Management Essentials

Passing the Baton to your Practice's Successor

By Farrell “Toby” Tyson, MD, FACS

The Summer Olympics are fast approaching in London. Most of the track and field events are solo events highlighting the achievements of the individual. The 4x100 meter relay race, on the other hand, requires individuals to perform individually, but, at the same time, coordinate what seems like a simple handoff of a baton. What seems to be simple frequently spells disaster on a public stage. This is similar to the challenges ophthalmology practices face when undergoing practice successions. Handing off a practice from one generation to the next, on the surface, seems mundane, but in actuality requires cooperation and hard work to be successful.

Successful practice succession requires understanding by both the senior and junior practitioners. Understanding is a two-way street. Junior ophthalmologists need to realize an ophthalmology practice doesn't just materialize out of thin air. The senior doctor has put years of hard work, risk and delayed gratification into building a practice. This has instilled in the practitioner a strong emotional bond to the practice. Many senior ophthalmologists even refer to their practice as their “baby.” This attachment makes it very difficult for the senior physician to hand over a practice without totally trusting the junior physician.

Hurdles of Negotiations

The junior doctor must have appropriate expectations. Many residents give an impression of entitlement. They may feel entitled to a high starting salary, a 9-to-5 day, or having patients given to them. The impression is not helped by the initial hiring negotiations. Most residents have never been taught how to correctly negotiate a contract. Their ineptitude results in a string of constant demands that belittles the founding doctor's hard work. These hurt feelings can percolate for years following the initial hiring, resulting in resentment. By entering into employment with realistic expectations and a good work ethic, eventual transition of succession will be much more palatable to the senior doctor.

The senior doctor, likewise, must have realistic expectations. Many doctors attract excellent junior associates with great talent and drive. The problem arises when the succession plan is either unobtainable or financially crippling. This usually arises from an unrealistic practice valuation or poor advice from consultants or lawyers. The last thing a senior doctor in this situation wants to do is drive away a succession candidate. He or she will not only be creating competition but will now have to start the costly and time-consuming search from square one.

A Mile In The Others' Shoes

Mutual understanding and respect is necessary for a successful succession. Both parties need to understand the financial needs of the other. The junior associate usually will be entering with limited financial resources, whereas the senior doctor is looking for financial security for retirement. The timing of succession also needs to be adequately analyzed. The most successful and rewarding succession plans are the ones that take place over years which allow for a gradual handoff of the practice. In this scenario, accommodations can be made so that an owner can get an equitable valuation, but the junior doctor has a reasonable timeframe.

Practices that have gone through several successions or partner additions have experience. This track record helps allay fears by showing all parties the expected outcome. Large practices cannot get set in their ways, though. What worked for one generation may not work today. Large practices need to be flexible with buy-ins and buy-outs as the world changes. If not handled appropriately, prospective partners may determine it is preferable to be an employed physician with less responsibility and risk.

Going For The Gold

Through planning, respect and understanding, practices can have a succession strategy that is mutually beneficial. When done properly, the process will appear as effortless as a handoff of the baton in the Olympics. The time and effort both parties put into it is the difference between obtaining a gold medal and not finishing the race. OM

Farrell C. Tyson, MD, FACS, is a refractive cataract/glaucoma eye surgeon at the Cape Coral Eye Center in Florida. He may be reached at tysonfc@hotmail.com.