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Advice for making physician partnerships work
Pat Raymond, MD, had been working happily in a private gastroenterology practice in southeastern Virginia when, for personal and professional reasons, she decided to reduce her practice hours. Her partners were not thrilled at the prospect of a drop in revenue or an increase in their workloads. Arguments, frustration, and eventually a practice split ensued.
Luckily, Raymond found a part-time slot in a group with younger physicians who share her self-described "save-the-world mindset" and commitment to family time for its physicians. Raymond has even started her own company, Rx For Sanity, for which she gives lectures and coaches other physicians about finding a balance between work life and personal life.
Not all physicians are so lucky to have as peaceful a relationship with their partners as Raymond has with hers. On the contrary, many of you work in practices where the discord and mistrust between physician partners is reaching a crisis point.
Partnership dysfunction is a silent epidemic.
Few physicians want to confess when things go wrong, but the fact is, physician partnerships easily turn sour. It's not uncommon for relations to get so frayed that they threaten the continued viability of the business.
Physicians themselves may be reluctant to open up about these problems, but consultants who work with multiple practices are clear about what they've seen.
"My experience is that [dysfunctional relationships] are almost universal. I mean, it's a hugely high percentage. In 90 percent of the groups I work with there are continuing head-butting contests," says Dennis Brush, a CPA with Physicians Resource Team of Lakewood, Colo.
Tina Hogeman, who helps physicians start new practices in Denver, has seen groups end up in arbitration to dissolve the business when partner relationships went south.
Here at Physicians Practice, our e-mail inbox is routinely stuffed with last-ditch appeals for help from physicians ready to dissociate from their business partners. You and your colleagues are complaining about call schedules, overhead, and compensation plans. No one seems happy.
What's going on? And what can be done about it?
The cause of your discontent
"It all comes back to the money," Brush says. "It's not about how we're going to treat patients or what procedures we're going to perform. It's not about medical issues. Nobody argues about that stuff. ... All the arguments are about money, and there is no resolving them" if each partner can only focus on personal gain.
Brush offers one example from a practice he recently worked with. The physician partners had all agreed to cancel a managed-care contract that paid badly. Then one physician realized that 30 percent of his business came through referrals from physicians in that payer network. Even though it represented only 3 percent of the practice's business, he insisted on keeping the contract.
"He thought dropping it might [reduce] his take-home pay, and he wasn't willing to go forward with a very logical decision to terminate or renegotiate a contract at a higher rate," Brush says.
Hogeman agrees that dysfunction creeps into partnerships over financial issues, but thinks the root of the problem is emotional, not financial. Physicians turn against each other when they think they're being treated unfairly.
"It's not money per se," Hogeman says. "It's feeling like you are carrying a heavier load. You can get the financial side of it structured. You can create a productivity compensation plan so that if I want to work three days, I get paid for three days. If my partner wants to work five, he gets paid for five. But you still have the emotions of who is carrying the practice. Even though my five-day doc is getting paid for five days, he gets resentful. Feeling like you are carrying the entire practice on your shoulders is hard to handle."
It's not always the physicians who perceive inequity, either. Sometimes it's their spouses. Families can get touchy if one partner seems to spend more time at work than the others, with bad consequences for that physician's family and, eventually, for the practice.
Such emotional burdens are only harder to handle as physician burnout increases. To an already exhausted, overwhelmed, and financially broke physician, having the impression that her partner isn't pulling a fair share of the work could be the last straw.
Brush holds little hope for physicians to look beyond their own pocketbooks and cooperate. "That is why smaller groups don't do very well. Once they get big enough that they have professional administrators in place and the ownership is diluted enough that individual doctors don't have much of a say-so anymore, then you are over that hump. But anywhere from two doctors up to 20, I just don't see how you do that ... unless you have very similar financial goals."
Is it really as bad as that? Not according to other experts, who agree with Brush that things can get ugly, but maintain that groups can work better together if they're willing to work at it.
Find the right partner
For a practice considering boosting a physician to partnership status, it is hard to know how an employed physician will behave as a partner. Two people can work well together more easily in a monarchy -- when only one person, the employer, makes all the decisions. When both people are sharing financial decisions, things can take a turn for the worse. That's why it's so important to find the right partners for your practice. When things get tough, you want people you can trust and work with.
It's not enough to just ask potential partners about their objectives and practice mission. If you ask anyone what they want out of a medical career, won't you always get the same pat answers about financial stability and helping others? That doesn't protect you when it comes time to decide who is going to cover call on Saturday night. Careful interviewing and pre-screening can help.
Hogeman has a client who was considering promoting an employed physician to partner. Before he committed, Hogeman sat down with the potential partner to discuss her expectations, what she wanted to do workwise, and the responsibilities of being a partner. "It's not just come in, collect a big hefty paycheck, and go home," Hogeman explains. The employed physician didn't seem to understand the complexities and responsibilities of partnership. And after two or three meetings, she decided she didn't want to be a partner.
Hogeman's client decided to give up the idea of any partnership.
Brush advises a similar, no-holds-barred conversation when you're in search of a partner. Specifically, he suggests confronting possible partners with a list of problems the practice actually faced in the past few months, and asking the incoming partner what they would do to help resolve them. "You might ask, 'What are you going to do with a receptionist who has been with the practice 10 years and is on the top end of the pay scale in this market, but we like her and want to keep her 10 years more?'" Hogeman says. "Partners should actually throw out to potential partners some of those kinds of situations where it really is a matter of sacrificing a couple of dollars to make the practice more functional."
Write it down
Even the best interviewing process won't avoid all potential conflicts. That is when written expectations can help, according to William Edsel, CEO of Pinehurst Surgical Clinic in Pinehurst, N.C. "Unwritten rules are really good for individual interpretation," he says.
Instead of working on assumptions, the 28 physicians in Edsel's multispecialty practice have a comprehensive physicians' owners' manual containing 140 policies covering everything from whether physicians will be paid for attending board meetings to space rental in satellite offices. The policies are brief and clear. For example:
When arguments come up, Edsel can more often than not simply refer the disputing parties to a written, approved policy, stopping the debate in its tracks. "We really don't have much dissension, and the doctors get along pretty well because they know what's expected," he says.
"Take inclement weather, for example. We had two inches of snow and the doctors ran around telling employees all kinds of things: 'You can go home.' 'You don't have to come in.' It was a major issue in the clinic. The doctors were mad each other, employees were mad at the doctors, and they were all mad at the administration. So we decided to create a policy [that] basically says that we have established inclement weather policies that are applicable to all employees in the clinic and no doctor has any authority to tell any employee to not come in or to go home or to stay," Edsel says.
Physicians who break this rule will have to incur any cost by having it placed on that doctor's profit-and-loss statement, he adds. "And, you know, we haven't had a single instance of that since."
Edsel doesn't recommend simply creating these policies by fiat, however. He suggests peer review of the policies and even advises having a policy for dealing with a physician who just ignores the policies -- namely, having that physician sit with an objective peer to work it out. "If you don't have a mechanism in place to deal with that situation, you're going to have hard feelings," he says.
If 140 policies sounds like more than your practice can handle, at the very least make sure you have written standards for major issues, including:
Change your attitude
When Steve Perry, MD, wanted to become a partner at Cherry Creek Pediatrics in Denver, none of these policies or procedures were in place. He was the first partner in a practice that had always been run by a single physician. Perry had been employed at the general pediatrics practice for four years when he pushed to become an equal owner with his employer.
"I wanted equity. I wanted some security. And obviously the other person had to give up some autonomy and give up some of the economic incentives to me, but it glued me to the practice more," Perry recalls. "When I went into practice I always wanted to be an owner and not just an employee. It gives you a lot more autonomy, and I enjoy the business part of it. I wanted to take part in that."
Because Perry was the first partner the physician-founder had taken on, negotiating the terms of their partnership took a couple of years, during which he remained an employee.
And even after the partnership became official, he says, "there were a few years of rockiness just because [my partner] had always been used to running the show, making all the decisions for such a long time. That was just in her personality, and the change didn't happen overnight. There was a lot of ... learning that went along with it. A lot of that learning was because it had never been done and it was a pretty big part of the practice to give up, from her perspective."
Many physicians would have thrown up their hands, but Perry says a little flexibility by both parties has made the relationship work. "The keys were being tolerant, flexible ... and willing to give up some of your own beliefs."
The doctors now have frequent meetings and end up negotiating over issues when they disagree, usually meeting in the middle.
Sound like the way a happy marriage works? Pat Raymond, MD, for one, takes that analogy seriously and even advises sparring partners to get family counseling. Recognizing that not every physician will accept such a step, she proposes a practice management consultant as the next best thing. A consultant can be used as an objective third-party to settle disputes.
"There is no way you can do it from within," Raymond says, explaining why she advocates external help. Just make sure everyone agrees ahead of time to abide by the consultant's advice.
And if your partner just won't be flexible? Well, it may be up to you to just make the most of the situation. If you can't change it and don't want to leave, the only other option is to learn to deal with it.
"It's no one else's job to make you happy," says Diane Robb, a professional speaker who gives workshops on attitudes in the workplace. "If you're not happy, you have to make a decision [to manage it or leave]. Not making a choice is a decision itself. You have to be responsible; your senior partner can't make you unhappy."
Robb urges physicians to see their attitudes about a partnership as something they can control. "Everybody has an attitude just like everybody has a temperature, but that doesn't mean you have to have a fever."
She offers these guidelines for smoother working relationships:
If you have to leave
Sometimes the best thing you can do for yourself in a bad relationship is to get out. Yet leaving a partnership isn't easy.
"Once you're a partner, it's pretty hard to dissolve the banns," Raymond observes. Most physicians face noncompete agreements, financial losses, and the hurdle of having to cover their own "tail" insurance if they pull out of a partnership. (Tail policies cover physicians if a suit comes up after they leave the practice.)
"Assuming there is something you like about your practice, and you are willing to trust your partners with your patients' health, it's worth deciding to stay and getting counseling. It's better to fight for it," Raymond says.
Still, many physicians at least fantasize about going solo -- 59 percent of those responding to a recent poll say they find solo physicians an inspiration. And lots of physicians actually are working solo. According to the American Medical Association (AMA), there are roughly 546,000 active physicians in the U.S. About 206,557 of them are in group practices, which the AMA defines as three or more physicians working together. That leaves 339,000-plus physicians in two-person or solo practices.
Hogeman suggests a compromise to leaving: "It might make more sense, depending on the practice, to all be individual practitioners, each of you having your own little corporation, and you just share overhead. Then, all you have to agree on are things that aren't quite as personal, such as, 'Do I like our receptionist?' If your practice isn't taking off, that's your problem ... not a problem for the guy sitting in the next office."
She warns that this plan can present problems with Stark self-referral laws, depending on the practice's plans for growth, the services offered, and the referring relationships among the physicians.
The truth is, physician partner relationships are no easier than any other relationship. Indeed, given the amount of money and the workload at stake, it's no wonder they are so difficult. While few physicians talk openly about it, it's worth knowing that you are not alone if you aren't in a blissful partnership. Now it's time to start talking about it.
Pamela L. Moore, PhD, senior editor for Physicians Practice, can be reached at email@example.com.
This article originally appeared in the October 2003 issue of Physicians Practice.