Sharing Control in a Troubled Group

Rory Peck* is a visionary pediatrician on the West Coast who built his solo practice into a 43-physician group.

However, this powerful 49-year-old entrepreneur couldn’t persuade any of his doctors - all employees and most under age 40 - to go the extra mile and assist a colleague who was swamped with patients during a recent Sunday clinic. And Peck can’t convince them to market themselves in the community, or wholeheartedly embrace his mission of treating Medicaid patients, who represent half the case load.

“New physicians today have a sense of entitlement,” says Peck. “They come in to see patients and then they go home. To them, medicine is a job, not a profession.”

Peck isn’t the first Baby Boomer doc who’s vented about Generation X, or Generations X and Y depending on how you define them, and their work ethic. Nor is he the first to discover that newly minted physicians value lifestyle just as much as income.

But is Peck’s quandary simply a generation gap drama, or are other dysfunctional forces at work? We asked three management experts and a physician executive how Peck can transform his group into something more than 43 recalcitrant children. The first step for Peck, they say, is listening.

“They would do what I did”

Peck launched his practice in 1990 with the goal of treating Medicaid patients like first-class patients - in other words, as if they were commercially insured. That’s still a priority for a doctor called passionate by some, and an independent decider by others. “If I believe in something, I’ll stand behind it,” Peck says.

And in the good old days, associate physicians would stand with him. That’s because he mentored them, using his own example as a professional template. “They would do what I did,” he says. “We shared call equally. We rounded equally. We all did our part.”

Over time, though, more associate physicians, particularly young mothers, have worked part-time hours and assumed less responsibility, he says. While everyone shares call equally, associates are loath to sub for someone in an emergency. And sometimes they shirk their work. Peck recalls how one vacationing physician texted the office manager Sunday night to say that, owing to personal reasons, he wouldn’t be back at the office on Monday as scheduled. “That wouldn’t have happened 20 years ago,” he says.

Another sore point has been the lack of partners. Several years ago, says Peck, he offered a 5-percent partnership stake to each of four senior doctors who were seeking to be owners. The plan was to eventually extend the same deal to other physicians, with Peck retaining a majority interest in the practice. None of the four doctors bit the hook, though, and three eventually left. Likewise, group meetings with associates that are designed to share decision-making generate a lot of talk, but not many decisions.

“It’s frustrating,” says Peck. “I try to be responsive to their needs. But things don’t get completed.”

He acknowledges that his management style may not work with today’s young physicians. “I don’t know,” he says. “I’m almost 50 years old. I’m more yielding than I might have been a few years ago. You can’t fix everybody.”

But associates aren’t problems to fix

Management experts who’ve heard Peck’s story applaud his compassionate, pioneering spirit, but advise him to accept the facts: The world has changed, and older physicians must change with it. “The way you hire and incentivize and relate to new physicians is different,” says Richard Hansen, who heads the consulting wing of the Medical Group Management Association.

Turning over a new leaf starts with more empathy, according to internist Grace Terrell, president of the 160-physician Cornerstone Health Care in High Point, N.C., and a fellow Baby Boomer. “Peck doesn’t seem to have insight into what his physicians’ needs are, like coming out of medical school with $150,000 in debt,” says Terrell, who also serves on the board of the American College of Physician Executives. “And who wants to work his tail off only to neglect his family or himself?”

Terrell and others note that the associates may be withholding their full-fledged commitment to the group because Peck has a tight grip on the reins of power. After all, he was willing to take on partners at one point, but only if he retained a controlling interest in the group. “Why would anyone want to invest in a practice like that?” asks Hansen.

Associates are sure to resist a physician executive who views them as problems to fix, adds fellow MGMA consultant Ken Hertz. “Peck’s situation is more a matter of culture rather than older doctor versus younger doctor.”

A compensation plan based on collections may explain why associates are less than enthusiastic about treating Medicaid patients, says Terrell. Since Medicaid fees are so paltry, and collection so problematic, clinicians would naturally avoid such patients. “Using gross charges or [Medicare] relative value units would eliminate any cherry-picking,” she says.

Peck acknowledges the economic lure of commercially insured patients, but notes that he’s negotiated competitive fees with Medicaid managed care plans. “They don’t pay as well, but they pay well enough for someone to make a good living,” he says.

Have an outsider survey the troops

What this practice needs is an objective outsider who can uncover the source of its discontent and help Peck and the associates forge solutions. Such an intervention could initially take the form of a work climate survey, says David Shaw, chief operating officer of the Coker Group, a practice-management firm in Alpharetta, Ga. “This would allow Peck to find out what motivates his doctors.”

Ideally, the firm performing the survey would interview each associate and compile a report, with the physicians’ comments remaining anonymous, says Shaw. The firm would then share the dominant messages of the report at a group meeting, with Peck announcing what he would do in response.

If Peck wants the associates to take this exercise seriously, he shouldn’t choose the consultant by himself, adds Ken Hertz. Instead, he could delegate this job to a committee. Sure, he could serve on it, but he should have only one vote.

Giving up control is hard, but it may be even harder for Peck to open the floor to unvarnished observations and complaints from the associates. “If you’re not willing to hear the truth and act on it, you shouldn’t spend a dime on this survey,” notes Shaw.

Turning associates into partners

Assuming that the practice reaches a consensus about a path forward, our experts recommend that Peck allow the associates to buy into the practice as equal partners. “If Peck wants the others to act like owners, then there must be equality - equal shares and votes for each doctor,” says Shaw. In other words, Peck must relinquish his controlling interest.

A shift to egalitarianism doesn’t mean giving away the store, though. To recoup his equity, Peck needs a practice valuation to determine what each associate must pay for a share. “An independent party should do this, because a lot of doctors have an inflated notion of what their practice is worth,” Shaw says.

The new partnership structure shouldn’t discriminate against part-timers, especially new moms, adds Terrell. In her group, doctors who switch to half-time status can still remain full partners with a full vote. “If you accommodate a young female physician after she’s had children, she’s far less likely to take another job elsewhere,” says Terrell.

Restructuring the practice like this, she says, would turn passive associates into active owners. It would end the parent-child dynamic that leaves Peck so frustrated. Says Terrell: “These doctors haven’t had to grow up, because daddy did it all for them.”

*Name and other identifying details have been changed.

Robert Lowes is an award-winning journalist based in St. Louis who has covered the healthcare industry for 20 years. He can be reached via physicianspractice@cmpmedica.com.

This article originally appeared in the September 2009 issue of Physicians Practice.