Read the Fine Print
Although dentists possess extensive knowledge regarding the techniques required to restore and maintain oral health, many are lacking when it comes to the business aspects of the profession, and one component of that is contracts. Whether you are buying or selling a practice or adding or becoming an associate, having an understanding of contract law is essential to protecting your efforts in our increasingly litigious society. This month's cover story, which explores the nuances of contracts in dentistry, also serves as a cautionary tale to dentists, myself included.
When I drafted the contract for my current associate, I included all of the necessary provisions regarding pay, hours worked, benefits, etc, but neglected to include a non-compete agreement. A lot of dentists may find themselves in this position. Perhaps you weren't overly worried about the competition, or maybe you wanted to be nice and not limit your associate if the arrangement didn't work out. Personally, I've known my associate since he was a pediatric patient and intend to one day sell him my practice. But when the time comes, what if he can't afford it? As you'll learn, having a non-compete agreement for each associate that includes an assignability clause to any new owner has become an essential element of taking a practice to market.
Proper negotiation is key in drafting any contract, and the result should be a win-win situation for both parties. However, despite being legally binding, a contract is really only as good as the relationship it represents. Handshake deals may be a thing of the past, but the trust that they exemplified is still essential to the success of a contracted agreement. When I bought the practice of my former partner, he was less concerned about realizing what he felt was its full value and more concerned about selling to a dentist who would uphold his reputation in the community and allow him to continue to work. Mutual respect and understanding are what got us through any disagreements. Regardless of the type of contract, for an arrangement to be successful, knowing the other party well and establishing the relationship still comes first-then get it in writing!
Robert C. Margeas, DDS
Editor-in-Chief, Inside Dentistry
Private Practice, Des Moines, Iowa
Department of Operative Dentistry
University of Iowa, Iowa City, Iowa