How Are Dentists Compensated?

One of the biggest questions that most dentists have upon graduating with their D.M.D is whether to join a Dental Service Organization (DSO) or open their own practice. Related to this is the difference in compensation plans that are available with each option. How exactly are dentists compensated in a dental organization versus as a business owner? Which option makes the most sense for you? These are the questions we will answer today.

GENERAL COMPENSATION OUTLOOK

Many dentists need to start generating income quickly to start paying off student loans or other expenses. The good thing is that according to Payscale.com, the average base salary for a dentist ranges from $82k-$200k, not including bonuses and commissions. How your salary is determined differs based on your location and whether or not you are self-employed or an associate in an established dental service group.

DENTAL ORGANIZATIONS

As an associate at a DSO or other established practice, you are typically paid by the hour or are salaried. You can also be paid as an independent contractor, and you would be expected to track income and set aside funds for tax purposes. However, you can also get a percentage of commission based on either the ‘production’ that you work on or, most commonly, of the funds that are collected after employer discounts, costs for office overhead, etc.

For example, if you are an employee at a dental group and you have several patients that have a 20% discount through their employer, you might only be eligible to receive roughly 50% of the remaining funds after they are allocated towards administrative expenses.

SELF-EMPLOYMENT

If you plan on or already run your own dental practice, compensation will look different for you as the owner. First of all, there’s no one over you determining your hours or commission rates, so your income potential can be higher than an associate. You also have more flexibility in terms of how you prefer to be paid – ie per production or a portion of total monetary collections for rendered services – which can maximize your compensation as well. One key benefit you have as a practice owner is to carry over your business as an asset when or if you stop working with patients.

However, like any business owner, you will need to take the overall overhead of your practice into consideration before compensating yourself. In addition to setting aside the appropriate amount of your gross income for tax purposes, several factors affect how you can claim as take-home pay. These include:

• Employee wages and benefits, if applicable
• Business Insurance
• Office space rental or mortgage
• Administrative systems like payroll, accounting software, etc
• Equipment
• Marketing

Once these main considerations are taken care of, then you can think about how much it makes sense to allocate for personal compensation. This number is often based directly on your overall success as a practice.

NEED MORE INFO?

Understanding the ins and outs of how you get paid as a dentist can be a little confusing. You might also be wondering if one type of compensation plan works better for your needs than others. If you have further questions about compensation or anything else related to your dental career, give Dr. Coughlin a call at (413) 224-2659.