Question

Doctors Mobey, Oak, and Chesterfield have been in a group practice for several years. Mobey and Oak are family practice physicians, and Chesterfield is a general surgeon. Chesterfield receives many referrals for surgery from his family practice partners. Upon the partnership's original formation, the three doctors agreed to a two-part formula to share income. Every month each doctor receives a salary allowance of $3,000. Additional income is divided according to a percent of patient charges the doctors generate for the month. In the current month, Mobey generated 10% of the billings, Oak 30%, and Chesterfield 60%. The group's income for this month is $50,000. Chesterfield has expressed dissatisfaction with the income-sharing formula and asks that income be split entirely on patient charge percents.

Doctor Payment Allocation Chart

1.         Income allocation per original agreement

		Mobey		Oak		Chesterfield		Total
Salary allowance			$ 3,000		$ 3,000		$ 3,000		$ 9,000
Per patient charges			4,100*		12,300**		24,600***		41,000
Totals			$ 7,100		$15,300		$27,600		$50,000
			*(.10 x 41,000)		**(.30 x 41,000)		***(.60 x 41,000)

2.         Income allocation per Chesterfield’s proposal

		Mobey	Oak	Chesterfield	Total
Per patient charges		$ 5,000 (.10 x 50,000)	$15,000 (.30 x 50,000)	$30,000 (.60 x 50,000)	$50,000

Required

Identify and discuss in detail the ethical components of this partnership decision for the doctors.

Answer 1