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May, 2011

How to Create a Successful Contract With an Associate

By Ramon G. McLeod, Editor-in-Chief

To help you enhance your practice and increase your bottom line, Dynamic Chiropractic PracticeINSIGHTS asks practicing doctors of chiropractic, like you, for ideas and solutions that have been tested in real-world environments. In this issue, we asked: "What are the key elements of a successful contractual agreement with an associate, and how should income and patient responsibilities be allocated?"

In a time when more and more practitioners are moving away from the solo practice model, this particular question is on the minds of many in the profession. Here's what some of you had to say.

Clarity in the Relationship

"The key elements of a successful contractual agreement with an associate are trust, honesty, ethical behavior, a fair agreement, and a demand for chiropractic services. It is essential that both doctors are patient-centered and ethical health care providers," said Dr. James Lehman, an associate professor at the University of Bridgeport College of Chiropractic. "They must trust each other to provide high-quality care with kindness.

"Doctors seeking a successful contractual agreement must discuss their wants and needs prior to the writing of the contract. It is essential for both parties to hire lawyers to counsel them prior to signing on the dotted line. Yet, an agreement will only be successful if both parties are honest," he said. "The hiring doctor must have a valid reason for hiring an associate. For instance, the doctor unable to meet the patient demands of a growing practice has a valid reason to hire another provider. The doctor wanting to retire or semi-retire needs an associate to reduce [their] workload and possibly sign a buy-out agreement.

"The most sensible agreement involves an hourly salary with full benefits. A properly managed business with a successful marketing strategy is capable of paying an equitable salary that serves both parties and maximizes profitability.

"The owner of the practice is responsible for developing the work schedule, but each doctor is responsible for determining patient care needs. It is unethical and/or illegal for the senior doctor to mandate the type of care provided by the associate doctor. Licensed chiropractors are responsible for determining medical necessity and providing high-quality care."

Echoing the need for legal counsel, Michael Blackman, DC, of Dover, N.H., related that he has employed associate doctors for the past 15 years and has used a variety of contract models. The contract should be reviewed by both attorneys. It should be very specific as to hours, rate of pay, restrictive covenants, and responsibilities.

Dr. Blackman wrote that he "[b]oth doctors should see all the patients. I start with a base salary for year one and then add incentives for year two. I would be happy to give additional info." He wrote that he would provide interested readers with a sample contract and could be contacted at 603-661-4465.

Responsibilities and boundaries need to be clearly defined before entering into any formal agreements, said Dr. Eileen Machida of Oregon. "What matters most in an associate relationship is a clearly defined business relationship: what is shared, what is not and for shared resources, like the CA or office equipment, a clearly stated policy on what charges an associate can expect," she said. "If the relationship is muddied, or the responsibilities cross to patient management, then the associate should be an employee.

"If the relationship is defined such that the associate is responsible for [their] own credit-card billing, gets charged for paper on a copier, gets charged rent for the treatment room(s), which includes the CA, marketing, spinal care classes and screenings, then the associate can safely be called an independent contractor. Merely asserting that an associate is one does not make it so," she said. "Income allocation can be anything agreed upon by the two parties, although in a true IC relationship, the room and use fees associated with the space with no other fees implied or owed is most likely the safest way to keep the unemployment insurance goons out of the chiropractor's office.

"A chiropractor who wishes to take on an associate and wants an IC (as opposed to an employee), [is] best advised to consult with the relevant IRS publications and if still in doubt, consult an employment attorney," Machida asserted.

Based on his long experience with associate doctors, Dr. Victor Rizzo of Altoona, Pa., has found subleasing a useful way to bring in good people who stay longer.

"After having five associate doctors in a 17-year span, I developed a sublease agreement that allowed me to keep sublease doctors much longer and with a better relationship, since I am not responsible for their patients, hours of work or lifestyles" he said.

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