Medical Clinics treating Practice Managers as Business Executives

A medical practice manager often wears many hats. Depending on the practice size and owner involvement, a practice manager can be the equivalent of a Chief Executive Officer, Director, Executive Director, Chief Operating Officer or Business Manager. In many settings they will be the one person who is aware and alert to all of the key components involved in running the practice, both internally and patient-facing.  

We often observe that many practices treat their practice managers similar to other administrative employees, especially if they were hired from within. This is not because they do not realise the significance of their role or value, rather, it is often the case that as a practice grows, their knowledge base of how everything works and integrates, grows too. The salary may rise but the agreement does not change enough to account for the increased scope of responsibilities, or the additional risk to the business that can come with this.

Considering the knowledge and insights most practice managers develop in a clinic, if they were to leave suddenly, many practice owners would quickly find themselves acutely aware of the breadth and significance of their role. If they remain with the company for a long time, this might not pose a problem for a period of time. However, people move on. They might relocate, retire, fall sick for a long period of time or need to reduce their hours to care for someone else. They may find another position that pays them more or have a falling out with someone within the practice. Whatever the reason, a practice manager that leaves has a big impact on the practice overall.

For these reasons, when hiring or promoting an employee to medical practice manager, the package you offer and agreement you make with them must match the scope of the role and responsibilities, and the risk as well. 

The employee contract you have with your medical practice manager (otherwise known as an agreement) should cover all the specific expectations of the role and also take into account what they have access and exposure to, during their employment. Practice managers often have access to your intellectual property, or are involved in creating it, as well as other information you do not want leaked externally.

What should an employment agreement for a medical practice manager cover

Any agreement between a practice and practice manager should achieve the following:

• Align expectations between the Practice and the Practice Manager;

• Reduce the risk of a conflict between the Practice and the Practice Manager;

• Ensure everyone is paid in accordance with their expectations; and

• Protect both parties and begin the relationship on the right foot.

In addition to the typical employee agreement inclusions such as salary and benefits, your medical practice manager agreement should also include clauses in relation to:

• Intellectual property protection

• D & O (Directors and Officers) liability insurance and indemnification

• Confidentiality and non-disclosure provisions

• Restrictive covenants

• Change in control provision

• Role specific termination and notice provisions

We will unpack most of these inclusions in more detail below.

Intellectual property protection

Every practice contains information that should be considered confidential intellectual property. Practice managers have access to a significant amount of information that is in the form of intellectual property that you will want to be kept within the confines of your practice and not available to others. 

Examples of intellectual property that you may already have in your practice may include:

• Hiring questions for doctors, nurses, and other staff members

• Patient lists

• Personal and business information relating to staff, including doctors.

• Treatment processes for specialty areas

• Marketing strategies

• Vendor lists and information

• Workflows for medical professionals and other staff

• Budgeting information, including budgets and the tools used or developed (spreadsheets, etc.) 

• Technology used in the practice group

• Technology created specifically for the practice group

• Strategic planning; or

• Implementation of certain processes that increase efficiency

While not an exhaustive list, this should illustrate the intellectual property that is within your practice. It is also an example of the type of intellectual property that should not be shared should a practice manager leave. Unless this is explicit in the employment agreement, then it is at great risk of being shared. Additionally, since intellectual property created by employees vests in the employer, the contract should clearly account for intellectual property ownership.

Confidentiality and non-disclosure provisions

Regardless of why a practice manager might leave, you do not want them to take personal and confidential business information to another practice.

Confidential information includes employee information and any information that might or might not be considered intellectual property. A practice manager typically has access to confidential information from all medical professionals in the practice. That information must be kept confidential, even from others in the practice, depending on the medical professional’s practice area.

The confidential information clause in the practice manager agreement should cover this and also dictate that sensitive health information is bound by secrecy forever – there is no expiration date for keeping this type of information private. While you know that doctors have a duty to keep their patient’s health information confidential, someone in a position that is not in a direct doctor-patient relationship should be bound by something more than implied or loose rules that may or may not apply to them. A sensitive health information clause covers anything that might not be considered doctor-patient confidentiality.

Restrictive Covenants

When a practice manager leaves a practice for another they may deliberately or inadvertently take others with them - fellow support staff, doctors, even patients. This is particularly the case where someone has great experience and has contributed significantly to the culture of the practice. 

There are three clauses that you must ensure are in your practice manager agreement:  

• A non-compete clause

• A non-solicitation clause

• A non-disparagement clause

A non-compete clause could, depending on how it is worded, prevent a practice manager from taking a position within a certain number of kilometres from your practice (or from even opening their own practice with a specific geographical radius). 

A non-solicitation clause prevents a practice manager from coercing or encouraging other medical professionals, staff or patients to follow them to another practice. 

While we all hope it never happens, a practice manager might leave on bad terms. A non-disparagement clause prevents the practice manager from bad-mouthing a practice, whether with ill intent or not.

Change in control provision

A clause that stipulates what will happen in the event ownership of the practice changes must be included in the agreement. 

This clause may be that the new owners are prevented from terminating the practice manager upon the transfer of ownership, or if the new owner terminates their employment, a payout is to be made.

Termination or notice provision

The employment contract should contain a termination provision that gives the practice enough time to locate another practice manager and allow for handover to occur. Given the enormity of the role and the time it may take to find the right person, the provision may be for as long as three or six months, with a clause that allows the parties to terminate the agreement earlier should a new practice manager be secured. 

However, it is important to note that whatever term is decided upon, regardless of whether they are required to stay or not, the practice will be required to pay out the full amount of that term.

Practice manager as a business executive

Just as hiring someone into this medical practice management role is considered carefully, so too should the employee agreement you offer them. Treating your practice manager as a business executive extends not only to salary considerations, it should cover each of the clauses identified above to encompass the responsibilities and obligations effectively.

While you may hope that finding the right practice manager means they will be with you for a long time, experience tells us that is never guaranteed. Many practice owners tell us that right now they are finding it hard to find the right candidate, whether the issue is the right cultural fit or degree of experience. Given the tight market, treating your practice manager as a business executive has never been more relevant.

Whether you are in the process of hiring a practice manager or, after reading this, understand that you are in need of a more comprehensive and specific employment agreement, take a look at our Practice Manager Employment Agreement. It is our fast-track solution that covers each of the important elements detailed above. 

Having a comprehensive agreement in place for your practice manager minimises risk to your practice, reduces the risk of conflict, sets clear expectations about the obligations and expectations of the role and genuinely sets you both up for a positive start to this incredibly important working relationship.

Our team works with medical practices of all sizes, across Australia to review and mitigate risk. To minimise your risk this year, book a time to discuss your practice with one of our specialists. Connect with us here.