Is it time to bring on an associate or partner? There are many reasons you might consider it. For example, your practice might have become so busy that you have little time to spend with your family or for yourself. Perhaps your practice volume has grown so much that you need help managing it. Maybe retirement is around the corner and you are thinking about selling. Regardless of your reasons, it is important to weigh the pros and cons before taking this important step.
What are Your Goals?
Bringing on an associate or partner is a significant decision. You are not just hiring an employee, so before beginning the process you must ask yourself:
- What do you hope to achieve by bringing on another professional?
- What credentials, expertise and personal characteristics do you expect that partner or associate to have?
- Have you budgeted for not only the expected increase in patient volume, but also the additional expenses?
- Have you done a break-even analysis so you understand the patient volume needed to achieve for profitability?
- Can your office infrastructure, including not only the physical space of the facilities but also the support personnel, handle the projected patient volume?
- Can your office location and surrounding community support your practice’s anticipated growth?
- Are you prepared to manage another physician?
- Finally, are you willing and able to give up a portion of control and decision making in your practice?
How will You Find a Good Match?
Once you are comfortable with your decision to add another physician, you now have to figure out where to look for the right person. Quality resources include journals in your specialty, talent recruiting firms that specialize in physician practices and referrals from other physicians.
Of course, you will want to bring on an experienced physician with excellent technical qualifications. But, just as in hiring an employee, personality, soft skills and fit with your existing culture are often more important factors. You want to not only get along with your partners but also share in the same vision for the future of the practice.
If your plan is to improve your work-life balance, the physician you are adding to your practice must understand that goal during the hiring process. If the goal is to increase patient volume and make more money, he or she needs to share that drive and vision with you, as well.
Next to personality, making sure that your new physician understands and fits with your practice’s culture might be the most important characteristic that you are looking to find. Culture can manifest itself in many ways, whether your interactions with patients and office staff are formal or informal, how staff customarily handles daily operations and whether staff is willing to extend themselves to assist patients and ensure their satisfaction.
Do you and the candidate approach patient care with the same philosophy? Can the candidate meet the goals you set? Is he or she willing to adjust to meet your standards? Is the candidate comfortable living and working in the community where your practice is located? To get a better sense of this, it is often useful not only to conduct a traditional interview but also to meet the potential associate in a social setting with your staff.
What About Compensation?
The new physician’s compensation will be a significant part of any job offer. Some suggested approaches to compensation are as follows:
- Pure Salary Strategy
Will the new physician generate enough income to warrant the salary? The risk of a shortfall lies with you; however, you may benefit if he or she is very successful, which will likely lead to future compensation negotiations.
- Pure Percentage of Production Strategy
With this approach, the new associate takes on more risk but is also directly rewarded for success. Caution is suggested with this method of compensation as there is potential to run afoul of anti-kickback laws. If this is your and your potential new hire’s preferred method of compensation, we suggest you consult with an attorney to make sure that you have a well-written employment contract.
- Base Salary Plus an Incentive
This is the most common approach. The associate is paid a base salary and receives a bonus based on a negotiated level of income generated. The risk is shared between you and the new associate. In this method, an incentive is not reached until the associate generates patient revenue of approximately three times his or her base salary. Commonly, the bonus consists of 15% to 25% of each dollar generated above the threshold with the agreement stipulating that the bonus is to be paid out monthly, quarterly or annually.
Other factors to be negotiated include:
- Malpractice insurance;
- Health and disability insurance;
- CME allowances;
- Dues and subscriptions;
- Vehicle/gas and other allowances; and
- Fees for licenses and boards, managed care privileges and hospital applications.
These types of employment agreements fall under several state and federal regulations, so we suggest that you consult an attorney familiar with medical practice agreements.
Does it Stop There?
After you make the new associate or partner part of the practice, it does not stop there. It is important to integrate him or her into the life of your practice. Make an effort to introduce him or her to patients as well as local colleagues. Review practice procedures and protocols together and agree upon them. Educate staff on the associate’s role and how his or her specialties and relationship with the practice should be presented to patients.
Obviously, any associate you agree to bring on will have a stake in the success of the practice. Stay open-minded, and provide him or her with clear and consistent feedback.
For more information, contact Greg Koelling at [email protected], or call him at 312.670.7444. Visit ORBA.com to learn more about our Health Care Group.