Partnership Issues

Winding down a medical practice need not be an anxiety-provoking process for a retiring physician. If he or she practices within a group, this process has probably already been addressed on some level. But what about doctors who are in a solo practice? How should they best accomplish a graceful exit? In an article in American Medical News, Karen Schecter addresses some key points to keep in mind.

Step 1: Present a Timeline to the Staff

First notify the staff by presenting a timeline. It is recommended that you give employees at least 90 days notice. Understand that at the first mention of a physician’s retirement, some employees may become skittish and tender their resignations. You may want to preempt this by offering some bonuses or severance packages to those employees who stay.

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Medical practices that are considering recruiting new physicians may want to consider the following fact: most residents will ultimately practice in the state in which they trained. The Florida Statutory Teaching Hospital Council, which represents Florida’s six teaching hospitals, says that about 70% of residents end up practicing in the community in which they do their residency. They attribute this primarily to residents developing relationships with hospitals and with other physicians in the community during their training.

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Recent studies suggest that larger physician groups not only have advantages over smaller groups and solo practices when it comes to negotiating contracts but they may also offer better quality of care. According to a report in American Medical News, larger practices are more likely to result in the “public practice of medicine”, where peer review and pressure improves the quality of the medical care delivered.

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One- and two-doctor practices may become a thing of the past as an increasing number of physicians are being wooed by hospitals.A recent article in the American Medical Association News magazine reports that solo practices may be becoming a thing of the past. According to a study by the Center for Studying Health System Change, during the period between 1996 and 2005, the percentage of one- and two-physician practices declined from about 41% to 32%, while single-specialty groups with 6 or more physicians increased from about 13% to 18%.

Joy H. Grossman, PhD, a co-author of the report, credits such issues as a better work-life balance and a perception of less hassle as a reason for new physicians preferring to join larger groups. Practices across the spectrum have seen decreasing salaries despite increased productivity, and solo practices are less able to absorb this financial impact.

Hospitals have had a sharp rise in the number of physicians they are recruiting, usually at the expense of these smaller groups. Another report discusses the increasing number of proceduralists (physicians who only perform procedures and do not have their own patients) being hired by hospitals.

So what does this mean for existing practices? Well, solo or small practices will find themselves competing with hospitals for the brightest and the best of the new doctors coming out of training. Larger practices may take some solace in the fact that new physicians are more likely to want the infrastructure and financial stability that they are offered, allowing them to focus less on operating a practice and more on the practice of medicine.

At a recent meeting of larger medical practices, an issue which comes up frequently is the challenge of recruiting a new partner. And time and time again, a recurring theme is one of differences between generations of physicians.

Those physicians with retirement on the horizon looked at their medical careers as the most important part of their lives - but also looked at new partners coming in as a source of their retirement, with expensive buy-ins and goodwill payments to boot.

The next generation, those physicians in their ‘prime’, have a similar work ethic, but are a little more pragmatic about their careers - there is no golden retirement and there is an expectation that one will have to work harder and harder to keep one’s head above water. As far as relying on new blood for retirement; well, there is little expectation of that. They are satisfied in merely finding new physicians willing to work harder who also want to become equity partners.

And this brings us to the new generation, which recent surveys have described as wanting to work less even if this means not becoming equity partners in a practice and remaining as employees for the long haul. They are more likely to be married to another professional with neither being considered the primary breadwinner and finding satisfaction less in work than in family and lifestyle.

Look in our articles section to come for more in-depth discussion from physicians, managers and experts in the industry on this important and challenging issue.

Is it too late to reverse the physician shortage?

According to an article in HealthLeaders Magazine concerns about a future shortage of doctors may be too late. Peter Fine, CEO of Banner Health in Phoenix, says the shortage is already here.

Several factors are to blame:

- One third of practicing physicians is over the age of 55
- U.S. Medical Schools have not provided for the loss of 33 percent of the physician workforce - by the year 2020, the nation may be short anywhere from 24,000 to 200,000 physicians
- Studies show that younger physicians coming out of training do not want to put in 80-hour work weeks required by certain specialties - it may take two younger doctors to equal one current doctor
- Aging baby-boomers are poised to increase the number of people over 62 from 46 million to 83 million - and older Americans tend to utilize health care services more

To combat shortages in specific areas such as Family Practice, Gastroenterology, and Urology, some managed care systems are having their hospitals recruit and hire physicians as employees, with enticing packages. Despite promises of newly constructed medical facilities to beautiful beaches within a short drive, many doctors coming out of training aren’t biting.

Ultimately, however, the United States may be forced to do what other industrialized countries such as Great Britain are having to do: import physicians from abroad, such as Asia or the Middle East.