Everything You Need To Know Before Starting a Medical Practice Partnership

Whether you’re a practicing physician who is feeling overwhelmed, struggling to grow your own practice, or you’re working for a large healthcare organization and want more freedom, you’ve likely thought about entering into a medical practice partnership.

If you have your own practice or are looking to start one for the first time, considering a medical practice partnership comes with a variety of benefits that can help grow your patient base, reduce overall costs, help with administrative tasks, and can lead to greater career growth.

We’ve talked with Dr. Sonia McGowan, a chiropractic practice owner, to gain some insights into those benefits (and the drawbacks) that come with entering into a medical practice partnership, so you know what to expect.

What is a medical practice partnership?

A medical practice partnership is when two different medical practices enter into an agreement in which they share responsibilities, profits, resources, and liabilities. It doesn’t just have to be between two physicians; a partnership is often built to help each partner grow their influence and patient base or offer coverage or a speciality that would help make each practice more attractive to new patients.

Why would you consider starting a medical practice partnership?

Dr. McGowan sought out a medical practice partner because she does pediatric chiropractic work. In certain cases, she wasn’t equipped to deal with the medical side of a patients’ problems and would have to refer out. She had always dreamed of having an all-in-one solution, so she began to look for a medical doctor to join her team to better help her patients.

Aside from helping to improve what your practice offers and fill in gaps, a few other reasons you might want to consider starting a medical practice partnership exist:

• Greater financial stability

• Better working hours because you aren’t solely responsible for every single patient

• Smaller overhead expenses for office space and supplies

• A better support system

Types of medical practice partnerships

A medical practice partnership doesn’t just have to be between one private practice with another, and you don’t always have to go all in when it comes to who you partner with. In general, there are a couple types of medical practice partnership agreements that you’ll encounter, so it’s good to have a decent understanding of each before you begin looking for potential partners.

General partnerships

A general partnership is an arrangement where at least two physicians or medical entities join together to operate. In these partnerships, physicians will share profits and liabilities and will make all decisions regarding management and growth of the practice together.

You will have less responsibilities when it comes to practice management, but you will also sacrifice some of your freedom when it comes to growing your practice because you have another person with different opinions who has an equal say in the matter.

General partnerships don’t always have to be split evenly down the middle either. One side can take a larger share of the profits but they will also be responsible for fronting the majority of the capital and making more of the tough decisions. 

This is unlikely to happen when two independent practitioners join together, but you can see imbalances like this when you choose to partner with a physician group or a large healthcare organization such as a hospital.

Be on the lookout for starting a private practice or combining practices if you don’t want to join a large medical group but you’re also feeling overwhelmed by the thought of having to run a business without any extra support.

Limited liability partnerships

A limited liability partnership is similar to a general partnership but with one important difference: Partners are more protected when it comes to their individual liabilities. Put simply, if you’re in a limited liability partnership, you aren’t responsible for your partner’s malpractices, and they aren’t responsible for yours. Otherwise, they function similarly to a general partnership. It’s a slightly riskier form of partnership that offers more freedom to the individual partner.

Look for a limited liability partnership if you don’t want to be on the hook for your partner’s malpractices, but also understand that they aren’t going to be legally obligated to help with yours either.

Benefits of joining or starting a medical practice partnership

Aside from the aforementioned benefits that come with a medical practice partnership, there’s a few less obvious ones that you might not have thought of.

You can accomplish more and help more patients

When you have two medical professionals working together in the same practice, especially if you are from complimentary backgrounds, you’re able to better serve your patients because you can help solve their health issues more completely without having to refer them out. They stay inside of your ecosystem which not only helps with patient records, but communication between physicians becomes significantly more streamlined.

Instead of having to call a different office to get records and information, they are all available to every member of your team since they’re all in the same system from the get go.

This was true in Dr. McGowan’s case. By partnering with a medical pediatric doctor, her chiropractic practice was able to cover all her bases. She could offer a wider range of services to her patients that she wasn’t able to prior to the partnership.

For example, if you’re a general practitioner and the growth of your patient base has stalled, a medical partnership with a pediatrician could make your practice more attractive to families. By finding a partner whose specialty complements your own, you’re offering more value to patients.

If you’re not interested in the multi-specialty route, you can still look for a partner who has experience and knowledge that will enhance your practice and make your life easier. Compare candidates’ strengths and weaknesses with your own to find a partner who will be able to take up the slack in areas where you’re lacking. For example, if you struggle to make business decisions, you should look for a partner who has experience with the business aspects of running a practice.

You can reduce physician burnout

One of the main reasons you might want to consider joining a medical practice partnership or bringing a partner onboard is to help alleviate some of the pressure of having too many patients.

If you’re constantly having to turn people away or finding that you aren’t able to meet the specific needs of your patients, it’s worth considering a new partner.

Physician burnout is a serious issue in the medical industry, and it’s not going away anytime soon. This particular type of burnout can have serious, wide-ranging consequences which include reduced performance and productivity, a high turnover rate, and increased medical errors. [2] 

The causes are multifaceted, but they can include poorly designed or maintained technology which can lead to inefficiencies. Additionally, workforce shortages are a huge part of the increase in clinician burnout.

So if you’re feeling overwhelmed by your workload, you’re not alone. The good news is a medical partnership could alleviate some of that stress by dividing up the responsibilities of running a practice.

You can take greater financial risks which will pay off in the long run

When you are in a partnership, you might be more willing to try out a new piece of emerging technology, such as artificial intelligence, because you have more capital. By having someone else who can help you test and rollout new ideas, you’re less likely to fail because you have another person who can help pick up the pieces if things don’t work out. 

You can also invest more heavily into patient outreach which will drive patients to your practice. By having more overall resources, you can spend more on marketing efforts or devote more time to search engine optimization (SEO) to make sure your practice pops up first in the search engine results pages (SERPs) when people are looking for a new physician online. 

Not only can you take greater financial risks, it’s financially less expensive in the long run. By sharing costs on office space and equipment costs, you’re able to find better facilities and provide better care to your patients while spending less money overall.

Drawbacks of joining or starting a medical practice partnership

Combining practices or joining a healthcare organization isn’t going to fix all of your problems, and it does come with its own set of unique challenges as well. While the benefits are great, you need to weigh them against the drawbacks that come alongside them. 

Your practice management becomes significantly more complicated

With more than one practicing doctor, a lot of the common issues you face gets doubled. You need to worry about malpractice twice as often (unless you are in a limited liability partnership), deal with insurance twice as often, and have more staff on hand.

One of the first challenges that Dr. McGowan discovered during her new practice partnership was how to navigate her and her partner’s malpractice insurances. Under her current malpractice insurance, she wasn’t allowed to employ a medical provider, so they had to set up an entirely separate LLC for her partner in order to circumnavigate that. 

If you’re combining two established practices, you might have redundant staff. Navigating new roles and responsibilities for each member of your team might lead to some complications or sadly, even some terminations. 

Ultimately, you need to remember that there will be twice as many patients to manage which can lead to an increase in practice management tasks. If you already have a practice manager on staff, this might not be a huge drawback, but if you were used to doing all of the management yourself before your partnership, you might find the sudden increase overwhelming.

You’ll face higher upfront startup costs

Starting a partnership costs a lot of money. If you’re combining two independent practices, you will likely need to lease a new location that can accommodate both of your practices, which means you have to let your patients and recommending physicians know about the change, taking both time and resources. 

Additionally, you will have to source new equipment or move the equipment you already have to the new location. You’ll likely need to hire lawyers to get new malpractice insurance or start an entirely new LLC with your partner. You need to decide if you’re going to offer any new services such as telehealth or home visits.

You also need to devote time and money to marketing the fact that you have a new practicing partner on staff. That means updating social media and your webpage, as well as making new brochures and other physical materials inside of your office.

The point is, it can be expensive. Over the long term, the reduced overall costs of operating together will offset this initial startup cost, but it’s still something that you need to be aware of before entering into a partnership. You have to have the capital. 

That’s why it’s so important to find a partner or partners who share a similar goal and vision for what you want the practice to accomplish. If everyone is on the same page from the beginning, you’re more likely to succeed.

Software is crucial to the growth and success of medical practice partnerships

For small practices, growth means success, but it’s not an easy thing to sustain. Finding a partner with fresh ideas and a new perspective on business operations will help you make adjustments to reinvigorate your practice and kickstart growth.

Let’s say your practice doesn’t currently use a patient portal to communicate with patients, but you know using one could boost patient engagement, and you have the budget to invest in the software. You can look for a physician partner who has used patient portals before to lead the new software adoption process at your practice.

Software adoption can be tricky, especially if you’re unfamiliar with the different types of systems available to you. Whether it’s medical billing software to help you with billing, coding, and collections, patient scheduling software to automate some of the tedious manual scheduling that can eat up a lot of your time, or a complete clinic management system to help out with all aspects of running a clinic, software can streamline all areas of running your business.

For more insights into what types of medical software other practices are purchasing, check out our Medical Software Buying Trends Report.

Finding a partner who has experience with these types of systems will go a long way.

A medical practice partnership is a big step, but one you can manage with some help

Entering into a medical practice partnership is understandably scary to many who have done the work of establishing their practices by themselves. A partner is someone you’ll spend most of your time with, so the process of creating a medical partnership requires trust and lots of forethought to avoid choosing the wrong partner.

If you’re coming from a larger healthcare organization and are looking to start your own practice, you might want to consider looking for an established independent practice owner who is looking to add to their team because they have the knowledge and experience it takes to run a business that you might be lacking.

If you’re an independent general practitioner or a specialist and are looking for a way to increase your patient book, consider looking for someone who fills some gaps in your coverage. For instance, if you’re a chiropractor like Dr. McGowan, you might want to find a medical doctor to add to your practice so that you can better serve your patients and make your practice more attractive.

As long as you focus on finding a partner(s) who compliments your skillset, shares a similar vision, and helps you mitigate some of the pressure you’re feeling when it comes to the growth of your practice, you’ll be fine.

Note: Interview responses have been edited for brevity and clarity.