Cost Considerations When a Partner Joins your Medical Practice
Check out these medical practice management tips when expanding your group
Part of medical practice management is knowing when it's time to bring in a new partner. If someone is joining your medical practice, it's important to consider his or her role, what your practice has to offer, how he or she will be compensated and how to pay for the equipment and space your new partner will need. You'll also need to consider the role of medical practice valuation in the hiring process and how to properly integrate new physicians. If you need funds to cover expenses related to hiring a new partner, a business loan or business line of credit from Citizens Bank can help. We have financing options to make joining a medical practice go more smoothly for your new partner. To learn more about your borrowing options, speak with a Citizens Bank HealthCare Banking Specialist.
Find the right partner to meet your medical practice's needs
When a new partner is joining a medical practice, it's often because they have unique skills needed to enhance patient care within your group. Before you begin the process, take some time to think about exactly who is needed to round out your practice. What are the current needs of your community? Who do your competitors have on staff? Do you need an additional family practice physician, a dermatologist, an OB/GYN associate, an alternative medicine specialist or an orthopedic surgeon? Do you want/need someone with admitting privileges at a local hospital?
When choosing a new member to join your medical practice, take into account a potential partner's skills. You'll also need to make sure that both you and your potential partner are clear about duties and expectations as they consider joining your medical practice.
What to look for in potential partners
Before you welcome a new partner, consider some of these factors to make sure he or she is the right choice for your practice. It's important to speak with potential partners to learn more about their patient care philosophy. This can help you consider how a new partner could complement other specialties in your practice. Some questions to ponder include:
- Is he or she a good cultural fit? Each practice is different - some have a more formal approach, while others may be more relaxed. Before bringing a new physician into your practice, determine whether he or she will fit in with the other members of your group in terms of rapport, bedside manner, approaches to treatment, personality and so on.
- What are the expectations for compensation? Be sure that you are clear about what your practice has to offer so potential partners can make an informed decision. For example, some doctors are willing to take a bit of a pay cut to work as part of a group, while others will want to be compensated for higher levels of expertise based on past experience.
- What are your rules for buy-in? Many practices require new physicians to work at a practice for a certain period of time before they are allowed to pursue a buy-in option. If you do not have buy-in rules in place or feel they should be updated, work with a legal professional to discuss your medical practice valuation and establish conditions such as ownership percentage, price and payment period, control of decisions and so on. Make sure this information is clear to those you're considering.
- Will you need more room or equipment? When a new physician is joining a medical practice, you may need additional office space or equipment depending on the needs of your new partner and his or her patients. If you need to make an equipment purchase or relocate, a business line of credit may help you cover the costs.
- How much revenue will the new partner bring in? Make sure your new partner provides a service your community currently needs so that he or she can help foster the growth of your practice. Some partners may bring several patients with them; others may be less established and their specialty may be what creates the draw, which could take time to show on the income statement and balance sheet.
- What insurance or legal considerations will you need to manage? Determine whether potential partners are held to a noncompete agreement from their previous employment and whether or not those who are would be violating the terms by joining your practice. Laws surrounding noncompete clauses vary from state to state, so make sure that you and your potential partners take some time to speak with a certified legal professional. A lawyer can also help you set up a noncompete for your new partner, should you choose to do so.
In addition to noncompetes, you may also need to add your new partner to your malpractice insurance policy, which could affect coverage and premiums. Be sure to review past claims against potential partners as well as policy changes with your insurance agent.
Consider all your potential costs before hiring a new partner
When a new partner joins your medical practice, it's important to make sure he or she fits in with the culture of the practice and has the tools needed to care for your patients. However, it's also important to make sure your business is prepared to take on the financial responsibility of an additional partner. While the new physician will eventually invest in and help grow the practice, you'll still need to have resources to cover his or her salary, benefits, insurance and more up front. If you have questions about financing options for your practice, a Citizens Bank HealthCare Banking Specialist may be able to help.