Partnership: Don’t Let Partner Conflict Destroy Your Practice

When the managing partner of a plastic surgery practice informed his colleagues that tough times called for everyone to take a pay cut - except for him - at least two physicians were ready to walk. When the seven older physicians in an orthopedic practice wanted to reduce their call schedule by having their three younger partners cover for them without reciprocating, the junior partners threatened to quit.

These examples of partner strife offered by consultants involved in settling the disputes, are typical of physician disputes, most of which revolve around financial issues and call schedules. Sadly, such conflict among the physicians in a practice are not uncommon, and when discord strikes, everything suffers: job satisfaction, staff attitude, practice productivity, patient satisfaction, and the bottom line all go down in warring practices.

Even patient care can suffer.

Kenneth Hertz, an MGMA consultant in Alexandria, La., says that when physicians become suspicious of each other and stop cooperating, “the staff picks it up instantly. As a result, [employees] don’t treat their patients [as] well, because they don’t care.” They’d rather go home right at 5 p.m. than try to squeeze in a patient who needs to be seen immediately. Some doctors will even argue within earshot of patients. “Who would want to work in an environment like that?” asks Judy Capko, a consultant in Thousand Oaks, Calif.

Nothing like this may have ever happened in your practice. But it certainly could, if you’re not careful. Here are some tips on how to prevent conflicts between you and your partners and how to deal with them when they arise.

Declare your expectations

The first step you should take to avoid strife is to have a frank and open discussion about what you expect from your partners at the beginning. “The reason we have conflict is that when we bring in the new partner or form the partnership, we’re not always clear and honest about our expectations,” Hertz says. “For instance, if I bring you into the group, do I expect you to build your new practice? I need to let you know that up-front. What are my expectations of your workload, of what you’re going to produce?”

Most partnership agreements don’t specify how many patients a physician will see or the amount of call he’s supposed to take. Because personal and business situations are always changing, it’s impossible to pin down these kinds of things in writing. But Hertz says it’s essential for partners to agree on their “unwritten expectations when they come together. These are all the things we don’t talk about, but that typically cause friction down the road: ‘What do you expect from the practice, and what can the practice expect from you?’”

What is written in partnership contracts can also lead to conflict. For example, if a buy-in agreement is onerous, you may not realize that right away, or you may sign on anyway, because you’ve already invested a couple of years in the practice. Down the line, however, you may resent the fact that you’re earning so much less than the senior partners for the same amount of work.

“If somebody feels like they got a really raw deal on the buy-in, they might passively-aggressively take it out on others thereafter,” says Daniel Bernick, a consultant with The Health Care Group in Plymouth Meeting, Penn. Don’t take advantage of new partners. “You could win the battle, but lose the war,” Bernick points out.

Make income division reasonable

The division of income and patients is another major source of disagreement. You may feel you’re not getting your share of new patients, or that you’re being assigned a disproportionate share of new Medicaid patients. In addition, partners may become angry if they believe that some of their colleagues are not pulling their weight, or that they’re putting personal expenses on the group’s tab.

Many practices try to avoid conflicts related to income division by basing salaries on individual productivity. (Physicians often describe this approach with the unfortunate phrase “eat what you kill,” which makes them sound like they’re hunting rather than healing patients.) While splitting fixed expenses like rent and utilities equally, these groups also subtract variable expenses, such as the cost of assistants or office equipment, from the income of each partner.

Equal division of income works fine for some practices that have a strong group culture, says Bernick. This method also rewards doctors who perform an essential function, although they don’t bring in as much revenue as their colleagues. For example, interventional cardiologists may split income equally with a noninterventional colleague, because they depend on her referrals.

Sometimes productivity will vary because of different practice styles; also, some doctors work fewer hours because of family demands on their time. Those considerations should be built into the compensation structure. Then the partner who’s making less will understand that this is a result of his own choices.

When disagreements arise over operational issues, such as the allocation of new patients or exam rooms, Capko suggests that you mention your concerns to your practice administrator. While these managers can’t usually resolve conflicts between physicians, they can find out more about the situation and bring the facts to the group’s board or managing partner.

Beware of employed spouses

Many practices run into problems when a managing partner hires a spouse or other family member. If a husband or wife is the practice administrator, and he or she is ineffective, it can have dire consequences for the practice. Yet the other partners will usually be reluctant to confront their senior colleague about the situation, and some have left their groups over it.

“The other doctors don’t know how to deal with it, so they don’t deal with it,” observes Indianapolis-based consultant Michael Brown. “The spouse may be a very poor employee. But you’re not going to go to the managing partner and say, ‘Your wife is doing a lousy job.’”

Jeffrey Denning, a consultant in La Jolla, Calif., points out that when a partner’s family member works for a practice, he might be “unsupervisable.” Who is going to correct the physician’s spouse’s poor performance? To whom will the spouse report? Also, the other partners might assume that this employee “will be more loyal to his or her relative than to them. So except in solo practice, if your wife needs a job, get her a job in some other doctor’s office.”

Rein in the great dictator

In many groups, one partner rules the roost. She may be the founding partner, the senior physician, or just the one who has assumed the mantle of leadership. Other partners are frequently afraid to cross swords with this individual, who may have punished other dissidents in the past.

Sometimes the managing partner will lead the group astray. Denning cites a large orthopedic group that, at the insistence of its leader, invested too much in unnecessary new facilities. Profits dropped, and some of the practice’s best surgeons left for better-paying jobs. Then it had trouble recruiting replacements. It got into this situation, Denning says, because “nobody was able to confront the lead guy.”

The bylaws of most groups specify that partners must be allowed to vote on certain matters, such as incurring debt, selling the practice, or bringing in a new partner. But in reality, Denning notes, “Physicians are uncomfortable confronting each other.” They might agree that it makes sense to oppose the senior partner, “but they don’t want to be the one to put the motion on the table.”

Deal with behavioral problems

You’ve undoubtedly run into physicians who are difficult to get along with, rude to patients, condescending to staff, or have other behavioral issues. If such a physician is one of the group’s rainmakers, the other partners may simply ignore his bad behavior. But as Denning points out, sticking your head in the sand in these cases can be “extremely damaging. It can cost the practice money.”

Hertz recalls a multispecialty group where a high-producing spine surgeon was so disruptive - abusing staff, throwing tantrums, nonstop complaining - that finally the group gave him an ultimatum: straighten up or get out. He quit, and the group missed his income for a while. “But eventually, they made up for it, and built a stronger practice as an overall team,” Hertz says.

Consider having a written code of conduct. “It strengthens the resolve of the other physicians to stand up to the bad doctor,” says Will Latham, a Chattanooga, Tenn.-based consultant. But the enforcement of such a code is tough, because doctors are reluctant to evaluate their peers. Some groups set up peer-review committees to do this; larger practices may refer such matters to their board, or to an executive committee appointed by the board.

Peer-review committees, however, usually have no authority to sanction or suspend a problem doctor. Many partnership contracts include clauses providing for termination without cause, Bernick notes, but firing a partner requires a vote of the entire group. That can be difficult if the bylaws require a super-majority that might be 75 percent of the partners, or allow a lone partner to block the termination.

Capko suggests a less disputatious approach: Ask a senior doctor whom the disruptive physician respects to speak with the latter about his behavioral issues. In a big group, that might be part of the medical director’s job description.

How to formalize decision making

To minimize conflicts in group practices, it’s essential to have a governance structure appropriate to your practice and a carefully considered approach to decision-making.

Partners in small groups usually see each other every day, and can discuss most problems in the course of business. In a medium-sized practice, the partners should meet once a week to address business matters. The group will usually have a managing partner, which can be a position that rotates among the partners. But once a practice grows beyond nine or 10 physicians, it often elects a board to make key decisions, because it would take too long for so many doctors to discuss and deliberate on them.

Another way to divide up management duties is to set up committees. That’s what an 11-doctor pediatric practice in Lexington, Ky., recently did. It elected a president, who appointed partners to head finance, clinical, and operations committees, which meet weekly. While some of the older partners grumbled about the change, the initial results have been gratifying, says pediatrician Katrina Hood.

In many groups, says Latham, the “dirty little secret” is that physicians feel free to ignore group decisions. “Individual physicians think, ‘If I didn’t vote for something or I don’t agree with it, I don’t have to support it or adhere to it.’ That creates a high level of conflict within the group.”

When physicians see that one of their partners isn’t abiding by a group decision, they may complain, says Latham. “But nobody does anything about it, because physicians won’t challenge each other. So they live in a constant state of being frustrated with each other, because people aren’t adhering to the agreements they thought they made.”

The key to resolving this dilemma, he says, is for you and your partners to agree in advance that you’re going to abide by group decisions. Second, those decisions, whether made by the board or the full group, should be written down in policy manuals. These may be based on minutes of meetings, which should be disseminated and reviewed. After that, they’re added to the policy handbook, which covers issues such as call coverage and reimbursement.

This formal mode of decision-making “doesn’t get rid of conflict, but it allows you to process conflict,” Latham says.

But whatever formal processes are in place, “The key factor for minimizing major conflict in partnerships is consistent, open, and honest communication,” Hertz says. “When you and I are honest with each other, and discuss things before they become a problem, or at the moment we identify them as a problem, we’re going to be OK.”

Ken Terry is a New Jersey-based freelance writer and the author of the book “Rx for Health Care Reform.” He can be reached via editor@physicianspractice.com.

This article originally appeared in the July/August 2008 issue of Physicians Practice.