Let's Make a Deal

March 1, 2004

How mediation can save your partnership

A California orthopedic group was struggling with an internal crisis that threatened to rip it apart. The practice had recently settled, for a large sum, a sexual harassment lawsuit filed by a former staff member, and now the partners were nearing war over whether the offending party, "Dr. Jones," should pay the entire settlement himself.

Dr. Jones was difficult for the other physicians to get along with, to say the least, but he was highly productive and generated a lot of revenue. The group needed him. Yet he was only part of the problem; over the years, the group had become like a dysfunctional family, riven by personality conflict, generational differences, and resentments over money and practice style.

The partners hired San Diego attorney Dirk Metzger to help them mediate their dispute over the settlement. He didn't know what he was getting into.

"We had a group session, and as it turns out, the allocation of the settlement was like the 'presenting symptom,' to use a medical metaphor, and there were a lot of other problems under the surface. You had the senior partners versus the junior partners, orthopedists versus the podiatrists, the big earners versus the ones who were hanging on. All kinds of things surfaced. It took a while, but we were able to do some good work with them."

A lot of mediations are like that, says Metzger and others who work in the alternative dispute resolution (ADR) field. Unlike arbitration -- a kind of private "trial" in which the arbitrator makes a decision, usually binding -- mediation is an anonymous, non-binding negotiation process. The mediator is a neutral third party who helps broker a compromise, using a combination of shuttle diplomacy, persuasion, and, in many cases, subject matter expertise.

People who work in the field say mediation is their favorite form of ADR. It usually saves the parties time and money, and it's completely confidential. It's also the only dispute resolution model with any realistic chance of allowing the parties to save their working relationship. That's because its informal procedure lets them get problems out in the open that may not be related to the dispute at hand.

And mediation works.

"In almost all instances, mediation is going to be the preferred ADR technique to use," says Pittsburgh attorney Jared Simmer, who frequently serves as a mediator in physician disputes. He says about 80 percent of mediations successfully settle. "And that's even for those matters that are already in litigation, and the parties take a time-out to see if they can settle on their own -- the 80 percent rule kind of holds true no matter what the nature of the dispute is, or what stage of the resolution process it's in."

Others offer less ambitious estimates, but all involved agree that mediated disputes are settled far more than half the time. That isn't to say that all parties walk away happy -- on the contrary, says Dallas attorney/mediator William Barnard, a successful mediation is often characterized by all parties walking away equally unhappy -- but when a deal is reached, everyone saves face. And in disputes among physician partners who hope to stay together, such a process may be the only way to avoid divorce.

What's it about?

Take the case of the Texas rheumatologist, for instance. Barnard met him when he was asked to help settle a dispute over the doctor's promotion to partner in a large multispecialty group. The other partners were upset that he had set up what they considered a "side business" infusing medication. Even though the practice's physician payment model was based largely on productivity, the partners felt he was generating income for himself unfairly, based on their referrals, and they wanted a big piece of it as a condition of his becoming partner.

"He got very offended, and he threatened to leave, and he threatened to call the lawyers," Barnard recalls. "But they said, 'Wait a minute, we've never had a situation like this, where you have basically set up a side business that uses our resources.' Eventually, most of the doctors had to leave the room, and as soon they walked out, the guy opened up to me, and ... interestingly enough, the issue was mainly cultural -- he was Asian, and in his culture, if he was getting less than 50 percent of the pie, he was being disrespected. For him, it wasn't so much the dollars; he wanted respect."

The rheumatologist got his 50 percent, which was still a good deal for the partners, but the key to saving the relationship was the way the other doctors treated the rheumatologist after that, says Barnard. "I went back to the other partners on the side and I said, 'Listen, from now on, every time you see this guy, I want you to put your arm around him and I want you to treat him like a partner. I want you treat him with respect, because that's really what he wants.'"

Of course, the doctor really wanted that 50 percent, too. And that's what most, though not all, squabbles between physician partners are about -- money: how to devise a revenue-sharing arrangement when a new physician is elevated to partner; how to split overhead when a doctor semi-retires or works part-time after a child's birth; how to fairly buy out a partner who is leaving; how to deal with the physician who doesn't want to take call anymore.

That's why Daryl Johnson, principal and cofounder of HealthCare Appraisers Inc., based in Delray Beach, Fla., says, "the appropriate economic solution can cure all evils." Whether the so-called "real" issue is respect, culture, or something else, Johnson says, "there tends to be some manner in which the physician will equate the issue to an appropriate economic give and take. ... When you're dealing with your partners, the way things are dealt with economically, I think, is the biggest step in keeping people working together."


On the other hand, some disputes are only indirectly about money, if at all. Doctors often squabble about staff, for instance -- one physician's nurse is a workhorse and a whirlwind of efficiency but is driving everyone else crazy, or the doctors are divided over the performance of the practice manager. Those disputes can be mediated, too, and if the alternative is breaking up, it's worth a try.

How it works

Either way, it's usually important to select a mediator with an understanding of physician practice management, as well as experience with the mediation process. A good mediator should get the parties talking -- in the same room for as long as possible, before splitting them up and shuttling between them to continue the negotiations -- and be able to suggest creative solutions. Although he should keep his opinions to himself early in the process, the mediator should be able to provide useful insight -- and perhaps, when the moment's right, some straight talk.

"It's a lot like counseling," says Chicago attorney Steven M. Harris, who has represented physician clients in mediation. "You often see an estranged husband and wife more able to talk to each other through an independent third party. If I tell you something, and I'm an advocate, that may have less of an impact on you than an independent party saying, 'Listen, guys, you're not being realistic.' The mediator can say, 'Look, I have no skin in this game, and I can tell you that if I had to try this case -- if I had the final decision -- here's how I would look at this.'"

The American Arbitration Association (AAA) is a good place to find a mediator. The association's Web site, www.adr.org, offers general information, and you can inspect the resumes and fees of potential mediators on a separate AAA site, www.mediatorindex.com. Mediators are typically lawyers and retired judges; their fees usually run around $150 or more per hour, and if you use AAA's service you'll have to pay an administrative fee, which varies depending on the value of the claim. It's not inexpensive, but if you can resolve your dispute in a daylong mediation, which is not unusual, you might spend $2,000 -- a lot less than what you'd spend going to arbitration or court. And you'll have a shot at salvaging the relationship.

If you can't come to terms, at least you'll have a sense of what a judgment might amount to if you press forward.

"Let's say you're looking at a major dispute involving several hundred thousand dollars, and it's going to be time-consuming," says Harris. "Would you spend a day trying to avoid all that by going through mediation? Would you spend $2,000 just to take a peek and see if there's any room for resolution? For my nickel, I would."

Leash your bulldog

Your attorney should also know some good mediators, but you might have to prod her into the idea. In fact, veteran mediators advise against bringing your lawyer to a mediation session. Most would prefer it if you didn't even hire one to help you with the conflict. Your chances of successfully resolving your dispute are much better without lawyers involved, they say. Of course, there are always risks in not having legal counsel, but when part of your goal is to resolve an argument in a way that allows you to continue working together, having a lawyer present -- particularly one whose specialty is litigation -- carries its own risks.

"It's not necessary" to have a lawyer involved in mediation, says Simmer, "but the way physicians usually look at it, if they have a dispute that might end up being a legal issue, they generally bring the lawyers in immediately. And it's ironic, too, because the lawyers they bring in are often the 'junkyard dog' type -- the physicians' idea of litigation is that the biggest, meanest dog wins, so they seek out these litigators with an attitude. That's why it's difficult to get physicians to mediate disputes -- because those kinds of attorneys are not predisposed to settlement; they're predisposed to fight."

No one really wins in mediation. That's why it is sometimes unsatisfying to parties who feel they have been badly wronged. The key to a successful mediation is the willingness of each side to negotiate.

"One thing you don't get is vindication and validation," says Metzger. "To some people, they may not even know that's what they're after, but that's important -- they want to be vindicated. They want someone in a position of authority to say they were right. They don't get that. It's a negotiated agreement, and to some people it's touchy-feely. They want war, and it's not war. It's more like diplomacy."

Other cases that usually make bad mediation candidates include those in which a physician is accused by other doctors of poor quality of care, or of doing something illegal; compromising in situations like that might be a bad idea. Finally, when the parties are very far apart or not in a compromising mood, mediation might be a waste of time and money.

But only rarely is mediation not worth the effort. Since the process is informal and non-binding, there is almost nothing to lose. With the price tag and time-to-resolution usually much lower, and the chance of preserving an important working relationship much higher, there is also much to gain.

"People in general can't handle conflict well," says Simmer. "Physicians handle it worse than most, because they're trained in a very black-and-white paradigm, and they quickly slide into positions, rather than interests. ... The most powerful feature of mediation is it's the one technique in the ADR field that allows the parties to fashion their own remedy."

Bob Keaveney, editor for Physicians Practice, can be reached at bkeaveney@physicianspractice.com.

This article originally appeared in the March 2004 issue of Physicians Practice.