Transitioning From A Solo Practice To A Group Practice

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Steven Peltz, CHBC

   John was still interested and asked if he could share in the profits of the large practice and still not be a partner. It took three weeks before Paul told him he could share the profits but there were a few partners who did not like the idea. John asked Paul to have his partners approve him attending a partner’s business meeting. At the meeting, it was clear that the group looked at John’s addition to the practice as a way to make a contribution to the overhead by capturing revenue that they were sending out of the office. While a few of the partners thought it was a good idea, one partner said very bluntly, if you join us and then decide to leave, or if we terminated you, you would have to start your practice all over again outside your restrictive area and we would probably hire another podiatrist.

   That night, John went home and did not sleep. He called me very early the next morning and said he could not join Paul’s practice and wanted to discuss the large podiatry group again.

   He met with the managing members of the podiatry group twice and then asked me to meet with them. I explained to them that John and I would like to perform the same type of due diligence on their practice as they proposed to perform on John’s. They agreed and John and the group exchanged and signed a nondisclosure agreement.

What The Due Diligence Revealed

After going through the group’s documents, a number of issues jumped out at John. The partners were making about 10 percent more than he was. The group had risk management meetings once per month. During these meetings, they reviewed surgeries, edited their patient consent for surgery forms, had strict rules for finishing charts on time and offered free time at the hospital emergency room. The group also had a seminar for all primary care physicians whether they referred to the practice twice a year and had guest speakers.

   If a partner became disabled, he received his base for the next month and then nothing more. The group had life insurance policies on all partners. If a partner was permanently disabled, he got his accounts receivable and then a small buyout from the practice. All partners were encouraged to purchase the maximum personal disability insurance they could. Each partner had to work 15 years as a partner to get any part of his buyout and was required to give a full 12 months’ notice before deciding to retire.

   The group was also in the process of hiring a fresh graduate to staff an office in an underserved area. They projected a small loss for the first year and then a large profit. The group had a professional administrator who held the partner’s feet to the fire when necessary. She understood her role as the manager of a practice that had thirty support staff. She understood finance, billing, was an RN, had training in human resources and knew how to communicate. She was also putting together a plan for an appraisal subcommittee owned by the group. She was also working on a collaborative effort with ophthalmologists and dieticians to form a diabetes initiative and treatment plan for all patients with diabetes. One of the partners told John she played a major role in why the practice was successful.

What The Solo DPM Decided To Do

John’s wife did not like the idea that someone else was going to take care of the practice’s finances and John did not like the idea of giving up his autonomy. However, after another meeting with John, his wife, his accountant and I, John understood that he was not going to move from his office and in fact he would have time to work in the larger office near his office and another partner would use his office when he took a vacation. He would still make the day-to-day operational decisions for his office and staff.

   The decision became clear when John attended a meeting at the hospital to learn about accountable care organizations (ACOs). John felt that if ACOs did in fact become real, the hospital or a larger group would dole out funds for primary care services. He saw many primary care physicians discuss joining a hospital or a large group. Would the large group refer to a group of specialists or to a solo specialist? He did not know the answer.

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