When the match is right, the benefits can be significant: more hands to share the load of running a medical practice, and increased revenue and expanded patient population. A partner can bring in new, complementary strengths and skills. Adding a partner is also a way to prepare for the future by setting your practice up for a smooth transition if you or another partner is looking toward retirement.
But a mismatched partnership can cost you time and money, not to mention endless amount of conflict, dysfunction, and liability. Mutual trust and a long-term commitment on both sides are critical.
“Just like with marriage, it can be very difficult, traumatic, and expensive to break up with a partner,” said Clifton Straughn, MD, partner at Direct Access MD, a concierge-service model family practice in Anderson, S.C. “So, do your due diligence and take your time.” Picking the right partner is essential.
Before you begin the process of partnership with a physician, be sure you know what you need, the skill sets you’re looking for to complement your practice, and the personality characteristics and values that are important to you so the person you choose can check all the boxes and not just add a name to the letterhead.
“A lot of times, doctors go into this with just a general idea that they need more doctors or that they would like to be bigger or have more clout,” said Tim Boden, a certified medical practice executive with over 40 years of experience. “But you have to understand that to a certain degree, if you’re bringing somebody in who has basically an identical clinical profile to yours, you’re going to be sacrificing a bit of your lunch for a while until that person builds a name for himself or herself. A new partner’s skill set should match the need that you’re trying to fill.”
Figure out and discuss with your current partners how much it will cost to bring in a partner between their compensation and additional practice expenses. How much revenue will you expect the partner to generate? Will your practice break even the first year or the second? And how will you cover any shortfall?
It’s also essential to understand how the day-to-day operation of your practice will change after you add another partner.
- Will the new partner’s percentage of ownership be the same as that of the other partners?
- Will their ownership include a percentage of the facility, equipment, supplies, and accounts receivable?
- How will you split call and work hours?
- How will decision-making work?
- How would buyout work if a partner were to leave the practice, and is there a minimum obligation, such as a 5-year commitment?
As a team, you may also want to discuss “soft skills,” or the way you’d hope a partner would represent your practice to patients and the community.
“These can be harder to quantify,” said Dr. Straughn. “Evaluating them can take artful questions and simple observation over time.”