5 Problems That Could Spoil Your Practice Merger

George Conomikes


February 27, 2013

In This Article

Some Employees End Up Unhappy

2. Protecting "Pet" Employees

No one likes change, and no one more so than well-established doctors who have their favorite employees. But the reality is that a merger usually requires job duties to be redesigned to fit the needs of the new, larger practice.

And not just at lower levels. For instance, after many mergers, job descriptions aren't updated. This makes it harder to match employees to their skills and create effective assignments for them. We've also seen merged practices in which some employees are cross-trained to help one another, whereas others continue to have fixed duties.

Beyond these personnel challenges, there's the common problem of the physician who insists on protecting a favorite employee. Take the case of a merger of 4 solo orthopedic practices. One of the doctors had a key employee who also handled his real estate investments. She worked 60 hours a week and earned a salary 40 % greater than anyone else from the 4 merged practices.

You can imagine what happened when the other employees discovered what this "pet" employee was being paid. They complained loudly to their managers and to the orthopedists, and a major personnel problem ensued, with threatened defections and rapidly weakening morale. Although the issue was eventually resolved, it created unnecessary, added stress for the new group -- stress that could've been avoided.

3. Trying to Save Money on Staff

Some doctors focus too much on the cost savings that they're going to enjoy after a merger, especially in terms of staff. We've observed that practices that spend more money on staff than similar-sized ones are the most profitable. Why? Because hiring more highly skilled personnel, such as physician assistants and nurse practitioners (NPs), produces greater revenues than those derived from even the most talented registered nurses (RNs) and licensed practical nurses (LPNs).

We've found this to be true as well. We advised 3 primary care practices in northern California to hire 3 NPs after their merger in 2007. Because the NPs can see patients and prescribe medications for them, the 6 doctors have effectively grown the practice to 9 clinicians, thereby increasing the revenue for the entire practice. Billings jumped 25% in the first full year after the merger and have increased roughly 10% -15% annually since then. The NPs are also skilled at performing some of the ancillary procedures that the practice now offers, which the RNs and LPNs in that practice weren't trained or licensed to do.