Issues can arise in even the best-managed medical practice. When physicians in the same practice disagree about how to handle job responsibilities, administrative issues or other matters, they can sow discord that can make the problems even worse. It’s important to foresee this possibility and have strategies in place for resolving issues before things get out of hand.
Many partnerships consist of one partner who leads the practice. The other physicians may have appointed this leader because the articles of incorporation require them to pick someone. Or they did so because that physician seems like the best fit to run the business.
Subsequently, the leader becomes the administrator responsible for daily practice issues. The problem? He or she is left holding the bag while other partners focus on issues that affect only them — not the practice as a whole. Solution? Elect a strong leader and pay a monthly compensation for handling administrative matters.
Unfortunately, physicians often downplay the importance of leadership instead of emphasizing it. Define partners’ job responsibilities — then, ensure partners are compensated for their hard work, extra hours and positive contributions.
If a practice stagnates, it will suffer and ultimately not make it. One key to staying alive is renewing your practice vision — its purpose, expectations, concerns and goals. Whether starting a new venture, adding new partners or implementing strategic changes, your partners must mutually maintain this vision.
Of course, there will be challenges. The practice will likely encounter issues if it opens up a new office or hires additional physicians. Such operational changes can alter your practice’s vision and create significant problems.
Because weathering these changes isn’t easy, don’t expect partners to always agree. Instead, allow each the opportunity to express his or her viewpoint. After all, rational, professional debate is healthy as long as it doesn’t deteriorate into heated arguments.
Physician partners’ age differences can also cause problems. Doctors from different generations (and cultures) often disagree about how to practice, what constitutes work hours and whether senior physicians deserve preferential treatment.
For example, older partners may feel they have the right to make special requests of younger partners, such as to take on an older doctor’s night and emergency calls. Their reasoning is often because they themselves had to comply with such demands early in their careers.
But younger partners may disagree with these requests and feel they unjustly create more work for them. And they’re usually right. In a true partnership, partners’ accountability lies in direct proportion to their ownership percentage. Therefore, partnerships typically shouldn’t provide unequal perks based on seniority.
When reimbursements don’t keep pace with operating costs, partners’ stress levels may rise. A need to decrease partner bonuses can add even more fuel to the fire. And if you’re trying to unify your partners, or add new ones, the financial turmoil only intensifies.
For instance, ill will can occur when one partner isn’t as involved in financial decisions as the others. Similarly, many practices struggle with partners who fail to produce results commensurate with their salaries.
To mitigate these issues, implement a clear, amenable compensation model for physician partners. At minimum, each partner must generate enough revenue, less expenses, to cover his or her salary. Also, annually set partners’ goals and review their performances and compensation.
The best time to prevent conflicts is before they occur — and transparency is key. Consider forming a committee to negotiate any issues that come up between physicians within the practice. It can include both internal parties, such as the physicians themselves and perhaps the office manager, and outside advisors such as your CPA and attorney. That way, you’ll have somewhere to turn when disagreements arise.
Keeping a practice running smoothly is important to maintaining profitability and will increase everyone’s job satisfaction over the long-term.
Please contact a member of your service team, or contact Kathy Walsh at kwalsh@cohencpa.com for further discussion.
Cohen & Company is not rendering legal, accounting or other professional advice. Information contained in this post is considered accurate as of the date of publishing. Any action taken based on information in this blog should be taken only after a detailed review of the specific facts, circumstances and current law.