Pick your partners carefully in a practice

Contract Language. By Steven M. Harris, AMNews contributor. Jan. 29, 2001.

CONTRACT LANGUAGE

A column examining the ins and outs of contract issues

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In a perfect world, how many physicians would you include in a physician group practice? Three? Five? 12? 20?

Probably the most appropriate response is, "It depends." Among myriad other things, it depends upon the type of medical practice, the personalities and professional reputations of the physicians making up the group, the extent to which group members have similar or divergent professional visions and, most important, whether group members have shared financial expectations.

Whatever your answer, give some thought to the implications (if not downfalls) of making business decisions that could trigger dissatisfaction among a certain segment of doctor shareholders in your practice.

Specifically, are you prepared to contend with a shareholder, or faction of shareholders, entitled to vote on a particular issue but who singularly or in the aggregate do not represent the majority view of the group? These shareholders are often referred to as minority shareholders.

Suppose that five years ago, three physicians founded an emergency medical physician practice group. The practice has focused on contracts to provide services at several centrally located hospitals in the downtown city area. As the practice grew, it added two more physician shareholders. To date, the founding three physicians serve as the only officers of the now five-shareholder practice.

As fate would have it, a long-time colleague of the founding physicians is chair of the emergency department of a new suburban hospital. She has just presented the three with a lucrative offer to provide services there. [...]