Quality practice governance is critical to the long-term success of any practice. The corporate world has evolved to a structure that includes a management team reporting to a board of directors that is elected by the shareholders. The board of directors has broad duties and responsibilities that cover all aspects of a business. Most large medical practices attempt to simulate this form of governance.
The board of directors of a practice is often called the governing board. In a small practice, the board usually includes all the equity-owning partners of the practice. The practice administrator also attends all meetings but will be excused during a doctor partners-only executive session. In the small practice, most decisions are made by consensus.
As a practice grows larger, there is usually an elected or appointed governing board that does not include all the shareholder physicians. It is wise to have diversity of ages, gender and, when possible, race on the board. Many studies show that an organization whose board has diversity is more successful. The board usually elects a leader who is designated as managing partner. Typical boards have an odd number of members, often five or seven. This allows decisions to be made with three of five or five of seven voting yes. Some major decisions such as selling the practice may also require a shareholder vote, which can be a simple majority or in some cases a supermajority. The practice administrator and chief financial officer are present at all board meetings, and quality counsel is important. Every practice can benefit from an experienced attorney, accountant/auditor and banker, and in my opinion, a top-notch professional practice management consultant is invaluable.
As discussed in the accompanying cover story, medical practice in the modern world is filled with unexpected challenges that require serious deliberation, informed and decisive decision-making and deliberate follow-through. It is important for every practice to have agreed how difficult decisions will be made in advance of the inevitable small and occasionally large crises that confront us, often daily, in a large practice. While all voices must be heard, once a decision is made, partner support is critical to long-term practice success.
Today’s regulatory and legal requirements continue to expand, requiring careful attention to practice governance. While it is no easy task, it is a requirement for every successful practice to have a well-delineated process for governance, decision-making and compliance that is documented in writing and carefully followed. Such is the nature of modern-day medical practice. The penalties for poor practice governance and oversight can be devastating.
Disclosure: Lindstrom reports he is founder and partner of Minnesota Eye Consultants and on the board of directors and equity owner of Unifeye Vision Partners.