Considering a Private Practice With Partnership…. Part One

 

As a newly minted doctor, you’re most likely asking yourself many questions about your pending physician career path, where you want to work, the practice setting that’s right for you, the type of work/life balance that best suits your personality. Often, one of those questions is something similar to “Should I join or start a private practice?”There is no way to guarantee a potential private practice with partnership will work. Consequently, weighing the advantages and disadvantages of having or being a physician partner, and carefully evaluating a partnership can help ensure that you find the right person to entrust as a partner. Under the right circumstances, though, a partnership can offer grand rewards. With partner status comes a voice in business decisions, and you need to ask yourself if you are cut out to be a business owner? Many physicians also feel that having a private practice earns the respect of their colleagues and their communities. And, in a profitable practice, partners are not only able to earn higher income, but they can also build up equity for retirement, whereas employees must rely on their 401k plans.

Becoming a partner includes the risk of taking on added responsibility for the same or potentially less money. If an employee must reduce his or her salary in order to finance a partnership buy-in, he or she could end up earning less money as a partner than as an employee. Also, should the practice become less profitable, partners must continue to pay for overhead costs and the salaries of their employees before paying themselves. Try to evaluate potential partners without regard to emotional ties or friendship. Draw up a set of criteria that you’re looking for and simply judge how well a potential partner lives up to it. Your potential partner should also have questions for you and should want to know about your character, reliability, and expectations. Evaluating a potential partner can be like trading life stories to understand if your business principles, company goals, and personalities are compatible. Before you say yes to a partnership, determine the level of responsibility involved and whether it matches your personal needs and desires. Because if you’re planning to buy into a practice, you’re likely to be a partner for a long time.This partnership is often called a “work marriage” since it takes dedication, loyalty, honesty and passion. Take as much time as you need to make a well-informed assessment of whether your business partner is actually a suitable one. You should share a sense of vision and values but not have overlapping skills.

If the practice with which you are interviewing has a path to partnership track, the interview is a perfect time to discuss the length of the track and how their buy-in process works. Typically, a period of two to three years is about average. After the practice presents you with a partnership offer, it is always a good idea for you to enlist the help of an attorney, accountant or other consultant to review the practice’s books. An attorney can also help you build important information into such an agreement, such as how the work will be divided, what will happen if more startup money is needed, and how decisions will be reached. Although partnerships need to be written up, remember that people make partnerships work, not legal documents.

As the economy and market trends continue to change, so will the advantages and disadvantages of becoming a partner. The right partner can assist in escalating the growth of the practice and shoulder a large chunk of the workload. Conversely, a wrong partner can bring down the business. Patience, honesty, and careful considerations will pave the way for making the right decisions. If you would like more information on evaluating a partnership opportunity, Pacific Companies provides complimentary consulting and our experts are always available to help navigate your job searching journey.