Q&A: How to cut compensation for a partner looking to reduce workload

Q: We have two cardiologists in our six-person practice, and they both want to cut back on their work schedules. One is a tremendous earner who has a large referral and patient base. The other doctor has neither. Can you give us advice on how to pay them for their reduced schedules and income to our practice?

A: Try to make adjustments that are based on the group's current compensation formula. Working within this familiar framework will be more understandable and acceptable to all physicians involved. For example, if you are currently splitting profits equally, a 20 to 25 percent reduction of the two doctors' shares may be warranted. If, on the other hand, your practice compensates partners by using a 100 percent production formula, their decreases may be self-correcting. Likely, you have a blended arrangement, so you may combine the adjustments to these two factors. Also, be sure that your lower producer is carrying a reasonable share of the fixed costs in order to justify holding his spot in the group. Run some models and start the dialogue and negotiations. The correct answer is the one that keeps all six doctors together.