Why We Don’t Include Partnership Language in Our Contracts

One of the most common questions I get from physicians we hire is: Can I become a partner in this business? It’s a valid question and one that deserves a thorough answer. However, the short answer is no. Now, before you think this sounds cold or callous, let me explain my reasoning as both a business owner and someone who has experienced the pitfalls of poorly structured partnership agreements firsthand.

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My Experience with Partnerships Gone Wrong

In one of my previous roles, I was burned badly when trying to buy into a partnership. That experience taught me a lot about what works—and what doesn’t—when it comes to structuring ownership in a practice. Fast forward to today: as my business grows and we hire more physicians, this topic comes up time and again. Here’s why we’ve made the intentional decision not to include partnership buy-in as part of our contracts.

The Cost of Growth

My goal for this business is simple: rapid and sustainable growth. But growth isn’t cheap. Every new clinic costs a significant amount of money to get off the ground. For example:

• Capital investment: Opening a new clinic can cost anywhere from $300,000 to $500,000, and it could take years before any of that money is recouped.
• Operating costs: Between rent, salaries, malpractice insurance, and other overhead, we’re often spending $40,000 a month or more just to get a clinic up and running.

So, where does that money come from? In my case, it comes directly from me, my co-owner, and the profits from our existing clinics. Unlike other businesses, I have no interest in taking on private equity, venture capital, or massive loans. This means we fund our expansion the hard way: by reinvesting profits or through capital calls.

What is a Capital Call? And Why Doctors Don’t Like It

A capital call happens when all the partners in a business are asked to contribute money to fund an expansion. For instance, if we need $300,000 to open a new clinic, and you own 20% of the business, I’m going to ask you for $60,000. And here’s the kicker: you might not see a return on that investment for three years (or longer).

I’ve asked every physician we’ve hired: Would you be okay putting in $200,000 for a new clinic and waiting three years to see any return? The resounding answer has been, Hell no.

The next logical question I ask is: Are you willing to work for free for the first year to help us grow the business? Again, the answer is a resounding no. And I get it—not everyone has the appetite for that level of risk.

Sustainable Growth: My Approach

To grow without outside investors, I’ve had to make some tough decisions. For instance, when we opened our second clinic, we paid $7,000 to $7,500 a month for nearly nine months before the doctor moved in. Why? Because the physician we hired backed out at the last minute, citing family issues. (A side note: I later discovered he works for a competitor just one mile from our clinic. Lying about a family illness is a sure-fire way to get blacklisted.)

The point is: opening a new clinic is risky and expensive. As an owner, I’m willing to shoulder that burden because I believe in the long-term vision. But I don’t expect every physician to feel the same way—and that’s okay.

The Future: Franchising

While partnership isn’t part of our current model, I’m exploring a new opportunity: franchising. Here’s how it would work:

• If you want to “own” a location, you can. You would be responsible for running that clinic as lean and profitable as possible without worrying about funding our broader expansion efforts.
• Instead of investing in the entire business, you’d invest in one clinic—your clinic.
• You’d keep the profits from that location and wouldn’t have to worry about the $500,000 cost to open another clinic across town.

For many physicians, this is an appealing alternative. You get the benefits of ownership without the overwhelming risk of capital calls or business-wide losses. As we look to open two more clinics in 2025, this model may become a significant part of our growth strategy.

Final Thoughts

If you’re an employer, how do you handle buy-in or partnership agreements? And if you’re an employee, is partnership something you care about? Are you willing to take on the financial risk that comes with ownership, or do you prefer the stability of being an employee?

I’d love to hear your thoughts. Drop a comment below, and let me know what you think about partnerships, buy-ins, and the future of growing practices. Until next time, take care!