Working Through Physician Partnership Issues

When deciding to enter into a physician partnership, it is beneficial to take actions to ensure you are going into business with a reputable and reliable individual.  Starting a physician partnership is an exciting time, full of new challenges, shared vision and celebrations of small successes. During the good times, keeping a relationship on solid ground while running a practice is easy. But what do you do when you do not agree, and the honeymoon period is over? Whether you are discontent with the level of effort of one partner over another or you suspect your physician partner of outright dishonesty, disputes are going to arise.

Unfortunately, there are physicians in a long standing medical practice partnership who are not satisfied with the status of the relationship. They may feel stuck, frustrated, angry…or all of these. They know they’ve been silent far too long, but just don’t know what to do. Like many married couples, physician partners often disagree about money and how it should be allocated. Even the best of physician partnerships go through rough times. But what if your partnership has issues you think cannot be resolved? What can cause such a change in a relationship that started out with high hopes and good feelings? In this article we address some of the most common problems medical practice partnerships face and ideas for how to deal with them.

Unfair workload

Perhaps one partner feels like she is carrying the bulk of the workload. This may have happened because there wasn’t an agreement about who would do what. Job roles, responsibilities and accountability have not been discussed.

Unmet expectations

Expectations may be quite different for each partner. When expectations aren’t met, it’s a set up for negative feelings. It’s important that each partner knows what to expect from the others.

Losing interest

It is possible that a partner has lost interest in the practice or changed thinking. Over time new attractions and options will continue to present themselves to all physician partners. When a physician partner becomes disenchanted with how the partnership is going, he is more likely to lose interest over time.

No communication

Communication is so critical to maintaining a viable medical practice partnership. When physician partners get so busy doing their own thing that they can’t find time to sit down with the other(s), they will likely start to feel less engaged. An unresolved issue can also lead to partners being unable to talk about certain things.

Mismatch

Unfortunately it may just be a wrong partnership. Sometimes the physician partnership has been a bad match from the beginning, but it was maintained for a variety of reasons. When the primary reason for the partnership was based on personal needs more than on business needs, if those needs are not fulfilled, the medical practice partnership will flounder. Maybe one physician thinks and acts fast and the other wants to research things in great detail. These physicians may never be able to function well together. Basic behaviors and traits will not likely change even if the person tries. Even if you think it may be a wrong partnership for your practice, it’s worth making the effort to see if it’s salvageable.

Being proactive and clear

If you want things to change, it’s up to you to change them. Make the decision you are going to break the status quo, but you’re going to do it strategically. It is extremely important that you are clear about what you want.  Start by thinking about what you want for yourself and the practice. For a physician partnership to be successful, all of the physician owners must agree on the same strategic direction for the practice. If one partner wants to build a well-known physician practice and the other partner only cares about earning a decent living, the practice is destined to fail. Set a clear, agreed-upon course for the practice that meets the needs of all physician owners.

Schedule partner meetings

I cannot stress enough the importance of scheduling partner meetings regularly.  When issues have arisen, you may also need to schedule a separate meeting to address them head on.  Give your partner plenty of lead time and full disclosure about what the meeting is about. Let them get prepared for the meeting, but don’t let it be put off because someone “doesn’t have time”.

Discuss actions and draft a plan

At your meeting, be prepared with actions you are willing to take. You can request or suggest actions from your partners, but leave the topic open for discussion and agreement. Once you reach agreement, set goals for yourselves and the practice. To keep things moving in the right direction it’s a good idea to schedule periodic meetings to iron out details. This is the perfect time to start the habit of regular planned communications.

Set a timeframe for evaluation

Three months is a reasonable timeframe to see if the plan is achieving the results you want. Schedule an actual time where you will sit down together to see what has been accomplished toward the goals you set. If you see progress, you may want to give it another three months. If your evaluation tells you there is no hope, it may be time to make that very difficult decision to end the relationship. If you cannot come to agreement or you are clearly going in different directions, it’s probably time to part ways. Why waste any more time on a losing proposition? Yes, it’s like breaking up a marriage, but sometimes it has to be. Rather than feeling defeated, congratulate yourself on gaining the freedom to move on to something better.

Finding a physician partner may seem hard, but finding your rhythm with your partner is much harder. Just like any other relationship, a business relationship too has its fair share of ups and downs. No matter how strong your relationship is with your physician partner, disputes are bound to arise sooner or later. When physician partners are disputing, their quarrels tend to disrupt the daily operations of their practice. If they are not careful about keeping their disputes between themselves, it can result in the failure of their medical practice. Remember, a strong physician partnership is built on open communication. Meet on a regular basis so you can share grievances, review roles, provide constructive criticism, and discuss future plans for the growth or direction of your practice.

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Contact ABISA for healthcare consultancy support or speaking engagements.

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Four Myths of Succession Planning For Physician Practices

While busy physician owners have many competing time pressures, succession planning is one of the most effective ways to give you peace of mind and ensure you are prepared for any unforeseen event or for retirement. When successful physician practice owners reach a certain age, it becomes imperative that they address the issue of succession planning.  Many of them may have been dodging this particular conversation for years, yet they sometimes approach me with seemingly ironclad convictions about how they would like the succession to play out. That doesn’t mean that they actually know what they want. The physician owners may have met with their accountant or a financial advisor to learn about avoidance of future or current tax liabilities related to ownership changes.

To be honest, physician owners often contact me fully devoted to a set of myths, beliefs and emotions that are almost always counterproductive in the early stages of the process. The first step by any qualified consultant should not be a discussion of strategies or tools.  It should be a frank discussion of what the physician client really wants. That discussion requires breaking down some myths that are almost universal amongst physician practice owners and confronting not only the realities of succession planning, but also the emotions and physician dynamics that are powerful forces in many medical practices. 

 Myth One:  There’s Plenty of Time

In physician practice succession planning, time is either your ally or your enemy. You can spend time planning for succession during your active business lifetime, or postpone planning and wait until the more chaotic, uncertain and expensive succession planning occurs post-mortem, when the choice is no longer yours.

Reluctance to accept the realities of time can have disastrous consequences, especially since timing issues are often beyond an owner’s control.   Just as the aging CEOs of major corporations are pressed by shareholders who demand a succession plan to protect their investments, so too a physician owner should implement a succession plan to protect the interests of all stakeholders. The lesson? Start early. Select your successor(s), and work with an experienced consultant to develop a succession plan before it’s an issue.

 Myth Two:  It’s Easier to Just Sell It

Really? To whom? When? For how much? Finding a willing buyer for any medical practice is rarely just a matter of hanging up a “for sale” sign.  Buyers are not necessarily prepared to wait until the time is right in a business’s life cycle before making an offer.  And it is even more difficult for solo physician practices.

The same issues of timing influence the way medical practices will be valued. Some physician owners have an idea of the worth of their practice based on revenues, fixed assets, profitability and a variety of balance sheet items.  If you are not one of those, then a valuation of the practice may be needed at some point.

What the physician owners want is fair value paid by the buyer, as if that was a constant or objective number.  Fair market value (as defined by the United States Board of Tax Appeals) is “The price at which property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell, and both having reasonable knowledge of the relevant facts.” The truth is that valuing a medical practice is a detailed process (as I have written about several times in the past) and when the time comes for a valuation, you should will need  an independent valuation of the practice, documentation of the business valuation data and methodology and perhaps periodic review of the valuation.

 Myth Three:  A Successor Will Be Ready When I’m Ready

It is not surprising how many physician practice owners approach me wanting a succession plan without a successor clearly established. “Established” means more than simply identifying a successor.  It’s also preparing that successor, which may require a long apprenticeship. The apprenticeship will certainly involve learning all the operational tasks required in the business, but it may require much more from both the successor and the current practice owner.

Growth is the lifeblood of any business. In most medical practices, growth comes not only as a result of outstanding clinical performance, but also the careful management and expansion of relationships with patients and referring physicians. A successful succession plan builds into the apprenticeship not only the mastery of business tasks but, equally as important, the building of business relationships. The outstanding taskmaster does not always turn out to be the best rainmaker, and that’s an important thing to learn when identifying a successor.

The physician owner may also have handpicked a successor that has very different ideas as to how the practice should eventually be run. Now the owner has to listen to new ideas about a successful practice he or she has built. It’s not easy. That’s why a consultant should stress a long apprenticeship as part of the succession plan.

 Myth Four:  Giving Up Ownership Means Losing Control and Income

Too many physician owners see a succession plan as “all or nothing”—that changing ownership necessarily means giving up control and reducing income.  However, it is entirely possible to create a succession plan that transfers business ownership to an eventual successor without losing control or income or—as is vitally important to many founders —the continued opportunity to build a legacy.

It is possible for a physician owner to still run a medical practice and be paid for that role without the loss of title or any of the other satisfactions of operating an independent physician practice. However, the earlier a physician owner begins transferring ownership to a successor, the likelier it is for a succession plan to be a success, both emotionally and financially.

Final Thoughts

Think of a succession plan as a living document that records exactly how you want the next chapter of your business story to unfold – a tool designed to ensure your practice continues to thrive for many years following your departure. Know that once you’ve made the succession plan, it can change. New circumstances, unforeseen needs, or a new vision can all inspire changes to your finished plan. The good news is you can change course and make corrections as you go, especially if you see any vital errors. But you must also trust in the training process and in your successor’s decisions.

So relax. You have to give up the reins sometime. Let go of the responsibilities of leadership, and look toward your future. Decide what legacy you want to leave behind, both professionally and personally, and greet it with promise and hope by making a rock-solid succession plan. it is helpful to work toward deadlines for completing your succession plan.  Allow yourself a generous amount of time to seek advice and carefully weigh the right decisions. 

People often say change is inevitable, but it is possible to cultivate a change for the better by planning in advance for your medical practice succession.

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Contact ABISA for healthcare consultancy support or speaking engagements.

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