How to Structure a Small Group Dental Partnership Agreement Part 2: Succession Planning
August 30, 2024
Do I Have to Sign a Listing Agreement to Sell My Dental Practice?
December 4, 2024
By David Haynes, MBA
In any small group dental practice, the efficient division of responsibilities among partners is crucial for smooth operations and long-term success. When responsibilities are not clearly defined, the practice can suffer from inefficiencies, decision-making paralysis, and administrative burdens. Here are some ideas on how to structure a dental partnership agreement that can address the division of responsibilities effectively.
Importance of Dividing Responsibilities
In a practice with multiple partners, having too many invested decision-makers without clear responsibilities can lead to gridlock. Decision-making paralysis occurs when everyone feels equally responsible, but no one is willing or able to take decisive action. This can cause delays in critical decisions, stifling the growth and efficiency of the practice.
If there is an even number of partners, decision-making can reach a standstill in the event of a tie vote. To alleviate this, it’s important to establish a clear structure for decision-making and responsibilities.
Partners can be assigned specific business categories or areas of responsibility. These roles can rotate annually or biannually to ensure that no single partner is overwhelmed and that everyone has an opportunity to contribute to different aspects of the practice.
A sample division of responsibilities is as follows:
- Partner/Board Member 1: Marketing and Associate Recruitment
- Partner/Board Member 2: Marketing and Accounting/Reporting
- Partner/Board Member 3: Employee Training and Coaching
- Partner/Board Member 4: Employee Benefits and Payroll
By assigning clear roles, partners can focus on their specific areas, reducing the likelihood of gridlock and helping ensure that all aspects of the practice are managed effectively.
Benefits of Hiring a Non-Partner General Manager
Given the complexity and size of some dental practices, partners might consider hiring a competent General Manager (GM). The GM would be responsible for the daily administrative and operational tasks, allowing partners to focus more on clinical work and strategic decisions.
The responsibilities of a General Manager may include:
- Finding, interviewing, hiring, training and firing staff
- Scheduling doctors and managing payroll
- Recruiting associates
- Overseeing marketing efforts
- Administering employee benefits
To attract a quality candidate for this role, the practice should offer a competitive salary. If a partner assumes the role of General Manager, the partner should be compensated accordingly, as this role significantly impacts practice operations.
When hiring a manager, there is a natural tendency for practice owners to step back, which can unfortunately create opportunities for employee fraud. To mitigate this risk, at least two partners should be assigned to oversee the General Manager’s functions and to sign off on expenses. A competent accountant should also be brought in to provide specific recommendations for reducing the risk of fraud, such as implementing checks and balances in financial processes.
Regular Partner or Board Meetings
To maintain alignment among partners, regular board or partner meetings should be scheduled. These meetings are opportunities to discuss ongoing issues, vote on plans of action, and adjust the division of responsibilities as needed.
During these meetings, partners can review the General Manager’s performance, financial reports, marketing strategies, employee matters, and more. This structured approach can ensure that decisions are made in a timely and organized manner.
A well-structured dental partnership agreement that clearly defines the division of responsibilities is essential for the success of any dental practice. Whether through hiring a General Manager or rotating partner responsibilities, it’s crucial to have a clear plan in place that can enable the practice to thrive.
If your dental practice is looking to develop a comprehensive partnership agreement or needs assistance in streamlining operations, our team at Menlo Dental Transitions is here to help. Contact us today to ensure your practice’s long-term success and stability.
