KEYS TO A SUCCESSFUL PARTNERSHIP: GOVERNANCE
Congratulations, you have been voted to join the partnership! Now what does becoming a partner in a practice actually mean?
Many physicians feel the path to partnership comes with longevity in the group, usually two to three years of service and complementary clinical skills with the existing partners. While that may have been true years ago when the margin of error between a successful practice and a failing practice was large, it is not true today.
Today’s practices must have physician owners (partners) who are willing to run the business. The margin for error is small, and decisions are much more difficult. Crises like COVID-19 happen. Practices have become complex businesses with legal, marketing, negotiation, investment, and compensation decisions to be made every quarter.
All this is to say that doctors who own physician groups today have the responsibility to govern them.
The Difference Between Governance and Management
Let’s start by defining the difference between governance and management. According to Webster’s New Collegiate Dictionary, to Govern is to control and direct the making and administration of policy; to Manage is to handle with a degree of skill. The line between governance and management is not always clear, but essentially physicians must allow managers to deal with human resource issues, staffing, employee supervision and other tasks that require a ‘degree of skill’ to complete. Physician partners in a corporation should focus on setting direction for the practice, providing vision, and setting policy.
Identifying and Communicating Roles
It’s important to review and understand what it means to be a partner in your practice. A partner is an owner. Owners have different legal responsibilities in different types of partnerships and corporations and different states. However, regardless of the state that you practice in or type of legal entity that you have ownership in, if you consider yourself a partner, you have a responsibility to lead. Some partners will take a more active role than others, and that is not unusual and not necessarily bad. The role of each partner should be understood by all partners and discussed openly. Having a partner who wants to take more of a leadership role and feels that he or she is being blocked by another partner can lead to problems. Successful organizations are clear about partner roles. In some groups, roles rotate, while in others they stay the same for years. The only rule to follow is: does it work for your organization without taxing one partner more than another?
Group vs. Personal Perspectives
Partners will look at issues from one of two perspectives:
Personally, as in, “what is in it for me?” or
Group, as in, “what is best for the group?”
It is vital that all partners, especially group leaders, lead from the group perspective and have articulated a clear vision and direction. If all physicians take the personal view, the group will only work in the individual’s self-interest and success will be difficult.
To determine if the group is succeeding in governing, begin by reviewing the principles for offering new physicians’ partnership. Are those defined? Do they work in healthcare today? Do the new physicians need to earn a partner title? Does the group train partners to make decisions in a thoughtful decisive manner?
Review the corporate documents and make certain that they fit the partners’ vision of the partnership. Review the compensation agreement and make sure it fits the vision. Review the buy/sell agreement to make sure the formula for buying or leaving the practice is consistent with the vision.
Establishing a Vision and Strategic Plan
Next, does the partnership provide a vision, mission and strategic plan to the practice? Groups that do not take the time to develop a plan make decisions haphazardly. Partners must think from a policy perspective and drive decisions based on principle, not individual goals or which partner shouts the loudest. An effective board must provide big-picture direction for the group. If everyone in the group agrees with the road map, the group will be able to settle disagreements and move toward the objective.
Even if a physician manages day-to-day operations, governance must provide staff and managers clear direction. Partners should set goals, objectives, timelines and budgets to provide managers the rules by which to implement their skill. If a physician partner finds himself in a position of implementation, he is no longer governing, he has changed roles and is now implementing policy of the governing partners.
It is no longer accurate to say a “physician is in private practice.” The correct terminology for physicians who work in for-profit groups is “in the business of medicine.” The realization must kick in that, regardless of the specialty or size of the group or practice, physicians are owners and they run a business. As such, they are required to guide the organization to the best of their ability, starting with the careful selection of partners and charting a solid course for governance.
Thomas J. Ferkovic, R, PH, MS, is CEO of Medic Management Group. His background includes extensive work in areas including business and clinical advisory; revenue cycle management, transaction support, crisis management / turn around execution, and practice management. MMG is a national provider of consulting services and back office administrative support to independent and system owned physician practice groups. Additionally, MMG has been formally recognized as a multi-year Northeast Ohio Top Workplaces award winner.