Hospital Negotiations

[pain killer]

Hi all,
I am new to this forum. I am in process of negotiating my contract and am wondering an offer of 280K per annum with no bonus for 7600 wRVU is reasonable?If it is not then what is reasonable?

Thanks!

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[lobelsteve]

$36.84 per RVU. If they offer benefits like $500k pension starting at age 50 for 30 years then maybe. I'm low at $52 per RVU afer meeting goal of 11100 RVU at 54.5. I have pension plan, and matching in 403b as well as 457 (or whatever it is) (35000 pretax). $20k available as perks (CME, phone allowance, meaningless use criteria met)

 

[emd123]

My opinion: you either need to keep looking, negotiate a way better deal, or at least negotiate dramatic increases based on a bonus structure, and/or dramatic increases in years 2, 3, and beyond.

Compare this offer to 2013 MGMA mean (2012 data) for anesthesia pain, total comp, including benefits, possibly ancillaries, etc:


25th percentile - $383,721yr
3702 wRVU
$101/wRVU

Mean- $545,259 / yr
6963 wRVU
$78/wRVU

Median- $443,447/ yr
5405wRvu
$82/wRVU

75th%ile- $680,652
10,013 wRVU
$68/wRVU


While I don't have the 2014 MGMA numbers, I'd bet they're a heck of a lot closer to the 2013 MGMA numbers than this lowball offer the hospital gave you. Get a copy of the 2014 MGMA and ask for 75th percentile MGMA numbers for anesthesia pain. Keep in mind, these are totals including benefits, which are part of your salary. The amount of money they'll make on facility fees, if you do a lot of procedures, is well over these yearly numbers. Bottom line: their offer of $38/wRVU is Family Practice numbers, actually worse, considering the wRVUs your going to putting in.

2013 MGMA family medicine (without ob work)

Mean- $225,701
5076 wRVU
$44/wRVU

 

[powermd]

Hi all,
I am new to this forum. I am in process of negotiating my contract and am wondering an offer of 280K per annum with no bonus for 7600 wRVU is reasonable?If it is not then what is reasonable?

Thanks!

For interest we ran our practice data through a HOPD financial model (well tuned for accuracy) and came up with a total of $177/wRVU in total revenue to the hospital. Even if they provide your office and referrals, you're still getting a very small slice of the pie. I'd be looking for at least $50/wRVU in that scenario. For mature turn-key practices looking to merge/lease out to the hospital the upper end of $80/wRVU would be totally appropriate.

 

[ampaphb]

Power, if your numbers are accurate, the problem is, you are looking at gross revenues. Assume 50% overhead (which is low for most institutions). If that is the case, the hospital is generating $88.5/wRVU net. To expect they would EVER give up 80, and just profit 8.5, is not realistic.

 

[ampaphb]

My opinion: you either need to keep looking, negotiate a way better deal, or at least negotiate dramatic increases based on a bonus structure, and/or dramatic increases in years 2, 3, and beyond.

Compare this offer to 2013 MGMA mean (2012 data) for anesthesia pain, total comp, including benefits, possibly ancillaries, etc:


25th percentile - $383,721yr
3702 wRVU
$101/wRVU

Mean- $545,259 / yr
6963 wRVU
$78/wRVU

Median- $443,447/ yr
5405wRvu
$82/wRVU

75th%ile- $680,652
10,013 wRVU
$68/wRVU


While I don't have the 2014 MGMA numbers, I'd bet they're a heck of a lot closer to the 2013 MGMA numbers than this lowball offer the hospital gave you. Get a copy of the 2014 MGMA and ask for 75th percentile MGMA numbers for anesthesia pain. Keep in mind, these are totals including benefits, which are part of your salary. The amount of money they'll make on facility fees, if you do a lot of procedures, is well over these yearly numbers. Bottom line: their offer of $38/wRVU is Family Practice numbers, actually worse, considering the wRVUs your going to putting in.

2013 MGMA family medicine (without ob work)

Mean- $225,701
5076 wRVU
$44/wRVU

As you said, these numbers are total comp, including benefits, ancillaries, and passive revenue streams. No one pays wRVUs that include those extras - those are carved out, and paid separately.

 

[powermd]

Power, if your numbers are accurate, the problem is, you are looking at gross revenues. Assume 50% overhead (which is low for most institutions). If that is the case, the hospital is generating $88.5/wRVU net. To expect they would EVER give up 80, and just profit 8.5, is not realistic.

We're looking at HOPD conversion as an option. If we ran our practice as an HOPD the hospital's overhead would be 34.5% of total revenues (including benefits, malpractice, etc, but not including physician salaries). We have a super efficient practice, but this should illustrate what's possible.

 

[ampaphb]

Your CURRENT overhead may be 34%. But that doest take into account the free care, underinsured, and Medicaid patients you'll be obligated to accept once the HOPD designation applies.

 

[powermd]

Your CURRENT overhead may be 34%. But that doest take into account the free care, underinsured, and Medicaid patients you'll be obligated to accept once the HOPD designation applies.

Not going to say much more here, but I'm not as worried about those problems as you are. Suffice to say, we've looked into all that.

 

[EtherBunny]

Hi all,
I am new to this forum. I am in process of negotiating my contract and am wondering an offer of 280K per annum with no bonus for 7600 wRVU is reasonable?If it is not then what is reasonable?

Thanks!

That offer seems quite low. Even right out of fellowship you should earn more. The hospital is going to make a fortune off your facility fees. I would definitely renegotiate. If I were you I would purchase the latest mgma data. I think one of the publications specifically addresses hospital based pain practice revenue, expenses, etc. Objective data will give you more credibility and leverage in negotiations.

I'm hospital employed and fresh out of fellowship. My compensation is almost double that. You're not getting what you deserve if you take that offer. Plain and simple.

Good luck in your negotiations!

 

[Ducttape]

Your CURRENT overhead may be 34%. But that doest take into account the free care, underinsured, and Medicaid patients you'll be obligated to accept once the HOPD designation applies.

Not going to say much more here, but I'm not as worried about those problems as you are. Suffice to say, we've looked into all that.

thats pretty cavalier. do not discount ampaph's point, unless you are doing ASC right now. once you become HOPD designated, what you imagine is the potential scrutiny will be nowhere close to what it actually is.

and to OP - emd is kinda wrong. the salary figure, besides the RVU #, is about on the ballpark for employed positions in the NE, particularly for University settings.

factor in 403B matching, health insurance, other insurances, educational funds/CME, and the total compensation package might be roughly around 350K.

in fact, do a quick search of Gasworks (anesthesiology job posting site). the NE jobs with posted salaries, only NY and NJ atm - $210, $210, $250, $280, $300. nothing over.

 

[powermd]

thats pretty cavalier. do not discount ampaph's point, unless you are doing ASC right now. once you become HOPD designated, what you imagine is the potential scrutiny will be nowhere close to what it actually is.

Define scrutiny.

 

[NOSfan]

Hi all,
I am new to this forum. I am in process of negotiating my contract and am wondering an offer of 280K per annum with no bonus for 7600 wRVU is reasonable?If it is not then what is reasonable?

This is very low. If the volume is there, then really don't worry about the 280 portion. You really should be more focused on the $/wRVU aspect of the contract in your negotiations.
Here's what I'd suggest:

1. Tier model. $68/wRVU up to 10,000 wRVU, then $73/wRVU for anything thereafter.
2. Make sure you know how modifiers are to be paid. In other words, if you do -50 for bilateral procedures, are they going to be counted as 50% of 1st level or nothing at all?
3. What about modifers -51, -59 and -80?
4. What about conscious sedation -99144 as it currently carries NO wRVU weight. The hospital will recieve payment for this, what about you? Have them assign a wRVU value (0.66?).

Get everything in writing ;>)

 

[SSdoc33]

pain killer, you havent given us much info, but on the info you have provided, i think this is a reasonable offer

 

[Ducttape]

scru·ti·ny
ˈskro͞otn-ē/
noun
noun: scrutiny; plural noun: scrutinies
critical observation or examination.

i have not heard of many (or any) situations where a private practice "joined" a hospital system and managed to survive. the one i "took over" did not...

 

[NOSfan]

....i think this is a reasonable offer

Seriously........$36.84 per wRVU reasonable? Not unless you are the hospital!

 

[Ducttape]

NOSfan - MGMA dashboard mean/median suggests $310,000 and 6300 RVUs for nonanesthesia pain. the $280,000 would be salaried. thats $44.44/RVU.

like many hospital employees, he has been given a disincentive contract, and he will have little incentive to try to get over 7600 RVUs.

otoh, he will have decent controlled days not wondering whether he should bribe patients with narcandy so that they acquiesce to injections...

 

[SSdoc33]

Seriously........$36.84 per wRVU reasonable? Not unless you are the hospital!

middle of a major city? no administrative work? benefits?

again, because no additional information is provided, it is hard to say, but the numbers arent all that outlandish from my standpoint.

not all of us live in BFE. some of us prefer a bit of culture. not that fly-over country isnt important. we need our corn flakes and walmarts and sorghum and bible thumpers.

 

[NOSfan]

but the numbers arent all that outlandish from my standpoint.

According to the MGMA physician dashboard, the wRVU would put him at the 63rd percentile and compensation that is too low to even register.....not that's outlandish :>)

http://www.mgmadashboards.com/compInputs.aspx

 

[Ducttape]

Dashboards check again, my padawan, for Pain Management: Nonanesthesia. 41%.

the $280K should not include ancillaries, so total package, if he gets them, will be higher.

 

[NOSfan]

Dashboards check again, my padawan, for Pain Management: Nonanesthesia. 41%.

the $280K should not include ancillaries, so total package, if he gets them, will be higher.

Pain Management: Anesthesia = Still does not register.

If you do use PM: Non-Anesthesia he still would be working at the 65% with getting paid 20% lower than benchmark.......Should physician's not get paid FMV for their work?

Wonder if there is any true compensation discrepancy between those (PM:Anes vs PM:Non-Anes) with dedicated pain practices?

 

[SSdoc33]

MGMA numbers are bloated, and do not account for regional differences.

 

[NOSfan]

MGMA numbers are bloated, and do not account for regional differences.

MGMA data is broken up into regions.

SS.....what benchmark data do you use?

 

[SSdoc33]

MGMA data is broken up into regions.

SS.....what benchmark data do you use?

i realize that, but we dont know where this job is. $280/year starting in some cities is fine. that RVU number is a piece of cake to reach.

i think that $/RVU is a very misleading concept. is this wRVU or total RVU? is the overhead included or not included? the data can be interpreted in many different ways.

benchmark data? SDN is what I use. i look at my paycheck and see if i like what i see. i work hard, but i feel like i get paid fairly, regardless of what other people might make

 

[NOSfan]

i realize that, but we dont know where this job is. $280/year starting in some cities is fine. that RVU number is a piece of cake to reach.

Agree that the $280 is more than reasonable for a starting salary. And, as you indicate, the wRVU (physician work component) should be attainable. That is why it is important to negotiate an equitable contract that represents the contribution that both parties bring to the table. The hospital should make an appreciable margin with the facility fees that will be generated.

That's why you need to bring a Johnnie Cochran (God rest his soul) to the table and not Jackie Chiles!

i think that $/RVU is a very misleading concept. is this wRVU or total RVU? is the overhead included or not included? the data can be interpreted in many different ways.

There is no ambiguity to wRVU. It is a component of the physician work component of the RVU. Practice expense and malpractice are the other two components.....Check out this primer that you may find helpful: http://www.acro.org/washington/rvu.pdf

benchmark data? SDN is what I use. i look at my paycheck and see if i like what i see. i work hard, but i feel like i get paid fairly, regardless of what other people might make

He should probably use MGMA data because I don't think that hospital administration will accept SDN 'benchmark' data ;>)
Think we would all agree that the 'harder' you work, regardless of your profession, the more you should be paid....right?

 

[Ducttape]

most hospitals base contracts on MGMA data. i would be extraordinarily surprised if this hospital is not offering median/mean salary based on MGMA data from the region. Beckersac i think is another one?

you cant extrapolate the bonus wRVU amount with his salary. his bonus is on top of his salary. i do not see how you get this statement: "If you do use PM: Non-Anesthesia he still would be working at the 65% with getting paid 20% lower than benchmark.......Should physician's not get paid FMV for their work?"

essentially, he will get a base salary of $280K. there is very little incentive in this salary for him to work hard to get a bonus. hence it is a "disincentive".

in terms of the difference - no idea why there has always been such a big difference between the 2 "fields". im guessing - possibly because more anesthesia pain is interventional, and more likely to work on a private practice model (ie totally wRVU based salary or non-salaried with no bonuses at all...)

 

[NOSfan]

you cant extrapolate the bonus wRVU amount with his salary. his bonus is on top of his salary. i do not see how you get this statement: "If you do use PM: Non-Anesthesia he still would be working at the 65% with getting paid 20% lower than benchmark.......Should physician's not get paid FMV for their work?"

Based upon $280 at wRVU of 7600 you would be compensated at the 41st percentile for performing while producing at the 65th percentile using the MGMA dashboard for Pain:Non-Anes. That's why having a base with a tier $/wRVU model may be of benefit.

Sorry, but don't know what you mean by 'bonus wRVU amount with his salary'?

 

[NOSfan]

p.s.....Now I have to get back to work :>)

 

[Ducttape]

i am clearly looking it a different way from you.

My understanding is that he gets a salary of $280K. he gets bonus above 7600 wRVU. he is not getting that salary after he does 7600 wRVU.
if he works 7599wRVU, he gets $280K. if he works 5000 wRVU, he gets $280K. if he works 4000 wRVU, he gets $280K.

if he works 280 wRVU... he gets... (wait for it)... $280K. thats $1000/wRVU. (of course, he might be fired right afterwards, but cie la vie).