Restructuring the Radiology Practice: A Guide

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David MyriceThere are multiple factors that might lead a radiology group to consider restructuring, but the majority of changes to a group’s governance are prompted by breakdowns in communication. This issue becomes particularly prevalent as groups expand; a single-site, hospital-based group of radiologists is able to handle critical decision making in a relatively casual manner, but a multisite group with a great number of partners will begin to experience potential internal dissent caused by poor communication.

This decentralization, nearly inevitable as practices grow, can have disastrous consequences. A hospital that is not satisfied with its radiology service, for instance, will expect a swift response from the group—the kind of response that cannot be coordinated without a more unified approach to decision making. Restructuring, however, is not without its hazards, and groups undergoing the process should be aware of best practices for ensuring that any new governance structure is effective from day one.

Establishing a Managing Board

Whether the radiology group is structured as a partnership, LLC, or corporation, the establishment of a managing board is recommended. The board, which traditionally consists of three to seven members (depending on the size of the group), will aid in circumventing the paralysis in decision making commonly experienced by radiology practices in which most or all physicians are partners. Reducing the group’s decision-making contingent to a core of elected representatives will enable it to respond more rapidly to emerging business needs.

Boards should always contain an uneven number of members to prevent voting ties. An ideal board member is a good communicator and a go-getter: a member of the practice who has demonstrated, in the past, that he or she is willing to handle difficult situations (such as discussing customer-satisfaction surveys with hospital administrators) and is able to communicate the results of these actions rapidly and effectively.

Financial sense is helpful in a board member; however, the most important factor is an active and enthusiastic involvement in the practice’s day-to-day operations. Board members’ elected terms should be staggered from the start to ensure continuity. Some terms should expire after a year; others, after two or three years.

The board’s rights should be established in the group’s bylaws as part of the restructuring process. These rights are more often defined in terms of what the board cannot do than what it can do. For instance, the board might be prohibited from firing a shareholder without a vote, or might be required to meet with all shareholders before signing a new hospital contract or bringing on a new shareholder.

Easing the Transition

Adjusting to a board-based governance structure can be difficult for practices in which all partners previously held an equal vote in all matters. For this reason, newly established boards must be prompt in communicating their decisions and the reasons behind these decisions. They must also, however, be judicious; effective communication with the rest of the group will relay key points, particularly any new policies, without overburdening practice members with details of day-to-day discussions. Boards should host a quarterly shareholder meeting in which they give an operational update and go over financial and clinical data.

While those shareholders who are not elected to the board are likely to feel, initially, that they have ceded a certain degree of control, they will also have to adjust to the fact that board members will be shouldering more of the administrative load than before, and as a result, will be less clinically productive during their terms. Understanding that the establishment of a governing board actually enables most members of the group to have greater clinical productivity is critical to the process.

To centralize communication processes, practices that are restructuring (particularly those with multiple locations) would do well to invest in a platform like an internal intranet, where policies and codes can be posted for reference and from which broadcast emails can be sent apprising the group, as a whole, of board-level decisions. The most challenging aspect of implementing a system like this is retraining everyone, including board members themselves, to use it consistently; however, an hour or two of training, performed to ensure that everyone is comfortable with the system,