Group practices with flair

Partnerships have many advantages, unless members fight. Avoid disputes by getting the basics right

By Theo Sands

You know what they say about group practice -- it's like a marriage. And what does it take to make a marriage last? Flexibility, compromise, hard work -- and more compromise. A dollop of good chemistry is usually assured at least at the start of a marriage and should be there at a group's wedding as well. Both unions need as much good luck as there is going around. Making it through is one thing, making it work gloriously is quite another. Here are some tips from medical practices that have turned the trick.

1. A GOOD LEADER
Whether there are two in your group, or 20, one physician has to take real and "psychological" responsibility for the group. Good leaders aren't dictators, they use regular meetings to make sure grievances are addressed promptly and that all members are on the same page. In truly large groups duties can be broken up into committees of two or three. Some schedule luncheon meetings once a month to oil the wheels of agreement but consultants strongly suggest these be augmented with structured get-togethers where decisions are made and written down in minutes.

2. COMMON GOALS
If half the group is intent on maximizing billings and keeping revenue low and the other half care more about extra time off than extra money, you're in trouble. A Calgary group came apart about a year ago on a similar issue. One strong willed doctor in a group of four liked luxurious quarters and talked his colleagues into spending a substantial sum on redecorating and expensive upgrades to office furniture and fixtures. The final bills came in above six figures and also cost all of the goodwill the partners had built up. Three partners went off and started their own group leaving the other to find new members and call his lawyer about the bills they left behind.

3. FAIR INCOME DIVISION
Groups who divide income equally instead of tying it to productivity often have an easier time of it. Unless one member slacks off noticeably the assumption is that each member is pulling his or her weight. A variation of this would be to have part of the remuneration divided evenly and the rest based on productivity. Disputes are inevitable between MDs who believe their not getting their due but, given the will, good groups find a way to talk them through.

4. GOOD BUY-IN, BUY-OUT CLAUSE
Perhaps the easiest way to handle buy-ins in a group that shares revenue equally is to let the new partner pay his or her way in by gradually ramping up his or her earnings to full partnership over a period of five or more years. That way there's no need for up front capital and the original partners benefit from having a larger pot to split until the new partner is fully integrated.

Buy-outs are more complex -- and more contentious. Practice consultants suggest agreements be revisited every couple of years. The simpler ones are simply based on partner income averaged over a period of two or three years. There should always be a clause to allow the buy-out to take place over a period of time that's long enough not to leave remaining partners strapped.

5. FAIR ON-CALL RULES
This can be a group breaker. Who does it? When? Is the income thrown into the pot or retained by the grouper who earned it? Should the junior partner take the majority of calls? One way around it that's worked for many practices is to divide call time equally and then allow the member who didn't want to take calls to pays others who did. Solutions are sometimes as easy as older members who want more time paying younger members who need more money. Whatever the formula, make sure it's recorded in writing in the partnership agreement.

There are other issues, of course, but if you get these right your chances for a long and happy practice life are far better than average.