Often I am asked, “How do I pay associate partners? How do I pay a medical doctor? Do I make them partners?”
The world of healthcare is changing. More and more clinics are becoming group practices. Whether integrating with a DC, a PT or an MD, the Stark Laws are in effect. Last year, I was told by one doctor, “I am going to add a PT because the laws are more lenient.”
Not true. Regardless of the type of staff you wish to employ or partner, the rules and regulations set forth by the Office of the Inspector General for general practices are relatively the same. Partners can be very beneficial. Associates can often grow into partners. I was blessed with both. Following are some suggestions.
Make sure a potential new co-owner fits in before you commit.
Everyone wants to be a partner; let your new hiree earn that right.
New-doctor contracts traditionally stipulate when the hiring group will consider promoting an associate to co-owner or partner. Even when the formal documents don’t spell it out, the recruiting practice often implies that a new associate will be one after about two years.
But use caution when making promises to a young recruit. Tremendous references and sparkling interviews don’t guarantee that he/she will truly fit in over time.
Promise eligibility only
Our average protocol requires two years as an associate before considering partner status. Many consultants don’t believe that’s long enough; three-to-five years makes more sense (set this goal up front). Simply avoid any language promising partnership after a certain period—in contracts, correspondence or even during interviews or informal conversations. This can come back to haunt you. You may, however, utilize the word “consider.” Emphasize that you’ll “consider” making a good young associate your partner after the specified period. Then, when the time comes, weigh the decision carefully before inviting him/her to become a partner.
Don’t be pressured by young candidates’ expectations. Most specialties still offer a fair supply of young candidates today. You don’t have to rush to fill a vacancy. It’s more important to find an associate who really appears to fit in and qualify for partnership down the road. Find someone that can fill a void in your office—maybe someone that offers a different technique, or has a unique but advantageous specialty.
How to prevent and correct the problem:
Implement these three ideas before a crisis arises
You simply can’t afford to carry a partner who doesn’t “pay for himself” in terms of producing income. At a minimum, each partner must generate enough revenue—less expenses—to cover his or her salary. Every month, you should review the production of each doctor in your clinic. Today, most computer software will generate this. Time is money; every person must carry his/her weight. Base raises and salary (when applicable by law) by production. Even that may not suffice, because a lesser-producing physician ties up exam rooms, staff and other resources that a more efficient provider could put to better use. One under-producer limits the group’s overall capacity.
What preventive and remedial measures can a group take to avoid and/or correct this problem? Here are three:
1. Set goals. Establish written goals before the start of each year for each member. Make some of them numerical, such as the number of patients to be seen or the total charges or collections for services—perhaps within a stated number of office hours per week. Other goals may be subjective, like developing a new service or charging a group or hospital activity.
2. Evaluate partners. For years, we have urged groups to develop an internal process for evaluating their partners. Lack of such oversight allows a weak producer to ride along without challenge. Groups must be willing to prod and pressure their members into performing.
3. Review compensation. An income share cannot be forever. Review your compensation format for flexibility as to both over- and under-performers. If a member is becoming less productive—especially, if recognized in the goal-setting process—then reducing pay is legitimate.
Nurture and reward your physician-leader
Learn to think like a successful corporation
You would never invest in a multimillion-dollar corporation that was lacking in effective leadership. Yet, many physicians in small and medium-size groups do just that by refusing to delegate responsibility and authority to a managing partner (or CEO). Your board should consist of your accountant, your healthcare attorney, and your consultant. Review financial decisions with this group.
A medical group with 3-to-10 providers commonly generates $1.5 million to $4 million in gross annual revenue. Wow. What a concept. That’s not cottage industry size! A company doing that much business deserves strong, empowered leadership.
Too many groups name a president simply because the articles of incorporation require it. Perhaps each partner takes a turn at it, whether qualified or not, making the president a leader in name only. The best title you will receive in your lifetime is DOCTOR. Don’t get hung up on titles; get hung up on responsibilities.
Effective leadership begins with defining the job’s responsibilities and then choosing the right person to do it. Today’s complicating factors make running a thriving medical practice a tricky, time-consuming job. So, expect a fully functioning leader to reduce his/her clinical time from 10% to 25% to properly handle executive duties. If this is your role, allocate the time necessary to do your job. Many clinics appoint office managers, yet they continue to micromanage the office. Do not give the responsibility without giving the authority.
And, if a physician-member truly serves the partners’ “big business” concerns, he/she deserves to be well paid for taking on the responsibility. Compensate your leader, not only for the time away from actual practice, but for a job well done. Bonuses, according to the governing laws, should be by performance and not by percentage. Consult a health care attorney prior to doing a percentage bonus system. Most I have seen are fraudulent.
If you grant the managing partner one full day away from clinical practice per week, adjust the doctor’s salary upward so he/she doesn’t pay a financial penalty for leading the practice. Be good to good employees. Be great to great ones. Get the message? Don’t be penny rich and dollar foolish. If someone, employee or partner, deserves a bonus, give it to him/her. It is a lot cheaper then replacing, and retraining. Raises and bonuses are the cost of doing business, of being successful.
Require more than just production from your new doctor
Revenue goals alone emphasize the wrong values
Effective personnel management calls for orienting, training and setting goals for any new employee. And, no new employee is more important (or as expensive) as a new doctor. Mark Victor Hansen says, “Goal setting is the first step to GOAL GETTING.” It is important to measure each member and set group, as well as individual, goals.
More than dollars
Too often, practices bring a new graduate on board and provide very little guidance for life in the “real world” of day-to-day medical practice. Excellent clinical training alone won’t help him/her integrate into the group. Nor can it assure that the new associate will satisfy your expectations—especially those outside purely clinical work. You cannot clone yourself. Many doctors expect an associate to build his/her practice. This is NEVER the case. Bring on an associate only when you have overflow. A pure practice builder will only leave you, in time. In my clinics, my associates had to spend a day or more with each employee in our office. He/she had to know every person’s job; they had to work the front desk, develop X-rays, provide therapy, answer the phone, etc. Each employee had to sign off. Your responsibility is also to train. In the event of an employee emergency, your associate will be trained at any position.
Further, the only goals offered to many new associates are production goals, implied by incentive-pay plans. Again, be careful. If you base a significant share of the recruit’s pay on pure production, you may unintentionally encourage a self-serving, dollar-oriented attitude. This is not the key to a successful relationship.
A learning environment is best suited for success. Any and every associate who ever worked for me learned from me. If he/she didn’t become a better doctor, a better person, it was my failure. My role was to make them more than rich.
So, to develop a well-rounded colleague who can blend in to your group’s culture, make sure you provide a new doctor with clearly written goals that go well beyond how much revenue he/she can generate. The best way for a newcomer to adapt quickly is to know, up front, what you expect. Here are some goals to consider for your list:
• Acceptance by patients and referrers
• Time commitment
• Handling managed care plan details
• Willingness to promote the practice and him/herself
• Appropriate utilization and outcomes
• Efficiency in handling patients
• Entrepreneurial involvement
• Team oriented
• A true understanding of chiropractic
• Community oriented and involved
• A leader
• A lover
• A giver
Success is a two way street. It is give and take. Don’t hire someone just to build your practice. Hire someone and build a relationship. By having multiple doctors with multiple specialties, you will acquire a greater influx of new patients. A group practice can be a special thing, if you work at it. Relationships take time, energy and effort to make them work.
Dr. Eric S. Kaplan, is CEO of Multidisciplinary Business Applications, Inc. (MBA), a comprehensive coaching firm with a successful, documented history of creating profitable multidisciplinary practices nationwide. For more information, call 561-626-3004.