Ask the Expert: What should I consider before making the leap to practice partner?

Dear Dr. Jerkins: I have been an associate in a practice for a few years. Practice ownership has been my goal since becoming a dentist, and I feel I am ready to take the next step in my career by becoming a partner. How do partnership agreements typically work? What should I know before making the leap?
— On the Partner Track

Dear Partner Track: Understanding the ins and outs of buying into a dental practice, including a group practice, can be overwhelming. But taking this step could lead you to reap financial benefits through the practice’s income and allow you to have a say in how the practice is run without the stress of running a practice solo.

Here are some questions about the nuts and bolts of the partnership you should investigate before putting your money on the table.

How is the offer structured?

Buy-in offers are typically structured in one of two ways:

• Percentage of the practice: You will know exactly how much ownership you will receive.
• Stock: Inquire about how much stock makes up 100% of the practice to understand how much of the practice you are receiving.

How is income distributed?

Three common models exist, each with their pros and cons:

• The equal allocation model gives each partner equal ownership and income.
• The productivity model distributes income based on individual productivity.
• The hybrid model combines elements of both, providing a mix of equal income and productivity-based compensation.

Choosing the best model depends on individual circumstances, but having a clearly defined and written structure is essential to avoiding conflicts later on.

What if I decide to leave the partnership?

Before buying into a practice, understand if your interest will be repurchased if you were to leave and when you are required to participate in future purchases.

How will I pay for it?

Some partners pay for the buy-in by contributing a portion of their paycheck for a certain amount of time. Others use a lump sum to kick-start their purchase. Work with a financial adviser to determine which is best for you.

If you are ready to buy into a practice, Panacea Financial is ready to help. Panacea’s partner buy-in loan can help you take the next step in your career. Learn more at panaceafinancial.com/ada.

Dr. Jerkins is the president and co-founder of Panacea Financial and a practicing physician in Little Rock, Arkansas. Panacea focuses on providing world-class financial services for dentists, physicians and veterinarians through all stages of their training and practice. It offers a full suite of banking and technology solutions specifically built for doctors, by doctors. Panacea is endorsed by ADA Member Advantage as the exclusive provider of practice financing, which includes partnership buy-ins.