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Professionals
Key Considerations Before Signing a Medical Practice Partner Agreement
Nov 18, 2024
In the medical practice business, choosing a partner is a weighty decision.
“Like with marriage, it can be very difficult, traumatic, and expensive to break up with a partner,” says Clifton Straughn, partner at Direct Access MD, a concierge-service family practice in Anderson, South Carolina. “So, do your due diligence and take your time.”
The right partner can drive your practice toward growth, shared responsibilities, and improved patient outcomes. But the wrong choice? It could spell financial instability and conflict and even threaten the survival of your practice.
In this article, we’ll walk you through the critical steps and considerations to ensure you make a partnership decision that propels your practice to success.
Key Takeaways
- The right medical practice partner can drive your practice towards growth, while the wrong choice could threaten the survival of your practice.
- A medical practice partner, unlike an associate, shares in the decision-making, financial responsibilities and long-term direction of the practice.
- With adequate partnership, patients’ overall satisfaction can be improved, thereby increasing their loyalty. A study by NRC Health showed that a 5% boost in patient loyalty can boost profit by 25%.
- Practitioners entering into a medical partnership should consult with experienced legal counsel to draft a partnership agreement that proactively addresses all key issues that may arise throughout the course of the partnership.
What is a practice partner?
A medical practice partner refers to a licensed healthcare professional who enters into a legal partnership with one or more individuals to jointly own, operate, and manage a medical practice. Unlike an associate, who may work under a contract or salary, a practice partner shares in the decision-making, financial responsibilities, and long-term direction of the practice.
There are various forms of partnerships, but the core idea is that this contract provides partners with the resources to perform their responsibilities in a mutually dependent way. A medical practice partner can be another physician, a physician group, a professional corporation, a hospital, or even a private equity firm.
5 Benefits of adding a partner to a medical practice
Adding a partner to a medical practice can provide several benefits that enhance both the operational and financial aspects of the business.
- Diversification of Expertise
Bringing in a partner with a different area of expertise can help expand the services offered by your practice. This could include special care or complementary services that attract new patients.
- Power of shared decision-making and autonomy
One of the most significant benefits of adding a partner to a medical practice is the power of shared decision-making. A medical practice partnership offers the autonomy to make decisions within the framework of shared responsibilities. When you have a partner, responsibilities and decisions are divided, allowing for more thoughtful, collaborative choices that benefit the practice as a whole.
- Improving Financial Stability
Medical practice partnerships provide a strong financial foundation for practices by allowing partners to invest in the business, sharing both the risks and rewards. With multiple contributors, the financial burden of operating and expanding the practice is divided, thus making it easier to invest in new technologies, hire additional staff, and even expand facilities.
- Improved Patient Care and Loyalty
With additional support, partners can ensure more timely patient care, reducing wait times and improving overall patient satisfaction. As a result, patients are more likely to return, recommend the practice to others, and remain loyal over time.
- Enhanced Revenue Potential
Medical practice partnerships can unlock significant revenue growth by enabling the practice to improve patient’s overall satisfaction and expand its services. A study by NRC Health showed that a 5% boost in patient loyalty can boost profit by 25%. This potential for growth, coupled with shared responsibilities, can create a stronger foundation for increasing overall revenue.
Qualities to look for in a potential medical practice partner
Here are some key traits to consider when selecting a potential partner for your medical practice;
1. Clinical Expertise and Competence
Your partner should bring a high level of medical knowledge and clinical skills to complement yours.
2. Compatibility with Practice Culture and Values
A good partnership is based on shared values. Your partner should align with the practice’s mission, vision, and work culture.
3. Strong Communication Skills
Effective communication is the foundation of any successful partnership. Look for a partner who is open, transparent, and able to discuss clinical and business decisions constructively.
4. Commitment to Long-Term Growth
Seek a partner who is invested in the long-term success of the practice. A good partner should be forward-thinking and eager to contribute to the growth and evolution of the business, whether through expanding services, adopting new technologies, or enhancing patient care.
5. Integrity and Trustworthiness
Trust is paramount in any partnership, especially in healthcare. Your partner should demonstrate honesty, transparency, and ethical conduct both in and out of the clinic.
Key Legal Considerations
When adding a partner to your medical practice, there are several key legal considerations that must be addressed.
1. Partnership Agreement
A clear, legally binding partnership agreement is essential. Practitioners entering into a medical partnership should consult with experienced legal counsel from the beginning to draft a partnership agreement that proactively addresses all key issues that may arise throughout the course of the partnership, including how profits and losses will be shared.
2. Liability and Malpractice Insurance Medical malpractice insurance covers physicians and healthcare professionals for liability related to patient injury or death resulting from disputed services.
3. Buy-In and Buy-Out Terms
Establish clear terms regarding buy-ins (how a new partner can buy into the practice) and buy-outs (how a partner can exit the practice). This should include how the practice will be valued, the terms of payment, and any restrictions on the sale of a partner’s share.
4. Regulatory Compliance
Ensure that the partnership complies with all relevant healthcare laws and regulations, including state and federal laws governing medical practices, such as those related to billing, licensure, and patient privacy (HIPAA).
Conclusion
Forming a medical practice partnership offers numerous benefits, from shared decision-making and financial growth to enhanced patient care and long-term success. However, careful consideration of qualities, legal terms, and financial arrangements is vital for ensuring a harmonious and prosperous partnership.
FAQs
1. Can a non-doctor own a medical practice?
Yes, a non-doctor can own a medical practice, but they must typically partner with licensed medical professionals to provide healthcare services.
2. What does it mean to be a partner in a practice?
Being a partner in practice means sharing ownership, decision-making, financial responsibilities, and liabilities in the business while contributing to its operations and growth.
3. How do you write a partnership agreement?
A partnership agreement is written by outlining the roles, profit-sharing, and legal obligations of each partner, often with the guidance of legal counsel.
References
- Herni J., Keisuke N. Patient loyalty to health care organizations: Strengthening and weakening (satisfaction and provider switching). Journal of Medical Marketing. 14(4) May 2015 DOI: 10.1177/1745790415578311
- Raftery P, Hossain M, Palmer J. A conceptual framework for analyzing partnership and synergy in a global health alliance: a case of the UK Public Health Rapid Support Team. Health Policy Plan. ;37(3) March 2022 https://doi.org/10.1093/heapol/czab150
- Benjamin Frederick. Medical Practice Partnership Models Explained Simply. 2024 Weave Communications, Inc. https://www.getweave.com/medical-practice-partnership-models/