Dental and Medical Counsel Blog

Understanding Shared Dental Space Agreements

October 24, 2018
Understanding Shared Dental Space Agreements

Dentists across many ages and different types of practices are looking for ways to cut back on costs--and sharing dental space is an excellent way to accomplish those goals. There are several key reasons why dentists choose to enter shared space agreements, including reducing overhead, trying to maximize the use of their facility, or minimizing risks as they open their first practice. If you're considering a shared dental space arrangement, it's important to be sure that you understand the details of shared dental space agreements, and how they differ from subletting space.

What Does a Shared Dental Space Agreement Cover?

Your dental space agreement is designed to cover the key details of sharing your office space. It's also meant to help prevent future problems and ensure that both you and the other dentist are able to navigate the arrangement smoothly. Below, you will find several key aspects that should be included in the agreement.

What days will the two dentists work?

Is the practice big enough to support both of you practicing at the same time, or do you need to limit the amount of days the office is typically closed so that you aren't in each other's way? One dentist, for example, might want to come in just a couple of days a week, while the other may prefer to work the other five days of the week. You might also choose to split hours in the space: one dentist might work during the early hours of the day, while the other dentist has the use of the practice space during later hours.

How much should I charge for renting my dental space?

Will this be a "pay per day" arrangement based on the amount of time the individual works, or will it be a fixed monthly fee that is paid regardless of how many days are actually used? In fact, many dentists divide their total rental expense including CAN/NNN and divide it by 21 days when determining the fee.

What equipment/supplies should be shared?

If you're entering into a dental space sharing agreement, you'll likely want to have the doctor use some of your equipment. If you're simply sharing dental space, on the other hand, you might necessarily want to share everything, like bleaching kits, gloves, and other commonly-used materials. If you do want to share these materials, how are they paid for? Are those material costs built into the terms of the agreement, or do they need to be paid for separately? You should also consider how you will handle the cost of maintenance on shared equipment. Decide, too, whether or not you want to share the same telephone and software. Usually, these are two things are among the items that aren't shared by dentists practicing in the same office space. You want your own unique numbers and software for each individual practice.

Are you sharing office staff?

Maybe, but not completely. If you're operating out of the same space at the same times, you might decide to share office staff. On the other hand, in some cases, you might prefer to keep your office staff separate. Make sure your agreement includes whether you want to share office staff, including who is responsible for paying them. If you do share staff, is one individual primarily responsible for hiring and firing duties?

Are you sharing any insurance?

If there's insurance associated with the care your provide for your patients, property or equipment--which there should be--both of you need to have a share in paying for it. Make sure that your agreement includes what percentage of the insurance each of you is responsible for covering.

How will you handle conflict resolution?

It's inevitable that eventually, you're going to disagree on something. Even the best of friends will eventually disagree on some key point. When you do disagree, how are you going to handle it? Does one party have primary veto power over the other? Do you have a third party who will help negotiate? Make sure that there's a conflict resolution clause in the contract to help make it easier to sort out disagreements when they occur. 

How will you handle terminating the agreement?

One of the primary benefits of a shared dental space agreement is the ability to protect yourself. What will you do if one partner decides to terminate the agreement? You need a clause that will prevent competition--for example, denying the individual who is sharing your space the ability to simply move out of the space into another one nearby, taking many of your patients with them. The agreement should also include how you will handle terminating the agreement if the primary owner or leaser of the space decides that it is no longer working out. You might consider putting an end date on your contract: the point at which you will no longer be bound by your agreements. Your contract may also include terms for renegotiating the agreement to continue the arrangement. Alternatively, there’s usually a 30-90 day notice before the change is expected to occur.

The Hazards of Not Having a Shared Dental Space Agreement

You'd like to imagine that a handshake agreement is all you need in order to start sharing space with another dentist. After all, you're practicing together; and if things don't work out, you can always go your own separate ways. Unfortunately, it's not always as easy as you might have hoped. A lack of a contract can lead to one party deciding to part ways while taking the majority of the clients with them--and that can lead to some serious concerns for the dentist who is left without patients to fall back on. If you don't have a shared space agreement:

  • One dentist can leave at any time and open a competing practice in any area
  • One dentist may end up with all of the patients, while the other ends up with none of them
  • Neither dentist will have legal recourse if the other party decides to move, including leaving them holding an expensive dental practice that no one else wants to buy into

A shared dental space agreement can help alleviate many of those concerns and provide you with a higher level of protection. If you need more help developing your agreement, contact us below to learn how we can help guide you through the process and ensure that you end up with an agreement that is beneficial to both you and your new partner. Consulting with a dental attorney who has experience with dental space agreements is one way to be sure you have covered all the bases for your dental practice.

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