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Private practice and asking for partnership

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  • Avatar Bruce 
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    Status: Physician
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    Joined: 11/21/2018

    I’m currently looking for private practice jobs in Dermatology coming out of residency. Something that I’ve noticed is that all the contracts I’ve seen never mention partnership. Is this common? I would really prefer the contracts to have good faith agreements about partnership so that a timeline and cost structure can be established. Is this something I should be pushing for?

    #180923 Reply
    Avatar Panscan 
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    Joined: 03/18/2017

    Absolutely.

    #180924 Reply
    Liked by Hank, ENT Doc
    Avatar jhwkr542 
    Participant
    Status: Physician
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    Joined: 02/15/2016

    No contract will ever guarantee partnership. You at least need to have the discussion with future employers about partnership track: specifically ask what’s the buy in, structure of the group, who current partners are, who aren’t partners, time to partner, if everyone has equal number of shares of corporation, are partners compensated differently if they have different production.
    You may even need to ask multiple people of a group independently to see if you get different answers. Also, if you’re looking in the same geographic area as your residency, ask your attendings about the groups you’re applying to. They’ll know groups’ reputations. My current practice, they specifically told me nobody has ever not made partner in 3 years. While that was not 100% accurate, it’s a foregone conclusion that I’ll be partner in a few months after my initial 3 years. My contract only mentions I’ll be considered for partnership after my initial 3 year contract is over with no guarantee whatsoever.

    #180926 Reply
    Avatar Bruce 
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    Totally agree. I’m not looking for a guarantee. But just a good faith clause and something about time to possible buy in and the costs etc. I just wasn’t sure if this is something I can really push for as a new hire out of residency since no contract I’ve seen or any of my coresidents have seen in their initial contact offer.

    #180933 Reply
    Avatar jhwkr542 
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    Status: Physician
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    Nothing in the contract will ever be binding because the business has to protect itself. Talking to multiple people about becoming partner and the process and timeline will yield the most valuable information. Also know if the group may sell the practice as well. If worried, you can ask for equal partnership payout in the event the company is sold. Someone in our group did this and the group was ok with it because there are no intentions to sell. Anecdotally, a fellow resident went to a two man practice who sold the business as soon as he got there. He knew nothing about the group, and it was an out of town group so he didn’t have any resources to discuss with. This is why discussing with any attendings who know the groups you’re interviewing with is so important. Best of luck

    #180967 Reply
    Avatar ZZZ 
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    Joined: 06/18/2018

    Derm has been overtaken by PE money and old d9cs selling out and screwing over newer ones. Go hang a shingle, you’ll be far better off in a few years. It’ll be hard work, but you’ll be better off for it.

    The current market allows most practices to offer employment only deals and make $ off the backs of new grads. Your experience isn’t unique.

    #180968 Reply
    Avatar Bartl007 
    Participant
    Status: Physician
    Posts: 72
    Joined: 01/30/2016

    Echoing comments above, Derm and recently Ophthalmology have been overrun by private equity firms. Rest assured that every practice you talk with is currently in talks, or is leaving the door open for a big buyout offer to be made in the near future.

    Make sure if you do have a non compete, that it is dissolved completely upon the sale, merger, or aquisition of the practice by another entity or third party.

    I haven’t heard of an associate (non partner) getting an equal share of the buyout upon the sale of the practice, but I guess anything is possible.

    #181039 Reply
    Avatar Bruce 
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    Status: Physician
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    On a similar note, do you think its worth discussing the addition of a good faith partnership clause in a contract before engaging a contract attorney? I thought it might be better to see if a potential employer is willing to offer this before spending money on having the whole contract reviewed

    #181070 Reply
    Avatar jacoavlu 
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    Status: Physician, Small Business Owner
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    Joined: 03/01/2018

    Largely insulated from all the private equity stuff so far here in flyover country

    The Finance Buff's solo 401k contribution spreadsheet: https://goo.gl/6cZKVA

    #181072 Reply
    Liked by Vagabond MD
    Avatar Kamban 
    Participant
    Status: Physician
    Posts: 2423
    Joined: 08/01/2016
    I’m currently looking for private practice jobs in Dermatology coming out of residency. Something that I’ve noticed is that all the contracts I’ve seen never mention partnership. Is this common? I would really prefer the contracts to have good faith agreements about partnership so that a timeline and cost structure can be established. Is this something I should be pushing for?

    Click to expand…

    Dermatology is one field where it is quite easy to start a solo practice. Start up costs are not high initially. You can rent space and have just one MA and one front desk / biller to start with and expand as your practice picks up. If you want to join someone and want to stay in the area then make sure there is no non compete. Especially if no partnership is offered.

    Do not be used as a wash rag and be thrown out in a couple of years.

    #181075 Reply
    Liked by Bruce, Hank
    Avatar s2km 
    Participant
    Status: Physician
    Posts: 41
    Joined: 01/12/2016

    Definitely need to have partnership track or terms detailed in the contract.  Not just a verbal promise, “oh yes we’ll make you partner in x years”, or “we’ll talk about the partnership terms when it comes time”.  I made that mistake and basically was strung along.  It won’t say you will definitely make partner, but it should have all the details of what it would involve as others have mentioned.  You need to know exactly what to expect in terms of buy in and compensation formula for partners so you can properly evaluate whether it would be worth it for you while you are an employee.

    #181114 Reply
    Avatar wcinewbie 
    Participant
    Status: Physician
    Posts: 66
    Joined: 09/30/2017

    Largely insulated from all the private equity stuff so far here in flyover country

    Click to expand…

    Live in fly over country myself and not the case for me unfortunately.  The good news is I now have a reason to leave.

    Does anybody know if it’s possible for a PE firm to demand a multi-state non compete?

    #181127 Reply
    Liked by jacoavlu
    Avatar pulmdoc 
    Participant
    Status: Physician
    Posts: 432
    Joined: 09/19/2016

    #1 Agree with sentiment to hang out your shingle. Derm is one of the few specialties left where solo practice is feasible because of lack of call/hospital.

    #2 To me, a guaranteed partnership at a specific point is actually a red flag; either they are not experienced with the business side or they are desperate for help. However, a specified duration of the employment period is a must, and that any noncompetes do not apply if they decline to offer you partnership. This sets the clock ticking for them to make a decision, with a negative outcome (you, with a referral base, as competition) if they don’t offer you partnership.

    #3 While not part of the contract, I think it is imperative to discuss how many pre-partners there have been in the past few years, did they make partner, and if not why not. There’s always noise in this data, but a group with a long track record of pre-partners not being partner should be looked at very carefully.

    #181865 Reply
    Avatar BlueCollarMD 
    Participant
    Status: Physician
    Posts: 19
    Joined: 08/20/2018

    I think this is very difficult to address in a contract for the reasons stated above.  Nobody can really commit to actions in 3 years, and the rules of the game are changing faster than that.

    1. I would first look at the comp and assess it’s fairness in the market

    2. Look at fairness of comp in the overall practice (i.e. over the 3 years are the partners making a lot off your back or mostly recouping their costs in bringing you on).

    3. As addressed above, look a their reputation, track record in advancing to partnership and familiarize yourself with the terms.  Partnership is like a marriage, and your long-term happiness is going to have many dimensions.

    4. Partnership can be a mixed bag.  In my case, being a partner included pressure to buy into a building in a declining area at a ridiculous valuation.  It worked out, but only after we separated that issue from the practice.

    5. Noncompete terms are key. If they don’t offer you partnership in 3 years, you should be free to practice elsewhere or on your own

    #182249 Reply
    Liked by Bruce
    Avatar s2km 
    Participant
    Status: Physician
    Posts: 41
    Joined: 01/12/2016

    “any noncompetes do not apply if they decline to offer you partnership.”

    I like that idea, but a place could make an offer for partnership with ridiculous terms that you would decline to accept, and then non-compete would technically apply.

    #182916 Reply
    Liked by Dusn

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