Owner v/s Professional
In a Group Practice, there are two requirements for it to be up and running:
Finance – Which is required to establish and operate the setup i.e., property, equipment, furniture and working capital (salaries of the staff, electricity bill payment, etc.). The providers of Finance are referred to as Owners in our discussion on the website.
Professional Skills – Which is required to run the setup i.e., to have paying patients visit the setup and serve them. The providers of Professional Skills are referred to as Professionals in our discussion on the website.
A matrix establishing the possible permutations of a Group Practice simplistically is explained as under:
| Type A | Type B | Type C | |
|---|---|---|---|
| Owner | Same persons are owners & professionals. | Same persons are owners & professionals. | Separate owners. |
| Professional | Same persons are owners & professionals. | Same persons are owners & professionals. | Separate owners. |
|
Sharing Arrangement | Agreed to share practice income in ratio of investment (irrespective of ratio of practice). | Agreed to share practice income in ratio of practice (irrespective of ratio of investment). | Fixed pool of professional fee negotiated and agreed between the Owner & Professional. Professional Group shares that pool between them in agreed manner. |
Unless a setup is structured right in the above context, there are bound to be various causes of friction between the members arising out of the interplay between these roles, which might largely remain misunderstood, and ultimately lead to the failure of the Group Practice.
A Group Practice is largely concerned with the Professionals’ hat that you wear in a Group Practice. A Shareholders’ Agreement or the LLP/Partnership Agreement (depending on the legal structure adopted) is the document that governs your rights and responsibilities for the Owners’ hat.