Choosing The Best Business Model For Your Practice
- Volume 25 - Issue 4 - April 2012
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Independent physician associations are relatively inexpensive to join and most physician practices maintain their autonomy. This is very attractive to many physicians who join these associations. However, the disadvantages are that independent physician associations are very loose and ineffective entities with significant unpredictability. In addition, these associations do not offer much value to the physician when it comes to increasing the overall equity value of his or her practice.
What You Should Know About The Group Practice Without Walls
A group practice without walls is a more tightly integrated model than an independent physician association and is one way to act like a group without truly being married “‘til death do you part.” In this model, the practices are usually set up with a single tax ID number. They share administrative and management costs, but maintain their individual practice locations and autonomy.
There are various types of group practice without walls. In some that are more integrated, the group practice without walls will employ the physicians, purchase assets from the practices and set compensation schedules. In a less integrated model, you would maintain your site autonomy and have separate site control and accounting.
In general, in a group practice without walls, you still maintain the financial emphasis on your own practice but as part of the group, you can share some marketing and administrative costs. The benefits are that you have more autonomy and can get some of the benefits of a true group practice model.
The reality is that in this model, you and the other physicians really are not fully committed to each other and have to really make sure you are set up properly from a legal perspective to receive the potential benefits of a fully integrated super group model. It is difficult to act as a unified team under this model with a set of shared core values. Again, under this model, your equity value opportunity is limited due to the nature of the structure.
Overall, you have many choices and there are many ways to skin a cat. The key to any of these models is education, education and more education. Do not make a career decision because it is the cheapest and least risky way to do something. You usually get what you pay for and that goes for this as well. You must seek wise counsel and have your own advisors on your side. Do your homework and understand every aspect of the model you are joining, including the leadership team. In this area, unlike with mutual funds, “past performance does guarantee future performance.”
The decision you make will either work or not work. Accordingly, it is important to understand the consequences of a deal going south and what impact it will have on you and your practice, and your career. If I can offer some friendly advice, do not ever do a deal because you feel that doing something is better than doing nothing. As they say in real estate, the best time to buy a house is when you do not need one.
The same holds true in choosing a practice model for you. Making emotional decisions based on the fear of being left out will ultimately be the “kiss of death” and lead to a fairly miserable practice experience.
Dr. Helfman is the CEO and Founder of Extremity Healthcare, Inc., and Village Podiatry Centers in Georgia.
For further reading, see “Transitioning From A Solo Practice To A Group Practice” in the October 2010 issue of Podiatry Today or “Understanding The Allure Of A Multispecialty Group Practice” in the February 2007 issue.