Pathology Group Conflicts Over Equity Vs. Salary

Arrival and departure of pathologists in a group practice triggers difficult issues

CEO SUMMARY: During the next two years, two of every three pathology group practices will see a change in pathologists, either through new hires or by resignation and retirement. These events fundamentally change the financial situation of the group, but since most groups are organized under the business models of 1980s medicine, they struggle to find the right combination of compensation, equity, and retirement benefits.

DURING THE 1990S, managed care damaged the pathology profession in many profound ways. Some are widely-recognized, such as reduced reimbursement. But others, like the unfavorable impact on pathology group practice shareholder arrangements, have yet to receive much public attention.

In recent years, THE DARK REPORT has watched different pathology groups around the United States attempt to address the question of equity versus compensation in their financial planning process. Unfortunately, conventional methods that proved successful during the 1980s are proving inadequate in today’s environment of meager reimbursement for profession- al services and increasingly complex compliance requirements.

Struggles For Consensus

Because the “old ways” no longer meet the financial needs of today’s healthcare marketplace, many pathology groups now find it extremely difficult to develop a consensus among their pathologists over issues of annual compensation, equity, productivity, and retirement benefits. Frequently, discussions about these topics generate conflict and rancor, as individual pathologists realize their group practice does not have enough cash flow to meet all the financial demands of its member-pathologists.

To help pathology groups develop effective strategies that are relevant for today’s healthcare marketplace, THE DARK REPORT is convening a special symposium titled “How to Craft Effective Compensation & Shareholder Agreements for Pathologists” in Atlanta on October 24-25, 2003.

This special symposium will cover the A-Z of issues involving compensation agreements, shareholder arrangements, funding retirement plans, and developing productivity models linked to compensation. It is designed to meet the needs of pathology group practice administrators and pathologist-leaders, as well as individual pathologists interested in learning how to best negotiate their own compensation agreement, shareholder arrangement, and retirement package.

Struggle For Consensus

THE DARK REPORT believes that the difficulties in developing consensus about compensation, equity, and retirement issues is a major problem within the pathology profession. For example, when the College of American Pathologists (CAP) conducted its Practice Characteristics Survey in 2000, it determined that, in the previous two years, 62% of the nation’s group practices had brought in a new pathologist and 52% of the groups had seen at least one pathologist depart. Of the departures, 49% were retirement.

Taken collectively, the numbers from the CAP study indicate that more than two-thirds of the nation’s 3,300+ pathology group practices are dealing with financial issues relating to the arrival or departure of pathologists during any two-year period. Since the majority of pathology group practices have less than five pathologists, decisions about compensation, equity, productivity, and retirement planning have significant impact.

To present the pathology profession with new business models better-suited to today’s reimbursement and compliance environment, THE DARK REPORT has assembled experts in law, finance, valuation, retirement planning, pathologist recruitment, and strategic leadership.

Relevant Business Models

Their charter is to update existing business models for pathology group practices. They will provide detailed strategies, techniques, and methods for developing effective agreements that help pathologists meet their personal financial needs while contributing to the ongoing clinical and financial success of their pathology group
practice.

Powerful Agenda Covers Pathologist Compensation

TO BE CONDUCTED ON OCTOBER 24-27, 2003 at the Hyatt Regency Hotel in Atlanta, “How to Craft Effective Compensation & Shareholder Agreements for Pathologists” features presentations on these topics and more:

Friday, October 24:

•Understanding Conflicting Interests in How Pathologists Want to Divide the Group’s Revenue Stream
–Richard Cooper, Attorney, McDonald Hopkins
•Financing a Shareholder-Pathologist’s Buy-In or Buy-Out: Strategies and Financial Tools that Make Sense
–Chris Jahnle and Kirk Rebane, Directors, Haverford Healthcare Advisors
•Pathology Practice Shareholder & Partnership Agreement Basics
–Jane Pine Wood, Attorney, McDonald Hopkins
•Panel Discussion and Case Studies—The Balancing Act: Methods to Satisfy Retiring Pathologists Without Limiting Potential for Younger Pathologists

Saturday, October 25

•Critical Issues in Structuring Equity and Compensation Agreements from the Group’s Perspective
(Session A for practice administrators and pathologist-leaders, session B for individual pathologists)
•Financial Tools Used to Fund Compensation and Stockholder Agreements Between Pathologists and Their Group Practice
(Session C for practice administrators and pathologist-leaders, session D for individual pathologists)
•Crafting A Good Pathologist Employment Contract
•Recruiting Surprises: What Today’s Candidates Want from Their Prospective Pathology Group
–Richard Cornell, Integro Medical Services
•Tax, Legal, ESOP, and Life Insurance Planning Issues
–Thomas Ledbetter, J.D., Garrett Prather & Co.
•Breaking the Decision-Making Logjam in Pathology Groups: Proven Methods for Achieving Alignment Behind the Business and Professional Goals of the Group Practice
–Greg Nelson, Development Dimensions, Inc.
For Information or to Register, call:
800-560-6363 or visit: www.darkreport.com

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