By the NumbersPublication Exclusive

A 2-year countdown from associate to partner

A 10-point timeline can help a new graduate set the stage for his or her career.

“We don’t stop going to school when we graduate.”
– Carol Burnett

“The poor man who enters into a partnership with one who is rich makes a risky venture.”
– Plautus

Although there is a discernable trend of young eye surgeons settling for durable non-owner associate positions in institutional, staff-model HMO and closely held private practices, most of the peri-graduates I speak with would strongly prefer to eventually be a shareholder. And private independent practice is still, by far, the dominant enterprise model in ophthalmology and will remain so for many years to come.

Accordingly, it is useful to review the typical 10-point timeline of events from one’s late residency or fellowship to employment and on through your early years as an owner.

While each of these 10 stages may feel daunting, rest assured, your employing practice is faced with just as many or more challenges as it undertakes the process of finding a candidate and moving him or her from newbie to economic peer.

1. Phase zero: Decide where you want to live.

A generation-and-a-half ago, you had to go where the jobs were because there were more doctors than jobs. Today, we have a seller’s market for young surgeon labor. Rising demand with 10,000 new seniors a day and falling residency slots are making you hot property, so you get to choose where you want to live. Take advantage of this. Break out a map. There are more than 300 discrete markets in the United States, and each has its own advantages and disadvantages. Denver, San Francisco and Chicago are great places to live, but there are too few patients per ophthalmologist, so you will twiddle your thumbs in the early years. On the other hand, if you love to hunt, fish and snowmobile and have family in the Midwest, you will be pounded from your earliest days. It is a giant trade-off. Generally speaking, eye surgeons in plum markets will have half the lifetime earnings of their colleagues in the climactically and culturally challenged spot on the map. And their personal lifestyle costs will be twice as high.

2. Decide what kind of practice you want to own and operate.

The most secure practices have a 50-plus-year operating history, 10 or more partners, and an enduring lock on patient access. But such practices are often like battleships, difficult to turn around in the face of market pressures. And they can be notoriously political hotbeds, affording young owners a disproportionately small voice in governance. They can also be larded with 60- and 70-something hard-working senior owners, whose imminent departure will leave behind a less ambitious third generation of surgeons ill-equipped to carry the largely fixed overhead, much less take on the burdens of modern medical commerce. At the other end of the spectrum, we find elegant, simple — but in today’s environment, profoundly vulnerable — solo and small group practices. The surgeons in such practices are often happiest, but this is tempered by their uncertain staying power.

Beyond the dimension of raw scale, you should also consider whether the practice you are contemplating for your first post-grad posting is overly dependent on one rainmaking senior surgeon who is nearing retirement or rests on the shoulders of a larger and more diverse provider base. And irrespective of scale, it pays a large dividend if before you accept employment in a given practice you interview local hospital administrators, as well as a few administrators and managing partners of the local competing practices.

3. Do not just find a job — negotiate a track to partnership.

In your first 2 to 3 years as an associate, representing perhaps 8% or so of your total career span, you will only earn about 4% of your lifetime earnings. Your base and bonus compensation as an associate, while important, will (if you are lucky and work hard) pale in comparison to your total compensation as a partner. Accordingly, you should focus your negotiations not just on associate-period terms but on the path to partnership, asking these questions:

  • What has been the history of associates becoming partners in this practice?
  • What are the objective financial or other hurdles one has to clear in order to “make” partner? How often will I receive feedback on my progress toward becoming partner-worthy?
  • What portion of the core practice, as well as auxiliary ASC, optical and real estate components, will I be allowed to buy into?
  • What will be the pricing for each of these? What will be the payment terms?
  • What are the buyout provisions for retiring partners?
  • What is the partner compensation methodology?
  • Can you describe the practice board and the governance model for the practice?
  • Is there a written business plan for the practice? Are all of the partners behind the big-picture plan (whether or not it is written down formally)?
  • Beyond owner-level leadership, do we have enough administrative horsepower to deliver on the plan?

4. Start your work. Get engaged.

Let’s assume you are now a partner-track associate in the practice of your dreams. Your workweek needs to be much longer and deeper than just showing up and seeing your patients on time. For your first 2 years, you should be spending a minimum of 3 to 4 hours per week out in the community, developing relationships and driving referral volumes. You should be liberally volunteering to lead special project teams in the practice in such areas as staff training, utilization review, marketing, outcomes analysis and the like.

5. Know the facts and figures.

Think like an owner. Make it your duty to master in the next 2 years all of the myriad details of operating a practice, starting with the normative benchmarks — stats such as the average collections per patient visit, the surgical density of the practice and the practice profit margins. Your administrator has probably mastered these by now and can be your tutor. If not, learning these together will help you bond.

6. Contribute more in value to your employer than the dollars you are being paid.

Inclusive of the base salary and benefits, recruiting fees, relocation costs and false starts with prior associates, it may cost your practice upward of $300,000 per year during your associate period to keep you on board. In the best scenarios, an associate is more than paying his or her way by the end of the first year. More typically, an associate just barely breaks even for his or her employer by the end of 2 years.

7. Think like an owner.

From your first day on the job, look at the practice the way an owner does.

  • Is there a good match between people and the jobs they perform?
  • Are we extracting maximal value out of all resources? (Staff, facilities, marketing dollars, equipment, etc.)
  • Are daily operational priorities in sync with longer-term goals?
  • Are we balanced in our work to improve profitability through a combination of revenue enhancement and cost containment?

8. Work like a tiger. Negotiate like a lion.

Hard work and high productivity make the final negotiations toward partnership relatively easy. Your tangible contributions over the last 2 or 3 years should make a compelling case to the board to extend to you a partnership opportunity. But do not stop there. Get appropriate counsel and seek contemporary terms. These should include:

  • Either an equal partnership position or at least a share in the company pro rata to your personal collections.
  • Internal financing for all buy-in costs except an ASC, which must be handled as a third-party loan.
  • All partners using the same compensation methodology, and this methodology leaving all partners with roughly equivalent take-home pay as a percentage of their net collections in the practice.
  • Full benefits, equivalent to every other partner with respect to time off, health benefits, auto payments, etc.

9. Close the deal.

Most surgeons hate to negotiate because negotiating involves confrontation and at least transient conflict, something that most ophthalmologists are allergic to. If you are conflict avoidant, delegate the negotiating to your professional advisers. Whether it takes minutes or months, most partnering negotiations eventually get to “yes.”

10. Pull your weight as a partner.

Unfortunately, your dues-paying days will not go away for many years. As a young partner, you should aspire to nothing less than one day becoming the managing partner of the group. Show you are worthy of this. Make a positive contribution in the boardroom. When you disagree, do so in an agreeable manner. Dig deeply into an important aspect of the practice (eg, IT, EHR, regulatory affairs or marketing), and become an invaluable, positive contributor.

“We don’t stop going to school when we graduate.”
– Carol Burnett

“The poor man who enters into a partnership with one who is rich makes a risky venture.”
– Plautus

Although there is a discernable trend of young eye surgeons settling for durable non-owner associate positions in institutional, staff-model HMO and closely held private practices, most of the peri-graduates I speak with would strongly prefer to eventually be a shareholder. And private independent practice is still, by far, the dominant enterprise model in ophthalmology and will remain so for many years to come.

Accordingly, it is useful to review the typical 10-point timeline of events from one’s late residency or fellowship to employment and on through your early years as an owner.

While each of these 10 stages may feel daunting, rest assured, your employing practice is faced with just as many or more challenges as it undertakes the process of finding a candidate and moving him or her from newbie to economic peer.

1. Phase zero: Decide where you want to live.

A generation-and-a-half ago, you had to go where the jobs were because there were more doctors than jobs. Today, we have a seller’s market for young surgeon labor. Rising demand with 10,000 new seniors a day and falling residency slots are making you hot property, so you get to choose where you want to live. Take advantage of this. Break out a map. There are more than 300 discrete markets in the United States, and each has its own advantages and disadvantages. Denver, San Francisco and Chicago are great places to live, but there are too few patients per ophthalmologist, so you will twiddle your thumbs in the early years. On the other hand, if you love to hunt, fish and snowmobile and have family in the Midwest, you will be pounded from your earliest days. It is a giant trade-off. Generally speaking, eye surgeons in plum markets will have half the lifetime earnings of their colleagues in the climactically and culturally challenged spot on the map. And their personal lifestyle costs will be twice as high.

2. Decide what kind of practice you want to own and operate.

The most secure practices have a 50-plus-year operating history, 10 or more partners, and an enduring lock on patient access. But such practices are often like battleships, difficult to turn around in the face of market pressures. And they can be notoriously political hotbeds, affording young owners a disproportionately small voice in governance. They can also be larded with 60- and 70-something hard-working senior owners, whose imminent departure will leave behind a less ambitious third generation of surgeons ill-equipped to carry the largely fixed overhead, much less take on the burdens of modern medical commerce. At the other end of the spectrum, we find elegant, simple — but in today’s environment, profoundly vulnerable — solo and small group practices. The surgeons in such practices are often happiest, but this is tempered by their uncertain staying power.

Beyond the dimension of raw scale, you should also consider whether the practice you are contemplating for your first post-grad posting is overly dependent on one rainmaking senior surgeon who is nearing retirement or rests on the shoulders of a larger and more diverse provider base. And irrespective of scale, it pays a large dividend if before you accept employment in a given practice you interview local hospital administrators, as well as a few administrators and managing partners of the local competing practices.

3. Do not just find a job — negotiate a track to partnership.

In your first 2 to 3 years as an associate, representing perhaps 8% or so of your total career span, you will only earn about 4% of your lifetime earnings. Your base and bonus compensation as an associate, while important, will (if you are lucky and work hard) pale in comparison to your total compensation as a partner. Accordingly, you should focus your negotiations not just on associate-period terms but on the path to partnership, asking these questions:

  • What has been the history of associates becoming partners in this practice?
  • What are the objective financial or other hurdles one has to clear in order to “make” partner? How often will I receive feedback on my progress toward becoming partner-worthy?
  • What portion of the core practice, as well as auxiliary ASC, optical and real estate components, will I be allowed to buy into?
  • What will be the pricing for each of these? What will be the payment terms?
  • What are the buyout provisions for retiring partners?
  • What is the partner compensation methodology?
  • Can you describe the practice board and the governance model for the practice?
  • Is there a written business plan for the practice? Are all of the partners behind the big-picture plan (whether or not it is written down formally)?
  • Beyond owner-level leadership, do we have enough administrative horsepower to deliver on the plan?
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4. Start your work. Get engaged.

Let’s assume you are now a partner-track associate in the practice of your dreams. Your workweek needs to be much longer and deeper than just showing up and seeing your patients on time. For your first 2 years, you should be spending a minimum of 3 to 4 hours per week out in the community, developing relationships and driving referral volumes. You should be liberally volunteering to lead special project teams in the practice in such areas as staff training, utilization review, marketing, outcomes analysis and the like.

5. Know the facts and figures.

Think like an owner. Make it your duty to master in the next 2 years all of the myriad details of operating a practice, starting with the normative benchmarks — stats such as the average collections per patient visit, the surgical density of the practice and the practice profit margins. Your administrator has probably mastered these by now and can be your tutor. If not, learning these together will help you bond.

6. Contribute more in value to your employer than the dollars you are being paid.

Inclusive of the base salary and benefits, recruiting fees, relocation costs and false starts with prior associates, it may cost your practice upward of $300,000 per year during your associate period to keep you on board. In the best scenarios, an associate is more than paying his or her way by the end of the first year. More typically, an associate just barely breaks even for his or her employer by the end of 2 years.

7. Think like an owner.

From your first day on the job, look at the practice the way an owner does.

  • Is there a good match between people and the jobs they perform?
  • Are we extracting maximal value out of all resources? (Staff, facilities, marketing dollars, equipment, etc.)
  • Are daily operational priorities in sync with longer-term goals?
  • Are we balanced in our work to improve profitability through a combination of revenue enhancement and cost containment?

8. Work like a tiger. Negotiate like a lion.

Hard work and high productivity make the final negotiations toward partnership relatively easy. Your tangible contributions over the last 2 or 3 years should make a compelling case to the board to extend to you a partnership opportunity. But do not stop there. Get appropriate counsel and seek contemporary terms. These should include:

  • Either an equal partnership position or at least a share in the company pro rata to your personal collections.
  • Internal financing for all buy-in costs except an ASC, which must be handled as a third-party loan.
  • All partners using the same compensation methodology, and this methodology leaving all partners with roughly equivalent take-home pay as a percentage of their net collections in the practice.
  • Full benefits, equivalent to every other partner with respect to time off, health benefits, auto payments, etc.

9. Close the deal.

Most surgeons hate to negotiate because negotiating involves confrontation and at least transient conflict, something that most ophthalmologists are allergic to. If you are conflict avoidant, delegate the negotiating to your professional advisers. Whether it takes minutes or months, most partnering negotiations eventually get to “yes.”

10. Pull your weight as a partner.

Unfortunately, your dues-paying days will not go away for many years. As a young partner, you should aspire to nothing less than one day becoming the managing partner of the group. Show you are worthy of this. Make a positive contribution in the boardroom. When you disagree, do so in an agreeable manner. Dig deeply into an important aspect of the practice (eg, IT, EHR, regulatory affairs or marketing), and become an invaluable, positive contributor.