In our previous article, we discussed the owner’s expectations in accomplishing a buy-in.  In this article we will discuss the associate’s expectations.

While buying-in to a practice is common, the road to the summit can be filled with potholes and detours.  Those potholes and detours often take the form of the practice blowing up, realigning services and offices, de-employing a physician, alienating physicians and friends, and confusing the staff and local medical community.  Why does this occur?  We believe a these problems occur due to lack of clear expectations and stated assumptions of what will happen after the buy-in.

Expectations of the Associate:

• Value of the practice: An associate may not understand the value in a practice that has been in existence for more than 15 to 20 years since the “rough spots” of the start-up occurred before he/she came to the practice. The concept of value is part of the process which requires education. It is important that the associate understands the environment in which the practice operates and the investment necessary to start and maintain the operation. Today’s associate adds value to the practice when the services he/she performs are reimbursable. However, value exists at the time the associate joins the practice and depending on the risk assumed, growth may not be solely attributable to their services.

• Effort: Buy-ins require money, and some more than others. Money earned by an associate is a direct result of the effort he/she puts into growing and developing the practice. One of the biggest hurdles to making the buy-in successful is determining the compensation plan for the associate before he/she becomes a partner. If the associate is paid at a rate which is above the overhead rate, the owner is subsidizing the associate’s compensation. This situation is acceptable until the associate decides to buy-into the practice. When an associate begins the buy-in only to realize he/she will take a cut in pay, the buy-in often fails. Therefore, knowing the effort required once the buy-in occurs is as important as knowing the practice.

• Timing: This is often one of the most discussed issues. When the timing or offer is not clearly addressed, the possibility grows for all parties to become confused and frustrated. Generally, most associates are not prepared in the first year to discuss a buy-in. Many things change, and the option is generally available after the end of the second year of employment. However, just because the option is available does not mean the associate is prepared to take action. It is our experience that the buy-in option can best be explained by having a time line for the associate to declare his/her intent. It is at this point in the process that the clock starts ticking – when the buy-in will occur or how long it will take. Each buy-in is unique and should not be viewed only as a sentential event. A buy-in by the associate is a commitment that has been thoroughly evaluated and planned. Both parties should be patient as the buy-in process may take up to nine months to complete.

There are foundational rules for completing the associate buy-in that apply to both the employer and the associate:

• Determine that both parties want the best for the practice and each other.
• The “deal” will not be discussed in front of the staff or patients in the office.
• All information will be kept confidential.
• Each buy-in is unique.
• Taxes are a concern for all parties.
• When in doubt, get a third party involved to assist in completing the transaction.
• Always use an attorney.
• Share information.
• Disagree without being disagreeable.
• Plan for the future.

For more information, contact Mike Crosby, president of Provider Resources, LLC at (888) 776-2430 ext. 2042.