Weighing The Pros And Cons Of Podiatry Supergroups

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Author(s): 
Lowell Weil, Jr., DPM, FACFAS, MBA

   A supergroup allows investment into the right people to manage and create growth, stability and profitability. A management team will usually be headed by a chief operating officer who reports to the chief executive officer (often a physician in the group) and has a team consisting of a human resource specialist, a senior accountant or controller, billing manager, clinical manager, patient services manager and IT manager. These may seem excessive but in comparison to a successful non-medical business, this group is essential to foster success. A supergroup allows a medical practice to start thinking and functioning like a business. Non-medical businesses continue to thrive in our country while medical businesses that think small barely survive.

What Happens When A Doctor Wants To Leave The Supergroup?

Supergroups usually provide physicians with an exit strategy when they want to leave or retire. The exit strategy can vary from group to group but there is usually a cash amount paid to someone leaving the group. When doctors own their own practice or have a partner or two, there are rarely good ways to get exit money out of the practice. There are very few young practitioners who are willing or able to pay for a practice given the economic times and the abundance of education loans. Many physicians are faced with a harsh reality that their practice is not worth what they think. The years of hard work and the expectation of a big sale at the end is not happening in today’s market. Joining a supergroup may make that big sale more possible.

   If some entity, be it a hospital system or a strategic buyer, decided to purchase podiatry practices, the resulting supergroup would have much greater value on the open market than the small practice alone. Individual practices that gross between $500,000 and $1 million would be valued at 100 to 200 percent of the practice profits. A supergroup that has revenue in excess of $10 million would be valued at four to six times the profits and that multiple can get higher the larger and more profitable the group becomes. By joining a supergroup, your practice value can literally more than double overnight.

A Closer Look At The Downside Of Supergroups

A supergroup does not come without its detriments. The most common concerns and obstacles I find with people considering joining a supergroup include the loss of their name and individuality. One or two people have started most podiatry practices and they have dedicated their lives to growing the practice. Their identity is tied to the practice and giving that up is a huge hurdle. When one joins a supergroup, the practice is folded into the larger entity and the name will eventually be the name of the supergroup. This is not a bad thing but a psychologically difficult one. The reason the supergroup will be effective is that everyone will be working in a business with the same goals. While individuality is important, one needs to set it aside for the good of the group.

   In solo or small group practice, physicians can immediately execute decisions. A supergroup will not allow that to happen. As a business becomes larger and more institutionalized, physicians must follow processes for changes to occur. For those who are accustomed to running their own business and practice, this issue can lead to frustration and unhappiness.

   There are two things that are commonly associated with supergroup failure. Many times, groups get together without a plan on how to benefit as a supergroup. They like the concept of a supergroup but have no idea what it means or how to make it successful. They get together just for the sake of getting together. Another problem that is common is a lack of strong leadership. If a group has not identified the person or people to lead the organization, it will flounder and ultimately fail.

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Dr.Alberto Rivera Zenteno,MDsays: December 3, 2013 at 8:17 pm

I really appreciated this wonderful info and guide to work better as group or working with partners-friends in Mexico.

Have a good day! Thanks again.

Sincerely,

Alberto Rivera, MD

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Dr DPMsays: December 26, 2013 at 11:28 am

One of the perks about working in a multispecialty supergroup medical clinic (of more than 10 physicians) is that if you represent podiatry as a minority in a sea of many MDs, MBBSs, and DOs, it is inevitable how much you, as a BE/BQ/BC licensed podiatrist, have to educate the BE/BQ/BC licensed allopathic and osteopathic physicians about your profession. I myself have the unique experience of doing this. It is the best part of my job!

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