Most grads I’ve interviewed, are interested in learning how the partnership works in our medical practice. I’ve always thought this was a crazy question; especially during the initial stages of getting to know the people and the practice.
This is the equivalent of asking a girl on a first date: “How long do we have to date before I can become your husband?”
Crazy, right? Anyway, regardless of how crazy it sounds to me, young physicians are very interested in this topic. So I wanted to give you a little behind the scenes of what it means to become a partner at a medical practice.
1 – There isn’t a pot of gold at the end of the rainbow
Most young physicians want to become a partner for the money. The assumption is that once you become partner, rivers of cash will flow into your bank account. The truth is, there is NOT a pot of gold. Most pediatric practices are poorly managed. Moreover, in primary care, you are only as rich as the amount of (cough, private, cough) patients you see in day. Many pediatricians do make a very good living, but not by merely becoming a partner; but rather as a result of their understanding of the business.
2 – Partnership does not give you control automatically
Becoming a partner may give you some control, but more often than not, it is an illusion. Despite what the senior partner has told you, you’re a young, unproven whipper-snapper. And most senior partner(s) are hard-headed. They’ve managed their practice their way for 30-years. Relinquishing control is not going to happen just like that.
3 – You will have to assume administrative duties
Once you become partner, you will mostly likely volunteer (because nobody else raised their hands when they asked who wanted to take care of this…) to manage some aspect of the practice (i.e. practice management, IT, operations, human resources or all of the above). As a result, you will not be as financially productive as your peers. Thus be prepared to justify your administrative duties as it translate to revenue for the practice. Be prepared to put in more un-paid hours.
4 – As a partner, you’ll now get paid after all the employees have been paid
As a partner, you get paid after all the expenses and the employees get paid. So when cash flow gets low, or payers delay payments or unforeseen expenses come along, partners are the first to suspend their pay so that the business can continue running.
5 – Your name goes on all the loans and lines of credit
May I be candid? Partners don’t want more partners because that means they have to split the pot one more time. So the upside of adding another partner comes down to diversification of risk. Let’s say the practice has $500,000 line of credit and four partners. Each partner is responsible for $125,000. With a 5-partner, each is only financially responsible for $100,000.
6 – You assume risk for the business
As an employee, if the business goes bankrupt, you’re out of a job. But as a partner, you assume all the practice liabilities with the rest of the partners. All of the sudden your home, properties etc. are in jeopardy if they were put up as collateral. Or if your name is on the lease, or mortgage, you will have a hard time applying for another loan until the liabilities are settled to the bank’s satisfaction.
If all partners are outstanding and responsible people, then the matter should be resolved without a problem. But if they aren’t….
7 – Getting out will cost you more than it took to get in
Breaking a partnership can be as bad or worse than a divorce. Dividing assets, employees, accounts receivables, leases, locations, buildings, computers, equipments, furniture… the list goes on. And to make matters worse, you’ll have to resolve these issues with people you dislike.
When one gets in to a partnership, one hardly ever thinks about the breakup. The truth is, consensus is virtually non-existence, progress moves at glacier speed and most often than not, you walk out with far more resentment than anything else.
I understand why someone would want to become a partner. Becoming a partner says you belong. But more important than that, a partnership gives you the sense you aren’t simply working for the man, but rather, working for yourself and the future of your family. It also provides a sense that you are in control of your destiny. I get that.
Becoming a partner isn’t the way to achieve that dream.
Believe me when I tell you that becoming a partner is not all that people make it out to be. Sure, there are examples of people joining great partnerships. And I’m sure your friend’s neighbors wife’s cousin knows of a doctor that became rich once she became a partner. But those are few and far between. Or flat our exaggerations.
There is only one way to achieve what you want – and that is – open up your own practice.
Here is the thing, for the same amount of work, grief and potential sacrifice you’ll put in as a partner, you will have the potential to earn more over the span of your career, practice medicine on your own terms, meet the needs of your patients the way you best see fit and overall have a much more rewarding career owning your own practice.