Succession Planning for General Practitioners
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1 Succession Planning for General Practitioners An introductory ebook for members of the Inner East Melbourne Medicare Local
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3 Contents 1 Foreword 1 2 How the GP Network can Help You to Plan Your Succession 2 3 Introduction to Succession Planning 3 4 Your Rationale for Succession Planning 5 5 Knowing Your Personal Preferences and Values 6 6 Transition to a New Business Model 7 7 Consulting with Key Stakeholders 8 8 Writing and Implementing Your Succession Plan 10 Appendix 1 11 Appendix 2 13 Acknowledgements The Melbourne East GP Network would like to acknowledge and thank the GPs who have contributed to this project through interviews and by providing feedback. Without your input, this ebook would not have been possible. We would also like to acknowledge the NSW Rural Doctors Network whose succession planning project materials provided ideas and impetus for our work; and Health Outcomes International Pty Ltd whose research influenced our thinking on new general practice business models. Contact Judy McIlree, Melbourne East GP Network, (03) Melbourne East GP Network, Suite 13, Whitehorse Road, Nunawading, VIC 3131.
4 1 Foreword Over 40% of GPs in the Melbourne East General Practice Network are over 55 years of age, and recently members have shown a strong interest in succession planning and exploring new business models. This interest is being driven by several factors, including: Retirement planning; Seeking to operate more efficiently in order to: o o o o o o maintain viability; maximise the goodwill built into the practice in order to prepare it for sale; attract other GPs to the practice, including GP registrars; make it easier to move towards accreditation and participate in current or future government programs (e.g.: Practice Incentives Program, fund holding models); improve the quality of care; and/or improve accessibility to care. Seeking a better work-life balance and/or seeking to delay early retirement through better stress management. The GP Network is proud to be responding to these concerns by offering focused support for GP succession planning and business redesign. It is essential for all of us to plan our future not only to look after ourselves and our families, but also our patients and practice staff. I encourage all GPs in the division, particularly practice principals, to read this ebook and to further explore what is on offer. Marianne Shearer CEO
5 2 How the GP Network Can Help You to Plan Your Succession The Melbourne East GP Network is pleased to offer you a number of tools to guide you through the process of succession planning. We recommended that you use the following tools (in order) to help plan your succession: 1. Read this ebook an introduction to succession planning for GPs; 2. Complete the GP Network s online needs appraisal tool the tool help you assess whether you should consider adopting a new general practice business model as part of your succession planning and if so, what kind of model may suit your needs and preferences; 3. Read the Your Practice Succession ebook a comprehensive guide for GP principals interested in selling the practice in order to release equity whilst looking after their staff and patients; 4. Download the succession planning template, and use it to begin planning your succession; 5. Talk to the GP Network to arrange a practice visit by a representative of an Australian consultancy firm specialising in business succession planning for small to medium enterprises; and 6. Talk to the GP Network s staff about how to discuss succession planning with other GPs in the region who have planned and implemented changes to their businesses.
6 3 Introduction to Succession Planning Planning for Change Congratulations for deciding to plan for your future career in a thoughtful, structured manner. Setting aside sufficient time to think about the desired change and then to write a plan are important ingredients for successful transitions. Many people do not plan for change in their life, therefore allowing the decisions of others or other factors outside their control to determine their future. Other people make changes without having consulted those close to them, or make plans in their head without considering all relevant factors these omissions can lead to problems. About Succession Planning Succession planning means formally planning desired changes in work practices and conditions over time. For general practitioners, well managed succession planning can help ensure the continuity and quality of care for your patients is maintained while you move to the next stage of your career or towards retirement. Five rural GPs who engaged in formal succession planning in reported that: Two to three years should be set aside to engage in succession planning and then implementing a plan, and up to five years should be set aside in advance of retirement; Itdidnottakeanexcessive amount of time nor expense provided that regular, dedicated time to engage in succession planning was set aside; The advice of families, friends and trusted colleagues was important and was relied upon heavily; Plans did need to be altered as circumstances changed over time; and When advising colleagues and the community of their plans, GPS found that problems were surmountable and support was sometimes found where it had not been expected. Further advice offered by these GPs is at Appendix 1. When to Engage in Succession Planning It is helpful to engage in succession planning each time you plan to significantly change your practice or working hours. However, it is particularly important toward the end of your career when you may be looking to significantly reduce working hours or stress and to ensure a smooth transition to a comfortable retirement. This process occurs best when personal needs and preferences are considered alongside those of your family, patients and colleagues. 1 Lowe, Estrella Rural GPs experiences of planning for succession. NSW Rural Doctors Network. Accessed 14 th February, 2010.
7 The Process of Succession Planning It can be either a simple or complex process depending on the extent of change required. However it is recommended that the process needs to be initiated at least two years in advance of any major change. This is to allow adequate time for reflection, consultation, planning and implementation whilst you continue to work. The process of succession planning entails: 1. Ensuring that you are totally clear about why you wish to engage in succession planning; 2. Analysing your personal needs and preferences to help inform an initial draft plan; 3. Consulting with key stakeholders; 4. Writing your succession plan; and 5. Implementing your succession plan. The remainder of this kit is dedicated to guiding you through each of these steps.
8 4 Your Rationale for Succession Planning It is important to determine the exact reason/s why you wish to engage in succession planning. Sometimes a key reason will be obvious (e.g. to plan for retirement) however there may be equally important underlying reasons (e.g. to reduce stress). Being clear about both the obvious and underlying reasons will make the end result much more satisfying, because you will have addressed all your needs. Essentially, GPs engage in succession planning for four reasons: (a) Planning for a financially comfortable retirement (which may include seeking to alleviate significant debt); (b) Planning to close the practice, or sell it to another party and move on in their career; (c) Planning to improve business profitability or to build and in the future to realise the goodwill inherent in the practice; and (d) Planning for a better work-life balance. One or more (or all) of these may apply to your circumstances. For example, a GP may intend to improve the attractiveness of the practice to increase the chances it can be sold to another GP, whilst concurrently looking to improve her work-life balance in the transition to retirement in five years time. Succession planning often requires a plan to improve the way the practice is organised and managed. Well managed practices can lead to greater satisfaction for GPs as a result of benefits such as: Ability to organise cover to enable the taking of personal, study or illness leave, or the ability to simply choose which sessions to work; Relief from practice management; Less stress; Improved patient services; Improved profitability; Realising goodwill; More access to equipment and ability to perform procedures; and/or Greater ability to participate in research, training or mentoring activities. Sometimes, realising goals such as these requires a transition to an entirely new business model, usually a form of amalgamation. Types of amalgamated business models are outlined in section 5.
9 5 Knowing Your Personal Preferences and Values Your personal preferences and values (driven by needs intrinsic to yourself) will have a large influence on the decisions you make as part of your succession planning. It is important to both be consciously aware of them, and to be able to communicate them effectively to others. These others include professionals such as business advisors and lawyers who may be employed to assist you, and other important stakeholders such as current or future business partners, colleagues and your partner/family and friends. You may run into problems if you are not able to communicate your expectations in relation to your preferences and values, because you or others may make assumptions about shared expectations or norms that are not accurate. For example, if you are looking to move to a new general practice business model that involves other parties, you can help understand your preferences and values by asking yourself: Do you enjoy change? Are you prepared to make a lot of changes to achieve your vision, or do you have a strong preference for minimal disruption? What are your ethics with regard to patient billing? Will these need to be maintained, or are you flexible? Do you believe it is important that patients have the right to see the same GP every time they require treatment or advice? What roles should professional managers, nurses and administrative staff play in the practice? To what extent will they be delegated authority to make binding decisions? Additionally, if you are retiring you should consider questions such as: What arrangements should be made for patients in the months leading up to your retirement? How will these be communicated? Do you believe it is your responsibility to find a replacement GP and, if so, does it matter what kind of GP this is? The needs appraisal tool in your personal Melbourne East GP Network succession planning web portal will ask you a series of questions that will assist you in this regard, and will make some recommendations about business models you may wish to consider in light of your preferences and values. Notes
10 6 Transition to a New Business Model Many GPs consider changing to a new kind of amalgamated general practice business model as a key strategy to increase practice efficiency, quality of or access to care, or to improve their lifestyle. It is therefore an integral part of succession planning, including for GPs who are looking to retire. Amalgamated business model options for GPs include the following: 1. Partnership model: an agreement between two or more persons to jointly own, manage and be responsible for the outcomes of a business. In general practice it usually means the physical amalgamation of small (often solo) practices onto one site. 2. Collaborative practices model: arrangements between two or more practices, or between a group of practices and a non-general practice organisation, to make collaborative business arrangements to benefit all parties. Examples include rostering after hours care or leave, and sharing administrative, nursing and/or management staff. 3. Virtual amalgamation model: similar to the collaborative practices model, though it goes further it also involves a commitment between a group of practices to agree on common practice systems. For example, these may include common policies, procedures and protocols, shared rostered staff and shared clinical systems and billing systems. 4. Corporation, privately owned and GP-controlled: In this model, GPs agree to work for a private company (corporate), usually on a fixed term contract in exchange for a salary. A lump sum payment and/or some limited equity in the business may also be offered as an inducement. The owners of the company are GPs who are seeking to realise a return on their investment. 5. Corporation, publicly listed: similar to the corporation, privately owned and GP-controlled model except that GPs are agreeing to work for a publicly listed company (corporate). The owners (or shareholders) of the company are seeking to realise a return on their investment. The models, and their inherent advantages and disadvantages, are explained in Appendix 2.They are also explained as part of the needs appraisal tool in your succession planning portal. Notes
11 7 Consulting with Key Stakeholders People involved in or affected by adjustments to your working life often expect to be consulted, and you may need their assistance too. It will be helpful if you are able to present them with a draft plan of what you would like to do whilst remaining flexible so to enable them to have real input. Key stakeholders usually include: 1. Partners and loved ones 2. Friends 3. Colleagues 4. Patients 5. Business professionals Partner/Family and Friends Changes that may affect or involve those closest to you include: A change in location a move could affect their friendships, affiliations, schooling etc; Changes to your working hours you may have more or less time to spend with them (consider changes to your working hours both during and after succession planning); A growing need for emotional or financial support; and Finances you may have more or less funds at your disposal. Colleagues These obviously include doctors, nurses, managers and administrative staff, but may also include tenants, directors or key personnel of the hospital, health services, training providers and division of general practice, and other health professionals you regularly refer to. Changes that may affect or involve your colleagues include: A change in location (as above); Changes to your working hours a decrease in your working hours could place additional strain on others, including financial or workload stressors, or conversely reduced business due to lower referrals; Significant plans to change your business model or the business model of the practice; Retirement plans; and Your need to resign from leadership positions eg: on boards, committees, advisory groups and businesses. Patients There are many examples of patients becoming upset or angry because they were not kept informed of significant changes to their general practice or their usual GP. Issues for patients include any change that may affect their: Access to care (consider opening hours, location of consultation, choice of doctor and length of consultation available); Access to medical records, particularly if they will need to find a new practice/doctor; Access to special arrangements, such as home and aged care visiting services, locum services or other arrangements for patients with special needs; and
12 General daily or weekly routine, particularly those with mental health problems and the elderly. Business Professionals These include anyone who supports you or who is likely to need to be consulted about your desired changes for example accountants, lawyers, business and financial advisors, spiritual advisors/ministers of religion, and local government officers. Notes
13 8 Writing and Implementing Your Succession Plan Writing Your Succession Plan Once you have established your rationale for succession planning, consciously considered your personal preferences and values, considered the transition to a new business model and consulted with key stakeholders, you will be ready to write your succession plan. You can download and use the draft succession planning template on your succession planning web portal to write your plan. Each step in the plan is sequential and follows the logic within this toolkit. Implementing Your Succession Plan Every succession plan is different, and thus it is not possible to offer detailed advice about implementation in this toolkit. However, the following general advice may be helpful: Remember to consult with your stakeholders again and again they will be appreciative of the opportunity to give feedback or further advice; and Your plans will need fine tuning along the way, for a number of reasons: Your personal circumstances may change; Your changes may instigate changes in others, meaning that your plan will need to change in response; or You may encounter unexpected problems or benefits.
14 Advice from GPs about Succession Planning Appendix 1 From the NSW Rural Doctors Network supported the succession planning activities of five rural GPs 2. As part of the evaluation of their experiences, the GPs were asked what advice they would give to other rural GPs considering succession planning. This advice is general enough to also be helpful for GPs in urban settings. Doctor A: It is important to plan your succession and do it early in your general practice career, and regularly review and modify it. The earlier you do it, the more likely you are going to make changes that will benefit you medically and personally. Doctor B: Don t be too daunted. Doctor C: Consider the succession process early, at least two years before you are thinking of making any change, even if it is only [a] minor change in how you want to work. This process can be immensely valuable in helping your peace of mind, in helping your confidence about the future and in carrying through your plans. One of the most valuable things I ve ever done in my extra curricular activities was giving just a little bit of extra space to the succession planning process, it opens up all sorts of vistas and possibilities that you can hardly believe when you first start out. Just take the time to do it, work through it and the rewards will be there. Doctor D: Succession planning begins when your working life begins. There are stages in the succession plan throughout your career. Doctor E: Succession planning is something that should be done, you need to rise to the discipline of it. Probably if you are around 50 years of age is about the time it should be implemented and have a 10 year plan. 2 Lowe, Estrella Ibid.
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16 Appendix 2 Common General Practice Amalgamated Business Models Partnership Model A partnership involves an agreement between two or more persons to jointly own, manage and be responsible for the outcomes of a business. It requires agreement between partners on shared business management and clinical arrangements, any may require limited capital investment. The transition to a partnership model in general practice usually means the amalgamation of small (often solo) practices onto one site. This can enable partners to share management and clinical functions with the aim of increasing efficiency and reducing per-consultation operating costs whilst maintaining a significant degree of business autonomy. A partnership may involve merging one practice onto the site of another, or involve small practices closing and establishing a practice on an entirely new site. Advantages A high degree of management autonomy and control Clinical independence is never an issue Continuity of the GP-patient relationship can be maintained If transitioning from solo GP arrangements, partners may benefit from a limited increase in economies of scale, collegiality, ability to participate in research, and increased ability to take leave Disadvantages Limited ability to realise goodwill Burden of management responsibility usually falls on the partners Partners may assume all the risks (legal, financial, clinical) associated with the business, depending on how the business was set up In comparison with other models there is less ability to access expensive equipment, employ support staff, reap the benefits of significant economies of scale or to have the scope to engage in teaching, research and quality improvement initiatives
17 Collaborative Practices Model A collaborative practices model involves arrangements between two or more practices, or between a group of practices and a non-general practice organisation, to make collaborative business arrangements to benefit all parties. Examples including arrangements for rostering after hours care or leave; sharing administrative, nursing and/or management staff; the bulk purchasing of equipment; and joint quality improvement activities. In this model, all practices stay on their current sites and work together or with a third party provider in the hope of improving efficiency and the quality of care through partnership. The cost of such an approach is minimal. Advantages A fairly high degree of autonomy and control is maintained, as practices should maintain the right to decide in which areas to participate Clinical independence is never an issue Continuity of the GP-patient relationship can be maintained GPs gain the ability to negotiate flexible working arrangements, including leave Disadvantages Limited ability to realise goodwill Burden of management responsibility may be lessened but still exists As practice ownership arrangements remain unchanged, GPs may retain all the risks (legal, financial, clinical) associated with the business and the changes inherent in this model Disagreements between practices or with third party providers may take time to resolve and cause stress
18 Virtual Amalgamation Model Virtual amalgamation is similar to the collaborative practices model, though it goes further it also involves a commitment between a group of practices to agree on common practice systems. These may include common policies, procedures and protocols; common clinical and billing systems; common information management and information technology systems; and the rostering of GPs and staff across different sites. In this model, all practices stay on their current sites and work together (with external assistance) in the hope of greatly improving efficiencies and the quality of care through partnership. The cost of such an approach is higher than the collaborative practices model, but the potential advantages are also higher. Advantages Agreement on best practice systems, policies and equipment and significantly increased economies of scale can improve clinical and financial outcomes Some increased goodwill, as virtual amalgamation models have been proven to attract new doctors GPs gain the ability to negotiate flexible working arrangements, including leave Increased collegiality, ability to participate in research, and potentially relief from management responsibilities Disadvantages Transitioning to this new model is complex and time consuming As practice ownership arrangements remain unchanged, GPs may retain all the risks (legal, financial, clinical) associated with the business and the changes inherent in this model Burden of management responsibility may be lessened but still exists Decision making is more difficult due to the number of, and different expectations of stakeholders in the short term
19 Corporation, Privately Owned and GP-Controlled Model In this model, a GP agrees to work for a private company (corporate model), usually on a minimum fixed term contract in exchange for a salary. A lump sum payment and/or some limited equity in the business may also be offered as an inducement. The owners of the company are GPS who are seeking to realise a return on their investment. Nonowner GPs coming to work for the business are likely to have less say in the day-to-day management and operations of the business than they are used to this may be a relief, or difficult to accept. Advantages Minimisation of business risks and complete relief from management for the participating GP Ability to realise goodwill, for example through equity or an upfront lump sum payment GPs gain the ability to negotiate flexible working arrangements, including leave Owners are GPs who will therefore have a good understanding of GP preferences. This in combination with economies of scale can lead to increased collegiality and access to a mentoring environment, ability to participate in research, ability to work as part of a multidisciplinary team, ability to access equipment and to perform minor surgery Disadvantages It may be difficult to maintain the quality of the doctor-patient relationship due to a lessening of continuity of care and due to a focus on profitable activities (eg: home visiting not performed) Expectations and vision of GPs and management may differ Likely to require ongoing negotiation with management to protect GP interests and maintain what an individual GP may regard as quality service Some loss of autonomy, particularly in management decisions
20 Corporation, Publicly Listed Model In this model, a GP agrees to work for a publicly listed company (corporate model), usually on a minimum fixed term contract in exchange for a salary. A lump sum payment and/or some limited equity in the business may also be offered as an inducement. The owners of the company, who may or may not be GPs, are seeking to realise a return on their investment. GPs coming to work for the business who do not have a stake in the entity that owns the clinic are likely to have less say in the day-to-day management and operations of the business than they are used to this may be a relief, or difficult to accept. Advantages Minimisation of business risks and complete relief from management for the participating GP Significant ability to realise goodwill, for example through equity or an upfront lump sum payment GPs gain the ability to negotiate flexible working arrangements, including leave Increased ability to work in a multidisciplinary team, to access equipment and to perform minor surgery Disadvantages It may be difficult to maintain the quality of the doctor-patient relationship due to a lessening of continuity of care and due to a focus on profitable activities (eg: home visiting not performed) Expectations and vision of GPs and management may differ Likely to require ongoing negotiation with management to protect GP interests and maintain what an individual GP may regard as quality service Some loss of autonomy, particularly in management decisions
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