Dentaltown July 2021 - 32

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Partnership
Townies share the pros and cons of entering into a 50/50 partnership with another dentist
dt92
Member Since: 10/12/17
Post: 1 of 28
In the works of buying into the practice I'm currently an associate with. Looking at a 50/50
partnership. I'm curious as to what different options are for buying in (taking out a loan, taking a
set salary and paying off the buyin with the rest of my collections, etc.). Also curious what different
compensation models are most popular. Would love for any advice or tips on a partnership. I've got
practice numbers and would be happy to post and get more feedback on the situation. ■
5/30/2021
niles19
Member Since: 09/22/06
Post: 2 of 28
We have a 50/50. Everything is split down the middle as we try to minimize any unfair
advantages. Does it happen? Yes, so have your CPA ask lots of questions and look closely at all
outgoing bills. Also trade off who has fi nal say on major decisions or the direction of the business
every year. I say this only because I did not, and it made growth and implementation of new
ideas very diffi cult.
What is the age difference of your potential partnership docs? ■
5/30/2021
jasonpatrickwood
Member Since: 01/24/08
Post: 3 of 28
Forgive me, but splitting everything 50/50 is the worst compensation model out there and
defi es economic theories galore. There is a built-in disincentive to work, rather than a built-in
incentive to work. Can it work? Yes, but the risk is very high and there is no benefi t to doing this
type of model. It assumes everyone is always altruistic. ■
5/30/2021
davidpalmer
Member Since: 04/14/00
Post: 6 of 28
The best partner compensation I know of is to pay all bills at the end of the month, then split
the remaining " doctors' profi t pool " by the percentage of collections each doctor was responsible
for in the previous month.
If you collect (not just produce) 75% of the collections for the month and the profi t pool
is $100K after all bills are paid, your check would be $75K and your partner's check would be
$25K. It's fair. If you spend two weeks on vacation in a month while your partner worked hard,
your check will be considerably less than your partner's. It must be set up on collections-that's
the only thing that pays the bills. ■
5/30/2021
jasonpatrickwood
Member Since: 01/24/08
Post: 7 of 28
Disadvantages of a 50/50 split:
1. Human nature. In simplest terms, it is similar to socialism as no matter how much you
produce, you receive 50%. Not to get too philosophical, but the main question is: Do you
believe man is inherently good or inherently evil? Do you believe man will work harder
with no constraints applied or work less given the choice? That is the main issue behind
this model. Can it work? Sure, but you are up against thousands of years of real-world data
that says otherwise. I have a few clients who have done this against our advice to varying
degrees of success, but this is few and far between. I have many, many more who come to
us saying they have this model and they want out.
32 JULY 2021 // dentaltown.com

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Dentaltown July 2021

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