When Steve Charles, MD, started a private retina practice in Tennessee in 1984, he originally worked alone. For backup and vacation coverage, he called on young ophthalmologists who had completed a year of medical retinal fellowship then spent a year learning surgical techniques from him.
But “it soon became apparent that that was an inadequate coverage scheme,” he says. “Plus, we just had too much volume for that approach.”
About 12 years ago, Dr. Charles started taking on partners. His first was a fellow from the University of Tennessee, who stayed on after he was trained. Dr. Charles’ two current partners were former residents at the University whose work impressed him. “Both of these guys were so awesome that I accepted them outside the match for fellowship, and talked to them about staying on with me, in practice, when they finished. It added extra meaning to their fellowships, because they knew they were staying and were treated like junior associates during the fellowships.”
There’s a wide variety in ophthalmic practices today when it comes to taking on partners vs. employees, says Albert Castillo, CEO of San Antonio Eye Center in Texas and a consultant for other practices. Models can range from a one-owner practice with employed physicians to a multiple-owner practice with employed physicians or an all-owner practice.
“Whether a practice hires a physician as an employee or potential partner is dependent upon the succession plan and the goals of the practice overall,” Mr. Castillo says. Small group practices with one to two younger partners may not be willing to give up ownership, he says, whereas practices run by older physicians looking to retire soon may be seeking potential successors.
FACTORS TO CONSIDER
Factors like geography play a role, says John Pinto, president of J. Pinto and Associates, Inc., an ophthalmic practice management consulting firm. “The fork in the road between choosing a durable associate (without a partnership) vs. a partner is directed as much by the market for physician labor and the market you practice in as it is your preference for the practice,” he says.
If located in a secondary or less attractive market, the practice may need to offer a partnership to recruit talent, Mr. Pinto explains. “This has been a trend for a while now, and the trend is only deepening in the years ahead as the demand for ophthalmologist labor is going up faster than the pace at which new ophthalmologists are being created.”
The advantages of hiring a partner-track physician are several, he says: They tend to have higher work ethic and ambition, and a deeper commitment to the practice. These traits can ultimately generate more practice revenue, as well. The advantages of hiring associate employees are principally economic. In a big-city market rife with physicians and specialists, such as New York, Chicago or Los Angeles, you can more readily find durable associates of higher quality and output. And, you don’t have to share the excess profits with them.
Hiring younger ophthalmologists coming out of fellowships is complicated. They may or may not want the commitment of buying in to a partnership. “I’m going to say that 80% to 90% of kids coming out of school have no desire to buy in at all,” says Ray Mays, administrator and CEO of Eye Centers of Tennessee. “They want to be employees, be paid and go home.” Consultants he has spoken with over the past few years see a similar trend. Many don’t want the expense or headache of becoming an owner. “They’re more interested in their personal time and their salary,” Mr. Castillo adds.
However, Mr. Pinto’s experience suggests the opposite, with “the vast majority” of new grads and mid-career surgeons still aspiring to private practice ownership. “In fact,” he says, “we’re noticing a modest counter-current now, with more young and mid-career doctors calling and asking our help in setting up de novo solo practices or buying out retiring soloists.” His impression, ultimately, is that younger physicians have a greater willingness to try out several positions before settling down to one “dream job.”
Ophthalmology is no longer a business in which you can hang out your shingle and get to work, Mr. Mays says. “It’s just so expensive, between the equipment, the computer and electronic record systems and compliance issues.”
Many practices want independence, but this requires management professionals to operate a practice on a day-to-day basis, says Jolynn Cook, RN, COE, CASC, a senior consultant with BSM Consulting in Worthville, Pa. To relieve the burden of daily business operations from the owners, many have considered or gone through acquisition by hospitals or private equity firms.
This solution also provides financial support for costly salaries. Entry-level ophthalmologists may earn an average of $225,000 per year, and figures above $400,000 “are not unheard of,” Mr. Pinto says. Hiring an ophthalmologist is more expensive today because of the demand for physicians, Mr. Castillo says, and most subspecialists are looking for practices where they could become owners.
Even with the best research and scrutiny of your candidates, keep in mind that newly hired physicians may leave your practice within one to three years, says Dr. Charles. Some choose to move closer to family or to please their spouses; others may have personalities that conflict with your practice, which is tough to assess before hiring.
TIPS FOR RECRUITING
Regardless of whether or not your practice plans to offer partnerships, our interviewees offered the following tips to consider when recruiting a physician:
- Know what you need. Some of Mr. Pinto’s clients say they want to hire a new surgeon or physician. But, when he reviews their practice volume data, he finds what they most need is someone who can handle primary eye care. In those cases, he recommends hiring an optometrist or two — they provide passive income while not siphoning cases off the existing surgeons in the practice.
- Tell candidates what you want. Mr. Castillo’s firm asks physicians to help train the staff, help the practice finish on time to avoid overtime and be involved in their community. “We value those things just as much as we do technical skill when considering someone for a partner,” he says. Privately owned practices are often looking for the next generation of owners, Ms. Cook adds. In this situation, entrepreneurial physicians must have a desire to take a leadership role, be willing to be transparent and learn to fit in with the existing culture.
- Prioritize personality. “Too many people get held up on the skill set,” Mr. Mays says. “An anterior segment guy is an anterior segment guy. Some can do a cataract in five minutes, some in six. That’s important, but it’s not nearly as important as a person’s work ethic and personality.” Make sure those match your objectives.
- Be transparent. In Mr. Castillo’s 20-provider practice, not only are all ophthalmologists paid the same, but they also receive a monthly report noting their productivity, compensation and expenses. “You’re never in the dark about what you’re doing for the practice, whether you’re an owner or not,” he says. In his consultant role, he frequently hears from physicians who don’t understand what they’re being paid or why, or who don’t understand why they’re not being offered a partnership. “Transparency is the key to keeping physicians once you find someone who’s the right fit for your culture.” OM
Tips for being recruited
For physicians considering what type of practice to join, consider these factors:
- Ask good questions. Look beyond the medical/surgical side of the practice, but inquire about how the practice is managed and what the future objectives are for continued management of the practice, Ms. Cook advises.
- If offered partnership, know what you are getting. Many young doctors do not understand this, Dr. Charles says. If you own part of a practice that has no optometrists, no fellows and no surgery center, you essentially own just your income. You’ll have job security, he says, but “if you’re a nice guy and work hard, the job security will be there anyhow.” If there is a buy-in, there will typically be a buy-out when you retire, he adds.
- Decide whether to join a one-specialty practice or multispecialty practice. This is an important consideration for those coming out of fellowship in a specialty, like retina disease. If you go the multispecialty route, you’ll have a built-in patient referral base and partners that can manage patients’ cornea, cataract and glaucoma needs, says Dr. Charles, but you will not receive referrals from other cataract surgeons, for example.