Medical Practice Management
Jan 19

Adjust income division for physician underproducers

Even under the current productivity crunch, many medical groups divide some or all of their income equally. After all, physicians still share many fairly equal responsibilities. Often, however, one partner lags behind the others in pulling his or her weight. Before that happens, have good data available. And create clear performance expectations so the underproducer knows the penalties for not meeting specific goals.

Define minimum performance expectations and maintain a “scorecard.” Emphasize the need for numbers to back up compensation decisions. When partners fail to meet agreed-upon standards—as shown by good data—they can less easily argue their contribution to the good of the group.

By setting a “fail-safe point” you maintain an agreed-upon productivity level. Any shareholder performing to the fail-safe level receives an equal portion of the group’s shared income. Below that level, underproducers receive only their percentage of the productivity income and the remaining partners divide the rest of the income equally.

Many practices believe they’ll never have this problem. They end up calling in a consultant (i.e. ME!) or attorney to resolve an issue with grayer lines than a fail-safe point affords. Save your group both consultant and legal fees down the road by setting clear production and performance thresholds up front.

About Reed Tinsley, CPA

As a top advisor to physicians, I help increase practice profits by delivering hands-on, expert medical accounting/tax support, practice counsel, and revenue-building strategies. Read more →