Michael Moore, Esq. Director McKenzie HR Solutions Printer Friendly Version

Merging The New And The Old (Part 2)

In Part 1 of this piece, we introduced a doctor who bought a practice only to find that the seller, the seller’s associate and the old staff began sabotaging the practice within just a couple months of closing.

The doctor came to VisionHR after she had terminated the seller/provider, the associate and several key staff because she had realized—soon after terminating the seller—that there was no way to manage the human relations aspects of the situation without documented policies. The seller had never had a written office policy, but had used his personality to keep things together. He had a front desk leader and an assistant who had been with him over twenty-five years. He also had very loyal patients. But his business operations were extremely inefficient and he was losing substantial revenue, though he was highly productive himself.

When doctors buy practices, the one thing that is never looked at by transition specialists is the state of the HR policies. In most cases, there are none, or the office manual is buried in a desk somewhere. Often when a dental practice is purchased it includes all of the potential employee issues that are waiting to explode on you.

If you are considering buying a practice now or in the future, you must consider the HR situation as a key element of your due diligence. Had my client been aware of this need, she could have mitigated substantially the negative effects from the old staff. Major warning signs to look for in a practice are (1) long-term employees [more than six or eight years] in key positions, (2) a patient base loyal to the doctor, not the office, and (3) the presence or absence of an up-to-date HR policy that has been communicated to every employee.

Remember, associate doctors—whether classified as employees or independent contractors—must be covered by the HR policies. You must have control over their actions that goes beyond the confines of the provider agreement. They must be subject to the corrective actions procedures. The provider agreement will usually state that the provider may only be terminated with cause.

In the case of my client buyer, she had no guidance and, consequently, when the associate sued, she had no documentary base from which to both defend and to sue him to remedy his violations of her rights.

Long-term employees are the most challenging aspect of the buyer’s creation of a core of employees who will continue to grow the practice. Particularly in the absence of clear HR policies, they will have fixed ideas about how the practice should be run (based on the seller’s past practices) and, without education and indoctrination, will become the major obstacles to the buyer’s success. Furthermore, if the seller’s spouse has had substantial involvement in the practice, the buyer must be satisfied that he/she will not become a source of disquiet if the buyer keeps the seller on for any period as a provider.

I say that you want to make the patients loyal to the practice, not a particular provider. I know that this flies in the face of common wisdom. But, if the patients are loyal to the practice because the entire staff cultivates trust and friendship, the change of an associate, or even the sale of the practice itself, will not impact the patient base. You must find out what the policies are and read them. Learn how long each employee has been with the practice, and ask the doctor about specific personalities of each. If possible, obtain the seller’s agreement for you to interview the staff individually. Find out the spouse’s involvement. If you decide to buy, you must include in the purchase agreement a specific provision requiring the seller to cooperate with you completely in re-educating the staff. There must be a clear process that you undertake to make sure the staff’s “goodwill” is transferred as well to you. We strongly recommend that if the HR policies are deficient or non-existent, you immediately implement a complete policy upon taking over the practice. It is recommended that the seller be obligated to institute the policy before you take over the practice as part of the sale agreement. We can develop the customized policies, and have them in place for you at the time you take over.

Take the time to sit down with the staff—and associates—and go over the HR policies. Make sure the policy has a written “employee concerns” provision that encourages staff to report complaints or concerns they have.

Importantly, address specifics of the transition with the staff and associates. In the beginning, the seller did not make clear exactly what his relationship was with the buyer. Some staff did not know that all management decisions now were in the hands of the buyer. This increased the awkwardness of the operations. If the seller is remaining for any period of time, he or she must be part of a meeting which outlines the changes, and must be fully supportive to the staff.

Doctors are quick to seek practice management support when they go into a transition, and for good reason. You should seek the same kind of support to deal with the internal HR challenges that will inevitably following the purchase.

Mike Moore is ranked among the best in employment law and has been named one of the top 10 lawyers in Ohio. As Director of McKenzie's HR Solutions, Mike is the creator of the Employment Policy and Handbook, geared to providing dentists who are unsophisticated in the legal arena with a step-by-step policy manual.

Click here to hear Mike present “7 Elements of an Effective Employment Policy.” Email Mike at mike@thedentistsnetwork.net.

Interested in having Mike speak to your dental society or study club? Click here.

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