Rejecting offer for partnership!?!

[deleted18755]

Hello friends,

I was having a conversation/disagreement with a friend and I thought I would seek the input of the SDN community because I really don't have much experience in this regard and maybe the discussion would help others (plus things appear to be changing so rapidly who knows what the best action may be?):

Long story short, resident graduates and enters private practice that he loves but has to leave after 18 months because of his family. He joins another group and is perfectly happy there after a little over a year and is on track for partnership but doesn't actually want to be partner! His reasoning is that his wife's career demands flexibility in regards to location (she is apparently in an executive level position with a very promising career ahead of her) and he doesn't want to be "locked down" or any more invested in this position/group than he needs to be.

I have minimal experience in this regards and I honestly don't know much about buy in, buy out, etc. but in general it seems to me like if one is happy in a practice and gets along well with the partners why not accept partnership and see where life takes you? This gentleman comes from a very wealthy family (both he and his wife) and from what I understand again his wife is on like a CEO track so I really don't think he cares or it matters what he does.

I guess my general question is: under what circumstances would an employee actually decline an offer for partnership? We hear about malignant groups with revolving door of associates who are unjustly denies partnership, but I don't think I've heard of somebody declining such as offer.

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[BobbyHeenan]

It all depends on the structure of the practice and what you're "buying in" to.

If this group owns a ton of property/machines, then I don't think it's unreasonable to decline partnership. There probably is a significant buy in fee and loans involved and if high likelihood to be leaving it's probably not a great idea to buy in. He could end up having to pay buy out fees and/or find a new partner to buy him out.

However, if his group owns no property/machines and bills professional fees only and is not asking for a significant buy in (really if you have no assets in my opinion there should only be a nominal buy in fee in this case just to cover the legal fees of partnership, etc), then I see no obvious downsides to becoming partner.

 

[Mandelin Rain]

Agree with the above. If there is considerable risk/expense associated with becoming partner, I could easily see it. If it's just a nominal buy in to get a higher wage and more vacation.... why not?

 

[evilbooyaa]

As a current resident, if I knew I had potential for significant mobility due to uncontrollable familial factors, I would be wary of accepting a partnership track job, as from what I've read on other specialty forums (nobody discusses the nitty-gritty details of their work and reimbursement better than our Emergency medicine colleagues FWIW) there would be a significant buy-in (cash payment) or 'sweat equity' (working for a few years while the partners skim of the top).

If it was going to be a lower risk decision to not go on the partnership track (because although I'm not actively looking for jobs, but I imagine there is always a buy-in one way or the other given the job market for a true equal partnership track) that would most likely put more money in my pocket for the same work in the short term, then I agree with your friend.

Outside of knowing more exact details (how much the buy-in/sweat equity is, compared to how much the partners are making), it's hard to give definitive advice, but I could certainly see the rationale in it.

 

[OTN]

Really depends on the buy-in as to whether it makes sense. Having said that, if I were in a group and a new MD declined partnership, when I was looking for someone for the longer term, to become a partner, etc, I would most likely start a search for a new radonc for the practice.

 

[BobbyHeenan]

Really depends on the buy-in as to whether it makes sense. Having said that, if I were in a group and a new MD declined partnership, when I was looking for someone for the longer term, to become a partner, etc, I would most likely start a search for a new radonc for the practice.

Agreed, this guy/gal is in a pickle.

If I were in that situation I would try my very best to spin it as "I just like my job and want no more stress and want nothing to do with the business aspect of the practice. Just keep paying me X amount, my wife makes a ton of money, etc, I just don't need the stress." Try your best to spin it at that way, which is not unreasonable (I know of one guy that wants nothing to do with partnership for this reason), but if they get any wind of it being a "flexibility" issue then look out.

 

[Gfunk6]

Though the buy in is a valid concern in this situation, the buy-out terms needs to be looked at closely. In our partnership structure, you are required to give very advanced notice before you retire/leave. If you give requisite notice you will receive your buy-in back in full.

If you leave on very short notice, you will be penalized by having some portion of your buy-in "eaten" by the practice. We have to protect the practice by hiring a replacement, messaging the community and transfer patients. This is not possible with a rapid departure.




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[deleted18755]

Excellent points everybody . . .

I'm not sure but I really doubt they have any ownership of the equipment so there shouldn't be a buy in (and therefore no buy out, correct?).

I'm not at all a particularly proud or arrogant person but I feel as though if I were a partner who had worked hard to build a practice and then invited somebody to join then they said "no thanks" I would honestly be offended or maybe even insulted. Then again, if I offered somebody partnership and then 6 months later they took off I would probably be even more angry!

We usually think of it from the resident/employee standpoint but the partners/group also invest a lot in the employee whom they hope will one day become partners.

 

[medgator]

Really depends on the buy-in as to whether it makes sense. Having said that, if I were in a group and a new MD declined partnership, when I was looking for someone for the longer term, to become a partner, etc, I would most likely start a search for a new radonc for the practice.

I really do think it depends on the setup. If there is technical ownership, this is a much more difficult situation, but if we are talking professional only partnership, I think it's easier.

If there are both aspects to the buy in, one could say they only want to collect their own professional fees and let the partners who are already "bought in" stay that way and split the technical revenue.