Joining a practice? Father knows best

July 7, 2006

Ignoring his dad's warnings caused this physician a lot of needless pain. Here's what those troubles taught him.

I should've listened to my father. He's a seasoned, small-town family physician, and he warned me.

He was right. But I was naive and enthusiastic. I'd spent the year after my family practice residency as a locum tenens, finishing up two months as a volunteer in Papua New Guinea. Now I was looking for my first practice job, and this one seemed ideal.

Maybe if I'd followed my father's advice, I'd have seen the flaws. Instead, I had to learn the hard way. Over the next two years, my "ideal" job became the source of increasing frustration and anger. It ended on a cool October morning when I arrived at work to learn that the clinic had been closed by judicial order, a casualty of feuding partners.

At the beginning, it seemed like the right place to begin my career. The clinic was owned by two physicians; I would make the second physician employee. I knew both partners slightly-they were young, intelligent, hardworking, and good doctors. Their recruitment approach emphasized collegiality over financial concerns. As the partner who served as medical director put it, "I have no intention of making any money off of you."

Maybe not. But as I tried to determine whether my contract was fair, I began to wonder if the partners actually had any idea whether they were making money at all.

My compensation was to be made up of a base salary plus a production bonus. The base was about three-fourths of the average pay for employed physicians in the community. The bonus would pay me a percentage of the revenue I generated after overhead costs.

I had no experience with practice expenses, but if my pay was going to be partly based on them, I thought I should at least know how much they were. So, acting on my father's wisdom, I asked to see the books.

The partners were surprised by my request. The medical director said they didn't keep an itemized list of overhead costs, nor did they know the percentage of gross income that was taken up by expenses. It turned out that the amount of revenue I had to generate before I became eligible for the production bonus was an estimate set more or less arbitrarily, not based on true overhead.

The more I pressed to see the financial records, the more evasive my prospective partners became. It should've made me suspicious; instead, it made me feel guilty for not trusting them. "If there's a pot of money left over," the medical director assured me, "I'll make it right."

So I signed on. But I still wanted to understand the practice finances, and I kept asking questions. Each time, the medical director seemed more upset by my curiosity.

"How much is our lease payment, anyway?" I asked.

"I don't recall."

"Do you know about how much it is?"

"Something like $4.75 a square foot."

Needless to say, nobody knew how many square feet the clinic occupied. The other employed doctor and I joked about sneaking around the exam rooms late at night with a tape measure. Maybe we should have.