A common question asked by practices is how they might allow physician owners to switch to part-time status or perhaps no longer participate in certain modalities (such as no longer providing obstetrician services in an ob-gyn practice).
There are many factors to consider in coming up with an effective part-time/reduced modality policy that works with the physician practice. The following are some concepts to consider:
1. The best time to come up with an effective policy is in advance before anyone is ready to make a switch. Under such circumstances, the various financial, scheduling, and related issues can often be addressed in a less emotional and more thoughtful manner.
2. Consider how much advance notice a practice needs if a partner wants to invoke the policy. Would a new provider need to be hired? Would other physicians need to pick up additional shifts or work volume? How long will it take to prepare the necessary documentation to allow the change to occur?
3. Once a physician switches to a part-time/reduced modality status, how long may the physician remain in this new position? Some practices use this approach as a step towards complete retirement and might limit the change in status to a maximum amount of time (usually two-to-three years) before requiring full-time retirement.
4. May more than one physician work under the policy at the same time? If so, is there a limit on the number of physicians that may be in this status at any one time without creating strain for the practice?
5. If a physician does switch to part-time status, does this mean that they must redeem a portion of their ownership? For example, if a physician becomes a .5 FTE, should the physician then be redeemed by fifty percent when they make the change? In many practices, this is an essential point of disagreement. Since it is typically the more senior physicians who desire to move to part-time status, they do not want to give up any ownership in the practice. Often, if an owner goes to part-time status but retains full-ownership rights, the physician may still have an equal vote in practice operations, an equal share of profits, and should the practice sell, would still be entitled to an equal share of profits. The other physicians will typically find this unfair. Of course, all of these elements can be agreed upon and properly documented, but practices often forget to address these concerns when they allow a physician to go part-time.
6. How does one define what part-time should be? There is no one answer to this question. Some practices insist that you are either a .5 FTE or a 1.0 FTE only. Other practices will allow some variation. Depending on the practice, having physicians at different levels of FTE can make compensation and scheduling particularly cumbersome. Some practices may also allow two shareholders in a .5 FTE position to share a single 1.0 FTE position in terms of compensation, call, etc. There is no correct or incorrect approach to take as long as it is clearly defined in the policy.
7. A physician-owner’s change to part-time status/reduction in modality can affect a practice’s compensation formula in many ways. In some cases, a simple proration of a set base salary or share of income may be all that is needed. Other times it can be far more complicated. In determining a policy, it is important to take into account the sources of income and expenses for the practice and the particular physician. For example, perhaps some of the ancillary services will no longer be used by the particular physician who drops a modality. Should he share in the income or the expenses of the modality? Additionally, a physician that goes part-time may be leaving the practice with unused examining rooms and staff, and perhaps the practice wants to hold such physician responsible for a full-share of the overhead costs despite the change in status. Each practice must think through carefully how the proposed change will impact the remaining physicians and the way in which the group operates.
These are just some of the issues to consider when a physician-owner goes to part-time/reduced modality. Every practice will be different and working with legal and financial advisors to develop a sound policy in advance is always advisable.