Physicians Practice - September 2008 - (Page 12) LETTERS SHORT SUPPLY “Unless hospitals are willing to have sick people lined up outside their door having been refused access, a mandate has no teeth.” CONTRACTS AND COMPETITION Having read Rob Anthony’s article about new physician employment agreements (“Build ’Em Right,” June 2008), I have thoughts on two issues. First, tail coverage is very minimal for a one year employee whereas quite expensive for a three year employee, especially if they go into a competing practice and have to switch carriers. Most new carriers will build the tail into the new contract to simplify it. Cooperatives may have a trust fund, which can be troublesome if the employee walks away with it. There should be written contracts regarding who “owns” the trust. Second, the covenant not to compete is very difficult to enforce in California. Is there a way to build in a “loan payback” at the outset, i.e., can you set the employment agreement in reverse? Currently we employ MDs and risk them walking off with hundreds of thousands of dollars of goodwill. As a solo, I have been burned by this. Would it be reasonable to institute a loan system wherein each year that they work they are forgiven the costs they incur (salary, expenses, etc.)? This means that if they leave after one year and compete with you, they have to pay back 100 percent of their startup costs (loan) since, in essence, what they are doing is using you to build their practice and then leaving. After two years employment, they pay back 50 percent if they leave and so forth. This way, after three years you may have finally received some benefit from their employment and the loss of goodwill is acceptable. This makes buy-in more easily tolerated by the employed MD. —Jonathan H. Wheeler, MD Newport Beach, Calif. OUR MISSION Helping physicians manage their practices more efficiently, leading to improved patient care. P U B L I S H I N G S TA F F VICE PRESIDENT & GROUP PUBLISHER Ken Karpay kkarpay@physicianspractice.com GENERAL MANAGER Katherine Hermann khermann@physicianspractice.com EDITORIAL EDITORIAL DIRECTOR Pamela L. Moore, PhD pmoore@physicianspractice.com EXECUTIVE EDITOR Bob Keaveney bkeaveney@physicianspractice.com MANAGING EDITOR Abigail Beckel, MA abeckel@physicianspractice.com SENIOR EDITOR, PROJECTS Laurie Hyland Robertson lchrobertson@physicianspractice.com ASSOCIATE EDITOR Shirley Grace, MA sgrace@physicianspractice.com MANAGING EDITOR, PROJECTS Alyson Siclare asiclare@physicianspractice.com ASSISTANT EDITOR Erica Lukenich elukenich@physicianspractice.com CONTRIBUTING WRITERS MANDATE COMPLIANCE? Appreciated your thoughts in the June Editor’s Note “It’s Time, at Last, for a Mandate.” The de facto enforcers of this mandate will be the emergency room physicians. Unless hospitals are willing to have sick people lined up outside their door having been refused access, a mandate has no teeth. —Jeffrey Loose, MD Ridley Park, Pa. Robert Anthony, Robert Lamberts, MD, Gregory Mertz, Jonathan McCallister, Betsy Nicoletti, Bob Redling, Shelly K. Schwartz, Ken Terry PROJECT MANAGER Amanda Rombach TECHNOLOGY ANALYST Alka Chander DESIGN GROUP CREATIVE DIRECTOR Nancy Bitteker ASSOCIATE ART DIRECTOR Naddya Chavez ASSOCIATE ART DIRECTOR Bill Ellis DEFINING GOODWILL IN VALUATION Your July/August article on appraisals (“What’s Your Practice Worth?”) was well written and follows a fairly common conservative “party line” with respect to valuing physician practices. While goodwill is commonly defined as the excess value above tangible assets, that definition is not technically correct. Goodwill is the value of a business in excess of its tangible and identifiable intangible assets. Practice valuations can be very controversial, but I believe that the value of a practice includes its tangible and identifiable intangible assets irrespective of profitability so long as it is going to continue in operation (and not be liquidated). And while the article referred to patient charts as tangible assets, I would argue that charts are in fact intangible assets, the same as other client or customer records. The value ascribed to the patient files is an insurance concept to replicate the work to recreate the files in case of a loss from fire or flood. There is no value to these files to a potential buyer unless the patient returns for more services, and there is a cost (or negative value) for maintaining these files (storage and regulatory costs) if the patient never comes back. So, if intangible H O S P I TA L S T R AT E G I E S ASSOCIATE PUBLISHER steven.gottshall@cmpmedica.com HOSPITAL RELATIONS STRATEGIST shelley.schoenfeld@cmpmedica.com HOSPITAL RELATIONS STRATEGIST lori.brenner@cmpmedica.com HOSPITAL RELATIONS STRATEGIST tom.reavis@cmpmedica.com ASSOCIATE PUBLISHER Steve Gottshall 847 242 9552 Shelley Schoenfeld 732 393 9696 Lori Brenner 715 384 6711 Tom Reavis 602 790 2652 B U S I N E S S A D V E R T I S I N G S T R AT E G I E S Eric Temple-Morris 503 203 1060 BUSINESS ADVERTISING STRATEGIST, EAST Pamela Peterson pamela.peterson@cmpmedica.com 973 228 1226 BUSINESS ADVERTISING STRATEGIST, MIDWEST, SOUTH Seth Geller seth.geller@cmpmedica.com 443 543 5131 BUSINESS ADVERTISING COORDINATOR Samantha Williamson samantha.williamson@cmpmedica.com 503 203 1059 eric.temple-morris@cmpmedica.com PHARMACEUTICAL ADVERTISING SALES Eric Temple-Morris 503 203 1060 eric.temple-morris@cmpmedica.com BUSINESS SERVICES VICE PRESIDENT/RESEARCH, MARKETING AND CIRCULATION Beatrix Eriksen SENIOR MARKETING MANAGER, B2B STRATEGIES Amy Tubman SENIOR MARKETING MANAGER, HOSPITAL STRATEGIES Monique Griffin TRADESHOW AND EVENTS MARKETING MANAGER Kristin Pichon CLIENT RELATIONS MANAGER Lindsay Moe CLIENT RELATIONS SPECIALIST Monica Brooks GROUP DIRECTOR OF MANUFACTURING AND PRODUCTION Steve Sanborn GROUP PRODUCTION MANAGER Carlos Yanez TRAFFIC PRODUCTION COORDINATOR Melissa Malpica CLASSIFIED ADVERTISING SALES Valley Forge Publishing Group 800 983 7737 HEADQUARTERS: 5523 Research Park Drive, Suite 220 Baltimore, Maryland 21228 Phone: 443 543 5100; Toll Free: 800 781 2211 Fax: 443 543 5170; E-mail: info@physicianspractice.com Web: www.PhysiciansPractice.com FOR SUBSCRIPTION SERVICES FOR PHYSICIANS PRACTICE: Contact Wilhelmina Dingle at 203 662 6551 or wilhelmina.dingle@cmpmedica.com PHYSICIANS PRACTICE® (ISSN 1072-2912), published by CMP Healthcare Media LLC, is distributed to more than 280,000 U.S. physicians. Copyright © 2008 by CMP Healthcare Media LLC. Single copies $10; annual subscription $56. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopy, recording, or any information storage and retrieval system, without permission in writing from the publishers. Send address changes to: Physicians Practice, c/o CMPMedica, 330 Boston Post Road, Darien, CT 06820; or send by email to wdingle@cmp.com. 12 | PHYSICIANS PRACTICE | SEPTEMBER 2008 WWW.PHYSICIANSPRACTICE.COM http://www.PhysiciansPractice.com http://WWW.PHYSICIANSPRACTICE.COM
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