• Chuck Hulse

Who… no… Why

The book Who – is a great piece about hiring the right people. Jim Collins, author of the classic management book, Good to Great, tells us success is a function of Who then What. Even Dr. Seuss wrote of Who. Not saying they are wrong, but if I were a famous author I’d write about Why. Why? Because why is to understand the reason, or the purpose, and purpose gives us the drive to achieve results.

As we drive for results, it seems there are parts of medical practice management that we just don’t want to address. Regulatory Compliance…. need I say more? In my work providing oversight to medical practices, I find there are things, in addition to compliance, that practices would rather not do, like review the LLC’s Operating Agreement.

Corporate documents are created by attorneys who do their best to reflect the intent of the parties at a point in time - when the business is being created. Times change, people come and go, business needs change, and so should the Operating Agreement. Here are 3 reasons why medical group leaders should pull the Operating Agreement (OA) out of the binder of corporate documents and periodically review it:

Why 1: Changing a business is a function of votes. The OA specifies the number of votes required for important decisions. Some OAs actually name specific people who are eligible to vote. Are those people still with the practice?

Why 2: Language in OAs make reference to various other documents. One of my favorites is “Policy”. The attorney probably drafted the document without really knowing how the business operates day to day, so he/she defers to the operators (management and governing body) to handle the details. For instance, if a member of the LLC is not documenting timely in the medical record, the OA language is likely going to be too vague to be useful to enforce a standard, and hence it will refer to something like “comply with polices of the practice”, begging the question if there is indeed a policy on timely medical record documentation.

Why 3: Some practices use the OA to address many of the points typically set forth in an employment agreement, and avoid creating a separate document. Best practice is to review the employment agreement regularly, so if the OA is the controlling document about compensation and other matters, then an OA review is good discipline.