American Academy of Emergency Medicine

How to Set Up a Democratic Emergency Medicine Group

by Anita M. Ziemak, MD FAAEM and Phyllis J. Troia, MD FAAEM


"History teaches us that men and nations behave wisely once they have exhausted all other alternatives."
-Abba Eban

The purpose of this article is to provide tools and knowledge to emergency physicians so they may begin to take back stewardship of their specialty, skills, and education in providing care to the acutely sick and injured. By so doing, emergency physicians may also reclaim personal self worth and professional respect which will be passed on to future emergency specialists. This empowerment inherently carries with it profound responsibility. We must assume the often difficult task of serving a high ethical standard in all our activities and decisions concerning ourselves, our colleagues, and our patients. Acknowledgment and acceptance of responsibility is the true source of all personal power and professional success. Knowledge creates a livelihood. Wisdom creates a life.

The contents of this article represent approximately a twenty-year learning curve. Mistakes became extraordinary learning experiences. The right decisions provided a template for the future. The wheel has already been invented, and now needs only to be replicated.

Basic Principles

Political Democracy/Equity
All members must be humble enough, no matter how long they are with the group, to treat new partners/shareholders as equals, going through the same process to become a partner/shareholder on time. Although less tangible, equal opportunity for administrative advancement is a very real part of political democracy/equity.

Economic Democracy/Equity
All monies from the group go back to the individual doctors (minus appropriate expenses for the corporation), not siphoned into the pockets of one or more skimmers or whatever you want to call them. Again, although less tangible than money, scheduling equity is a very real part of economic democracy/equity.

What You Need

Almost any law firm will be able to draw up your corporation s bylaws/articles of incorporation and individual contracts the way you want. Of course, tell them that you wish to set this up as a democratic group.

A middle-sized local firm is recommended, and should serve your organization well without unduly burdening it with exorbitant fees, like with some well-known accounting firms.

It is understood that the following sample set up may be used for single or multi-hospital equitable groups. It is also understood that this represents only one set of ways to accomplish this task, and that there may be many other ways that satisfactorily do the same. Much of the following is based on a real democratic group successfully using this set-up for years.

President, Secretary, Treasurer, two Vice-Presidents-this makes up the five member Board of Directors. Smaller groups may wish to delete the Vice-Presidents. The officers should be elected by secret ballot at yearly shareholder meetings. A two-year term is probably preferable (one year may be too short to accomplish certain things while in office). It s a good idea to stagger the officers elections, so not all of the board is up for election the same year-this facilitates continuity and retains the experience and advice of previous members on ongoing issues.

Your organization may wish to limit the number of consecutive terms an officer can have in order not to politically ingrain the Board of Directors. However, some smaller groups, for example, have one or a few people who administrate quite well and your organization may wish to keep them running the group administratively for a long time and not have limits to their consecutive terms. If your organization is not certain how to proceed, you may wish to begin without limiting consecutive terms, but retaining the right to vote on limiting consecutive terms of officers as well as other issues, at annual shareholder meetings.

Or, your group may wish to state that once you grow to four or more hospital contracts then any member of the Board of Directors may not have more than three consecutive two-year terms. Keep in mind that this may be an incentive for some individuals to keep the organization from growing to four or more contracts. Therefore, it is always best to put in any restrictions at the time the group is set up.

The salaries of the members of the Board of Directors should be comparable to the average clinical physicians in the group. They are already getting paid for their administration by less shifts, nights, weekends, holidays, etc. There are those in business who would say not to do this since they think administration is undervalued. However, it would be hard to convince that to a group of physicians who think that one of the greatest things you can do in life is serve your fellow human being as a physician, and administration lies somewhere else down the line in importance. Only when a physician administrator also does clinical work with patients will he then be considered to be on par with his peers.

In addition, no physician in the group should ever obtain more than the maximum number of shares that a straight "worker bee" physician would get. For example, let s say once someone becomes a shareholder in a group, they get one share a year for five years, and maybe an extra one after 15 years of service. No member of the Board of Directors should ever be allowed to obtain more than those five shares (and one at fifteen years). If you have someone who has been an administrator for a while, getting rewarded every so often with extra share(s), they may be inclined to sell or merge the corporation (whether it is a good idea or not for the other physicians) because they will make more money off the sale, and are able to influence the vote more with more shares.

You do not want to wake up one morning and find that your corporation/career is about to be on the stock market. Again there are those in business who think administrators should get more shares. However, if any physician can have more maximum shares than another, then you do not have a true democracy. In the history of business, many heinous acts have been committed against others in the name of something being legal.

Members of the Board of Directors must be restricted to doing their assigned tasks as in your set-up, but must always require involvement of all shareholders on any major decision involving looking for ways to get more capital for the organization once the need has been recognized, whether it is good to merge or sell the corporation, what direction to take the corporation, and other major decisions. There are those that say selling out to an HMO or physician practice management group in order to get more efficiency with information systems, billing, computer/communications systems, etc. would be of benefit. There are others who say you can contract out just those management services that you need to a company, and retain ownership of your corporation, physician autonomy, and control over patient care, etc. You want to be able to make these decisions democratically, not skewed to one or a few administrators with a disproportionately large amount of votes.

Above all, never forget that a physician is the patient's advocate first. Fiduciary and other responsibilities come somewhere else down the line. A Congressman once said it well when he said health care is not a "commodity" that can be traded like pork belly futures. It is a societal right for all, a part of our human dignity. The above principles can be used to set-up other medical specialist s corporations, too, not just emergency medicine.

Pathway to Partnership/ Shareholdership
Defined for all as two years of consecutive service (twenty-four months) with minimal full time hours of 1440 per year (averages 120 hours per month). You can choose what you think the minimum number of hours should be, but there has been good satisfaction with the above. Also, after talking to many people, most become partners after two years-the concept of "buy-in." Three years is too long for most. One is very nice, but not often seen. Directors should have the same pathway to shareholdership as all other physicians.

All criteria to partnership other than faithful service to the organization should be put in writing, as well as any criteria subjecting a physician to termination. There should be no hidden requirements.

If you are a multi-hospital group, you cannot require certain things to become a shareholder for physicians at one hospital, and not at another. This would not be a democracy. All must have the same pathway to shareholdership. It is understood that hospital bylaws at each hospital may differ somewhat, but this should not interfere with your organization s pathway to shareholdership. A good example is the United States of America, where everyone has the same requirements for U.S. citizenship, no matter what state they live in.

If you are a candidate and you do not get to be a partner/shareholder exactly on time as told to you when you first started, and you have been faithful to the organization from your end, then you should leave the organization. Period. That s it. Accept no excuses like: "Oh, we had a bad year financially, so you can t become a shareholder this year," or "don t worry, you'll get it next year." Next year won t happen. Don't wait to find out!

A Method to Facilitate the "Buy-In" Process
First year: Get income.

Second year: Get income, half-pension/profit-sharing, become shareholder with a vote (at the end of twenty-four months), and bonus based on pension/profit-sharing calculations. Attorney/Accountant can help determine a good pension/profit-sharing plan and bonus plan, and will know if there are any legal limits, etc.

Third year: Get income, full pension/profit-sharing, and bonus.

The maximum number of shares the organization will give a partner should be determined when you set up the corporation. There should be no outside shareholders. It may be between 3-20 shares each, or whatever, accumulating one each year after the first is obtained, until reaching the maximum. You may wish to consider awarding an additional share for ten or more consecutive years of service. This will be another incentive for people to continue practicing Emergency Medicine for longer periods of time. Of course, be supportive of your colleagues with regards to anti-burnout tactics, and you'll find many may stay longer in Emergency Medicine in your organization than in other places.

If the Board of Directors is to recommend you for shareholdership at the end of twenty-four months of consecutive service, if they are good and well informed, they may. But in other organizations, this leaves open the possibility of someone not nominating you because they did not like the way your hair is parted. This type of set-up may make you guilty until proven innocent. Perhaps a better set-up to make you innocent until proven guilty would be to add the element of due process to the process of becoming a partner/shareholder.

An example of this might be: Everyone who has faithfully served the organization as outlined by contract for twenty-four consecutive months will automatically be recommended for eligibility for shareholder status by their Board of Directors, and will become one by default if nothing is said. Recognizing that an organization may not want to have as a partner/shareholder someone who has a problem with alcohol, drugs, gambling, or other just and serious problems not adequately taken care of by twenty-four months of consecutive service to the organization - then the Board of Directors may recommend the candidate not be eligible for shareholder status.

If the candidate is recommended by the Board of Directors to not be eligible for shareholdership, then the candidate may choose to do any of the following three things at this point:

  1. Voluntary termination of employment.
  2. Continue employment without shareholdership if all parties agree, with or without the possibility of becoming a shareholder in the future (again, if all parties agree).
  3. Be given the opportunity to refute the lack of eligibility for shareholdership recommendations to all the members of the organization - say, at the corporate conference area within one month.

After this, and by secret ballot (best done in person rather than by mail), shareholder members of the corporation vote if that person would become a shareholder or not. A majority vote rules (more than one-half). In the event of a numerical tie, the President may be given an additional vote to break the tie. (It is always good with voting on any issue to state how many votes there are going to be, so that it is obvious what number a majority vote will need.)

Sabbaticals, Fellowships and Leaves of Absences for Just and Serious Causes
It is best to let the one or two years these usually involve not constitute a break in consecutive years of service for the corporation. Since insurance and other benefits are usually better with the corporation than most people could obtain alone during the sabbatical, fellowship, or leave of absence, this may be continued by anticipating the time off, and using a portion of that person s last working year bonus to pay these off, so as not to interrupt corporate benefits.

For example, Dr. X has been with the organization for four years, and decides to do a fellowship for one year. When he returns at the start of year six, it will be considered to be his fifth consecutive year with the organization. (This assumes Dr. X went right back to work for the organization as soon as he finished the fellowship, and was not doing something else.)

This can get complicated, but try to stick with it. One possible type of plan that has already proven itself to work equitably is as follows:

Money received each month (calculated separately for each hospital contract in the corporation) minus malpractice cost minus billing costs (and possibly minus some other legitimate operating expenses that you may want to include here) equals net receipts.

Now, because you have people who are in their first, second, and third or more year of service, monthly income is calculated as follows:

  • First year = 50% of net receipts
  • Second year = 52% of net receipts
  • Third year or more = 54% of net receipts

An easier way to do this would be to determine the approximate hourly rate this would come out to for your individual hospital (say, between $45 and $75/hour, depending on your hospital's payor mix), give that to everyone at your hospital, and adjust the differences in the percentages for each type of individual later, like on a quarterly basis.

As far as monthly income goes, the above formula thus far has worked out well, since in Emergency Medicine, we cannot necessarily predict how many customers we are going to have, especially during certain months. The above formula provides a reasonable amount of minimum income for all during fat and lean months - kind of like the utility companies do with average monthly payments over the course of the year, adjusting the difference at the end of the year.

Now, you say, what about the remaining percentages of the monthly net receipts? This money is used to pay monthly premiums for members life insurance, disability insurance, and dental insurance. One-half of the remainder of the money is given in each of the first three quarters, and in the last quarter, the last halves of the first three quarters and all of the remainder of the fourth quarter are given (nice to have around Christmas time!). You may say that this seems like a lot of money all at the end of the year. But, what if, due to managed care or other forces, your ED volume drops by 10,000 that year? (Hope not!) Then, you still get paid regularly a reasonable amount all year long even though your end-of-year goodies may not be a large as before. This keeps everyone afloat. Are there other ways to accomplish this same thing? Most likely.

Deferred Compensation Plan
Even in democratic organizations, sometimes people leave, often after many years of service, going out of state for family matters, changing careers, etc. If they do this before what is felt to be the lifespan of a full Emergency Physician in your corporation (deemed to be somewhere between ten and twenty years, usually), then they get a return on their investment in the corporation while they were there.

Let's say your organization decided fifteen years was the minimum required. Then from the end of the second year (the time they became a shareholder) to year fifteen constitutes the years of investment that will be compensated. After good and bad debt are taken into account, using your accountant to determine how to get this sum of money (which may also be under some sort of legal regulations, so ask your attorney, too), this sum of money will be given back to the leaving shareholder when employment is terminated. However, the money is returned over a period of three to seven years (or something similarly), so as not to financially drain the corporation, putting the remaining members at undue risk, and yet still compensating the individual over a reasonable amount of time.

Let's take as an example a corporation that gives one share each year from year two for a total of five shares, but their deferred compensation plan starts at year six and goes to year fifteen. 10% of net receipts will be the value of the first year of deferred compensation (year six) if the physician leaves. That 10% plus 20% will be the second year (year seven). That 30% plus 30% will be the third year (year eight), and so on for 10 consecutive years. Let's say 10% of net receipts of $5,000, and stays that way through all ten years, although in reality these numbers are not that exact or consistent. That means the value of each year will be:

Year of
6 $5,000
7 $15,000
8 $30,000
9 $50,000
10 $75,000
11 $105,000
12 $140,000
13 $180,000
14 $225,000
15 $275,000

So the value will equal $275,000 at the end of the tenth year. You can see the growth is exponential.


The larger the group, the better the negotiating power to get a good plan. Indemnity plans are still out there.

A reasonable term insurance plan between $25,000 and $100,000 is usually good. Plans that are over $100,000 usually require an exam.

Do your best. You may be surprised how much you can negotiate here.

Usually limited based on salary. You may wish to give first year people $1,000 to $2,000 per month, increase the amount by another $1,000 to $2,000 per month for second year people, and people who have served for three years or more receive $7,000 to $10,000 per month total, depending on their income.

Obviously, consult insurance agents on all of the above, and shop around.

Director Dynamics
The position of hospital Emergency Department Director has caused many a good idea in Emergency Medicine to catapult to a position where many patients, hospitals, etc. were helped tremendously. However, by the same token, it still appears to remain the most common instrument to effect inequity in Emergency Medicine by an unscrupulous Director. If too much power is given to this position, even though you have equal split of monies among physicians, you may not have scheduling equity or equal opportunity for administrative advancement for other physicians, etc., unless you build in some safety stops. A classic example of this is the United States government, where there exists a system of checks and balances between the President, Legislative Branch, and Judicial Branch. Our forefathers understood this principle very well!

Since you are a democratic group, you should choose by democratic election (best done by secret ballot) within each hospital the positions of Director, Assistant Director (and Associate Director, etc., where applicable). Since you are not a hospital employee group, you should not need to worry about who might be appointed as Director, etc., possibly causing a problem from misuse of power benefiting the Director at the expense of other physicians in terms of scheduling, opportunities, money, etc.

Each hospital group should elect the term of the administrative positions in the department. This is best from one to four years. If each member would like to serve a year as Director by agreement, they may want to make the administrative positions one year in length, to give each physician a reasonable opportunity to do this. If the physicians are at an academic contract where a longer term of Director is preferred by hospitals, etc., then it may make more sense to have a four-year term. There are other possibilities for all kinds of reasons, too.

In the event of a newly-acquired hospital contract to the corporation, the Board of Directors may appoint a Director for one year until the physicians at that contract can have an election, if unable to do so at the onset.

What should each hospital contract administrator s compensation be? First, you have to decide how much of the contract should go to total administration. This can be done by a flat sum or percentage. Percentage may more fairly compensate an administrator, since larger contracts generally require larger amounts of administration, and therefore should pay a larger sum. Vice versa for small contracts with smaller administrative needs. Perhaps a reasonable amount of money for each contract to commit to administration is 6-8%. Let s say 6% is chosen. Then it should be 6% for every contract in the corporation - no inequities. There should be at least a Director and an Assistant Director at each hospital contract. There should never be just a Director at a hospital. A back-up administrator, such as an Assistant Director, should always be a part of the administration. There are various compensation possibilities, depending on how many administrators are at each contract. The total payment of all should not exceed the 6% per year.

Some examples would be: If you have a Director and Assistant Director, compensation is 4% and 2%, respectively. If you have a Director and an Associate Director (for those Directors who want to delegate more administrative duties), compensation is 3.5% and 2.5%, respectively. If you have a Director, Associate Director, and Assistant Director, compensation is 3%, 2%, and 1%, respectively.

The above administrative compensations are considered to be in addition to the compensation provided for clinical hours worked.

The Director should be ultimately responsible for his or her contract. But the Director should also be ultimately responsible to the corporation for ensuring equity of all the physicians at that contract. To enforce this, Director noncompliance with corporate policies on these matters should require forfeiting up to one-half of the administrative compensation as determined by the Board of Directors. You may wish to hold this amount until the end of the year, dispensing it in one lump sum if upon review of the immediate past year, equitability was maintained. If not, the sum is divided equally among the remaining physicians to help compensate for their loss. The Director may be subject to termination of employment or Directorship.

Democracy is a delicate balance. If one wants to be more equal than the others, it will be at another s expense. The price of equality is equality-if you want to be equal, you must be sure the others are equal as well, no matter how long or short you or another has been with the corporation or individual hospital contract.

Scheduling Equity
When Emergency Physicians are surveyed, one of the factors that takes the most toll on an Emergency Physician is shift work, let alone the physicians who are on the short end of the straw of a scheduling inequity. The corporation must define the minimum requirements for nights/weekends/holidays for each administrator of a hospital contract. Usually this applies only to the Director, with the remaining time being split equitably between the remaining physicians. This should be in writing in each physician s contract with the organization, so all will know what is expected of each physician. Non-administrative physicians will know what will be expected of them if they become administrative physicians.

Each individual contract s physicians have the right to democratically vote if they have one or more people who want to do nights only, or more nights than usual, etc. They also have the right, if they wish, to weight nights, weekends, holidays, etc., or request certain numbers of hours to work within corporate policies. It may be prudent at each contract to decide what the physicians there think constitutes a "holiday," a weekend, etc. Does a holiday also include the eve of a holiday or just certain ones, etc.?

A Director must comply with at least the minimum of required Director clinical hours, so as not to end up with a Director collecting a relatively large sum of money compared to nonadministrative ("worker-bee") physicians, for only scheduling and/or attending meetings, doing relatively little or no clinical work. The scenario would be comparable to a relatively nonproductive tenured professor whom a university cannot stop compensating or get rid of. All too many a university has learned this lesson the hard way. Noncompliance by a Director subjects them to forfeit up to one-half of administrative compensation as determined by the Board of Directors, and possibly also termination of employment or Directorship. If there are two people who split all the nights at a given hospital contract, and democratically the physicians agreed to this, then the Director and other physicians do not have to fulfill the minimum required night shifts. If there is any question as to the vote being democratic or not, the Board of Directors may administrate the secret ballot election amongst that contract s physicians. This probably is a good idea anyway anytime there is a vote altering the corporation s scheduling policy.

The Director or any other administrative or nonadministrative physician may be the scheduler at an individual hospital contract. The person chosen is best done by democratic vote at that group. A nonadministrative physician must also be fair, or be subject to actions by the Board of Directors.

The administrative corporate physicians (President, Vice-President, Board of Directors, etc.) also must have a minimum required number of clinical hours, and possibly also nights, weekends, and/or holidays. You cannot fully understand this business unless you continue to also work clinical hours.

Board Certification
Board certification is a criteria increasingly being used to award partnership. The problem with board certification is that the only way this criteria can be applied perfectly fairly is if all physicians were going to get certified by the same board. This is a moot point, of course, for someone already certified by that board when they come to your organization.

If an Emergency Medicine group only accepts ABEM (American Board of Emergency Medicine) or only accepts Pediatric Emergency Medicine Boards, then the playing field is equal for all. However, if more than one of any of the following is accepted also, there may be some inequities: ABEM Pediatric Emergency Medicine, Internal Medicine, Pediatrics, Family practice, etc. Even if an organization only wishes to accept ABEM and Pediatric Emergency Medicine Boards there may be inequities. Take heart though, there is a reasonable way around this.

First, let us consider what are the factors that may constitute the inequities if not dealt with. ABEM candidates must pass a written exam (usually given two times per year) and an oral exam, the latter of which they may not be able to schedule until 1-2 years after passing the written exam even if they passed the written exam on the first try. Take into account that most pathways to shareholdership are two years in length, and that most of the other boards mentioned above have only a written exam to pass. Couple this with the fact that ABEM has a lower pass rate in general than most of the other boards mentioned above, and that sometimes people do not pass their boards right away or are unable to take them right away due to illness/death in the family, other just and serious causes, etc. Furthermore, non-ABEM board candidates who only have a written exam to pass may have many more opportunities to pass an initially-failed exam than their ABEM candidate counterparts during the two-year pathway to shareholdership. What this all amounts to is that an ABEM candidate Emergency Specialist is disadvantaged by a corporation that practices Emergency Medicine!

How can you get around this problem? Well, if it takes anyone (ABEM or other board candidate) longer than two years to become board certified, the first year they become shareholders they should be given all the shares that year that would include what they did not get before (since year two), plus one share each succeeding year like everyone else, until the maximum as outlined.

For example, Dr. X has been with the corporation for three years at a two-year pathway to shareholdership corporation, given a maximum of seven shares and he just became board certified. Had he become board certified at year two, he would have received one share. However, since it is year three of service, he should initially get two shares, then one every year after that like everyone else, until the maximum seven shares outlined. It is necessary to do this because along with each share comes a vote. If Dr. X only gets one vote at year three and gets one more vote each year for six more years, then he is behind one vote for each of seven years from his colleagues who otherwise worked faithfully as long and as hard as he has up to that point, but became board certified at two years. Thereby, Dr. X would lose equity in the corporation if only given one instead of two votes when becoming board certified. If Dr. X became board certified at four years, then he should initially get three shares. At five years he should initially get four shares, and so on. Time is equity. Time is not just money. So loss of time is loss of equity, and therefore the above corrections should be made. This also brings to mind any economic benefits that may have been attached to shareholdership. The amount lost during the one year (from year two until Dr. X became board certified at year three) should be estimated and given back to Dr. X at the time he becomes a shareholder.

A better way around this problem is not to tie any economic benefits (continuing medical education compensation, other perks, etc.) to shareholdership. Rather, they should be tied to years of service. For example, they may be given to all after two years of service, whether board certified or not.

Requiring board eligibility (if you feel the need to require something like that for partnership) may be a better idea. That way all physicians will have at least three years of post-graduate training, and the playing field would be more equal.

Inter-Hospital Transfers within the Corporation
This section seems to apply to multi-hospital equitable groups only. But there are principles here that apply to single hospital groups with old members who take on new ones. One of the beauties of a multi-hospital group is that within the same corporation most people are able to find their own little niche. One might prefer location of one of the hospitals to another, or perhaps an academic setting to a community setting, etc. Each physician member of the organization may have many hospitals to choose from, each with a different character.

This sometimes means that a physician may want to transfer from one of the organization s hospitals to another. If the contract is new, then you are likely dealing with new recruits, but may also have veterans who wish to transfer to a new facility for whatever reason.

For a physician already at one of the organization s hospitals and wishing to transfer to another, there are several things to consider. First, a written request should be made to the Board of Directors by the physician wishing to transfer. Of course, the current hospital Director needs to be informed also, after the new Director accepts. The current Director may be concerned that he may not be able to recruit a new physician to the impending vacancy for a while. Likewise, the leaving physician may leave your corporation and go on to another if the wait to transfer takes too much time out of his life. Perhaps a reasonable time limit is that the transferring physician must be able to go to the new setting as soon as mutually reasonable, but no longer than after a maximum period of 4-6 months.

With multi-hospital or single groups, once at the new hospital it should become corporate policy that the physician should not be treated as the "new kid on the block" or "last on the totem pole." If this is not done, then potentially the new physician may get more nights/weekend/holidays to work, etc. because he has not been at that hospital as long as the others, even though he may have been with the corporation at another hospital for many more years than any of his colleagues there. Or he may be new to both hospital and corporation. Either way it does not matter since all physicians should be equal all the time.

Rather, the solution is that everyone is scheduled equitably as outlined in the Scheduling Equity section herein, no matter how short or long you have been with the corporation, or how short or long you have been with that individual hospital contact. That way everyone is equal all the time, anywhere.

This effectively means that there is no seniority except as outlined on the pathway to shareholdership. This is necessary to keep the delicate balance of democracy from being disturbed. If you cannot convince yourself that everyone must be treated as equal from the newest member to the oldest, then you will find inequities and disgruntled individuals popping up all over the place. Not to mention lack of democracy.

Once again, the price of equality is equality, all are treated equal, all the time!

Finder's Fees
A finder s fee is the money paid to an individual within the corporation who successfully recruits a new physician or acquires a hospital contract. There are also finder s fees for individuals outside the corporation, such as from physician recruitment firms, but these will not be dealt with here. Your corporation may not wish to give finder s fee since every new physician or hospital contract benefits all in the corporation. However, if your corporation does decide to use them, this must be done fairly. There should be a certain written policy ahead of time as to how much an individual is paid (either by a fixed percentage or flat sum, as decided by your corporation) for a physician recruit or a hospital contract acquisition. This sum should not be unreasonably high or low. Each physician recruited should have equal value, no matter what position he takes (Director, Associate Director, Assistant Director, "worker-bee" physician etc.). In other words, an individual or one type of physician should not be higher-priced than another. The same should be true for hospital contracts, whether the hospital is more profitable than another or not. Perhaps a good approach would be not to pay the fee until the individual recruited or hospital contract acquired has successfully completed one year with the corporation. This will avoid paying out fees for short-lived service. There should be no arguments over who did the physician recruiting or hospital acquisition work. As best as possible, this should be known from the beginning. However, if there is ever a question, do not be afraid to ask the recruited who got them to your corporation. Hopefully, it will never come to this. However, it is a potential problem. In cases of controversy, it may be wise to then have the Board of Directors vote on this, having as policy that their decision on this matter will be the final one.

If a physician becomes unsatisfactory after becoming a shareholder (consistently treats patients below current standards of care, alcoholism/drug/etc. problems surface which the physician has not satisfactorily taken care of in spite of support from colleagues and others, and so on), his or her employment may be terminated for just and serious cause. Reasons for termination must be put in writing. Legal advice is appropriate here.

Any physician may terminate his or her employment with 30 days prior written notice.

Acquiring New Contracts
When your corporation acquires a new hospital contract, it may have to staff it from scratch. But there may be a fully intact or partially intact prior group who wishes to join their single hospital to your corporation for positioning themselves better in a managed care environment, democracy, etc. Your corporation and the new group must understand that if your corporation adds them, it will be on your terms, that is, democracy. It must be understood that any previous inequitability designed and executed by a Director or anyone else will not be tolerated. Any new people from your corporation joining them also will be treated equally.

Beware of the wheeler-and-dealer, unscrupulous Director who will try to talk your corporation into letting him maintain some or all of the previous inequities designed to benefit him, just to entice you into getting that contract, particularly if it is a very profitable one. Do not give up your principles!!! If you cannot agree on democracy, do not take on the contract. If they want the benefits a larger corporation can offer, then they must be able to be democratic. If you do not adhere to this, you will be very sorry later. Your organization will no longer be a democracy. Inequities, disgruntled individuals, a bad corporate reputation, etc. will follow.

The price of equality continues to be equality.

Some Final Words

  1. You may wish to give some of the money otherwise given as bonuses towards a continuing medical education benefit, say $2,000 to $10,000 per year, in order to gain some tax benefits.
  2. Every organization should have a reasonable amount of cash on hand to maintain its liquidity. Ask your accountant to help you determine what amount would be good for your organization.
  3. Your billing and collection agency should not be the same. To do so would pose a potential conflict of interest.
  4. Making all shareholders Assistant Vice-Presidents may have some tax advantages.
  5. It's always best to do your own billing if you can, but it s not required. Beware of billing companies owned by contract management groups.
  6. An individual hospital contract s physicians may wish to have other types of administrative physicians, such as an EMS Director, Research Director, Emergency Medicine Residency Director, etc. Their compensation is outside of the percent allowed for Director, Associate Director, Assistant Director, etc. There are good ways to handle their compensation that have proven to work out well with democratic groups. One way is to have them work one-half the clinical time of the average physician in your hospital contract with the other half pay used to compensate them for their administrative work. That way they end up with a full-time salary comparable to the rest of the full-time clinicians. Another way is to have them work one-half the clinical time of the average physician in your hospital contract, give an additional base flat sum administrative amount (equal to less than the other half clinical time), plus an hourly wage for administration time.
  7. The physicians of the corporation cannot simultaneously work for or "moonlight" for a contract management group or solo-nondemocratic group (as defined by the Board of Directors) unless they are non-full-time (less than 120 hours per month with your corporation) independent contractors.
  8. Academic involvement in Emergency Medicine by physicians in the corporation should be encouraged, not discouraged.
  9. A good, efficient, democratic multi-hospital group should have as yearly overhead approximately ten percent (plus or minus one percent) of total monies taken in. This is true economies of scale. Solo groups may have a slightly higher number.
  10. Any physician can petition the Board of Directors at any time on any matter.
  11. Anytime there is an individual hospital group deviation from corporate policy that is approved by the Board of Directors (such as two people wanting, and agreed by all, to work all the nights and no one else works nights, etc.) the matter shall be up for re-evaluation on a yearly basis (unless requested earlier by that hospital group) with a democratic secret ballot election administered by the Board of Directors. This method cannot be used to force someone into doing all nights who does not want to, or to otherwise deviate from corporate policy when it is against the will of an individual.

Editor's Note: The creation and structuring of any physician group or hospital contract involves numerous important and sensitive legal issues. Care should be exercised to make sure that all applicable laws, regulations, and other requirements are complied with, including federal Medicare and Medicaid anti-kickback rules, federal self-referral laws (Stark I & II), state and federal antitrust laws, and state fee-splitting laws. The physician is strongly advised to obtain the assistance of competent legal counsel when considering the creation of a physician group or entering into a hospital contract.