ADVISORY e-ALERT                 February 18, 2009
Advisory Law Group, a Professional Corporation
What's the real cost of losing an employed or subcontracted physician? 
What about losing a fellow partner or shareholder?
Consider the cost of replacement:

●  Recruiter fees
●  Group leaders' lost time and efforts in recruiting

●  Relocation expenses
●  New hire bonuses
●  Lost or delayed income due to credentialing lag
●  Cost of locums, especially for hospital-based groups

Then, consider the cost, both direct and indirect, of that physician leaving to compete with your group.
Recent examples that come to mind include a surgeon leaving a group, taking scores of patients with him to his new practice, and a hospital-based group that lost three of its partners when they left to take the exclusive contract at a competing facility. 
In the first example, hundreds of thousands of dollars of surgical income were lost.  In the latter example, the move led to referral sources following the departed physicians and left the old group in a weakened state that threatens their ability to service their main hospital, a relationship worth tens of millions of dollars annually.
Employment agreements, subcontracts and partnership/shareholder agreements can provide leverage to keep physicians aligned with the group, but only if those agreements are a part of a larger retention strategy. 
For example, compensation plays a large role in retaining personnel, but so, too, do a range of other tangible and intangible issues, including such factors as:
●  What potential is there for advancement?  
●  What opportunities exist for involvement short of ownership that make employed and subcontracted physicians feel that they are part of the team, not just cogs in the wheel?  
●  What group benefits are offered.
●  How much effort has the group expended in understanding the value of recognition - and how it can be used both to replace and amplify the value of dollars?   

Of course, in states that permit the broad enforcement of covenants not to compete, they can be utilized to reduce the likelihood of a physician's departure and, if the physician does leave, the impact of his or her departure.
But what about in those states that do not permit enforcement, or which limit enforcement to instances, for example, the sale of a partner's interest in the practice partnership, that may not apply? 
There are strategies that exist even in those instances, such as our Applied Legal Strategy™, The Rights Retention Solution™ through which groups can retain the value of the training, experience and contacts they provided a now departing physician.
Many "experts" state generically that "employees are a company's most valuable asset."  But that's only true to a certain extent:  If the employee (or subcontractor or fellow-owner) is highly competent and also has the emotional quotient required to perform at or above the required level.  On the other hand, a simply competent employee (or subcontractor or fellow-owner) can do your practice far more harm than good -- they cannot be allowed to bring the practice down. 
Star-level physicians must be nurtured, and that requires an interplay between the group's employment/subcontract/ownership documents and the group's "binding" efforts.  To be most effective, those efforts must provide a fine balance between keeping the physician in place with the group and preventing him or her from damaging the group by departing, especially by departing and competing.
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Customers expect service. 
My clients generally refer to customers as "patients" -- that may be a mistake to the extent that it creates the impression that the relationship is not subject to the same rules as apply to other business relationships.
You might provide your patients with the world's best medical care, but if you piss them off they probably won't be back, and they will probably let others know about it.  If you piss them off before they become patients, it's even worse.  It used to be that disgruntled patients simply told their friends.  Today, all it takes is a keyboard and internet access to tell the world.
So let me tell you a story. 
The day before I sat down to write this article, I made a call to a group practice in the course of looking for a new physician.  I was transferred from person to person three times.  Each time I had to listen to the same recording about hanging up and dialing 911 if it were a medical emergency.
When I finally reached the woman who schedules appointments, I gave her my name and told her that I had received Dr. X's name from my insurance carrier's online panel list, which indicates that he is taking new patients. 
The first words out of her mouth, harshly spoken, were, "Date of birth." 
I said, "Excuse me?"  She again barked, "Date of birth." 
I chuckled - at that moment it was all but over in terms of that group ever seeing a dime of my money-- and weighed whether or not I should just hang up.  I decided to play along and give her the information.  I suppose she was trying to screen out Medicare patients contrary to all the warm and wonderful things it says about their group on their website. 
Ms. Unfriendly then informed me that Dr. X wasn't taking any new patients - my carrier has it wrong.  She told me my only choice was to see Dr. Y, a new physician with their group.  Wrong.  I had another choice.  I hung up.
As I've written in other articles, this is the time for aggressive medical groups to grab the market. 
But to attract and keep patients, it doesn't matter how wonderful your expertise is or even how wonderful your claims of delivering caring service are; if you can't properly treat your customers, present or potential, someone else will.  And, customer satisfaction alone should not be the goal; rather, the goal should be to delight the customer, to provide a unique, branded experience that no one else can duplicate.
This is the case whether you are a solo, office practice physician or the head of 100 member hospital-based group. This is the case even if your "customers" include not only patients, but referring physicians and facilities as well -- in that case, you need to assure delight on each of those levels.
You need to train your team, both physicians and support staff, and establish incentives and disincentives to spur then to deliver the level of service that exceeds what the customer expects.  These efforts must be reflected in the employment agreements and subcontracts you have with your group members and staff.  In respect of non-contracted staff, there must be written policies and procedures setting forth customer service expectations and there must be coordinated rewards, and punishment, to stimulate it.

Think of it this way.  If you have to benchmark (although I hate the entire notion of benchmarking), don't benchmark to any other medical group.  Benchmark to the Four Seasons, or to Nordstrom.  If you don't get it, someone else will.  And they'll get your patients.
ADVISORY LAW GROUP, a Professional Corporation
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The materials presented in this Advisory e-Alert are educational only and are neither legal advice nor a substitute for it. Advisory e-Alert presents a general discussion which may or may not apply to your particular legal or factual circumstances. The distribution of Advisory e-Alert is not intended to create, nor does it create, an attorney-client relationship. Please do not send us confidential information without receiving explicit authorization from Advisory Law Group to do so. Do not take or avoid taking any action as a result of the materials presented in this e-Alert without first obtaining legal counsel.   
Let Us Know What Business/Legal Issues You'd Like to See Addressed in A Future Issue
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In This Issue
The Real Cost of Losing a Group Physician
Customers Expect Service
Teleseminar: Responding to Crisis
Mentor Program
The Wisdom. Applied. Blog

Unfortunately, hospital based groups are often confronted with hospital crises, for example, misbehavior by a group physician or the failure to follow medical staff or hospital policies.

Left unmanaged, these crises can permanently damage the relationship between the group and the facility, sometimes to the point of endangering the group's exclusive contract. 
Listen to Mark as he explains, using a case study based on a real life situation, how groups can not only protect, but improve, their relationships with their contracted facilities by adopting an agressive, proactive response to a crisis.   
February 25, 2009 at 4:00 p.m. PDT.
The cost of this teleconference is $497 per site (you may have muliple listeners on your single call-in line).  Email to for enrollment information.
Mark's mentor program, the Advisor Program, is designed to provide an extremely high level of personal guidance for solo physicians, including those just completing their residencies, as well as for physician group leaders. Its focus is on personal career guidance and on leadership skills, not projects.
Admission to the program is upon application only - space is highly limited.  If there is no space availble, you will be placed on the waiting list.
For more information on the program, click on the following link:  The Advisor Program
The Wisdom. Applied. Blog
Can't get enough free advice? 
Read Mark's new blog, containing frequently updated mini-articles on issues relating to the business of healthcare.
The Wisdom. Applied. Blog appears on ALG's website. 
Read it ... often!
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