Retention is a standard feature of most associate contracts, designed to ensure continuity of patient care after an associate’s departure. Yet despite its routine inclusion, there is often uncertainty around what it is actually for, how it should be used, and what happens if the costs go beyond the amount retained.
What retention is and why it matters
Retention is either a proportion of an associate’s earnings, or sometimes a fixed amount, that is withheld for a defined period after they leave the practice. It is not intended to be a permanent deduction, it is temporary. The expectation is that, at the end of the retention period, any remaining balance is reimbursed to the associate. It is a little like a rental deposit, money held in case something needs to be put right, but not for anything else. In the same way, retention should only be used where there is a clear link to putting treatment right, ensuring that patients are not disadvantaged by changes in dentists.
Retention should only be used where there is a clear link to putting treatment right.
Its primary purpose is to protect the practice against financial risk linked to remedial or replacement treatment. As self-employed dentists, associates remain responsible for the care they have provided, even after they have left a practice. At the same time, responsibility for ongoing patient care usually sits with the practice, with treatment continuing either with the practice owner or, more commonly, another associate.
In those circumstances, it is reasonable that the dentist taking over care is remunerated for the work they carry out. Where it is not appropriate for the patient to bear that cost, such as where treatment is within a guarantee period, it is the original associate who should meet it, particularly as they are no longer there to provide that treatment free of charge themselves. Retention provides a practical, local way of managing this, allowing issues to be dealt with as they arise and within a reasonable timeframe, rather than escalating into more formal routes for patients to seek reimbursement.
Limits on how retention can be used
We commonly see situations where retention is suggested to be used in a way that is not consistent with the contractual arrangement.
As a rule, retention should not be used for other deductions that may, on the surface, appear reasonable, like lab bills received after termination, or other costs the practice finds itself facing that were not anticipated at the time, such as clawback.
While these may feel like legitimate expenses to recover, they do not fall within the scope of retention. These situations need to be considered separately and, where appropriate, discussed and agreed, or pursued via more appropriate channels.
Keeping retention clearly aligned with its original purpose will go a long way in reducing misunderstandings and avoiding unnecessary disputes.
Determining the retention amount
Our model BDA Contracts generally suggest up to 5% of the associate’s gross income in the six months immediately before notice to terminate was given as the retention amount. In our experience, this is a reasonable amount and usually sufficient to cover the likely need for replacement or remedial work. Different working arrangements may justify different percentages, but this should be agreed in the contract. Retention is based on gross income, as it is intended to cover both the incoming associate’s fees and the practice’s associated costs.
Different working arrangements may justify different percentages, but this should be agreed in the contract.
We are often asked whether this effectively becomes a blank cheque for the practice - it should not. Most agreements include a maximum permitted spend, setting a threshold below which the practice can act without referring back to you, and above which costs should be discussed and agreed.
While this arrangement can feel uncomfortable at first, it is worth considering the patient’s perspective. If someone presents with a filling that has come out after five months, they will reasonably expect it to be resolved promptly. Allowing the practice some flexibility to address lower-value issues without delay can help avoid unnecessary friction and potential complaints.
That said, there should always be a clear financial limit. Higher-value treatment is more likely to involve a complaint or a more complex discussion, and it is entirely appropriate for you, as the original dentist, to be involved. In these cases, you may prefer to manage the issue through other means.
The appropriate maximum spend will vary and should be agreed between you and the practice, reflecting the type and value of treatment you provide.
Practices should note that associates are entitled to justification for any deductions from their retention, even lower-value deductions. They should be able to see patient notes if they wish.
When costs exceed the retention
There may be times where the full retention amount is used, and you are asked to repay additional sums to the practice. This could arise from a number of smaller items, or from a single higher-value course of treatment, although the latter should not come as a surprise if the maximum permitted spend provision is being followed.
In these situations, it is usually best to work with the practice to reach an amicable resolution, rather than allowing matters to escalate into a financial dispute and incur unnecessary costs on either side.
Clear and open communication is key.
Clear and open communication is key. Both parties should engage reasonably throughout, so that by the end of the retention period there are no unexpected or unresolved issues.
Key takeaways on retention
Retention is ultimately a practical mechanism to support ongoing patient care. Where expectations are clear from the outset in the contract, and both parties approach it reasonably, it can do exactly what it is intended to do.
Most issues arise not from the principle itself, but from how it is applied. Getting that right makes all the difference