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Democratic Group Practice Section Newsletter - September 2010, Vol 4, #1

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circle_arrow From the Chair
circle_arrow Democratic Group Practice Section Meeting at Scientific Assembly   
circle_arrow Lessons Learned from Failed Contracts- The Fatal Flaw of the Small Democratic Group 
circle_arrow Election of Officers 
circle_arrow Section Reception at the House of Blues
circle_arrow Look before you leap - questions you should have answered before you sign on the dotted line! 


Newsletter Index


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From the Chair

kloth“What happens in Vegas”…and what you learn there might just be what you need to find, learn about or create a satisfying long term work career opportunity for yourself. Hopefully, we will be able to shed light on some of the health care issues that affect our careers at the Democratic Group Practice section meeting. Democratic groups promote ownership, equality among members and are typically involved in advocacy. During this time of uprooting and change in healthcare, hospital administrators are demanding more and more from their emergency department (ED) physicians. Of course, it is imperative to be involved and to advocate for the care of patients but it is also important to be cognizant of the business side of emergency medicine-how you are treated how much say you have in your practice, and how you engage with your work. We’ll talk about how to create fertile grounds to grow democratic practices in this era of high performance demand and how to cost effectively provide what hospitals demand. 

We have some interesting articles addressing how to choose a hospital ED group to work with and an article about one of the fatal flaws of starting up a democratic ED group as well as information about section election. 

Join us Wednesday, September 29, 2010 at 12 Noon in Coral BC Room at the Mandalay Bay Resort & Casino. Lunch will be provided for all participants. Please RSVP to Margaret Montgomery .

Also, we welcome you to the reception for the Democratic Group Section later Wednesday evening from 8:00pm to 10:00 pm at Crossroads at the House of Blues. In this more informal setting, you can talk to members in democratic groups about their challenges and successes. No reservations are required for the reception.


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Democratic Group Practice Section Meeting at Scientific Assembly

Make plans to attend the Democratic Group Practice Section Meeting! 

Wednesday, September 29, 2010
12:00 pm – 2:00 pm
Room: Coral BC
Mandalay Bay Resort & Convention Center

Come join your colleagues to discuss the issues most pertinent to democratic groups. 

Special thanks to CEP America for sponsoring lunch. 

Be sure to check the schedule on-site as meeting time and location could change.


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Lessons Learned from Failed Contracts- The Fatal Flaw of the Small Democratic Group

Theodore I. Kloth, MD, FACEP

Reprinted from The Inside Track Newsletter with permission. 

Over the years, many groups, small and large, democratic and non democratic, have had their contracts let out to bid. What can a small democratic group do to help mitigate this from happening? 

In general, I have found that hospital administrators would rather not deal with mom and pop type groups, because these entities rarely have structure, depth and solid business practices. While it is possible for these groups to achieve success, it takes a strong time and effort commitment from most of the docs to succeed as a small group. When problems do arise in these small groups, they are frequently ignored and when noticed, the group may have difficulty in crafting a systematic and efficacious approach to solving these problems. Despite this recognition, and because of the frequent longevity of the ED docs and their relations with the medical staff, it may appear to them that their contract is safe because the CEO may not be willing, at first, to stir the waters and unleash a tempest of discontent among the medical staff. It is at this time that the local group is most vulnerable. Interestingly, democratic groups are even more susceptible at this juncture. 

Why is that? 

In many small democratic groups, all the docs are equal. Decisions must be reached by a super majority of the group, and in many cases, each Partner may even have veto power over any group decision. Even if there are a few of the docs that recognize the need for change, there are still enough others that can block any change. So, the ED group carries on, and the Administration becomes more and more unhappy. Without being able to effectuate change, the ED group continues to dig itself into a hole, even if this problem is only due to 1 or 2 individuals. In addition, because of the wording in the charter agreement, removal of the one or 2 “bad apples” may actually invoke a “dissolution of the group” clause, where if one doc leaves, they all must leave and none of them could work at the contract. Without the charter agreement enabling the removal of a “bad apple,” the entire group is now at risk of losing the contract. So the group ends up doing “nothing,” or “not enough,” often leading to conflict in the group. What had once been a harmonious group is now a group rife with dissension. This creates “noise” from the ED, and “noise” is not something a CEO likes to hear! Sooner or later, the Administration feels helpless in resolving problems and has no choice but to seek out other physicians to staff the ED through an RFP (Request for Proposal). And once the RFP is sent, it is rare that the same group of docs, even without the bad apples, will be offered the new contract. 

One way to avoid self destruction 

At the very beginning of the group formation, or even now, when everything is going well, it makes sense to make sure that the charter agreement makes clear that even though you are all equal partners, there are certain situations that are cause from removal from the schedule and even from the group if necessary. I certainly would consult with an attorney for help in this area, but would consider enumerating certain situations as examples, because the problems I reference here are not illegal in the same way felonies are, but could very well be the cause for losing the contract.


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Election of Officers

 Election of officers will be held during the section meeting at Scientific Assembly. Nominations from the floor will be accepted for the following offices: 

  • Chair-elect
  • Secretary/Newsletter Editor
  • Councillor

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Section Reception at the House of Blues

Come join the reception for the Democratic Group Practice Section being held at Crossroads at the House of Blues on Wednesday, September 29, 2010, from 8:00 pm to 10:00 pm. 

Special thanks to CEP America for their sponsorship of the reception.


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Look before you leap - questions you should have answered before you sign on the dotted line!

Theodore I. Kloth, MD, FACEP

This article also appears in the September2010 issue of the Young Physicians Section Newsletter. 

It’s been a long haul and for many of you, the light at the end of the tunnel is becoming more and more of a reality. Congratulations! Residency is almost complete and it is now time to look forward to making use of all you’ve learned and actually going out on your own and practicing medicine – for real! The excitement and anxiety are probably palpable. Now you will go out and make far more money than you are making now, by working far fewer hours, allowing you far more “free” time to pursue whatever your interests may be. The difference between residency and private practice in terms of time and income will be so remarkable, you might think that it really doesn’t matter who you work for because it is such a “win” with whomever you work for! So, why worry? Well, perhaps “worry” is not something you should do, but preparing as you have done your whole life is certainly worth some time and effort. Because, if you are not careful, and if you do make some wrong decisions now, the ramifications could haunt you and seriously derail future opportunities. 

As a partner in a democratic group for 34 years, you can imagine where my biases lie. Unfortunately, the number of democratic single groups is dwindling, largely because of the difficulty in managing the increasing complexity of EDs, which requires far more involvement of all the physicians at the site, not just the medical director. It is still very much possible to run a high performing ED as a small group, as long as there are enough physicians putting in the hours to satisfy the increasing demands of hospital administrations. However, administrators talk among themselves and are quickly learning what is going on at other hospitals and what they can expect from their ED groups in terms of quality, performance, collaboration and participation. When performance slips, they are ready to look elsewhere to get what they think they should have. To satisfy hospital administration, many solo groups have come together and/or have merged with other small groups to gain economies of scale, and attain resources and skills that are prohibitive for one group to pay for by itself. Unfortunately, when performance continues to fall short of expectation despite this effort, there are always other, frequently larger, groups that are willing to step in. And when that happens, the finances, practice, and local autonomy is altered, often drastically, and changed to a situation that is less than desirable for you, the ED doc. 

So what are some of the characteristics of your new found group that you should be asking discerning questions about? What might be some questions that I would be sure to ask? 

It is clear to me that location is still a leading factor in your decision making process. As it should be. Please be aware that this decision, however, may well preclude being able to ask for and negotiate a compensation and or benefit package to your liking, especially if the options are limited.  

One of the most important characteristics of your new group should be, in my opinion, transparency. As a physician billing the government, it is your obligation to know, as you are the responsible party, how much and for what services you are billing. Your new group must allow you to see this information. Additionally, you should also be able to follow the money when it is received. How much goes to overhead? What is included in overhead? How much is charged for billing? malpractice? health insurance, etc.? Is health insurance even available? Who is responsible for deciding where overhead dollars are spent? Who oversees these expenditures? What is paid to the medical director? The Chairman of the Board (if there is one)? the managing partner? This is the only way you can tell if you are getting value for what you are spending. If you don’t know what you are spending, to whom and to where, its hard to figure out if you are getting your money’s worth. 

Is there a clear pathway to obtain full and equal ownership and vote? Is full equality even possible? How long does it take to get equity in the group and how much do you get? And what does ownership entail? In many places, the medical group is a partnership equally owned by the partners, but in fact has no economic value, and so obtaining equal ownership in this entity, while attainable, is not very significant. In fact, the real value may lie in the ownership and profit of the management pieces, for example the management organization that the docs use for payroll, etc, or the billing company that the docs again pay to collect their money. Who owns these other pieces? Is ownership of these revenue-producing businesses available as well? Or is ownership of the entities that hold the value something that is unobtainable? If it is available, how much does it cost? What are the steps to get there? Is there a weeding out process, where after working a number of years one is suddenly told that he/she is no longer needed and partnership or ownership is out? If it is available, what are the steps? The requirements? The costs? Many of us are so excited about getting the job, that we don’t ask the hard questions or listen closely enough to the answers that may determine whether or not you will want to stay with this group for a career or not. After you hear the responses, I would then definitely check with the rank and file docs who have been there awhile (2-3 years) to verify that the process described to you is real. Of course, when the time calls for a decision, all of the assertions need to be written clearly in your contract, employment agreement, or partnership agreement so no misunderstandings occur later. 

How much local autonomy do the docs have regarding the local practice? Will you have a say in the way the local practice runs as soon as you are working full time or is your input restricted? If restricted, for how long, and will it eventually be equal to all the other members of your local group? What about your input into the decisions made on how to spend money and in which directions these dollars should be spent? 

As malpractice insurance has always been provided for you during your medical school and residency training, understanding the ramifications of malpractice can be a daunting task. However, it is extremely important to address. The first question is how much coverage do I have? This is usually standard and is in the neighborhood of $1million per case and $3million per year. More importantly, you must find out whether the insurance is “occurrence” type (the company will insure you if you have an active policy when the case occurred -uncommon) or “claims made” type (the company will cover you only if the claim is made when you have the insurance - more common). In this latter situation, when you move to a different ED and change insurance carriers in order for you to continue to have coverage for when you worked, you have to buy what is called a “tail” policy to cover you if the claim is made after you stopped working at the site and stopped paying for insurance. This is very expensive, ranging from 1.75x to 3x your previous annual malpractice insurance policy cost. The question you must ask here is who pays for the tail coverage? I recommend you get this answer in writing as well. Many physicians who desired to change jobs were startled and then dejected when they realized that they were precluded from moving unless they themselves paid for the tail, frequently in the tens of thousands of dollars. 

Remember- financial transparency, a clear path to meaningful ownership, and the ability to make meaningful decisions about your practice, among others, are keys to a long term satisfying career. 

You have worked long and hard to become experts in the practice of emergency medicine. Don’t let the business side of emergency medicine overwhelm you and become your Achilles heel. Though seemingly daunting, getting answers to the right questions will educate you and allow you to make the make the right decision about your career choice.  

We welcome you to meet with members of the democratic group section in a casual setting to clarify some of the points above, get other points of view and answer any other questions you might have about emergency medicine. Please attend our Section Reception on Wednesday, September 29, 2010, from 8:00 pm to 10:00 pm at Crossroads at the House of Blues and/or the annual Democratic Group Practice section meeting at SA on Wednesday, September 29, 2010 from Noon to 2 pm (free boxed lunches) in Room Coral BC, Mandalay Bay Resort & Casino.

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This publication is designed to promote communication among emergency physicians of a basic informational nature only. While ACEP provides the support necessary for these newsletters to be produced, the content is provided by volunteers and is in no way an official ACEP communication. ACEP makes no representations as to the content of this newsletter and does not necessarily endorse the specific content or positions contained therein. ACEP does not purport to provide medical, legal, business, or any other professional guidance in this publication. If expert assistance is needed, the services of a competent professional should be sought. ACEP expressly disclaims all liability in respect to the content, positions, or actions taken or not taken based on any or all the contents of this newsletter.

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