Bringing aboard new associates is a fundamental milestone in the growth and evolution of a medical practice. Timing and criteria are paramount for a successful transition — especially to the culture of the practice and its staff.

Indeed, my first job out of fellowship was to join a single general ophthalmologist practice. I was most excited to finally put my years of training to the task. Unfortunately, the timing for the practice could not have been more wrong. The practitioner had opened a second office in anticipation of bringing a new associate into the practice. However, seemingly no analysis of need or timing was considered, and most days I saw only one to three patients. There were some days I saw no patients.

I did all the right things: taking call at four hospitals, lecturing in nursing homes, sending letters to area optometrists and primary care physicians followed up by in-person meetings. At the end of the first year, I was paying my own way in the practice. However, there was not enough overall practice volume or revenue to support two doctors and two offices, and I was terminated the weekend my second child was born.

What had I done wrong? How could I have made such a huge mistake affecting my young family and my career? I had turned down several excellent practices to join this doctor, and now I was literally meeting a federal worker each week in order to collect unemployment while looking for a new path — a demoralizing beginning to my future career.

Ultimately, I came to understand that it was not my fault. The practice owner’s lack of analysis of need and timing were ultimately the problem, and she eventually went bankrupt and out of business.

To help you avoid making a similar mistake, here are a few tips regarding how to determine whether you need a new associate and how to make this marriage last.

CREATING A PRO FORMA

It is imperative that you create an honest pro forma in order to determine the appropriate timing of adding providers to your practice. This will allow the practice to subtract known expenses from a conservative expectation for revenue income to determine if the financial picture supports and justifies the addition of a new practitioner. This applies to practices bringing in a new optometrist as well.

To start, use your own average revenue calculation per patient encounter and select a conservative volume of patients per half-clinic day, as well as an average number of surgeries scheduled per half day of clinic. I suggest that you start with 10 patients per half day, both to be realistic in your calculations and to have mercy on a new doctor. Every patient is new to them, and it will take time to integrate into the practice patterns of your clinic.

The expenses incurred by bringing on a new associate are fixed and easy to calculate. These include:

• Salary and benefits (benefits are typically 20% of salary)
• CME/meeting allowance ($3,500 per year is average)
• Society dues
• Malpractice insurance/tail coverage
• Extra staffing costs needed to support another physician
• Special diagnostic equipment and instrumentation needed to deliver sub-specialty care (this must also include extra expenses in privately-owned ASCs)
• Marketing expenses to announce and introduce the new physician to the community
• Peripherals such as cell phone and IT costs.

Remember that new physician billing and collections, even with full accreditation on all insurance panels, has a lag of 60-90 days from the time of services rendered to the time of payment receipt, so the practice will have to carry the expenses of having a new associate. So, it may be prudent to take out a line of credit to have available moneys for the added payroll and equipment purchases such as building out additional lanes (working capital). This delay in payment for the first quarter of employment should also be taken into consideration when calculating the new physician’s productivity bonus, especially if paid out only once a year (as opposed to quarterly), as it is not fair to penalize the new doctor for the lag of payment initially. We provide two scales for bonus between year one and year two, using a lower threshold in year one in part because of this first quarter delay.

TIMING

Once you determine it is the right decision to bring a new associate on board, you must consider the right timing. This is based upon three primary factors.

First, the clinic has to be ready to deploy the new doctor by purchasing and setting up new exam lanes and equipment as necessary, increasing staffing and establishing a schedule template.

Second, credentialing the new physician with all hospitals, ASCs, state and federal licensure (based upon the practice address-not the new doctor), and Medicare/Medicaid and all third-party insurance companies takes approximately 6 months. Most insurance companies will not retroactively pay for services rendered prior to their credentialing and authorization. Some practices try to get around this by having an established physician briefly examine and sign off on the chart, but this is still time consuming, slowing down the more senior clinician and cannot be achieved if this surgeon is in the OR or away from the practice. Therefore, it is best for the new doctor to be fully credentialed prior to their start date.

Lastly and perhaps most important, timing should be planned when new graduating residents and fellows are interviewing and ready to begin their new career. Interviews usually occur in late August to December of the year prior to the anticipated start date. Contract negotiations then ensue, and giving the graduate time to move, acclimate and transition usually puts them with the practice in the August-September time frame.

RECRUITING

You can recruit a new physician via several sources: Advertising through the AAO and ASCRS recruitment programs is frequently successful. Further, headhunters are eager to help you vet and send potential applicants, but know that they are expensive (typically around $25,000 for the successful placement of a candidate). Lastly, contacting residency program directors and department chairmen/women can provide fruitful results, especially for sub-specialty recruits coming out of fellowship.

INTEGRATING WITH STAFF

It is imperative to get the entire staff on board with new doctors entering the practice. Change is often uncomfortable, and an additional doctor is an obvious disruption to the accustomed ebb and flow and injects a new personality (or personalities if additional staff is required).

Have occasional staff meetings prior to the start of a new doctor to discuss how this will impact the practice overall. Reassure the staff that their workload will not increase appreciably if new staff are being brought in, and remind them that this will loosen up overloaded clinic schedules for the current doctors. Consider scheduling a picnic or dinner with the staff and new physician (and spouse) in order for everyone to meet prior to jumping into the workday.

FINAL THOUGHTS

During the interview and contract negotiations, be certain that both parties are on the same page regarding an employee track or a partnership track. First-time associations often break up due to either employee or spouse unhappiness in the new city or the perception of an unfair salary/bonus arrangement. More recently, issues abound regarding work-life balance.

But, even fellowship trained sub-specialists as well as comprehensive ophthalmologists change their minds about becoming a full partner in the practice vs remaining an employee. I had two different glaucoma specialists remain during the 2-year employment period, successful and always hitting bonus, only to realize that they did not wish to take on the stress and responsibility of business ownership. At the time, I did not have an employee-only pathway, but I certainly do now. OM

Steven M. Silverstein, MD, FACS, is a cornea-trained comprehensive ophthalmologist in practice at Silverstein Eye Centers in Kansas City, Mo. His e-mail is ssilverstein@silversteineyecenters.com.