Arguments for and against becoming a partner in your practice
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“One of the penalties for refusing to participate in politics is that you end up being governed by your inferiors.”
– Plato
“By working faithfully eight hours a day you may eventually get to be boss and work twelve hours a day.”
– Robert Frost
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A couple of generations ago, the vast majority of newly minted eye doctors followed the crowd and stepped into partner-track positions with private practices. Academic posts and staff model HMOs were available back then, as they are today. But most jobs, and most of the rewards, were in smallish partner-based independent practices.
There are numerous options open today beyond the classic “private practice equal owner” model. Some of these are old, some new:
- Fractional ownership: In the past, MD partnerships were almost universally equal. Today, some practice founders want to retain majority control, and some junior partners prefer a part-time career that does not substantiate equal ownership.
- Academic practice: There will always be doctors (bless them) who are more drawn to teaching and research than optimal paychecks; none of us here in the outside world would be here without them.
- Government/military service: Like academic medicine, public service is a higher calling. You know who you are, and thank you for your service.
- Health system employment: Some ophthalmologists enjoy being part of something big and interdisciplinary and are more than happy trading off control and peak incomes for employment stability and a lack of business duties.
- Staff model HMO: This can be a little like working in a special kind of health system. Once the last job refuge for less employable doctors, the best systems, such as Kaiser Permanente, are now admired, both as care providers and as employers.
- Private equity employment: These positions come both with and without partnership options but are typically more favored by senior doctors who have sold to PE for an upfront premium than by their junior colleagues who can end up losing a hoped-for shot at traditional partnership.
- Durable employed associateship in a private practice: A few private practices are taking a page from PE and employing doctors who are not on a partner track; this is perfectly fine for some associate doctors who do not have long-term commitments to the community or who are leery of the demands of ownership.
- Locums or other independent contracting: This can offer the best of both worlds: being your own boss in a “company of one” with no staff or facilities to worry about.
With all of these options, and the generally tougher economics of health care, some have been recalculating the benefits and risks of being a classic practice business owner. Here are the chief pros and cons of becoming a practice owner. Most of these apply whether you are in solo practice or one of 30 partners in a regional supergroup.
The pros
1. Increased income potential: As the quip goes, “Money is important, if only for financial reasons.” Partners typically share in the profits of the practice — not just the profits directly flowing from their personal work, but also the profits associated with ancillaries such as ASCs, optical dispensing and employee providers. To give you an objective sense of this, in a practice with an overall 40% profit margin, the associate (non-partner) doctors might take home around 30% of their personal collections, while the partners take home 50% or more. Over a 30-year career, this adds up to millions of dollars.
2. Autonomy and control: Control is happiness. Partnership often brings a greater degree of control over decision-making in the practice. You have a say and a vote in running the practice, patient care protocols and strategic planning.
3. Long-term stability: Partnerships often come with a sense of stability and security. You have a vested interest in the success of the practice, which can provide a sense of long-term career satisfaction. You can still be fired for gross misdeeds as a partner, but you will not lose your job (as associates do) when the practice hits a tough patch.
4. Respect and referral support: Rank has its own privilege. Staff naturally tend to be more responsive to partners as compared with associates in the practice. As an owner, you may have more pull with the local ASC or hospital administrator.
5. Professional development: As a partner, you have access to opportunities for professional growth and leadership roles within the practice and in the wider medical community.
The cons
1. Financial risk: Partnership involves financial investment and shared liability for the practice’s deficits and legal missteps. If the practice experiences financial challenges, you could be personally liable. Becoming a partner generally requires a substantial financial investment, which may go down in value. Even a fair and reasonable buy-in cost, when combined with student loans, may make your take-home pay lower for a few years as compared with what you would earn as an associate.
2. Administrative burden: With ownership comes additional administrative responsibilities. Managing the business aspects of the practice, such as billing, staff supervision and regulatory compliance, can be time-consuming and stressful.
3. Interpersonal conflicts: Partners are sometimes in conflict regarding practice decisions, patient care or financial matters.
4. Time commitment: Being a partner can demand a significant time commitment. You may be held to a higher level of production than associates and will spend uncompensated time on practice management and leadership.
5. Exit challenges: Leaving a partnership can be complex and may involve legal and financial hurdles, especially if the practice is not structured for an easy exit.
Ultimately, the decision to become a partner should be based on a careful evaluation of your career goals, risk tolerance and willingness to take on the responsibilities associated with ownership. Consulting with experienced professionals and seeking advice from current partners can be helpful in making an informed decision.
- For more information:
- John B. Pinto is president of J. Pinto & Associates, Inc., an ophthalmic practice management consulting firm established in 1979. He is the country’s most published author on ophthalmology management topics, including John Pinto’s Little Green Book of Ophthalmology: Strategies, Tips, and Pearls to Help You Grow and Manage a Practice of Distinction, UP: Taking Ophthalmic Administrators and Their Management Teams to the Next Level of Skill, Performance, and Career Satisfaction (with Corinne Wohl), Simple: The Inner Game of Ophthalmic Practice Success, and Ophthalmic Leadership: A Practical Guide for Physicians, Administrators, and Teams. Available now for purchase at slackbooks.com. Receive 20% off with promo code PINTO20. He can be reached at 619-223-2233; email: pintoinc@aol.com; website: www.pintoinc.com.
Signs you are in the right practice to make a long-term partnership commitment
No practice is perfect. Like best friends and spouses, they all have quirks you have to live with. That said, here are signs you are probably in the right practice and should stick around.
- Alignment with your values and goals: The partners’ mission, values and goals should align with your own. In the present environment, a prominent point of agreement has to be long-term succession planning and the practice’s stance regarding private equity.
- Collaborative culture: Respectful communication and a sense of camaraderie among colleagues contribute to a healthier workplace.
- Comparable economic upsides for everyone: A practice with one “cataract queen” or “retinal prince” while everyone else is struggling to stay afloat is not happy or sustainable.
- Patient-centered care: The focus on patient care and patient satisfaction should be evident. A medical practice that puts patients first not only helps to align the partners but will likely lead to a more fulfilling and profitable career for you.
- Transparent compensation and benefits: The practice should have clear and fair partner compensation structures. And because conditions will change over time, ask yourself, “Does this practice have a system in place to periodically ascertain the continued fairness of the comp model and make periodic changes where needed?”
- Adequate resources that everyone agrees on: Yours does not have to be the most technically sophisticated practice to provide great care and satisfy doctors. But it is crucial that the board’s spending priorities are aligned with community standards and your reasonable requirements.
- Low physician turnover: A stable team of physicians is always a positive sign. High physician turnover indicates underlying issues within the practice.
- Transparent communication: The practice leaders should be upfront about their expectations, policies and future plans.
- Work-life balance: The practice should recognize and support the importance of work-life balance.
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