Growth Strategies: Growing Pains

March 1, 2006

One of the most common ways to generate new revenue is to hire another physician. But it's not that simple.


Many practices complain about the difficulty of finding new physicians to join their practices. It's true that we face a physician shortage in general, and in some specialties recruiting is particularly challenging. Still, if you're looking for a new doctor, you're likely to find a number of seemingly suitable candidates with impressive credentials. But simply finding someone is easy compared to finding the right physician - that is, a person with whom you can forge a lasting and mutually beneficial relationship that makes sense professionally and economically.

Before you rush to judgment, take cautious steps to ensure that adding another doctor to your crew won't rock the boat.

EXAMINE YOUR MOTIVATIONS

Begin with a careful examination of your motivations to bring a new physician on board. Many physicians tell me the reasons they want to take such a step include:

  • Having a colleague with whom to share interesting or complex cases. This provides an "in-house" informal second opinion.

  • Freeing up their time. Having someone else in the office who can handle both clinical and business issues allows physicians to get out of their offices for more than one week at a time to take those longed-for, well-earned vacations.

  • Implementing a succession plan. Identifying someone who perceives the value in the opportunity to join your practice may also provide an opportunity for you as the senior physician to develop a succession plan that incorporates younger physicians purchasing equity when the practice has achieved its greatest value.

While these are all valid reasons, there are other considerations that are equally important when evaluating why and how to go about adding another physician to your practice.

FACE ECONOMIC REALITY

Are there already enough existing and potential patients in your practice to keep the new doctor busy? If not, you'll have to factor in the costs of providing her staff and covering her operating expenses as well as her compensation while she beefs up her own revenue. Then there are the hidden costs relating to the time it will take senior doctors to mentor a new physician and bring her up to speed with everyday activities and long-term goals. These costs can initially create an unexpected downward trend in the senior physician's productivity numbers.

I was recently working with a six-physician group in which the senior physician's production was compromised the first year after a new physician was brought on board. Why? The senior doctor was guiding, training, and monitoring the new addition. He was also earning small assistant surgical fees while the new physician generated larger fees as the primary surgeon. The senior physician remarked, "It is a constant learning process for both physicians in the group. There have to be compromises."

There are also administrative responsibilities entailed with bringing on a new physician that take up time for both the practice manager and the senior physicians. These can include getting the new doctor involved in the community, introducing her to referring physicians, and implementing new marketing strategies based on her capabilities. Of course, there's a cost to all of this - it requires time, resources, and financial investment.

BEYOND MONEY

Sometimes adding another physician can be a great complement to an existing practice, providing much-needed relief to busy physicians. The new doc can broaden the services you offer and appeal to different types of patients.

But selecting a new doctor for your practice can also be an experience that brings with it a barrage of issues you never expected. In general, when such a scenario works out, it's very good - and when it doesn't, it can get ugly. This is often apparent when a woman physician with a unique skill set is added to a group practice composed of only male doctors.

Adding a woman to the mix can change the dynamics within the practice and among the physicians who work there while also broadening the practice's appeal to patients. These can be wonderful changes, but such a step does require mutual respect and an understanding of potential effects on the status quo.


I recall an OB/GYN practice I worked with some years back in which four male physicians brought in a woman and subsequently discovered that her production and the demand for her services far outweighed their own. Resentment and wounded egos soon emerged. At the same time, the young female doctor began to exert more power within the practice, and she was more than a little impressed with her success. The result was an emotional roller coaster that required considerable intervention before all physicians were on an even keel and effectively working together for the greater good.

GOOD, BAD, UGLY

Lewis Kanter, MD, the founder of Coastal Allergy in Camarillo, Calif., made several attempts to bring in a physician partner before he succeeded. First he worked with a physician who leaned toward public medicine and preferred to work within a large practice with a great deal of structure. This doctor preferred not getting involved with administrative issues, the details of building a practice, or dealing with day-to-day business problems.

"Looking back on it, it may have worked if I had just given him an employment contract, offering salary and benefits for five years," says Kanter. "He would have made less money long-term, but more stability and certainty. He just wasn't suited for a partnership track."

Then there was the physician too good to be true; he was mellow and interviewed well. He talked the talk, but ultimately he didn't understand what it took to build and be a part of a small group practice. Sure enough, it got bad - then ugly.

In less than one year, Kanter discovered that his new partner-in-training was making plans to set up his own practice and ultimately become a direct competitor, all without prior discussion or the notice he was contractually obligated to provide. The emotional havoc and the financial repercussions that resulted were difficult to deal with. It's tough to discover that a person on whom you have spent a great deal of time and money is planning to turn around and compete against you. Fortunately, Coastal Allergy Care has an excellent reputation, a great community presence, and loyal patients that kept it on firm ground throughout this incident.

The third time around Coastal Allergy was much wiser. Not only had Kanter better learned how to evaluate a potential future partner, but he had also put more time into understanding his practice's needs.

"I looked at the demographics - the community, patients, and the competition. Based on this, it made sense to recruit a female Hispanic with training in internal medicine rather than pediatrics. I needed somebody who was well-read, personable, and hard-working - someone with a desire to build a practice, someone with the basic entrepreneurial spirit. I hit the trifecta. I couldn't be more satisfied," says Kanter. "It's a win-win - a perfect fit for physicians, the staff, patients, and the community."

COMMUNICATION ADVANTAGE

Too often, senior physicians in a practice fail to tell their new doctor what they expect of her. This includes everything from how she will build her patient base to the number of patients you anticipate she will be seeing after a month, six months, and at the end of her first year. Let her know what kind of support staff she will have, what resources are available, how many exam rooms she will be given, and which tools and supplies are on hand and which will be ordered at her request.

Good communication also includes a new physician integration plan. How will she be integrated into the practice and the hospital? What type of orientation will you provide for her, and how will she be introduced to your patients and your medical community?

Beyond this, who will take responsibility for guiding the new physician through your office routine, teaching her how to do charting, medical record maintenance, handle telephone messages, and code and submit both office and hospital charges? Who will teach her how to use your practice management system and understand the reports that help assess each physician's productivity and overall performance? Having the answers to these questions beforehand will make a big difference in how well you bring your new doctor up to speed and make her feel like an important part of your practice.

Once a new doctor comes onboard, meet weekly with her to discuss how things are going, address small issues that may have emerged before they evolve into something bigger, answer any questions she may have, and provide reassurance. Each month, share your practice's numbers with her. She wants to know how she is doing. And it's important for her to understand the costs of operating a practice and making a capital investment on her behalf.

WORDS OF WISDOM

Learn from those who have gone before you, and you just might avoid their mistakes. For example, don't assume a signed covenant not to compete will eliminate the potential for someone coming in, learning the tricks of the trade, and then setting up shop across the street. Covenants vary from state to state and can often be very difficult to enforce. Even if they are enforceable, the legal costs of contesting one may not make any conflicts worth pursuing in court.


When recruiting, include all stakeholders in initial interviews. If there is even one issue that is unacceptable to the other physicians, it's fruitless to go beyond that point.

Physicians who have gone through the process agree that adding a physician can be a wonderful experience, but there have to be guidelines and expectations. These things need to be discussed before the new doc's start date.

There are hard lessons, says Kanter: "You cannot assume the person you are dealing with is honorable - on either side. Have multiple discussions (over time) with the physician you are considering. Discuss as much as you can about the practice, your expectations, the community, and the patients."

And remember, spouses are also part of the equation, so include them in relevant discussions. It's a family decision.

Open communication is vitally important, both before and after making an offer. "Above all," says Kanter, "don't be in a big hurry - the decision is too important to rush!"

Judy Capko is a healthcare consultant and author of the popular book, Secrets of the Best Run Practices. She is based in Thousand Oaks, Calif., and can be reached at www.capko.com.

This article originally appeared in the March 2006 issue of Physicians Practice.