The decision that gets made on a feeling
The schedule is full. New clients are waiting three weeks. The owner is working through lunch and catching up on records at night. So the practice hires an associate.
Sometimes that is exactly right. Often a full schedule is a statement about how the schedule is built rather than about how much demand the practice has. Either way, nobody has written down what has to be true for the hire to pay.
What a break-even model needs
Five inputs. Every one of them comes from your own practice.
1. The ramp
A new associate does not produce at a steady state in month one. They need a panel, they need to learn your protocols, and they need the schedule to route work to them. Decide now what you expect them to produce in month three, month six, and month twelve. Writing the ramp down is most of the discipline, because it is the number everyone is optimistic about and nobody records.
2. The full cost, not the salary
The offer is one line of it. The rest is employer payroll taxes, benefits, license and dues, continuing education, insurance, and whatever production or ProSal structure sits on top. If the compensation is production based, model it at your ramp, not at the number that made the offer attractive.
3. The support the associate consumes
An associate does not work alone. Every producing doctor needs some number of technicians and support staff to keep a schedule moving, and that number is specific to your practice. If hiring the doctor means hiring support, that belongs in this decision, not in a separate one three months later.
4. The capacity they need, and what it displaces
Exam rooms, surgery time, and equipment are finite. If the new associate works the hours the owner already works, in the rooms the owner already uses, some of their production is not new revenue. It is the same revenue, produced by someone who costs money. The model has to separate added capacity from reassigned capacity, or it will credit the hire with work the practice was already doing.
5. The month it crosses
Put the ramp against the full cost, month by month, and read where cumulative contribution covers cumulative cost. That month is the break-even date, and it is the number to hold the decision against.
If the break-even date is month nine, you need nine months of cash. That is the decision, and it is a cash decision before it is a staffing one.
What the model tends to show
Two patterns come up repeatedly.
The first is that the hire is sound but the cash gap was never funded. The practice can carry the associate, just not from month one, and nobody planned for the months in between.
The second is that the practice did not have a doctor problem. It had a schedule problem, a support ratio problem, or a pricing problem, and adding a producer at full cost was the most expensive available way to leave that unfixed.
Before the offer goes out
Three questions, answered in writing:
- What do we need this associate to produce by month six, and what in our own numbers makes that credible
- What is the fully loaded monthly cost, including the support we will have to add
- How many months of that cost can we fund before the role carries itself
If those three have answers, the hire is a decision. If they do not, it is a hope with a payroll obligation attached.
This is general analysis, not advice on your practice. The inputs are specific to how yours is staffed and scheduled.