by Bruce Bryen, CPA, CVA
This topic is a matter of grave concern for the dentists, the dental practice and families of those dentists who fit in with the above title. For the dentists who have been involved with a start up or an acquisition, working together provides considerable positives and negatives for all of those involved with this possibility. One of the most difficult personnel choices for the dental practice is the hiring of licensed dentists who are reliable in their work habits, hard working, competent and also trustworthy. Having married or partnered dentists practicing together in an office will give each a sense of relief in that they both feel that they are attempting to achieve the same goals. This is typical and understandable at the beginning of this experience. Not worrying about the professional showing up for work on time, working hard and contributing to the income and growth of the practice is a given since these two people share so many things. The management of the practice, hiring and firing of personnel and training employees normally just flows through one of the dentist’s verbal job descriptions without any discussion, argument or advice from advisors. Once the organization chart is imaginatively formed by doing those things necessary for the operation of the practice, there is usually no thought of memorializing those items as they just occur. They just happen naturally and both parties are typically so busy that they just continue doing what it takes to continue the practice.
The independence of two unrelated dentists working together as partners compared to the married or partnered dentists:
Some comparisons are as follows:
The married or partnered dentists have a relationship where events unfold. Job classifications and responsibilities are assumed by merely occurring on the go with little or no points memorialized in writing as neither party feels the need to do so. The independence of other dentists who create a partnership almost always make sure that operating agreements are prepared that are fully executed, or should be. These written agreements take time to prepare and are usually completed with the input of advisors and attorneys as well as the professional dentists themselves. When changes occur, the married or partnered dentists typically accept the result and continue moving forward without the thought of retaining an advisor such as a dental CPA to assist them in doing so. After all, they are together emotionally and physically almost twenty four hours a day and seven days a week while these events are taking place. The independent dentists would normally meet, review the situation and amend their written agreements to comply with what is occurring or with what they desire to be taking place. Some dentists have no written agreements whether in a personal relationship or not. This concept is definitely not a good idea. It causes many dental partnerships to incur unnecessary legal and expert fees, lost time and revenue and many bad feelings. What may happen eventually in either case where there is a verbal understanding without a written agreement most often becomes an attorney’s dream and the dentist’s nightmare. If litigation occurs without good documentation, the dentists should be aware of the amount of time and money they will each need to resolve the issues that were not in writing. It is certainly much cheaper to have the agreement that is executed in advance of the partnership becoming an operating one. The married or partnered dentists normally do not think along these lines unless they also have a prenuptial agreement. That contract typically changes the thought process for the dental partnership. The dental practice agreement then usually is in writing.
What type of approach can be used for the married or partnered dentists who decide to work together?
For the younger professionals, some may request a prenuptial agreement for their marriage or relationship partnership. For most of the young dentists, it is not a common thing to ask for such a thing. The more mature dentists or those who may have been divorced are more likely to want an agreement prior to when their personal contract is in place. It is much easier to have a formal agreement for the dental partnership arrangement when the prenuptial agreement is already one of the points agreed upon before the living arrangement. For those with no premarital agreement, just the idea of a written dental contractual basis does or should provide for the inclusion of others in the practice. This is an important point for the relationship of those married or partnered for the future growth of the practice. It is not that difficult to have an agreement in place specifying a formula for valuation of the practice. In the event that a third party wishes to join the practice, rather than waiting weeks for the preparation of the agreement, the value is stated. The methodology for the acquisition is in place. The responsibilities are listed in the agreement. A dentist who wants to become a partner will be ready to read the contract, ask questions and be ready for a decision quickly. If a contract has to be prepared at that point in time, the potential partner may go elsewhere because of the wait involved. He or she may think that the practice is so unorganized without a contract in place that the thought of joining it becomes less appealing to him or her.
What about the negatives in working together as married or partnered in a relationship dentists?
The most important reason for not working together in one of the titled positions is the event of a separation or a divorce. If that occurs, it’s not just the personal relationship, but also the dental practice that may likely dissolve or at least face a multitude of issues. This dual calamity is not common to the independent dentists in a partnership with an operating agreement. The thread here is that the living arrangement will end with a written agreement notably the divorce papers, that will probably be expensive to each party and also very time consuming. Financially, the dental practice revenue will most likely suffer as the patients and staff understand what is occurring, and feel the tension in the office very quickly.