Negotiating partnership or profit sharing with practice

[liquidshadow22]

Took a job with medium sized group practice with private equity backing. My current contract is essentially w2 work and when I initially inquired about partnership, they would not entertain the idea and said it might be considered down the line.

I guess my question is, what should be my game plan to try and get some sort of profit sharing / partnership in the practice? Will it be unlikely given I was not offered it from the start and there is already venture capital ownership in the practice? Don't have any experience with this kind of negotiation. Appreciate any insight.

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[dantt]

Is there a noncompete?

 

[liquidshadow22]

Is there a noncompete?

Not really. Very minimal noncompete

 

[dantt]

Not really. Very minimal noncompete

How many partners are there and how old are they? How many employed physicians are there? What do you mean by they would not entertain the idea of partnership? Is there any kind of indication of when partnership might be considered? After 1 year? 2 years? 5 years? Is this a partner track position? What would you bring to the table as a partner?

 

[trixter888]

Interesting question, will follow. I would just preface, that you should take a look from their perspective too. Why would they give a piece of the pie to a new employee, especially when plans are to scale. You should then ask yourself what you offer to the business, and how you can contribute to help them grow (i.e. not just be a simple employee).

Additionally I think it is really important for you to first figure how you will work with these people. What if you start working there and decide you hate it and want to start up your own gig? You are going to feel pretty silly trying to get out of a contract or promises you made to get a "piece of the pie."

I am in a similar position as you. What I ended up doing was saying to the owner that I would be with his practice for the first year. I asked before signing the contract of what the plan might be for my future. In other words is there room for "growth within the company" and subsequently if I can help contribute to the profitability, will I then get a "piece of the pie." This was confirmed. And to be honest, I wouldn't have it any other way. The current owners have put in a bunch of work into the business already to get it to a place where they are getting investors.

If you prove your worth, I am sure they will reward you. If you have no worth, then they won't.

 

[calvnandhobbs68]

Interesting question, will follow. I would just preface, that you should take a look from their perspective too. Why would they give a piece of the pie to a new employee, especially when plans are to scale. You should then ask yourself what you offer to the business, and how you can contribute to help them grow (i.e. not just be a simple employee).

Additionally I think it is really important for you to first figure how you will work with these people. What if you start working there and decide you hate it and want to start up your own gig? You are going to feel pretty silly trying to get out of a contract or promises you made to get a "piece of the pie."

I am in a similar position as you. What I ended up doing was saying to the owner that I would be with his practice for the first year. I asked before signing the contract of what the plan might be for my future. In other words is there room for "growth within the company" and subsequently if I can help contribute to the profitability, will I then get a "piece of the pie." This was confirmed. And to be honest, I wouldn't have it any other way. The current owners have put in a bunch of work into the business already to get it to a place where they are getting investors.

If you prove your worth, I am sure they will reward you. If you have no worth, then they won't.

Eh, unless they're looking to get their buyout and peace out. Also remember that if a private investor now owns a majority share of the company valuation THEY for all practical purposes own the company now.

You'd really have to know the specifics of the deal with the investor to figure out how this could even possibly shake out in the end. You need the private equity guys to think of you as someone who's gonna deliver them value and not just another employee...which means speaking their language. How are you going to increase the value of the organization and make them more money by becoming a partner? Are you going to open up another branded office and expand their foothold in the area? Are you going to expand a profitable service line (TMS, ketamine, some kind of contract service with another organization, etc)? Are you gonna go start hustling to be the psychiatrist for the local college/professional sports team so they can brand that as part of the practice? It's likely to require a lot more hustle than just sitting around seeing patients for 7 hours a day and collecting your paycheck every 2 weeks.

If private equity has a major foothold in the practice, you're gonna want to be speaking their language of added value and how you're going to deliver that to get them more return on their investment. Otherwise they aren't going to see the point of making you any kind of "partner" and will just dump money into what they know makes them money...paying "practitioners" as little as possible and trying to get them to bill as much as possible.