The dental industry is a highly entrepreneurial, if not the most entrepreneurial, sector of healthcare. According to recent ADA surveys, 76% of dentists are sole practitioners and another 15% are partners. For almost every dentist, ownership becomes a consideration at some point in his or her career.
However, nearly every dentist will be an associate and sign an employment contract with a local, regional, or corporate group at the beginning of his or her career. Most dentists graduate from school happy to have a job, start seeing patients, and begin paying down their student loans. But without close inspection, employment contracts, particularly the non-compete clause, could drastically inhibit their future ability to start their own practices in areas of their choosing.
Here are a five tips for non-compete agreements for dentists who want to open their practices in the future.
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Understand what you are signing. Employment contracts are drafted to protect the company more so than the employee. You want a contract with your employer to secure your wages and benefits. However, it’s important to thoroughly review that contract. If you don’t understand anything in the contract, either ask your employer for clarification or hire an attorney for review and explanation. At Xite Realty, we always recommend our clients hire attorneys to review legal documents before signing.
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Negotiate the smallest non-compete radius. A reasonable non-compete radius should be between three to five miles. We’ve seen radius as large as 20 miles! If you agree to a radius that is too large, you could easily be prevented from practicing in an entire city.
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Negotiate the shortest non-compete period. A typical non-compete clause should only be enforceable for one to two years. If you can agree to a shorter time period, that will work in your favor when you want to open your own office. Just like the radius language, make sure the period is well defined.
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Don’t agree to a non-compete that covers multiple locations. If you associate at a practice that has multiple locations, restrict your non-compete to only the location where you work, instead of all the company’s locations.
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Don’t take the non-compete clause lightly. If you are considering breaking your non-compete agreement, first consult with an attorney because these clauses are legally binding and very serious. You may have to move on to another job with a less aggressive non-compete, wait for your original non-compete to expire, and then start the process of opening your practice. However, because Xite Realty uses a data-driven approach to site selection, we can easily identify areas outside of your non-compete agreements that are under served and need a dentist with your skill set.
For more guidance with your employment contract or to begin searching for your dental office space, contact our dental real estate experts. Additionally, American Dental Association members can access this Dentist Employment Agreements: A Guide to Key Legal Provisions publication.