In today’s practice environment consolidations, expansions, and buy-ins are all some examples of when it is time to properly consider if a partnership is the right option. If the answer is “Yes”, then the next biggest consideration may be is who is the best fit.
There are many good reasons to take on a partner or partners for your practice. You’ll have someone to share your vision, help grow your patient list, cover for you when you take time off (and vice versa), and share the risks and rewards of hard work and growth.
At the same time, building a successful partnership takes dedication and long-term commitment. Up to 60% of strategic business partnerships fail, and untangling yourself from a broken partnership can be messy. While there are no guarantees a partnership will work, considering a few basic questions in advance may help you decide whether it makes sense to move ahead.
What’s our vision?
As nice as it is to be in practice with someone you personally like, it’s perhaps even more crucial to find someone whose goals align with yours. Say, for example, that you dream of expanding your expertise and building one of the preeminent practices in your region, but your prospective partner, though unquestionably skilled, wants to work just hard enough to support a comfortable lifestyle. While neither choice is wrong, a partnership based on such divergent goals is unlikely to succeed.
How will we make decisions?
Just like a corporation, a healthcare partnership works best when guided by clear governance rules established up front. Over the years, you’ll face hundreds of major and minor decisions, from leasing office space to purchasing equipment to hiring or firing employees or taking on new partners. No matter how collegial or in synch you and your prospective partner(s) feel, set clear rules for who makes what decisions, and how you’ll break a tie.
What about the money?
As tempting as it is to assume a 50-50 split on income, you would be wise to spell out the details in advance. If one partner is clearly putting in more hours or bringing in more business, how will that be reflected in pay? By the same token, how will you divide costs?
What’s your exit strategy?
Lives and goals change. What if a decade passes and suddenly you’re eager to uproot and start anew on the opposite coast? Or a partner passes away and you’re unsure how to compensate the surviving family? Or the partnership just isn’t working out the way you intended? Setting clear guidelines for the end game at the very outset of a partnership can only make the alliance — and your comfort level — that much stronger going in.
Your practice is one of your largest investments, so planning ahead regarding timing and details for a transition will be a vital key to success. Also, consider engaging true qualified healthcare business professionals who can properly support the entire process.
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By Jeff Holt, CMPE, VP, Senior Healthcare Business Banker with PNC Bank
Jeff Holt is a Senior Healthcare Business Banker and V.P. with PNC Bank’s Healthcare Business Banking and is a Certified Medical Practice Executive. He can be reached at (352) 385-3800 or Jeffrey.Holt@pnc.com.