IDOC actively shares industry-focused articles, blog posts, podcasts, videos and other thought leadership with our members and other optometric practitioners. Below, you will find links to our growing library of educational materials and multi-media assets written and created by IDOC's team of seasoned industry experts.
Nathan Hayes | 12/3/2018

Partnerships can be powerful drivers of growth, combining the energy, expertise and capital of multiple doctor owners to create a bigger practice than the sum of its owners individual abilities and contributions.

For all the benefits, partnerships come with their own sets of challenges.  One of the biggest sources of conflict between partners is the fairness of pay.

Is it really all about the Benjamins?

It might seem petty that money should come between business partners, but remember that owners own their practices for three reasons: the income potential, control over how they practice, and the equity they build in the business that they can eventually sell.

Of the three, partners have absolutely given ground on two: control IS going to be shared and they only own PART of the business.  And while partners won’t earn as much as they could as sole owners, they can still have a similar premium of high-income with time flexibility as the practice grows.

Pay Formulas as Conflict Resolution

Part of laying out your compensation formula is talking through the roles each partner will play, each partners contribution to the practice.  Of OD owners, this breaks down into three parts:

  1. Revenue Generation (patient care)
  2. Management / Practice Growth
  3. Strategy and Investment

Most partnership agreements require partners to make a minimum contribution to the practice, but in theory a practice could have an OD who is merely a shareholder and does no patient care or management.


I’ve seen a number of very ‘thoughtful’ compensation formulas, which are usually so complicated that they create more headaches than solutions.  In terms of measuring any OD’s contribution to the business, there’s only one number that matters: Collected Gross Revenues.

Collected Gross Revenues encompasses all the inputs of the practice: customer service, marketing, optical sales, medical billing, patient flow, A/R management, all of them.  And as owners, the second most important number is Cash Flow.

My Preferred Partner Pay Structure

Here’s my baseline formula for partner compensation:

  1. Owners are paid 20% of the Gross Collected Revenue they produce.


In a low-net practice, the percent may need to be adjusted down so the practice doesn’t contractually pay more than the cash it generates.


  1. IF one partner takes time away from patient care to manage the business – allowing the other(s) to focus on patient care – that partner is paid 2%-4% of the total Gross Collected Revenue of the practice for being the rainmaker.


In large practices ($3M+ in gross collected revenue) this might have to be adjusted down.


  1. At regular intervals, distributions are made after all the bills and loans are paid, based on the cash the practice has generated in excess of its needed cash reserves. Distributions are split according to each partner’s equity percentage.

This way of divvying up partner pay has a number of advantages.

First, by focusing on revenues it focuses partners on what matters.  Time spent on the practice is nice and patient volume is important, but unless activities translate into revenues, they don’t really matter.  Before anyone gets too upset: culture does affect revenues.

Second, by paying on percentages it naturally flexes and adjusts as partners work more or less, smarter or less efficiently.  Want to drop a day of patient care?  That’s fine, and if you can generate the same revenue in less time, you can even preserve your income in the process.

Thirdly, it recognizes that ownership matters.  If a partner gets in a car accident and can’t work, her equity stake ensures that so long as the practice has positive cash flow, she will be paid something for her investment.

Fourth, it should discipline owners to take their income based on cash flow.

And this leads to a final point: owners should take regular salaries that are half to two-thirds or their expected income.  Always leave margin for error.   But then, take as much cash from the practice as possible.

Partner pay matters because it lays out expectations for each partners roles and responsibilities both at the outset of the partnership and as roles and workloads change over time.  It matters because a partner who doesn’t feel he or she is being paid fairly for their contributions to the business is going to be unhappy, leading to conflict.  And finally, it matters because it forces owners to make decisions with an eye on the impact to the practice’s cash flow.

Want help with your partnership?  I’m always here to help.  Email me at or set up a call at

Nathan Hayes
Director, Financial Services
Nathan Hayes joined IDOC with a solid background in the eye care industry and serves as IDOC’s Practice Finance Consultant. Before Prima launched in 2011, he spent five years in business development for Red Tray and HMI Buying Group. Nathan graduated from Vanderbilt University in three years, with a degree in Spanish and a minor in mathematics.

After graduating, he spent a year working abroad. During that time, he worked for two firms in San Jose, Costa Rica. He interned with Grupo Juridico de San Jose, working in environmental policy to protect a threatened parcel of land, then he worked as a project manager for a US-owned precision machining shop. Nathan then spent 6 months working with street children and orphans in Mexico.

Before getting into the healthcare industry, he was an Assistant Store Manager and completed the Corporate Training Program with Haverty’s Furniture Company in Atlanta, GA. Nathan and his wife Heather have a son, Daniel, and a daughter, Hannah. In his spare time, Nathan enjoys reading and outdoors activities - especially cycling and hiking.
Trending Blogs

12/2/2022 | Author: IDOC

Hayley Stewart, IDOC Financial Services Manager

The end of the year is quickly approaching, which means you are probably thinking about your practice’s bookkeeping and all the many year-end deadlines that are going to be here before you know it. One of those deadlines you... Read more

11/4/2022 | Author: Nathan Hayes

IDOC is excited to announce the first benchmark report for our new Books & Benchmark; Financial Statement Benchmarks are live.  With over 30 practices connected to the database, we’re now able to run benchmarks.  Let us share a couple of aspects of how we do benchmarks that... Read more

9/9/2022 | Author: Maddie Langston


If you are looking to increase the number of new patients at your practice, then your marketing strategy should include working on how to get noticed in local online search results. One powerful way to increase your visibility in local search is to optimize and maintain the... Read more

8/22/2022 | Author: Kelsey Garcia

So you created a Facebook and Instagram account for your practice, but now what? Coming up with post ideas can be overwhelming and can quickly leave your creative “well” feeling dry. By categorizing your posts into three main buckets, you can easily streamline the brainstorming... Read more

8/5/2022 | Author: Dr. Steve Vargo

As I type this, the news is dominated by concerns over the economy, including unease around inflation and a looming recession. This has practice owners understandably concerned and asking, “What should I expect, and how can I prepare?”

I’m not an economist, and I... Read more

7/22/2022 | Author: Nathan Hayes

Do you worry that your staff aren’t consistently doing the little things in your practice? Do you lose sleep because you just ‘don’t know’ what’s happening outside your lane?  Do you struggle to find the time to oversee things?

Let me suggest that... Read more

7/15/2022 | Author: Amy Alvarez

I think I would be hard pressed to find an independent practice owner who doesn’t understand the power that marketing has on their ability to attract patients to their practice. Keeping patients, new and existing, visiting the practice is an important part of a successful... Read more

7/8/2022 | Author: Lana Greene

I have never spoken to a practice with a zero patient-owned-frame (POF) percentage. I encourage practices to strive for less than 25% POF percentage at a minimum, and less than 15% for the best-in-class. You may see a slight increase year-over-year, which will happen when you sell quality... Read more

5/19/2022 | Author: Dr. Steve Vargo

As research for launching a new service called IDOC Specialty Services, I interviewed several industry experts of various specialties. At the end of each call, I asked everyone the same question: “What prevents more ODs from succeeding with a specialty?”

Their answers were insightful.... Read more