Merging practices, melding identities

Your practice is joining forces with another group; define success by more than bottom line growth.

Merging practices, melding identities

Your practice is joining forces with another group; define success by more than bottom line growth.

By Bruce Maller, Lisa Peltier and Dana Jacoby, MBA

Many ophthalmologists have formed or joined large group practices in response to legislative and regulatory changes to the U.S. health-care system. In doing so, many did not think about how their merger would negatively impact their existing cultures, leadership and compensation packages. These issues are especially challenging when smaller groups merge — each practice has developed an identity, almost a personality, but now those employees have to give it up to create a new one. Conflicting visions and values, along with differences in leadership and management style, can pose problems. As for large groups merging, perhaps their biggest issue is deciding how to allocate revenue and share in overhead expenses.

In part one of this two-part series, we will focus on the key issues of culture, governance and leadership. In part two, we will address the critical issue of shareholder compensation while providing practical suggestions on how to optimize ophthalmology group practice performance.

How to avoid “culture wars”

We will define culture as a shared understanding of guidelines, principles, social mores and communication styles, resulting in commonly held assumptions and views among leadership and staff.1-4 While culture is a critical “hinge” in building a successful group practice, it can prove difficult to create and measure: Few studies of culture and collaborative best practices either in health care or business have been conducted.5-7

The unique dynamics of ophthalmic group practices involve sharing staff, investing in infrastructure and providing ancillary services. But this need to share practice resources is frequently in conflict with who spends, and how they spend. Although successful group practices demand a cooperative culture, many factors at play often bedevil attempts to foster one.

Collaboration defines how people who see different aspects of a problem can constructively explore their differences and search for solutions that go beyond what they thought possible — clearly what is needed when forming a new practice culture.8 But adopting a collaborative mindset can prove challenging as newly formed partnerships struggle with improving communication among stakeholders and developing a shared vision and mission.

A Harvard Business Review article, “Building a Collaborative Enterprise,” lists the following four key areas for developing a culture based on trust and teamwork: 1) A shared purpose, 2) An ethic of contribution, 3) The institution of independent processes, and 4) The creation of a collaborative infrastructure.9

Lay the groundwork

When developing a sustainable business model, a practice should invest the time and resources in creating a common identity with a shared mission, a vision and values. When contemplating a merger, these groups must talk about this common identity prior to going through the time and expense of completing the transaction. Group leaders, however, frequently overlook this step as they devote more time to legal, financial and operational issues.

For existing practices, the boards and leadership teams need to devote time to invest in this process, which can prove difficult as discussions may uncover strained relations between key stakeholders. It is important to have a proper forum to discuss these issues with the “volume in the room” lowered. Hiring an experienced third-party facilitator could help. Yes, this adds a layer of expense to the process, but it is most often worth the investment. The facilitator should educate himself about the group as well as the individual stakeholders, and interview or survey stakeholders before any group meeting.

Table 1 provides an example of a partner survey to obtain a baseline assessment of a group’s culture. Groups should implement the survey using one of many available online survey tools. Results can be easily tabulated and presented back to the partners as an agenda item during a planning session. These data can prove valuable in identifying areas of opportunity to improve partner communication and group culture.

Table 1: Partner Survey
  Rating Scale
Group Z has developed a shared vision, mission and values that are supported by the group’s strategy and processes. 1 2 3 4 5
Physician and board leadership is balanced and effective. 1 2 3 4 5
Strong, respected physician leader(s) are in place to drive mission-critical decision-making. 1 2 3 4 5
Transparency and accountability exist throughout the group and are exhibited throughout day-to-day operations. 1 2 3 4 5
There is a process to achieve economic and clinical goals through collaboration and integration. 1 2 3 4 5
Financial incentives are aligned with group values and drive the right behavior for group mission, vision and values. 1 2 3 4 5
Variation in group practice patterns, quality and operational performance measures are minimal. 1 2 3 4 5
Partner excellence is rewarded appropriately by group leadership. 1 2 3 4 5
Incentives are aligned appropriately for quality, patient satisfaction and citizenship. 1 2 3 4 5
There is a process in place to address rogue or isolated partners who do not “fit” the partner excellence structure. 1 2 3 4 5
There is a process in place to drive collaborative planning and decision-making. 1 2 3 4 5
Communication among group members is fluid, honest and open. 1 2 3 4 5
There is a culture of accountability for leadership, MDs and staff. 1 2 3 4 5
Rating Scale: 1 = Strongly Disagree; 2 = Disagree; 3 = Neutral; 4 = Agree; 5 = Strongly Agree

Develop a strong governance structure

Historically, ophthalmology groups would elect each shareholder to participate on the company’s board of directors. The board would assume responsibility for developing policy and managing the affairs of the company. Delegated authority would be given to an elected president or managing partner to carry out the policies and plans of the practice. While this model is more likely to work well if the practice is large and has about 15 shareholders, it no longer gets the job done when groups grow in size and scope. Thus, many larger group practices have found that it makes more sense for the shareholders to elect a board that can assume responsibility for managing the company. The number of board members will vary based on group size, though most groups have an odd number (between seven and 11).

A practice’s effective decision-making starts with a well-constructed governance model. In the case of a professional corporation, the board of directors establishes the “rules of the road” concerning delegated authority and decision-making. The board elects the officers of the company whose job it is to carry out the day-to-day management of the company.

Depending on group size, it is not uncommon for a board to appoint various operating committees to provide delegated authority to carry out company policy and provide oversight for key functional areas. These would include finance and accounting, personnel management, facilities management, marketing, operations, IT and payer contracting. In some cases, the board may also appoint an executive committee (a smaller subset of the board) with delegated authority to work with the senior management team in implementing the company policy and business plan. The key is to establish consistency in communicating across the organization so that all stakeholders feel connected to the direction and decisions of the governing body. Figure 1 provides an example of a governance structure for a large ophthalmology group (20 or more MDs).

Figure 1: Sample Governance Structure — Large Group (20+ MDs)

The case for leadership

In large ophthalmology group practices, a strong group president or managing partner is essential. Oftentimes, the job is assumed by one of the partners in the practice and is not a full-time position. In other cases, the group will recruit a full-time individual either from within or outside the practice. Whichever type you choose, we recommend the board develop a job description that clearly outlines the individual’s responsibilities and scope of authority. A sample job description is provided in Table 2. Also, construct a compensation plan for the president or managing partner that is aligned with the group’s overall goals and values and that takes into account the scope of responsibility the leader assumes. Table 3 delineates responsibilities between the board and president.

Table 2: Sample Job Description
Job Description: President
Position summary
The board of directors appoints the president. He/she represents the board and provides leadership and direction to the administrator and management team. Also, the president carries out the strategic plan of the practice. An important part of this job is knowing the ins and outs of the practice’s finance and operations, including the roles and responsibilities of the practice’s employees.
The president will have the following qualifications:

    • Represent, without prejudice, the best interests of the entire group

    • Act in a nonpartisan fashion

    • Act as an arbitrator or mediator when necessary

    • Provide a long-term vision within the context of group decision-making

    • Provide leadership in all aspects of group governance

    • Maintain a calm demeanor and exhibit appropriate decorum with management, staff and doctors

    • Have or develop a working knowledge of business and financial matters

    • Have a working knowledge of practice operations including clinic flow, staff job descriptions, third-party contracts and medical practice software

    • Represent the best interests of the practice in the community.


    • The board will elect the president for a three-year term. The board will conduct an annual review to assess the overall performance of the president.

    • A supermajority vote of the board is required for removal from office.

    • The president shall act in concert with the board, but may act independently when convening a board of directors meeting is not feasible.

    • When acting independently, the president will coordinate decision-making with appropriate members of the board as deemed necessary. It is likely there are/will be infrequent instances when immediate action and decision-making will be appropriate. Should the president take such independent action without consulting the board, the president shall report such action to the board as soon as possible.

    • The president will chair all board meetings or appoint a designee in his/her absence.

    • The president will hold regular monthly board meetings, as well as other meetings as deemed necessary. In addition, the president will meet on a weekly basis with the administrator to review practice operations and relevant financial matters. When available, the president will also participate in management team meetings.


    • Provide leadership to the board in the development of professional policy, group strategy, goal planning and prioritization of key initiatives.

    • Work in concert with the administrator and management team in managing third-party contracts, including research agreements, managed-care contracts, major capital expenditures and facility-lease agreements.

    • Participate fully in all aspects of provider recruiting and hiring, including needs assessment, interviewing, development of compensation packages and negotiation of employment agreements.

    • Mentor and support new associates to assist them in meeting their objectives while also assisting in their professional growth and development.

    • Work with the board, management team or task forces to promote, implement and participate in professional and business opportunities.

    • Seek consensus or make decisions on policy where none are established.

    • Work with the administrator and finance director to develop an annual budget and track and review monthly income and expenditures. A preliminary budget will be presented to the board for approval no later than December 20 of each year.

    • When necessary, support the administrator and provide input on staff management issues.

    • Coordinate and communicate with outside advisers to the practice, as needed.

    • Time commitment: The duties of the president are expected to consume an average of eight to 10 hours per week.


    • TBD

Table 3: Board vs. MD-President Responsibilities
  Board MD President

    • Ensure proper maintenance of legal and compliance requirements.

    • Implements policy as set forth by the board.

    • Is accountable to the board.

Financial Management

    • Approves the annual budget.

    • Monitors financial performance for adherence to annual budget and strategic plan.

    • Develops the annual budget in consultation with the board.

    • Establishes and presents regular financial reports and updates for the board.


    • Establishes direction for the strategic planning process.

    • Approves long-term strategic plan and annual business plan.

    • Responsible for drafting plans for submission to the board.

    • Responsible for implementation of strategic and business plans.

Human Resources

    • Establishes company policy concerning compensation and benefits.

    • Responsible for state and federal legal and compliance regulations.

    • Participates in the recruitment, selection and development of board members as well as management positions that report to the board or senior leadership team.

    • Works with the management team to implement company policies.

    • Provides direction and oversight concerning recruitment, development and termination issues.

    • Establishes and drafts personnel policies for board review and approval.

Consider the “corporate” model

Many large groups have found it beneficial to further develop their senior management teams through recruitment of more traditional “corporate suite” roles, including chief executive officer, chief operating officer and, in some cases, a chief financial officer. These decisions are based on the size, scope, service lines, number of partners and overall complexity of the organization.

Key success factors with effective group governance include, but are not limited to:

    1. Governing documents with clear lines of authority and decision-making criteria.

    2. Effective delegation from the board to several operating committees; each should have its own charter and guiding principles.

    3. Accountability from each operating committee to the board for regular communications, including status reports on key committee initiatives.

    4. Board commitment to providing resources and support to developing the business skills and strengths of the leadership team.

    5. A succession plan on developing a leadership “bench” to ensure long-term stability in leadership and management of the practice.

    6. Board commitment to a formal strategic-planning process for continued focus on the company’s vision, mission, core values, strategies and tactics.

Strong, visionary leadership is a defining factor of a successful practice. Effective leaders should:

    • Adhere to influential and authoritative, but benevolent, leadership principles

    • Motivate, inspire and influence all

    • Own conflict-resolution management and work toward successful outcomes with administrative personnel

    • Innovate toward strategies for creation of best practices and optimal group efforts

    • Focus on improving health-care outcomes

    • Focus on providing opportunities for employee development while attaining financial and operational results

    • Develop leadership opportunities for other team members and find creative solutions to short- and long-term challenges

    • Develop confident, principled and ethical ways to approach their job responsibilities

    • Garner the respect of all.

Groups interested in successfully building a culture should invest time and attention in developing practice-wide communication strategies. Meaningful communication reinforces core competencies and encourages active and honest discussions. Groups that struggle with communication have found that a partner survey can uncover inter-partner issues; some hire an outside resource to develop the survey and analyze the results. OM

In part two, we will discuss shareholder compensation programs and their role in optimizing performance of group ophthalmology practices.


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2. Schall MS. A communication-rules approach to organizational culture. Admin Sci Quart. 1983;28:557–581.

3. Rousseau D. Assessing organizational culture. The case for multiple methods. Scheider (ed). Climate and Culture. (San Francisco: Jossey-Bass, 1990).

4. Schein EH. The role of the founder in creating organizational culture. Organ Dynam. 1983;12:13–28.

5. Schein EH. Culture: the missing concept in organization studies. Admin Sci Quart. 1996;41:229–240.

6. Marcoulides G,Heck R. 1993. Organizational Culture and Performance: Proposing and Testing a Model. Organization Science. Published Online: May 1,1993, pp. 209–225.

7. Rousseau, D. Assessing organizational culture. The case for multiple methods. Scheider B (ed). Climate and Culture. San Francisco: Jossey-Bass, 1990.

8. Gray B. Collaborating: finding common ground for multiparty problems. San Francisco: Jossey-Bass; 1989.

9. Adler P, Heckscher C. Building a Collaborative Enterprise, 2011 Accessed June 17, 2015.

About the Authors

Bruce Maller is the president and CEO of BSM Consulting, an internationally recognized health care consulting firm headquartered in Incline Village, Nev. and Scottsdale, Ariz.

Lisa Peltier and Dana Jacoby are senior consultants at BSM Consulting. More information about the authors or BSM Consulting are available at