The Basic Types of Dental Compensation

How do dentists get paid?

Dental compensation depends on the office. Associates get paid differently depending on where they work. I’s important to check one’s contract to ensure that expected dental compensation matches what the hiring manager has promised.

One common dental compensation structure is salary. For example, the associate makes $120,000 a year by coming in Monday to Friday from 9am-5pm. This is also called fixed daily pay, or base. If the contract promises a fixed amount per day, there is no opportunity to make more (or less). The positive facet of this is security — if patients do not show up, the associate still takes money home. The industry standard for base pay has, for a while now, been $500 per day. The drawback to fixed compensation is that the office can overbook the associate and while overall production can exceed the $500, the associate only makes the $500.

Offices like to hedge against the associate taking home a minimum amount of money without motivation. They want to incentivize more production. As such, compensation will often include a base plus some sort of percentage. This is where it is important to distinguish between percent of production and percent of collection.

Production vs. Collection

Production is the exact dollar amount of the chairside care that has been provided to the patient (thus, percentage of production). Say the patient has agreed to have a crown done, for which their insurance will reimburse $800. That day the associate has “produced” $800 for the crown, and at most jobs the associate will get paid every two weeks.

However, it might be in a month or two months that the insurance actually sends the office payment for the crown. The office actually collects that money at a date way later than the bi-weekly pay cycle. So production for the crown might be $800 in that pay cycle but the office has actually collected zero. Some offices pay their associates a base plus a percentage of collection. Other offices give their associates a base plus a percentage of production.

Another different type of dental compensation structure is a fixed pay per procedure.

An associate, for instance, makes $400 for a crown, regardless of how much insurance will reimburse for a crown. This is usually calculated as 35% of the lowest paying insurance reimbursement. The associate leaves a lot of money on the table with a structure like this. Instead of paying the associate on percent of production or percent of collection, the office might pay the associate a fixed dollar amount. (Each procedure will have a different dollar amount associated with it).

Draw

The last concept that an associate may encounter is that of a ”draw”. In a draw, the practice pays the associate in anticipation of future earnings. The associate will still have an agreed upon base and percent of production or collection. However, say an associate receives a fixed daily minimum of $500. This may be the agreed upon daily draw amount. Assume the associate has only produced $400 that day. The practice would be paying the associate an extra $100. However, the next time the associate produces $600, the office will deduct $100. The draw works on a pay-period basis. The office deducts from the associate’s paycheck anytime earning is above the draw amount. 

Double checking one’s dental compensation structure prior to taking on a job will help minimize miscommunication down the line.

Paying special attention to percentage of production vs. collection will allow the associate to know where to negotiate. Asking for a day sheet and calculating one’s own daily earnings will allow an associate to stay organized and ensure that take home matches expectations.

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