The Virtues of Merging Retina Practices
The Virtues of Merging Retina Practices
Are small retina practices better off joining forces or going it alone?
James Vander, MD
One size fits all. The phrase, occasionally applied to the labels of generally unflattering garments, implies that it is possible to have one size work for everybody. Just as the claim is almost universally unfounded when applied to clothing, so it is when considering the ideal size of a medical practice.
There is no perfect size in any field and that includes my own, the specialty of retina. Having joined the practice known as Retinovitreous Associates over 20 years ago as its fifth member, I do not have first-hand knowledge of what it is like to be in a very small or solo medical practice. I have, however, been very heavily involved in the growth of that five-man group into what is now a 19-member retina-only practice spanning three states and 16 practice locations. Living and working through this period of substantial growth has provided some insights into the many advantages the practice gained by this growth, as well as an awareness of the dangers and pitfalls along the way.
A SLOW AND STEADY BUILD
There have been two phases to the growth of our practice, now known as Mid Atlantic Retina (MAR). The first was the slow but steady expansion that developed over the first 18 years of my partnership in this group. An opportunity would present, perhaps in the form of a more senior partner wanting to slow down a little, a geographic opening that required more manpower to cover a new office location, or the acquisition of a retiring solo practitioner's business. In each case, a well-trained, newly or recently minted retinal colleague was invited to join the group one at a time until we built up 10 members of the practice.
Just over two years ago, we undertook a far more aggressive and ambitious approach to our growth and almost overnight (if you ignore the nine months of intense work that preceded that night!) we grew to 19 practicing retinal specialists. While technically not a merger, as I will explain in a moment, the issues to consider are quite similar to those that might present with a true merging of two or more practices.
EDGE ON THE COMPETITION
All of the members of MAR had been practicing in the greater Philadelphia area, some for quite a few years. The common link was membership and active participation at the Retina Service of Wills Eye Institute. Wills Eye is a wonderful institution with a storied history and a well-deserved reputation for excellence in patient care, resident and fellow education and research, particularly of the clinical variety.
The members of MAR make up almost all of the members of the Retina Service and worked in three distinct private practices. My practice was the largest in terms of the number of retina doctors, with the other physicians belonging to sizable multi-specialty groups. For years, the three groups worked in a collegial fashion at Wills in terms of the training and research programs, but in many ways we were also competitors. We were friendly competitors, to be sure, but competitors nonetheless.
This arrangement created inefficiencies and obstacles that impeded the potential growth and success of the Retina Service as well as its member practices. Due to a fortunate confluence of events, including expiring leases and shifting perspectives among a few of the members, we realized that the retina members of the other two practices were interested in and able to withdraw from their existing groups and join ours. Thus, MAR was born.
Creating a group of physicians this large, whether by expanding an existing practice as we did or by true merger, is complex. Before tackling the myriad details involved, it is critical to assess what the aims of the growth are, to appraise the personalities and philosophies of its constituent members, and to acknowledge the inevitable changes that come with such growth and honestly consider each physician's willingness to accept those changes.
For us, the potential advantages that we hoped could be attained by joining forces were numerous. We wanted to realize the potential strengths of a large unified group anchored at a terrific institution. Our interests would be aligned nicely so that our training program could work far more efficiently. Recruitment for clinical trials is enhanced when the competition between groups is removed.
Personnel do not need to overlap at the same locations, thereby reducing redundancies and achieving some cost savings. There are some economies of scale realized, especially with certain types of expenses such as information technology and professional services. Resources are enhanced so that acquiring new technology is economically feasible and opportunities for investment become more viable. Satisfying the needs of referring doctors is more rational and much less confusing for them and for us.
Expansion might also theoretically help respond to some of the external forces confronting medicine today. Given the asymmetric nature of the relationship between medical practices and government/insurance companies, it is possible that bigger is better.
THE DRAWING BOARD
Achieving these goals is only possible if the members of the practices are a good fit for this type of endeavor. We were greatly aided in this piece of the puzzle by our years of shared experience at Wills. We all knew each other and respected each other. We had already worked together in some important capacities at Wills, so there were few surprises. We had seen enough of each other's abilities, character and idiosyncrasies to know what was ahead. It is not essential that all of the physicians are close personal friends — although it helps if you truly enjoy each other's company, considering the hours spent together at meetings, in the office, etc.
It is critical to possess a similar ethical and practical approach to patient care. In any retinal practice, there will be variations in the approach to patients between partners. For instance, some may advise ongoing injections for macular degeneration patients even if the response has been marginal. Others may give up after two or three injections. Some surgeons will offer vitrectomy for a 20/30 pucker whereas others may consider that heresy. Some partners may be very succinct with patients and efficient in the office. This allows for minimal wait times and avoids overtime for staff, but it may occasionally leave patients feeling short-changed and complaining to friends, family and referring doctors. While it is not necessary for all potential members of an expanding group to practice with the same style, the physicians will need to be comfortable with the range of approaches used by their partners. An unethical, unfriendly, disinterested doctor in the practice creates fallout that affects everybody.
Similarly, potential partners need to ensure they are compatible in terms of the operations and administration of the practice. For example, how are patient responsibilities to be shared? Some practices divide up new patients by rotating evenly using a socialist approach, while others let the patients flow to whichever doctor is requested by either the patient or referral source.
Are referring doctors encouraged to refer to the group or are individual relationships the priority? Strategies for this issue vary widely in my experience and it is not a small matter. The last thing any practice needs is for its member physicians to feel like they are competing with each other for their livelihoods. Are there any entanglements in the “old practice” that could sabotage the new group? I would strongly advise that all members be responsible for taking care of their own “messes” even if they become apparent long after forces have been joined.
How is compensation structured to avoid resentment as inevitable differences in work effort, economic productivity and transitioning of new and old members appear on the landscape? If there is not a comfort level on this question, the merger can never succeed. There will inevitably be differences among partners with different personalities and at varying stages in their careers. Embracing this variability and openly addressing it is essential. All must agree under what conditions someone can join the group and when it is time for someone who is slowing down to move to a non-partner status in the practice.
The style of governance for the practice must be agreed upon in advance. Our practice has always worked by achieving consensus on matters big and small. When we were five or six members, this was fairly easy to achieve and was reasonably efficient. With growth, it becomes impossible to discuss every issue with every member before taking action. The group must decide how it wants to approach this issue, preferably before joining forces.
We have basically expanded upon our existing structure with some relatively minor modifications. We have what some would call a “managing partner” but depend heavily on a series of active committees to divide up the workload. I am convinced that keeping all of the doctors engaged by sharing in the various key requirements of running the practice is critical to the vitality and success of the group. If a small number of partners “run things,” then resentment and disenchantment will inevitably follow.
Our practice consists of highly intelligent, creative individuals who want to keep their hands in the operations of the group. We have an understanding as to what matters can be handled by the individual committees or managing partner and what matters should come before the board before action is taken. We do have a CEO who is indispensable to our success, but the physician board definitely runs the show and our administrative staff is charged with carrying out the wishes of the partners. While there are occasions when this slows things down, I believe in the long run it is healthier.
PIECING TOGETHER THE DETAILS
If the consensus is positive after an honest appraisal of critical issues, then the task of plowing through the details begins. Crafting partnership agreements, unifying employee benefits and retirement plans, insurance credentialing, adjusting schedules, and marketing the new entity are just some of the matters to be addressed. Dividing up the work will be essential, as will be the input of an attorney and accountant, preferably individuals with experience in this process who can offer reassurance, guide the way, and respond quickly to the inevitable glitches that will develop.
The process will take longer than one might think, but it is helpful to set deadlines and stick to them. If the process is open-ended, repeated delays could undermine the entire endeavor. Expect some bumps along the way. Most will be minor and if you have done your homework on the front end, major ones can be smoothed over or avoided entirely.
Now that we have lived with our new, much larger practice for a couple of years, we can begin to see how things are working out a bit more clearly. We have achieved many of our goals already. The Retina Service of Wills runs better than ever. Our research unit is highly productive. We have been able to address some internal and external issues with a certain degree of success. We meet monthly and talk far more frequently and so far have been able to handle the obstacles before us and find opportunities with reasonable results. There have certainly been bumps along the way and joining together in this fashion is definitely not for the weak of heart. All in all, though, this has been a positive move for the physicians individually and collectively. We are looking forward to bigger and better things to come! RP
|James Vander, MD, is an attending surgeon on the Retina Service of Wills Eye Institute in Philadelphia and is the president of Mid Atlantic Retina. Currently, he is Medical Co-Director of the Wills Eye Institute Ambulatory Surgery Center and President of the Faculty for Ophthalmic Education at Wills Eye. He serves as Clinical Professor of Ophthalmology at Thomas Jefferson University School of Medicine.|
Retinal Physician, Issue: March 2011