March 19, 2015

You can also learn about practice purchase strategies for transitioning employees by listening to our podcast on the subject. There are lots of other great podcasts available over at Live From HR Base Camp, be sure to check them out.


In a recent online discussion with a group of doctors, I found myself embroiled in a heated debate. The issue was what to do about transitioning employees when you are purchasing a new practice. Do you fire them all? Do you keep them? Do you wait it out and make them prove their worth? What are your legal obligations? Is it insane to think about letting what one doctor called “the lifeline to the patients” think anything other than that their job is secure?

transitioning employees forming a lineBecause we are a Human Resource organization for healthcare offices of all specialties, at CEDR, we see this issue come up all the time. With clients in all 50 states, we are regularly asked how to handle the transition of employees during the sale and transfer of a practice. This is a time when your decisions will affect a lot of lives, and the more prepared you are about the choices you have and which options to avoid, the smoother your path will be through the often painful process of transition.

If you are the purchaser or new associate partner buying the practice, how much can you afford to upset the apple cart? What about your soon to be employees? Will they support you or is there a problem brewing? Taking a “let the chips fall where they may” approach is certainly an option, but at what cost? One thing is for sure, whether we are talking about 2 or 50 employees, you must have a strategy.

I want to start this discussion with the basic but often forgotten premise that fear, intimidation, uncertainty, and insecurity are not the way to begin, maintain, or grow your relationship with any employee — at least not if what you ideally want from that person is loyalty, positivity, and commitment to your goals. At a minimum, you need their honesty. And the best way to get that is not through intimidation or being less than truthful with them, or yourself.

With this premise in mind, it is easy to see that if you take a passive approach to managing the transition of employees, and adopt a wait-and-see attitude, it may exacerbate conflict in what is already a time of fear and insecurity for the employees. By the way, this is the time to let new employees know that you will not be operating from a place of fear either. Threats, outbursts, and dismissing new ideas and your requests will not end well for the perp. That leads to my first practice transition tip.

Know What You Don’t Know and Get Help

The most common mistake we see is from employers who refuse to accept the importance of getting reliable expert support on employment related issues. You may be the most skilled doctor in the world, but unless you have spent as much time specializing in human resource law or management as you did to get those medical skills, you likely should NOT be trying to write your own handbook (this goes double for the doctor who is selling you his practice), or to evaluate the risks of being sued by an employee you would like to fire. To be a bit blunt: If you’ve been in practice for twenty-plus years, things have changed. If you’ve been in practice for two years, and you think things will be more casual and easy without a bunch of written rules, you are in for a rude awakening.

I’ll spare you the scary statistics about employment litigation and the exponential rise in audits of the pay practices of small businesses in this article. Let me just say that there are easy solutions to this problem. The first is to put an employee handbook in place that is brand-new, up to date, and customized for your state, your number of employees, and your particular practice. Do not attempt to do this on your own. Of all the things you can put off until you learn what is going on, this is one that cannot wait. This important document is your leadership platform and your most important protection.

Promise Carefully

Setting clear and honest expectations with employees will avoid disappointment and improve your credibility. The day you purchase the practice is the first day of the rest of your relationship with the employees. It is critical that you do a “reset” with the employees. Reset their expectations. Let them know there is a new sheriff in town, what you’re about, and what you value in a good team member.

Let the employees know what to expect in the first few months. If you don’t know specifics yet, tell them you don’t know, and when you plan to know. Before the deal is even done, we recommend you meet with each employee to discuss the transition. Ask them what they do, if they are happy, and how they see the practice evolving. Ask them what they want to contribute to your vision. This is an opportunity to show you are a worthy leader, who is capable of compassion, and rewarding of those who commit to the success of the practice.

A good approach is:

“I want to be very clear about my expectations for each employee, and will be evaluating each individual to see how they fit in with the vision for our practice. I want employees who are in support of the patients and my vision for our success. But, it is not my intention to keep any employee in a position that neither of us wants them to be in. So, I encourage you to talk to me, tell me your concerns, and to expect the same from me.”

Don’t make any specific promises. Never promise to keep any employee as a condition of the sale. A common request or condition of a sale usually shows up late in the negotiations and it goes something like, “I need you to let Mary stay on at her current pay and benefits for at least two years.” This is a bad idea that will cost you money that you would not otherwise be obligated to pay. Great employees do not need your guarantee of future employment.

Approach Terminations Objectively

This issue was the center of my online debate. The chatters varied in their approaches: 1) Do nothing; 2) Fire everyone and start over; 3) Make everyone re-apply; 4) Do nothing, and then eventually do something when you can no longer do nothing. Frankly, none of these options are very appealing or effective.

Firing everyone is costly, risky, and could cost you a good portion of the patient base of your new practice. Making everyone re-apply for their old positions, especially those who have been with the prior owner for many years, is a great way to establish mistrust, disloyalty, and insecurity. And, while you may think it is a good idea to do nothing, or even to wait for six months before you do anything, rest assured that your responsibility and exposure to all of the risks of being an employer started the moment you took over.

Don’t wait until your new team finally becomes settled with the changes to make termination decisions. Trust your gut and make the tough decisions as soon as you know which people are not a fit for your vision. The more proactive you are, the less time the employee has to establish a claim against you, or worse yet, to create a toxic atmosphere with the rest of the employees. But you do need to proceed carefully, knowing exactly what the risks are and whether your employee can come back and bite you and how. It may take some good documentation, and some level of confrontation, but with the right techniques, and CEDR’s support, it can be done relatively painlessly.

While we agree with the consensus that keeping the existing team intact during a transition is the ideal solution, it is important to understand that you do not have to retain anyone so long as you have the proper mechanisms in place. This starts with an employee handbook–and not just any old employee handbook. It continues with support and guidance when difficult issues arise.

Have questions after reading this article? Are you purchasing a practice and experiencing issues with transitioning the employees? Contact CEDR today for a free HR consultation. Call  866-414-6056 or email info@cedrsolutions.com.

Friendly Disclaimer: This information is general in nature and is not intended to provide legal advice or replace individual guidance about a specific issue with an attorney or HR expert. The information on this page is general human resources guidance that is believed to be current as of the date of publication. Note that CEDR is not a law firm, and as the law is always changing, you should consult with a qualified attorney or HR expert who is familiar with all of the facts of your situation before making a decision about any human resources or employment law matter.