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As fewer dermatologists go it alone, experts detail how to adapt to non-solo practice

An increasing number of dermatologists are choosing employment over practice ownership — the number of solo practitioners has dropped 6 percentage points since 2005, from 44 percent to 38 percent, according to the Academy’s 2012 Dermatology Practice Profile Survey. Further, only 18 percent of dermatologists under 40 are solo practitioners, with the plurality of younger dermatologists joining dermatology-only groups in both the under-40 (46 percent) and 41-49 (45 percent) age cohorts.

They are avoiding what small and solo practices are experiencing — finding themselves dedicating an ever-larger amount of administrative time to maintaining compliance or keeping up with the various benefits available to their patients through different plans. This can not only eat up physician and staff time, but often requires the hiring of additional staff focused on compliance efforts. Meanwhile, incentives to encourage participation in quality measures reporting, use of electronic health records, and electronic prescribing are being replaced by penalties and more stringent requirements. 

Why join up?

The most frequently cited reasons for joining a group practice are reducing the administrative burden just described, the ability to secure coverage for vacations or medical meetings, and the benefit of having colleagues on-site to confer with and consult on cases. Group practices also enjoy exceptions under various health laws that allow dermatologists to add and benefit financially from ancillary services for their patients, according to Miami board-certified health lawyer Sandra Greenblatt, MBA/HA, JD.

In addition to allowing physicians to delegate or share administrative or regulatory burdens and foster a closer relationship with patients, a well-staffed dermatology practice can allow for the development of sub-specialty skills, according to W. Patrick Davey, MD, MBA, who previously practiced in a dermatology-specific group in Kentucky before beginning his own solo practice in Scottsdale, Ariz.

In a larger dermatology practice, dermatologists can spend more of their time, both clinical and administrative, doing exactly what they like to do best, according to Dr. Davey, who chairs the Academy’s Practice Management Committee. Mohs and other dermatologic surgery are well-established examples, he said, “but in my old practice, we had people who liked to do pediatric, and someone who took time to do research. Getting really into a certain sub-specialization is impossible for solo practitioners.”[pagebreak]

Having specialist colleagues can also make for a collegial environment, and one that allows the complementary skills of the different physicians to benefit patients. Having an extra set of eyes, Dr. Davey said, can prove invaluable. In addition, colleagues can provide an extra set of hands to free up vacation, conference, or personal time.

“It’s nice to have coverage if you need to go to a meeting, go on vacation, or get sick. If you’re a solo practitioner and you get sick, there’s that additional worry about your patients and the health of your practice,” he said.

Who makes decisions?

Though it may seem elementary to some, Dr. Davey said that one of the most important considerations when looking for a new practice situation is how decisions are made at the partnership or management level. Many doctors joining a larger concern for the first time, he said, forget or neglect this.

“You’re not the decision-maker anymore, and that’s one very big thing solo practitioners give up when they join a partnership,” Dr. Davey said. “This means that sometimes people miss how governance decisions in the new practice are actually made [when they review a potential agreement]. Does it take a majority vote? Is a supermajority necessary?”

Autonomy in treatment decisions, according to Milwaukee dermatologist Sidney Herszenson, MD, is the first and most important aspect for dermatologists to consider. After more than 30 years in his solo practice, Dr. Herszenson joined a group practice in lieu of moving his practice when his building’s owners declined to renew their tenants’ leases.

“I looked for a physician-owned group, rather than a hospital-owned practice or one owned by a large health care company. It was important for me to go to somewhere with dermatologists who have had positive experiences,” Dr. Herszenson said. “I’m able to provide a high level of care and feel like I’m given autonomy. I knew that wasn’t necessarily how dermatologists felt everywhere, so I was careful to shop around extensively.”[pagebreak]

Avoiding pitfalls

As in any important professional negotiation, securing competent legal advice is paramount. While physicians generally trust their intelligence and instincts, according to Greenblatt, even contracts from smaller practices require close reading by legal counsel specializing in health law, both to protect the physician’s rights as well as to ensure the contract complies with applicable health laws.

“I recently had a young physician call me, in tears, after signing her first group practice contract and later reading through some of the language,” Greenblatt said. “Unfortunately, since she had thought she didn’t need legal counsel, there wasn’t much I could do for her. She was essentially committed to a practice situation with which she had serious problems and a non-compete clause if she terminated. A good rule of thumb is that if you think you might need a lawyer, you definitely do need one. The devil is in the details.”

In addition to compensation, profit-sharing, and other common measures of contracts, physicians joining a practice should look closely at the work responsibilities spelled out in the contract, according to Philadelphia health care attorney Bill Kalogredis, JD.

“One of the things that trips up doctors who don’t know what to look for is where they agree on the hours and locations of their practice activities,” Kalogredis said. “I’ve seen people join a large group practice or become a hospital employee and not realize that they’ve tacitly, if not overtly, agreed to go to this or that location in the practice network (in the sole discretion of the employer) until after they’ve committed. I prefer specificity in the contract.”

Should a physician want or need to leave the practice or is terminated, it’s important to know the details of the contract’s wind-up or wind-down period. The state in which the practice is located, Kalogredis said, is important for practices that include a non-compete clause as part of the exit terms. Those clauses are unenforceable in some states, he said, and in others are rarely enforced. In others, they are commonly enforceable. Either way, a physician should be careful before signing and have a clear understanding of the ramifications after consulting with experienced legal counsel. Then the physician may decide if the restrictions are acceptable or whether further negotiations are necessary.[pagebreak]

Adjusting to a new paradigm

For someone used to making decisions on patients and treatments, a new hierarchical setup can prove an adjustment, according to Dr. Davey.

“There can be, for some dermatologists, the unpleasant reminder that you’re not the only one in charge, that you’re not the captain of the team anymore,” Dr. Davey said. “The first thing to come to a decision on when you’re considering a practice change is whether or not you’re okay with that. And really, some people think they are, but find they aren’t totally prepared when the time comes to demonstrate this.”

Greenblatt said that for a physician used to managing the risk and benefits of practice ownership, the sometimes-competitive environment of a revenue-driven group practice can require adjustments to workflow or practice style. Also, the physician no longer has control over the billing and collection process and should seek a compensation formula that rewards his or her efforts rather than one based on someone else’s collection activities (or lack thereof).

“A lot of times, the compensation in many group practice or employment agreements is very much tied to the amount of revenue the physician under contract brings in. It’s very much eat what you kill,’” Greenblatt said. “But it needs to be very explicitly spelled out in the contract. I had a client that was an incredibly successful urology group practice, but they hadn’t detailed the (Stark Law-compliant) split of income from new ancillary services when they formed. Despite all of their success, this really nasty dispute tore the practice apart, which was a shame considering what they’d built.”

One major change in joining a partnership in particular, Dr. Davey said, is the need to choose a physician leader to interact with business partners such as accountants, attorneys, and even software consultants. The partners, he said, should come to a mutual agreement upon who to do business with and then leave it to a single partner to manage each relationship.

“As a practice, you don’t want to send mixed messages, duplicate a concern that a colleague has already made, or make the process of accessing your attorney or accountant inefficient,” Dr. Davey said. “Apart from possible tension between partners or frustration from your attorney’s side, there’s the fact that the clock starts when they get on the phone with you.”[pagebreak]

The relationship with staff is often different in a larger group than a small practice. While most solo practitioners foster close relationships with members of their small staffs, a new setting will likely include a larger number and variety of employees with various working styles, tenure, and opinions on how to run the practice. Newly employed physicians coming into an established office may have difficulty at first effectively adapting to a more corporate management setting. This can often lead to tension, as detailed by Manhasset, N.Y., dermatologist Amit Garg, MD, during his session on Hot Buttons at the 2014 Annual Meeting.

“Hot-button moments often surface in high-stakes situations, such as when working with colleagues,” according to Dr. Garg, and there’s a lot at risk in these moments. The ability to manage emotions during these moments “impacts our reputation, our relationships, and our ability to advance our positions at work and in society. The goal is to better understand why our buttons get pushed and ultimately shift our focus from someone else’s behavior to our own responses.”

Dermatologists are being presented today with multiple options for their practices. According to Greenblatt, practice partnerships are like marriages. “Don’t get married’ out of fear or because your colleagues are doing it. What is good for one physician may not be right for another. There are pros and cons to every practice form that should be weighed carefully for the quality of medicine you can practice, financial considerations, growth possibilities, and more. Physicians should reach out to financial professionals and health lawyers for advice and representation before they decide and to ensure that, if things don’t work out, a later practice divorce’ leaves doors open for future opportunities rather than leaving you facing a devastating dead end.”

Going it alone

Despite all the external pressures to go into practice as a partner or employee, some dermatologists fundamentally want to be their own bosses and drive the ethos and workflow of a practice. Hoover, Ala. dermatologist Elizabeth Martin, MD, is one of a number of younger physicians who bucked current trends— in large part, she said, because she felt she would be able to have a closer relationship with patients as the ultimate decision-maker.

“What I wanted to do when I went into practice for myself was to control my own destiny,” Dr. Martin said. “But I understand how someone coming into practice could perceive that there’s very little control over that in the current regulatory climate.”

Even though Dr. Martin, who currently employs one other non-partner physician, finds her best practice setting to be a small practice, she said that groups, large practices, and academic centers all have very important lessons for dermatologists to absorb. Though her ultimate career desire was ownership of her own practice, Dr. Martin said that the 11 years she spent at a clinic chain were well-spent and vital to her development as both a dermatologist and a businessperson.

“I was confident in my dermatology training after residency, but a group practice was the perfect transition for me from academic medicine to general practice,” Dr. Martin said. “I had a lot of dermatology knowledge, but no idea how to run a business. To work for a practice that was well-run was definitely important to my development, even as I was looking to go out on my own.”

Dermatology practice patterns shift

The results of the AAD’s Dermatology Practice Profile Survey over the last decade show a small but significant shift away from solo practice and toward groups. But the breakdown of the latest results by age indicate that the trend could pick up as a generation accustomed to solo practice is replaced by one that chooses groups by a wide margin. The results of the 2014 survey should be available later this year.

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