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Hire Your Spouse? What to Consider Before You Say “I Do”

As featured in The Journal of the Michigan Dental Association.

While recently helping a mid-Michigan dentist value and sell the practice, I started thinking about its history. From day one, it’s always been a two-person operation: the dentist takes care of his patients, and his wife handles the business side.

This kind of spousal working arrangement is not uncommon to dentistry, although it may not occur as frequently as it did decades ago when there was a societal expectation that once married, women would concentrate on hearth and home. The landscape has obviously changed since then.

Yet if a spouse works in a dental practice nowadays, it’s still more likely to be the wife (which is why I’ll be using “her” in this article), and more common to find that working arrangement in a solo practitioner’s office rather than a multi-doctor practice.

Of the three most common positions in a dental practice—front desk employee, hygienist and dental assistant, a spouse is most often found working at the front desk.  She may have joined the practice from the day it opened, or was hired later because she had the necessary skills and could fill the spot of a long-time employee who retired or left for personal reasons.  

An employee/spouse can serve the practice in two ways: either on-site or mostly off-site in a supporting role with the responsibility of handling such tasks as payables, accounts receivable, billing and insurance—all possible to do from a home office computer.  When a spouse works on-site, she may be part of a two-person front desk team where one employee is the receptionist and the spouse takes on the role of office manager. In that capacity, she might handle both the financial aspects of the practice and its human resources tasks (performance reviews, hiring, etc.)

There are two major advantages for a dentist to hire — and work with — his spouse:

Trust. If you can’t trust your spouse, whom can you trust? In a practice where you’re seeing more than 20 patients a day, you need an employee to handle the desk duties of answering the phone, welcoming patients, making appointments and reminder calls, and collecting payments. You need another employee to handle the business/human resources aspects of the practice. Your spouse has a vested interest in helping the practice thrive and be successful. That means helping to ensure a steady cash flow, processing insurance, making deposits, preparing payroll, making payments, ordering supplies, dealing with staff issues, etc.

Salary & Benefits.  Your spouse can make less money in salary than what’s paid to other comparable staffers but enough so she qualifies for the maximum contribution into her IRA or 401k. This can also help to reduce the practice’s overhead. Or she can be paid a comparable—or higher—salary than other like staff members which would mean an increase in overhead but it’s also more money coming into your household.

Additionally, many practices have dropped health insurance coverage for their employees in recent years because of runaway costs. However, a spouse who works in the practice may either be added to her dentist husband’s policy or have a separate policy and charge its cost to the practice.

The Office Manager/Spouse

Hiring your spouse as an office manager can trigger alarm in your other staff members, especially if she’s going to have the sole responsibility for human resources duties, including holding regular staff meetings. It’s not difficult to imagine what they might be thinking—“Great. Now I’ve got two bosses.  How am I going to protect myself?”

From what I’ve seen as a consultant visiting dental practices, staffers may have good cause for that alarm. That’s especially true when the personalities of the dentist and his wife are 180 degrees apart. When the dentist is the extrovert, then the staff knows he is clearly the one in charge and making decisions. Tension comes into play when the spouse is the extrovert and the dentist is content to let her handle everything. That makes it difficult for other staff members to express any concerns they may have about the management of the practice to the dentist.

It’s possible, too, that in some practices where this is the case, the dentist and his spouse employee have decided in advance what roles to assume. He may prefer just doing what he was trained to do and she’s okay with dealing with any staff issues and being the ultimate decision-maker. That’s fine if those roles are clearly defined and the staff understands up front that final decisions rest with the spouse.

When a dentist hires his wife as his office manager, he should establish clear guidelines for her and she must be supportive of them. It should be clear that he’s the final arbiter. It’s critical that he sees exactly what’s going on in his practice, runs the staff meetings and makes the final decisions on employee issues.

Clearly Defined Roles for Everyone

If you’re planning to bring your wife on board as office manager, it’s important that she—like everyone else on your staff—is a team player who treats others as equals.  Although it’s hard to be truly objective where your spouse is concerned, you should be as clear-eyed as possible about whether she has both the necessary skills and personality to fit the position.

Like everyone else in the practice, she needs to have defined job responsibilities. It’s critical, too, that all of your employees be cross-trained and are able to step in to assume front desk duties when someone gets sick or is otherwise away. If the office manager is suddenly unavailable--especially in a smaller practice—then the dental assistant should be able to step in and do the ordering while the receptionist or dentist can handle the banking and the like. In a smaller practice, all staff members should know at least the bare bones of front desk duties such as rescheduling patients, making appointments and taking payments.

Specific duties for each employee should be spelled out in an employee manual, including who’s cross-trained to do what. That means everyone knows that dental assistant Donna can fill in at the front desk taking payments from patients, or that receptionist Shirley can take deposits to the bank.

When it Comes to Selling Your Practice

What happens when your spouse has served as a long-time employee and you’re ready to sell that practice and retire? Now you’ve got to consider her salary and benefits as part of the valuation of the practice.

You bring a consultant in to do just that. He or she has to look at what you’re paying your spouse and what her duties have been, and then make the proper adjustments. The consultant might tell you that for these responsibilities, your spouse should have been paid the $30,000 that the market supports instead of the $60,000 you’ve been paying her. The consultant will make that adjustment accordingly in the practice valuation. If the spouse’s salary has been excessive, it may devalue the practice for a potential buyer (even though the difference can be added back into the practice net income).

More commonly, spouses who work in dental practices are paid a baseline salary in order to be able to contribute to a retirement account. In a valuation of the practice, the consultant would have to increase that salary (and thus overhead) because the buyer will have to hire someone new at a higher salary level. Perhaps the wife was also provided with health benefits, and other practice employees had their coverage dropped. That could be considered an excessive compensation package that the purchaser of your practice would not have to extend to her replacement.

If your spouse works in your practice and you’re nearing retirement age, you may want to devise an “exit strategy” to consider her replacement before your practice is valued. That strategy could be that she retires before you do and someone new transitions into her place. Or she agrees to stay on for a period of time with the practice after it’s sold in order to train her replacement.

The value of goodwill. You also need to factor in the goodwill aspect of your practice. In the case where your spouse has been an integral part of your practice for many years, then she’s part of that goodwill value of your practice. Considered an intangible asset, goodwill is the value of the practice over and above its tangible asset value. It’s based on the reputation of the dentist and the practice, location, track record, and overall ability to continue attracting patients and generating income. 

If your patients see your spouse at the front desk each time they enter your practice and she’s the one who’s in contact with them, it’s even more important to bring in a replacement to train in her duties over time and before you have your practice valued. As the replacement is being trained, your spouse can begin to cut back her hours, and patients can get to know—and develop a relationship with—the new front desk person.

Putting your practice on the market, without taking this step, makes it less attractive to a potential buyer. He or she is either going to think twice about buying or insist on a contract for your spouse to stay on with the practice for six months to a year. Training someone to take her place well in advance of your retirement will make your practice look better and you’ll likely get a better value for it, too.

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