Partnerships began springing up 15 years ago, mostly as a backlash against national contract groups. Many emergency physicians were treated badly by employers, who thought of them as shift labor and didn't compensate them fairly. As physicians began demanding open books, a voice in running the department, and a financial piece of the pie, partnerships began to look more appealing. Still, questions remain. Some of the physicians I interviewed for this series had some final thoughts on partnership, from advising EPs to thoroughly investigate groups promising full partnership to ensuring that the group has a strong communication system, policies for fairness and equality, and guidelines for voting, buying-in, and or cashing-out of the practice.
One of the owners of a partnership that I interviewed for this series said job-seekers should be aware of regional and national groups that promise full partnership and profits but then deduct from those profits for administration, billing, malpractice coverage, accounting, physician credentialing, and other “management items,” leaving significantly trimmed earnings. What is particularly disturbing about this practice is that these groups own the companies providing the services, he said, and while the charges may be reasonable, this practice sends profits back into the pockets of the primary owners and out of the pockets of working physicians.
John Myers, MD, the president of Questcare Partners of Dallas, TX, described the challenge of taking his group from one owner-physician to 51. “It was tough, and has taken nearly three years from proposing the change to refining the operations,” he said. “The financial and business issues required the physicians serving on our board of directors to learn to be business people as well as physicians. We now have a 13-member board elected by the member-owners (comprised of the president, three at-large members, and representatives from each facility), and our officers are elected by the board.”
Dr. Myers said group participation in governance and an open-book policy are key items to success. For graduating residents, “partnership has become a buzzword. Good groups don't want a backpacker mentality; that is, they expect owner-physicians to contribute more than merely clinical time. I believe the new generation of grads expect full disclosure and require an environment that breeds less suspicion about the nature and motives of group management,” Dr. Myers said.
Many of the groups, like DFES in Delaware from part two of this series, are corporations with stock ownership for their physicians. The Schumacher Group of Louisiana is steered by Kip Schumacher, MD, the principal owner and stockholder of the group, and though he has given out nearly 40 percent of the company to his leading physicians via stock options, he retains all liabilities. “Options are given to those physicians who show great leadership. The reason some groups fail is that their physicians just have to show up to earn rewards; they don't have to go the extra mile, making it difficult to rid the group of dead weight,” Dr. Schumacher said. “For true success, everyone has to push the wagon up the hill. Any group can be successful. It's determined by the group's leadership. Good group governance is the key.”
I asked Ronald Hellstern, MD, the senior vice president of physician executive development for PSR, the emergency medicine division of Medical Edge, a practice management consulting firm in Dallas, why some partnerships work and others don't. He replied with a three-page letter, emphatically pointing to a lack of leadership as the biggest reason they fail. Good leadership, Dr. Hellstern said, sets the tone of the organization and helps the emergency medicine group define its mission, vision, and values. “A group culture that has the rank-and-file honoring the contribution of the leadership, just as the leadership honors the contribution of the rank-and-file, is essential to success. No leader can lead those who refuse to be led or who publicly challenge the group's collective decisions. Effective discipline is also an essential part of effective group leadership.
“Control is the real test of emergency medicine group democratic rule commitment,” he said. “If a majority of the members of the group cannot remove or replace the leadership of the group, they are not in control of the group. The most successful emergency medicine groups I've seen are led by extraordinary leaders who inspire, direct, and discipline the group members, view control of the leadership as an investment decision rather than one of status, and make compensation for clinical practice the same for everyone in the group while keeping the question of administrative compensation separate and tied to results.”
Risks, Benefits of Partnership
So what should physicians look for in a contract promising potential partnership? William Sullivan, DO, JD, a Frankfort, IL, health law attorney specializing in physician employment contracts, said at a minimum, a contract offering a partnership track should state the time frame within which a partnership offer will be made and should describe any “buy-in” that a new partner will be required to make.
“Depending on the business structure, a new partner may inherit liabilities of the other partners or of the group as a whole,” Dr. Sullivan said. “In a general partnership, if the group is sued for any reason, all of the partners share in the liability even if only one partner was accused of wrongdoing. If the group's contract guarantees that the group will pay for malpractice tail insurance and the group does not have sufficient funding to do so, a partner could face financial liability if the group breaches its contract.”
Dr. Sullivan recommended that job-seekers discuss a prospective partnership with a business attorney before accepting an offer because different business entities provide some liability protection to partners. “An offer of partnership shows that a group is willing to make a long-term commitment to the physician,” he said. “Before accepting the offer, the physician should know the risks, benefits, and alternatives to partnership so that an informed decision can be made.”
And Jim Shortall, head of the Paladin Group of Hampton, NH, which provides business management services for several emergency medicine groups in New England, said the foremost element of a successful group, no matter the legal structure, has to be a strong commitment from all the partners toward a common goal for the practice. “This becomes the essential element in the process of building a strong, well-functioning group because it provides the compass for all decisions, both current and future, that the group will make,” he said. “It's very important that new members are selected based on their ability to embrace and support that goal.”
Mr. Shortall also identified other important elements for a successful group: establish a strong communication system for all members; create policies and procedures to create fairness and equality for all members; develop guidelines for voting on important matters; define procedures for buying-in or cashing-out of the practice; and implement systems to deal effectively with problems when they arise.
He emphasized that it also is important to address how group finances are managed and how profits are distributed. And his final thought sums up this series: “For physicians seeking to join a group, they need to make sure they understand the terms and conditions of the deal, make certain all their questions and concerns are addressed to their complete satisfaction, and make sure they understand and can support the common goals of the practice.”
Emergency physician groups will continue to change, evolve, and grow, but it is the responsibility of all physicians looking to join a group to first know themselves to determine their suitability for a potential partnership in a practice.
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