Dental Compensation

What is the difference between percentage of production and percent of collection?

Dental compensation varies by office.Some offices pay their associates a base plus a percentage of collection; other offices give their associates a base plus a percentage of production.

When negotiating dental compensation, understand that it is preferable to partake in a contract that includes a daily base plus percentage of production. This is because the percentage of production is always going to be the higher number. Production based compensation structures are also easier for associates to keep track of.  If the associate is able to calculate daily, he or she can more effectively resolve errors when incorrectly paid.

The difference between percentage of production and percent of collection is usually smaller in a fee-for-service, or cash, office, where offices don’t have to wait for insurance to reimburse for procedures.

The percentage that an office is going to offer varies by office and location. The industry standard has been 35% of collections. This means that if 35% of the associate’s total collected value is higher than the base pay, they will be paid that higher number. It’s fruitful to try to negotiate the contract to say percent of production, or to 40% if staying with collections.

Another dental compensation consideration is that most offices will take away the base after the first year. This leaves leaves an associate without a safety net if choosing to stay at the practice for another year. If an associate is not consistently making above base, it’s important to understand why. Is the office not booking enough patients? Is the office not booking high-production procedures? Or is the associate missing the opportunity to treatment plan certain procedures? Is he or she referring too many things out?

If an associate is not consistently making above base, their dental compensation will be much below base in year two. This means they will have no choice but to look for a new opportunity.