19
3
An Introduction to
the Group Practice
Environment
The group practice environment is unique and distinct from solo practice in many
ways. Three distinct differences are the organizational powers, properties, and char-
acteristics, which are dened through organizational bylaws, contractual agree-
ments, policies, and procedures.
The legal structure of group practice in this day and age of managed care and
increased litigious behavior can be set up as a regular corporation, an S-corporation,
or a professional limited liability corporation (PLLC). Many of the established prac-
tices of yesteryear have actually restructured themselves as PLLCs, not only for
liability purposes, but also for the tax incentives still present under Internal Revenue
Service (IRS) regulations. Many tax experts, however, state that these incentives
may be short lived.
The management structure of the group practice has changed throughout the
country. There are still a fair amount of self-managed group practices, but many
practices have either hired a professional management rm to handle day-to-day
business operations or have outright sold their interest in the practice for cash and
stock to physician practice management (PPM) rms. This trend is also seeing some
attrition and backre as physicians experience the PPM style of practice manage-
ment and decision making and decide for themselves that this may not be the pana-
cea they initially identied.
In a group practice, the physician or owner is also the producer of the majority of
the revenue. Difculty arises when the interests of the members of the group are mis-
aligned. Even more difcult is the group practice where some of the physicians are
owners and others are nonowner employees of the corporation. This type of group
practice requires some strategic planning and vision, just like any other business, to
survive. An additional problem that compounds the difculty of steerage of the group
practice is that oftentimes physicians, being the creative and intellectual persons
that they are, often have difculty with leadership and communication. Sometimes
communication and leadership require even the gentlest form of confrontation, and
through their entire professional training, they are taught that confrontation among
peers is taboo. The lack of communication and leadership can often lead to a break-
down of the entire group, because no one speaks up, and problems are allowed to
fester until it is too late and the relationship among the parties breaks down.
In my own experience in practice management, I have seen this happen for a
number of reasons. In one instance, two established subspecialist physicians brought

Get The Physician Employment Contract Handbook, 2nd Edition now with O’Reilly online learning.

O’Reilly members experience live online training, plus books, videos, and digital content from 200+ publishers.