Choosing a path: Apprentice or entrepreneur?
For years you have dreamed of being your own boss, designing your own office, and soon, when you are finally finished with training, that day will be here.
You will immediately face two large hurdles: You have no experience running a practice, and you have no patients.
So, what do you do? The logical answer is to work for someone else, see how they run their practice, and learn to build a patient base—this is the concept of an apprenticeship. But maintaining a mutually beneficial relationship between the apprentice and the mentor can be a balancing act.
That’s because the objectives of both parties often change over time. The apprentice will steadily increase his or her skills during the first year. The apprentice’s patient base will hopefully grow rapidly, and their standing in the community will be established during the first two years.
There will be a different party negotiating on day one than on day 366; the apprentice will have different goals and aspirations to address.
(Of course, our apprentice with big dreams could always turn out to be a less-effective people person or poor marketer, in which case aspirations may be curtailed.)
Starting out right
A proper apprentice-mentor relationship begins with an offer and acceptance, and preferably a written agreement. As an employee, you sign a contract and you agree that you’re going to follow the mentor’s rules and learn how to treat their patients, which may inevitably put you and your mentor on opposing sides of the same table.
Part of the agreement presented will likely include protective provisions barring the apprentice from stealing the mentor’s patients. In all likelihood, the contract your mentor presents will include two key protections for the mentor: A non-competition provision that will restrict where you are authorized to work during and for a period after the agreement expires or terminates; and a non-solicitation provision that states you will not look to solicit or divert away the mentor’s patients, referral sources, or employees when you leave.
From the mentor’s perspective, the restrictions are reasonable because the mentor has spent considerable time and money building the practice that the apprentice is joining. Most states enforce restrictive covenants as long as they are reasonable in scope, duration, and geography to protect a legitimate business interest.
Jumping the gun
Partnership often comes to mind when we want new employees to think there is potential for growth and autonomy. But offering or discussing an equity interest too early (or even before employment) is a frequent deal-killing mistake.
The rules for entering into partnership and sale of equity to a new owner are much more complicated and fraught with quagmires than an employment relationship. The owner must be ready to open the books and explain monies in and out, disclose debt on the practice, and so forth when equity comes into play.
In addition, the entity has to be valued and sold at the right price. Once sold, it is difficult to undo the agreement if things don’t go according to plan. Most people wouldn’t enter into a marriage without a courtship period; instead of rushing in, it is best to give the relationship one to three years before a decision is made on partnership (if that is where the arrangement is headed). That way, the parties can ease into roles that will allow for a more natural transition for a buy-in and potential co-management, or certain sharing of managerial responsibilities.
The key to a great employer-employee relationship is transparency and communication. Oftentimes, when a road to partnership isn’t specified in an employment agreement, it might be mentioned that at the option of the employer partnership may be offered within a certain number years of employment.
Similarly, certain progressive incentive compensation can be structured through the course of employment so the employee continues to feel valued and appreciated before or in lieu of a partnership offer. If an employee is incentivized properly, they will likely remain with the employer, unless they are convinced they can do it “better themselves” or there is potential resentment stemming from the compensation structure. If the employee does stay and can chart a course that will lead to partnership, there is no better succession planning then picking and training your own successor.
Structuring for future growth is key to maintaining a successful and evolving relationship between apprentice and mentor. Some tactics include planning for a potential increase in compensation should the employee begin to originate their own book of business, or reach the point where the employee begins to maintain a presence at local health fairs, conducting marketing and development in the name of the practice.
One of the keys to a happy employee is to develop a payment structure that allows growth in the employer’s environment (and doesn’t result in the employee taking the employer’s patients). Transparency and communication are vital at the start of the relationship and as the employee starts this new section of their career.
Jennifer Kirschenbaum , Esq., is the head of Kirschenbaum and Kirschenbaum’s healthcare department; her practice specializes in representing chiropractors in partnerships, buy-in/buy- outs, licensure defense, insurance carrier disputes and audits, patient collection efforts, HIPAA and anti-kickback compliance, multidisciplinary practice structuring, and general practice matters. She can be reached at 516-747-6700 (ext. 302), email@example.com, or through kirschenbaumesq.com.