Practice Management

Limiting the financial impact of a new owner's buy-sell agreement

Q In negotiating a buy-sell agreement, my associate has asked that annual payments for buying me out at retirement be limited to 5 percent of the practice's gross revenues. I've never heard of such a thing. Is it fair of him to ask for this?

A Anything is fair during the negotiating process.

Five percent of gross annually should be adequate for you. If the practice grosses $500,000 a year, for example, your associate would pay a maximum of $25,000 a year. It would take four years to complete a $100,000 buyout agreement.

If you consent to his request, you should stipulate that the associate pay a fair market interest rate on the outstanding balance.

When a staffer's behavior is a turnoff to patients

Q Our new receptionist is an organizational genius who keeps the front office running smoothly. But her lack of tact in dealing with patients sometimes creates the impression that we care more about office protocol than we do about them. What's the best way to handle the situation—let her go, or try to improve her communication skills?

A She may not be aware of how she comes across, so first, talk with her about how patients perceive her. Stress the importance of good communication, and try to improve her skills through seminars, tapes, or other training materials.

If that doesn't work, move her to another position or terminate her. The receptionist position is vitally important to your practice; you can't afford to have someone in it who can't communicate effectively with your patients.

Should you put your services on the auction block?

Q Several medical groups in our area are marketing their practices to the uninsured and underinsured through Web sites that let patients or doctors bid on services. Our practice manager says our multispecialty group should jump on the bandwagon. Should we? And, if we do, how will it affect our liability risk?

A Stay away. Such sites raise serious questions for both physicians and patients. Not only do they reduce the doctor-patient relationship to a question of cost, but physicians agree to provide a service without examining the patient.

Moreover, at least one malpractice insurer, The Doctor's Company (the nation's largest physician-owned carrier), has advised physician members not to engage in such transactions. If doctors continue to do so, the carrier says, it's not unthinkable that in the future, its standard policies will deny coverage for claims that arise from such agreements.

What it takes to persuade a health plan to sweeten the deal

QOur internal medicine practice is about to sign on with the two HMOs that have enrolled most of the patients in our affluent suburban area. One plan's fee schedule is adequate, but the other would barely meet our expenses. How can we get the second health plan to increase our reimbursement?

A Explain that you can't participate because the fee schedule isn't financially feasible, and to back up that argument, present your costs. Bring up anything that sets your practice apart from others in the area, such as quality of care, convenient office hours, and location.

But if the HMO won't come around, be prepared to walk away. Perhaps the plan will be more willing to negotiate in the future.

Edited by Kristie Perry,
Senior Associate Editor

Do you have a practice management question that may be stumping other doctors, too? Write: PMQA Editor, Medical Economics magazine, 5 Paragon Drive, Montvale, NJ 07645-1742, or send an e-mail to mepractice@medec.com (please include your regular postal address). Sorry, but we're not able to answer readers individually.

 

Kristie Perry. Practice Management. Medical Economics 2001;8:156.