Deciding who decides: How practices get governed

Help protect your practice from organizational and financial chaos by setting up who's running things and determining how leaders will be chosen.

By Larry Stevens, amednews correspondent. Nov. 11, 2002.

A few years ago, Unifour Anesthesia Associates in Hickory, N.C., which had 10 doctors at the time, was having trouble making decisions. The group had a democratic, one-person, one-vote structure. But all decisions had to be approved by the group as a whole.

Because of this, "our meetings were interminable," remembers anesthesiologist Bruce Stevens, MD. Dr. Stevens says everyone felt the need to voice an opinion on each issue; so discussions tended to be long-winded, repetitive and circuitous. And even when a decision was finally made, the issue might surface again at the next meeting.

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Will Latham, president of Latham Consulting Group, headquartered in Charlotte, N.C., says many groups have governance problems because of a mismatch between physician training and temperament and the requirements of group decision-making. Physicians normally work independently, but for many doctors, the overall structure in which they do so is a group.

"How do you walk out of an office where you're the primary or even sole decision-maker to a meeting where you're one of many?" Latham says.

The answer to that question, experts and physicians say, is by creating a structure that makes clear who's making the decisions and how they get made. That structure may vary by each group, but not having one may lead to organizational inertia that could hurt a group's morale and perhaps its financial health.

Symptoms of governance problems include difficulty or inability to make decisions, lack of support or even open sabotage by some doctors for decisions made, and backbiting and resentment on the part of some members of the group toward others. If untreated, the problem can result in group paralysis, reduced income or even dissolution.

Unifour Anesthesia solved its problem, with Latham's help, by applying a dose of good old-fashioned representational democracy. Instead of all decisions being debated and acted upon by the entire group, most are assigned to committees such as benefits, finance, compliance and personnel.

Physicians can be on any committee or committees they choose, and most committees include three to four doctors. The small committee size allows for more efficient decision-making. There are fewer voices, and physicians tend to become expert on the subjects.

Committee members usually e-mail their positions to each other before the meetings so by the time they sit down, many issues have already been resolved. The structure ensures that doctors have a voice in issues that particularly concern them. And it provides an answer to doctors who are dissatisfied with any action.

"We tell them, if this is something that's very important to them, they should join the committee," Dr. Stevens points out.

To provide a check, all decisions have to be approved by an elected executive committee. But so far, Dr. Stevens says, that body has rubber-stamped nearly all committee decisions.

Unifour, which now has 16 physicians, has a bit of an advantage in terms of creating a governance structure in that being a single-specialty group, the doctors' interests are pretty similar. Larger, multispecialty groups also can take advantage of similar governance frameworks, although it may require more structure and discipline.

Slocum-Dickson Medical Group in New Hartford, N.Y., a multispecialty group with 59 physicians, uses a strict one-person, one-vote policy. "That prevents power from accumulating in the hands of one doctor or a small group of doctors," says James O'Malley, MD, an internist who serves as president of the group's board of directors.

While some groups do well under strong centralized leadership, Dr. O'Malley and many consultants believe the democratic model protects the group from divisiveness if it should hit on rocky financial roads.

"If everyone has a voice in the governance, there's no one to blame when if they have difficulties," Dr. O'Malley says.

But like Unifour, Slocum-Dickson didn't want to sacrifice efficiency for an overly democratic process where everyone has a say in every decision no matter how minor. When the group has an issue that requires a decision, it is first taken up by the board. That body determines, based on the organization's bylaws, whether the issue is one that needs to be decided upon by the group as a whole or, if not, which committee has responsibility for it.

Only the most important decisions -- such as changes to bylaws, changes in compensation, expansion of the group, merging of the group -- are handled by the monthly shareholder meetings. (Physicians become shareholders after two years).

If the issue is sent to committee, that body studies the issue, and makes a recommendation to the board, which has final say.

In the beginning

It's hard to imagine forming a group of any significant size without first developing a governance structure. But many groups are not formed out of whole cloth. Some start small, where no formal structure is needed, and grow gradually by bringing in partners or merging.

Eventually, "they've outgrown their laissez-faire approach, but they won't know it until the process stops working," says Keith Borglum, vice president of Professional Management and Marketing, a practice consulting firm in Santa Rosa, Calif.

There is no exact size that signals it's time for a group to move from informal to formal governance. But experts say when groups have between five and nine doctors, it's time to think about beefing up the bylaws.

But while size counts, it's not the only factor. "If people feel their needs are not being met, even a group of four or five may need stronger governance," Borglum says.

He adds that very small groups may run smoothly with seat-of-the-pants meetings if the physicians' personalities are complementary. But if one doctor is very aggressive or one is overly passive, problems can occur.

Still, while many experts say good governance can help prevent serious clashes, character, personality and culture does play an important role -- especially when it comes to members of the governing body: the executive committee or the board.

As Dr. O'Malley notes, "Doctors in our executive committee, if not the group as a whole, have to realize that the good of the group may mean that, in some cases, their individual interests may not be completely met."

That's an attitudinal and cultural issue that can't be legislated. But it can be encouraged and fostered through education. To help, Slocum-Dickson executive board members are encouraged to take classes that stress the group culture Dr. O'Malley hopes to engender.

Thomas Royer, MD, general surgeon and CEO of Christus Health in Dallas, agrees. "When members of the board enter a board meeting, they have to act as if they are managers, keeping their doctor hats outside the room."

One way to further that aim is to rotate board members. At Christus Health, regional board members are elected for terms of one year and cannot serve more than three terms. Also, regional board members who persist in voting their personal interests are warned and finally removed from the board by Dr. Royer.

Are you talking to me?

Experts stress that if board members are perceived to be partisan, doctors may begin to feel that it's very important to elect board members who share their own interests. Elections will become divisive, and group members will lose respect for board decisions, possibly sabotaging those that seem counter to their individual interests.

But the other piece of the puzzle lies in the hands of nonboard doctors. If board members must shift their attitudes so as to subsume their individual needs under those of the group, nonboard members must discard their I'm-the-boss attitude in favor of a more cooperative model.

Richard Hansen, vice president and managing principal for the Medical Group Management Assn. Health Care Consulting Group, says a serious problem he has found is that some doctors don't feel that decisions apply to them. He cites the example of a group that decided doctors should fill out a particular form for each patient encounter.

But a senior physician, who had never filled out any form in many years of practice, didn't intend to start then.

When situations like this occur, groups should make every attempt to solve the problem amicably, Hansen advises. Speak to the doctor. Try to find out the problem and try to solve it. But when all else fails, disciplinary action may be necessary.

"Many doctors are averse to confrontation. But if you're not willing to enforce group decisions, you might as well throw out the entire governance structure," Hanson says.

Not every group has to bother creating a governance structure. If one group member makes most of the decisions, and other members are content, there may be no need to make changes. On the other hand, it's important to be aware of the dangers of a loose governance structure.

One new doctor, one bad decision, one power struggle or a drop in revenue can turn a placid group into one fraught with divisiveness and paralysis. Good governance can go a long way toward eliminating that threat.