Financial questions

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earboy

pluggin away
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So I'm getting out of current gig - bad boss, too many things that aren't right. I'm looking at an opportunity in town that is intriguing....

Guaranteed salary for 6 months which switches to eat-what-you-kill after that. I'm ok with that and think it'll go well since I've already been in town for 7 months and have developed some consistent referrers.

They suggest that I pay for billing services as 6% my collections. Does that sound right?

Also, overhead is to be split 50/50 apart from individual stuff like family insurance, personal malpractice, CME,etc. He been practicing for over 25 years and would like to sell the practice within 5 years. As a new guy, is it standard to come in and just take on 50% of the overhead or is there an equation or other factor that this percentage should be based upon? I simply don't know this kind of stuff...

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I pay half overhead..just joined..not sure if that's standard or not..make sure you have equal ability to eat what you kill relative to the other guy..six months seems short.. What does the other guy make? how are referred pts split among the group? How is OR time given? You get half of hearing aids and allergy? If not make sure equal number of pts with hearing loss and allergies are sent to you..if not your new partner will have you pay half of those expenses and take all the hearing aid and allergy pts for himself. Leaving you the medicaid otalgia. Good luck
 
Good point about determining how the referrals and ancillary income is split. Is it more typical to share ancillary income, or for each doc to collect on his /her patients?

As far as overhead, of both doctors are equally productive then 50/50 is fair. Otherwise, it is better for the doctor that is more busy. E. G. If he is using 4 medical assistants in clinic 4 days a week and you are using 2 3 days a week, 50/50 is going to screw you. What I am thinking about doing as I join with a doc next year is splitting the "fixed" overhead (rent, utilities, maintenance, etc) based on office hour utilization, and the variable expenses (payroll, medical supplies) based on collections or billing. So if doc A works 5 half-days in clinic and doc B works 7, you split the rent that way.

If you split the overhead totally on collections, then the busy doc who spends less time with his patients ends up subsidizing the slow one. So, you can end up resenting a partner who isn't as efficient as you, even though they are really still helping to bring your overhead down.

I would try to make sure everything looks fair, bring up the issues you have and get a sense as to whether this guy wants an equal partner or wants to take advantage of you.

Also, there are a lot of details about if he retires, how much you owe to buy him out. Make sure he is not asking anything to keep the patient charts, or anything else that amounts to "good will. " And equipment value can be very different depending on if you are talking about resale value vs replacement value. You may or may not need to hammer down all of those details right now.
 
Some thoughts to consider:

1 - Dr. B hits the nail on the head. Higher producing docs tend to reap greater benefit when splitting overhead 50/50. Whoever is outproducing the other, gets the reward. If it's a pretty even split, then no worries.

2 - Are you practicing under one tax ID or do you each have your own? If you're under 2 separate, you'd better have a very clear agreement on how incoming referrals get divided up. His staff will be naturally more loyal to him, not you, and may siphon patients to his clinic until he's filled and leave you the leftovers. Or he may take the better cases (sinus) and leave you with the pain (dizzy).

3 - If you want to get a new capital expense, how is that decided? What if there's disagreement. You want a distal chip and he says no. How does that shake out. What if you buy it then? Can he use it? Same for a microscope, a rigid, a CT scanner, etc.

4 - If you split overhead 50/50, consider having an agreement to keep a base amount that each physician should "get" like how many MA's. Does he utilize 2 and a scribe, but you only get 1? If so, how is that fair for 50/50?

5 - Heaven forbid there is a cash call for a bad month. Who takes out the LOC?

6 - If you're taking on 50% of the overhead, do you get 50% ownership in hard assests? Do you have to buy in for that? If not, who pays for repairs, etc?

A lot of this is nitty gritty and can easily be worked out but these are questions to think about because you don't want these little things to blow up into big things in 6 months.
 
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