Pain management for practice breakups

Splitting up a practice partnership is nearly always emotional and painful, but experts say there are ways to minimize the drama.

By — Posted Oct. 10, 2011

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Attorney John Fanburg likes to say that medical partnerships are "marriages without love." He should know, as part of what keeps him busy is helping medical practices divorce as peacefully as possible.

There may not be love, but there is plenty of emotion embedded in a medical practice partnership, whether the practice is made up of two or two dozen doctors.

When the partnership fails, there is much at stake: Professional reputations, health insurance contracts, vendor relationships, employees' livelihoods -- and, most important, patients' health and happiness -- are at risk.

Even a relatively amicable split can be emotionally and professionally draining.

Elizabeth Twardon, MD, is a family physician who practices at Family Care of Fairview in Asheville, N.C. This summer she left her employed, part-time position at another practice in town when the partners in the group split up, with some starting their own group and another leaving family practice.

She has had to deal with practical considerations, such as learning a new electronic medical record system, making sure she has copies of her paper records from the old practice and ensuring that her patients know how to find the new office.

But the biggest hardship was on the patients, especially those who had to find a new physician after decades of care from the same one, she said.

Though she felt lucky to find another place to practice where there was room for her and the patients who followed her, she said the transition has been a struggle for everyone involved. "It was sad to see it go," she said.

Fanburg, who works out of the New Jersey office of the Brach Eichler law firm, is not the first to compare a medical practice breakup to the dissolution of a marriage. Experts say the keys to surviving a practice split are the same as those for surviving a divorce:

  • Prepare for the possibility of a breakup even if everyone in the partnership thinks it never will happen.
  • Be reasonable.
  • Communicate.
  • Ask for help from a professional if things get out of hand.
  • Choose partners the next time who share the practice's values and vision, and resolve not to let the next partnership suffer from neglect.

Why it's so hard to stay together

Many factors threaten medical partnerships. The combination of increasing demands on physicians' time and declining compensation for care can prove poisonous.

"When people are dividing the pie, and the pie shrinks, their table manners get worse," Fanburg said, quoting a favorite aphorism.

Many common reasons for breakups come down to a generational divide, said Jim Farrell and Timothy Monaghan, West Palm Beach, Fla., attorneys with the law firm Shutts & Bowen. The two attorneys spend much of their time guiding practices that are splitting.

They and Fanburg said resentment among older and younger partners over work distribution, on-call requirements, partnership buy-ins, profit sharing and delayed retirements are commonplace.

The newest common reason for medical practice divorce is disagreement about whether to sell the practice to a hospital system or merge with a larger medical group.

Sometimes even absent a generational disconnect or choice about whether to sell the practice, the rapid pace of change in health care and the stress of keeping up with those changes can lead to feuding.

"Whether it's a marital partnership or a business partnership, often external frustrations get expressed to the people nearest to you," said Charles Bond, an attorney and health policy analyst with the Berkeley, Calif., firm of Physicians' Advocates. He represents physicians exclusively and has done work for the American Medical Association.

The medical partnership prenup

The right preparation and thoughtful approach to establishing a practice can keep a practice split, however unexpected, from being more painful than necessary, experts said.

States have varied requirements about what legal documents are needed to establish a medical practice. Other decisions to make are whether partners are forming a corporation, limited liability corporation or another entity. What's essential in any case -- even if it's merely an agreement to share an office or equipment -- is completing that paperwork and keeping it current.

In about half the breakups Fanburg manages, the group's paperwork is nonexistent, flawed or out-of-date. If that's the case, splitting partners probably will need an attorney or at least a mediator to ensure that the breakup unfolds fairly.

"Every physician should have a shareholder employment contract, different than the ones from nonowner employees, and documents called bylaws that set forth how the corporation is run and managed, who the president is and how that person is elected," he said.

Experts recommend reviewing -- and, if necessary, revising -- shareholder agreements or other practice documents annually at best, but at least every five years.

Establishing ground rules when a practice first sets up shop is not enough, either. Debra Phairas, practice management consultant and owner of Practice & Liability Consultants in San Francisco, said physicians should revisit their bylaws often and make sure they still make sense. Looking at those rules during an annual strategic meeting gives the group a chance to talk about values and goals on a regular basis before disagreements push the partners apart, she said.

Consider this

Whether partners are contemplating a split or have agreed to part, it's important to be realistic about the risks and to try to address every contingency. Here are some questions to discuss with practice partners:

  • Will one or more partners remain and take over managed care contracts in the practice's name? Be sure that payers don't require new contracts.
  • Are electronic patient records protected? Monaghan and Farrell said downloading an entire set of patient records can violate the Health Insurance Portability and Accountability Act and is unethical, but too often that doesn't stop departing physicians from trying it. Talk to the practice's EMR vendor about how to handle licenses for the physicians who still need access to the records.
  • How will patients be notified? What will the letter say? Will it go to anyone who has ever been there, or just in the last few years? If just one physician is leaving a large group, how will the practice identify his or her patients to notify them?
  • How will physicians split equipment like x-ray machines and exam tables?

There also are some realities in a practice breakup that partners might not be aware of:

  • The departing physician may become excluded from an insurer's panel after leaving. Sometimes, Monaghan said, insurers will limit a physician panel in a certain area. If a practice splits, insurers will exclude physicians who worked for an in-network group.
  • If a practice divorce becomes too contentious, Monaghan warned, it could get back to payers, and "they could use it as an excuse to dump the whole group."
  • If the entire group dissolves, noncompete clauses don't apply, so physicians should prepare for competition from former partners.

Patients come first

There are many decisions partners must make on how to divide up equitably when a practice dissolves, but patients and their records are not among them, Bond said.

AMA policy calls for physicians to give patients adequate notice that a practice is closing or a partner is leaving and to forward medical records, if necessary, to wherever the patient wants to transfer.

It is unethical, according to AMA policy, not to disclose where a physician has moved if a patient asks.

Phairas and Bond said physicians sometimes forget this, but it's the best policy, because it leaves the decision to the patient.

If the practice shuts down entirely, physicians still must maintain patient records. The requirements for storage vary by state, so it's important to find out what the law is and make sure patients have access to those records.

Monaghan said doctors risk losing their business if they ignore patients or expose them to breakup drama.

It's also important to protect patients from solicitations from departing doctors, Farrell said. Surreptitious downloads of patient files might lead departing partners to contacting patients who may not even have seen them.

"All of a sudden there's been a mass mailing based on that database, and the front desk gets a phone call from a patient who says, 'I've always been with Dr. Smith. Why am I getting solicited by Dr. Jones?' "

Next time

If the dissolution of one partnership gives rise to another shared practice, experts say the ground rules for strong marriages will help avoid conflict.

"I say my most successful partnerships have four C's: courage to communicate, confront and compromise," Phairas said.

That's one reason she recommends that practice partners meet often. Failure to talk and listen can be fatal to the partnership.

"Its almost like in marriage. There's this expectation, 'They should know how I'm feeling, or figure out what's going on,' " Phairas said. "But nobody can read your mind. You have to communicate -- before it blows up, before seething resentment starts building."

As in any relationship, sometimes the saving grace for a medical partnership is recognizing what would be lost with a breakup.

Doug Griest, PhD, is a psychologist with Atlanta firm Management Psychology Group, and works often with medical groups facing organizational crises. They come to see him, he said, because they want to stay together but need help working as a team.

That type of commitment has kept clients who were in at least one case literally fist-fighting from splitting up, he said.

"It's like they say -- the biggest step is recognizing you have a problem and acknowledging that," he said. "If we get a commitment and we all agree that it makes sense to stay together to try to work this out, that goes a long way."

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Legal considerations

Experts say many of the headaches associated with the dissolution of a practice can be prevented or mitigated by ensuring that partners put their expectations and agreements in writing.

  • Start off on the right foot. Be sure that when a practice is formed, all partners sign the appropriate shareholders' agreement and employment agreements. The agreements should include a contingency plan for a practice split, and for one or more partners' death or disability.
  • Keep practice documents updated by revisiting them on a regular basis -- annually if possible, but at least every five years.
  • Make sure that when new partners join the practice, they have signed the appropriate agreements.
  • Agree upon a time frame for a partner to give notice before leaving or retiring.
  • Agree upon how to assign patients to a primary physician, so that if one partner leaves, it is clear which patients need to be notified.
  • Make sure buy-in requirements are in writing and regularly updated to reflect the reality of the marketplace and the practice.
  • Make sure requirements for on-call time are in writing.

Sources: Attorneys Charles Bond, Physicians' Advocates; Jim Farrell and Tim Monaghan, Shutts & Bowen; John Fanburg, Brach Eichler; Debra Phairas, Practice & Liability Consultants

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What to tell patients

Whether a partner leaves and the practice stays open, or the practice is closing, patients want to know what's going on and need to be told. But how do physicians break the news?

  • Send a letter to patients and answer questions about the changes to your practice by phone or in person. Be prepared for the additional call volume when patients receive the letter. Instruct staff how to handle calls about the practice changes.
  • If one or more partners is leaving but the practice is not closing, tell patients, "We're sorry to see them leave. We're still available to take care of all of your needs."
  • Tell patients where a departing partner will be practicing. Provide an address, phone number and instructions on how to get a copy of medical records. Patients have a right to follow their physicians and to receive copies of their medical records.

Sources: AMA policy; Debra Phairas, Practice & Liability Consultants

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