Medical groups, especially first generation medical groups, often suffer from a common management error: Their leaders or board members manage from the perspective of their individual personal success, not from the perspective of the group’s, that is, the business’, success and of its long-term future.
For example, the group becomes interested in acquiring other groups by way of merger. The cost of developing the strategy and of implementing it might run into several hundred thousand dollars. Yet the return on investment might not be realized for six years. Three of the group’s five person board will be retiring within four years – they all vote against the proposal. After all, it will just be money coming out of their pocket, or so they think.
The opposite is true as well and is the common driver of a significant amount of the M&A deals in many specialties.
You have to decide whether your medical group (or any business for that matter) is simply a collection of individuals, a “club” if you will, or whether it’s a real business. If it’s a real business, then you have to make it clear that managing for personal gain is a form of breach of fiduciary duty.
When an owner has his “owner hat” on it’s up to him to vote his share as he wishes. But put an owner on the board of directors and he owes a duty to do what’s best for the group, not just what’s best for him.
