set the stage for a successful associateship:

First, make sure your young associate knows that his job will include a list of nonclinical responsibilities such as attending staff meetings, joining local service clubs and perhaps sharing in the management of a specific area such as your in-house lab.

Second, paying your new O.D. a set salary regardless of what he does reinforces something you don't want in a long-term associate -- an employee mentality. I suggest that you start a new doctor out with a set salary for no more than 6 months. Thereafter, base his compensation on his production.

An incentive for hard work

To keep the math easy, let's say you agree to pay your new associate $1,000 per week for the first 6 months. After 6 months, his pay should be based on his production minus his lab fees.

For example, let's say that your associate produced $150,000 in collected fees for professional services and optical products for July through December.

$150,000 gross minus 33% cost of goods sold = $100,000 gross profit produced by the associate.

Now multiply that times an agreed-upon figure, such as 30%, to allow the practice owner to retain some margin for practice overhead and personal profit.

$100,000 x 30% = $30,000 for the associate's compensation for months 7 to 12 versus the $25,000 he would have made on his set salary. This rewards the associate for being productive and gives him a clear incentive to think like an owner and work hard to grow the practice.

Taking the plunge

Just remember that the successful integration of an associate into your practice requires a lot of planning on your part. Most importantly, set clear expectations for both parties and develop a fair compensation package.

This two-step approach should increase your chances of having a successful relationship. Just make sure you're doing it for the right reason , and that you set realistic goals. 

A frequent writer and speaker on practice management issues, Dr. Hayes is the founder and director of Hayes Consulting. You may call (800) 588-9636 if you need help with your practice.

Optometric Management, Issue: April 2001