Medical Practice Management
Apr 30

Dr. Slow Down – putting it in writing

Want to see how one practice handles a physician who wants to “slow down”? Here is a real life example of how such an event is actually written in to the practice’s legal agreement:

13.1 Shareholder Step Down Plan. In the event that a Partner meets the requirements as specified in this Article and upon the affirmative vote of a majority of the Partners of the Partnership, a Partner may reduce its clinic service efforts on behalf of the Partnership, while maintaining an active role in the Partnership through the follow plan. (“Step Down Plan”).

13.2 Eligibility. In order to be eligible to participate in the Step Down Plan, a Physician Member’s years of age plus the number of years during which the Physician Member or his respective professional association has provided professional services on behalf of the Partnership must equal the number sixty-eight (68) or greater (“Eligibility Date”). Upon reaching the Eligibility date, the Partner may request a vote of the Partners in order to step down from full partnership duties and to establish the Step Down Date upon which such Partner will cease to serve as a full Partner hereunder.  The Step Down Date shall be six (6) months following the aforementioned approval by the Partnership of such Partner’s request to become a Step Down Partner.

13.3 Voting Rights and Compensation.  Following the Step Down Date, Partner shall become a “Step Down Partner” and shall no longer be entitled to exercise full voting rights as a Partner hereunder.  The Step Down Partner shall be permitted to vote on Partnership matters relating to clinical issues and management issues; however, Step Down Partners shall not vote on Major Decisions as outlined in Section 4.2 or other matters contained in this Agreement which require a Super Majority Vote of the Partners.  A Step Down Partner shall be entitled to receive certain Step Down Compensation as defined in Section 13.4.

13.4 Call, Vacation and Step Down Compensation.  Step Down Partners are not obligated to participate in the Physician Call Schedule as outlined in the Physician Policy Manual of the Partnership.  The Step Down Partner and the Partnership shall agree upon a mutually acceptable coverage schedule for such Step Down Partner to begin on the Step Down Date.  A Step Down Partner who elects not to take call coverage hereby agrees that his/her Distribution under the Physician Compensation Policy shall be reduced by forty-five percent (45%), and such funds shall be reallocated to the Distributable Pool to be reallocated to the other Partners excluding any Step Down Partners in accordance with such Partner’s percentage ownership in the Partnership.  A Step Down Partner shall be entitled to vacation and CME in accordance with the Partnership’s Physician Policy Manual and shall abide by the Partnership policies as set forth therein.

13.5             Retirement Notice.  A Step Down Partner may notify the Partnership of his intent to Retire by providing twelve months advance written notice to the Partnership.  Upon receipt of such notice, the Partnership shall follow the procedures for Retirement outlined in Article 10.

13.6            Purchase Price of Step Down Shareholder.  As of the Step Down Date, the Step Down Partner shall be entitled to receive payment for its Accounts Receivable.  Such payment shall be calculated in accordance with Sections 10.2(a) and 10.5 hereunder.  Such payment shall be made by the Partnership over twenty-four (24) months as set forth in the above referenced sections.  A Step Down Partner shall not be entitled to any additional payment for Accounts Receivable upon Withdrawal and/or Retirement hereunder.  Upon Retirement or upon the occurrence of any event of Withdrawal under Section 10.1, the Step Down Partner shall only be entitled to the Purchase Price as set forth under Section 10.2(b).

Note: The Section 4.2 referenced above pertains to various major decisions. Examples:  purchases over a certain $$ amount, commitments to long term leases, amending the partnership agreement, etc.

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 →