A doctor opened his medical practice in Connecticut as a young man. He worked hard to establish his reputation. His efforts were rewarded with financial success and high regard in the community.

The doctor had a son and daughter, and each in time also became a doctor. Both entered practice with their father. As the practice grew, other physicians were hired, and several became partners.

The doctor’s son had a vision of establishing a full service medical practice, and assured the non-family partners that the company would be operated for the benefit of the group, rather than for the benefit of the founding family.

All went well until children of some of the partners entered medical school, including the founder’s grandchildren. At this time, there were six non-family partners and three family partners.

When the first of the next generation completed her medical studies she had no interest in the group practice. The founder’s granddaughter was next to finish medical studies. The group did not then need another physician and ordinarily no job offer would have been made to anyone. However, the parents of this new doctor were anxious to have her locate nearby. So, the father spoke to his father and his sister. They agreed to ask the company to hire this child.

A great debate ensued among the partners. The practice did not require another physician, and the hiring would be based on family interests rather than on the interests of the group.

Those non-family partners who also had a child or children in medical school voted with the family partners; the non-family partners who did not have children in medical school voted against. In the end, she was hired.

Within three years, the company did not exist. Three of the nine partners were no longer practicing medicine (only one due to anticipated retirement). The remaining partners each had a separate practice — in two cases, together with children. Thus, a healthy thriving business ended because it could not withstand the stress of adjusting to the next generation.

How might this have ended differently? First and foremost, the partnership should have had a written agreement, or at least some letters or written memoranda setting out the major elements of their business arrangement. Such documents do not necessarily have to be prepared by an attorney. Simple everyday language is sufficient to deal with most problems.

The assurance given by the son of the founder, that the company would be operated for the benefit of the group rather than the benefit of the founding family; should have found its way into such a written memorandum. When the first child of the second generation entered medical school, every member of the group closed his or her eyes and saw no problem. This was the time to have a frank discussion about hiring the children of members and to adopt a policy satisfactory to all. They did not see the problem until it was too late.

In this case, the group had a second opportunity when the first new doctor did not want to join the group, but the members were too busy with other matters to see the danger. Dissension and ultimately breakup of the practice were almost inevitable.

To put it another way, the physicians were concerned with the health of their patients and did not pay sufficient attention to the health of their business.

Any one of a variety of business consultants — accountant, lawyer, medical management consultant-might have helped this group avoid its fate.