Some recent experiences with physician agreements in group practices prompted me to write this article. As my MD Practice Management Consulting colleagues and I have seen, this type of situation has created a tremendous amount of conflict between many physicians. Any business arrangement must clearly define the conditions and financial obligations established by entering into an agreement, how income or expenses are to be shared during the term of the agreement and how to address one's obligations when exiting the business relationship, both voluntarily and involuntarily. A partnership is a separate business entity and establishing a partnership agreement is standard practice. As time passes, changes to the way a practice operates must be reflected in the agreement.
Many agreements often fail to clearly spell out associate or cost-sharing arrangements.
It is not unusual to receive two or three calls a week from physicians complaining that an associate left their group on short notice, effectively walking away from financial obligations that were assumed to be understood by the partners. Take the example of a three-physician group that recruited a fourth associate to equally share in the expenses of the group. This seemed like a good investment, since the addition of a new member would reduce overhead costs for the whole group. The new associate was asked to pay one-quarter of the total overhead. No formal agreement was signed and the new associate didn't have to sign the lease.