MEDNAX buy out--stay or go

[scudrunner]

They say most will average 350K post buy out. Salary would be very low like 160K but you make the difference by working the premium hours outside of 7-3 M-F.

Everyone in that group should tell them to eat a giant bag of d1cks. Then, keep your practice and your income for the foreseeable future.

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[GravelRider]

The problem is that, except for CCM, it's pretty tough to land a post-match fellowship. And even post-match is a year ahead or more. So, realistically, if you want a fellowship, you have to apply about 15-18 months before.

Oh I am aware of the obstacles. However, in this practice climate of employed positions (via PP, AMC, or academics), there is no reason to maintain job loyalty. So getting screwed over on a partnership track gig could provide a new grad more incentive to pursue fellowship...even if it takes a couple years to get there. In the meantime, find a higher paying employed job with reasonable hours and possible extra money for extra shifts, pay down loans, save some money and enjoy some free time before going for fellowship. It may also allow you some time to decompress and recover from the rigors of residency, so you may appreciate the learning in fellowship more.

I bet I can land a post-match OB fellowship pretty easily

 

[Mountainman12]

I am currently in similar shoes as you. I am 1 year out from residency, although I make less and work more than you. I was given the ol' bait & switch, much like you. Do you have a fellowship? I didn't want to do a fellowship, but I am now thinking of using this as an opportunity to do a fellowship.

Nope, no fellowship. It has crossed my mind though. I turned down a fellowship to take this job. Yeah, probably a mistake.

 

[GravelRider]

Nope, no fellowship. It has crossed my mind though. I turned down a fellowship to take this job. Yeah, probably a mistake.

I guess that's my point. You took a risk and hoped a partnership track would work out, but it didn't (most don't these days). Use this as motivation to do whatever fellowship strikes your fancy. In the meantime, find a gig that you can work at for a few years and enjoy life.

 

[Mountainman12]

Agree. If it's a non-shareholder we are talking about here with less than a year with the group, then there really isn't any obligation.
The way I understand it, non-shareholders that were with the group less than a year didn't get anything when MAC and Valley merged with Sheridan.
Sounds like total package will be around 500K+ for 5 years. That isn't a bad deal IMO, but if you don't have ties and have similar opportunities elsewhere, then jump ship. In the end you have to be happy wherever you go. This is of paramount importance.

Yes, I am a non-shareholder. I'm reminded of that quite often. I'm actually otherwise very happy in the job. I like the people I work with and the work I do. It's just hard to know that I'll be permanently relegated to a subservient status to the shareholders who will make significantly more money to do the same work. I'd have to watch as an awesome practice deteriorates as they bring in the CRNA's or lesser quality anesthesiologists who are willing to become MEDNAX employees. I'd have to watch as the leadership takes marching orders from Wall street MBA's.

 

[deleted171991]

Oh I am aware of the obstacles. However, in this practice climate of employed positions (via PP, AMC, or academics), there is no reason to maintain job loyalty. So getting screwed over on a partnership track gig could provide a new grad more incentive to pursue fellowship...even if it takes a couple years to get there. In the meantime, find a higher paying employed job with reasonable hours and possible extra money for extra shifts, pay down loans, save some money and enjoy some free time before going for fellowship. It may also allow you some time to decompress and recover from the rigors of residency, so you may appreciate the learning in fellowship more.

I bet I can land a post-match OB fellowship pretty easily

I forgot about the joke fellowships (neuro, OB etc.). I am not sure they are worth the waste of time and money. And, seriously, why would you expose yourself to the OB liability for life, especially as an employee? (Nobody in PP will care about your OB fellowship.)

 

[Arch Guillotti]

Nope, they didn't disclose it. I had no idea. I thought I was on a one year partnership track otherwise I almost certainly wouldn't have taken the job. Old bait and switch.

They probably were prohibited from disclosing it although I would hope that you would of gotten wind of the sale before you joined.

 

[Scotty_G]

ICU fellowships out of anesthesia are more commonplace now. I think you would be able to land one without to much difficulty.

 

[deleted480308]

I gotta say @scudrunner ....you made me laugh out loud at the internet for the first time in weeks. thank you sir/ma'am

 

[B-Bone]

Mednax just bought out a group in my town and screwed over the Jr partners. wonder if this is it? If so, sounds way worse than we've all been speculating. Boo.


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[sevoflurane]

Yes, I am a non-shareholder. I'm reminded of that quite often. I'm actually otherwise very happy in the job. I like the people I work with and the work I do. It's just hard to know that I'll be permanently relegated to a subservient status to the shareholders who will make significantly more money to do the same work. I'd have to watch as an awesome practice deteriorates as they bring in the CRNA's or lesser quality anesthesiologists who are willing to become MEDNAX employees. I'd have to watch as the leadership takes marching orders from Wall street MBA's.

I hope nobody is treating you in a subordinate manor. That is not acceptable. Besides the buyout, you should be on equal grounds with everyone else as they will be working for the same person and under the same rules as you if you decide to stay. If you are being mistreated then that is a whole different bag of worms and should def. get out. You need to be happy in your day to day work experience.

As for what happens to the group post sale... Well, there are a lot of nay sayers around here and I hope that your group has done their due diligence. Many groups that have gone through their initial contracts have had pay increases that have been significant enough to come close to their pre-buyout income. In an all MD model, brining in AA's (or CRNA's) will only give the group more of a lifestyle angle going forward if they elect to do this and the situation is right. I would bet that if it's an all-MD group, then the transition will be extremely slow and will cap out at 30% supervision for at least 10 years. This will allow more time away from work in the form of early days and vacations. The key is to be very selective with the hiring process.

Keep in mind that wherever you go next, there is a good chance the group is either in conversations with an AMC or Hospital administrator or will be having that conversation at some point in the future. At that point you may be in the same boat your are in now, albeit hopefully, with a buyout clause in your contract.
Sometimes, the hospital directly contracts with an AMC and cuts out the group you are currently working for, leaving you zero on the table. Something to consider. Nothing is 100% bullet proof as you have unfortunately learned.

The sky isn't falling, but the landscape has certainly changed over the last 5 years. The position you find yourself in is the collateral damage of these deals and it's a blow to anyone who finds themselves in that position. I hope you rise out of these ashes and look back on this time as a blip in the road of an otherwise long and lustrous career in anesthesia. Anesthesia is still awesome IMO despite some of these challenges. I think that is the big picture and I think you know this.

 

[sevoflurane]

Oh... and the fellowship option is also a good one if that is of interest to you.
A year comes and goes really fast, especially after taking a year off in PP land before re-entering academics.

 

[urge]

Agree. If it's a non-shareholder we are talking about here with less than a year with the group, then there really isn't any obligation.
The way I understand it, non-shareholders that were with the group less than a year didn't get anything when MAC and Valley merged with Sheridan.
Sounds like total package will be around 500K+ for 5 years. That isn't a bad deal IMO, but if you don't have ties and have similar opportunities elsewhere, then jump ship. In the end you have to be happy wherever you go. This is of paramount importance.

From what I understand they are offering a sign on bonus to non partners so they can keep staff while they drive the market down for new hires.

You might think about 500k sign on bonus and rationalize it into a decent salary even if you are getting 300k a year. The problem is all the new hires will have no bonus and you have set a low market for them.

These guys are not giving away free money.

 

[deleted171991]

They probably were prohibited from disclosing it although I would hope that you would of gotten wind of the sale before you joined.

Which again underlines how important is to put this kind of stuff in any partnership track contract.

 

[Psai]

How feasible is it to make your own group and negotiate with the hospital without a middleman digging through your pockets and tossing some pennies your way?

 

[Planktonmd]

Makes you wonder when will academic department try to take groups controlled by AMCs.

Academic departments can not take over private practice groups and maintain efficiency, they don't even know how!

 

[Planktonmd]

Nope, they didn't disclose it. I had no idea. I thought I was on a one year partnership track otherwise I almost certainly wouldn't have taken the job. Old bait and switch.

This is a very common situation and this is why the whole private group model will disappear in a few years. As for the dishonesty of your "senior" colleagues, don't be surprised, the business of anesthesiology contains more crooks and dirt bags than the used car business, these so called "anesthesiologists" would sell their mothers for a nickle!

 

[GravelRider]

This is a very common situation and this is why the whole private group model will disappear in a few years. As for the dishonesty of your "senior" colleagues, don't be surprised, the business of anesthesiology contains more crooks and dirt bags than the used car business, these so called "anesthesiologists" would sell their mothers for a nickle!

Anesthesiologist is a term I would use sparingly. Most of these old doofs couldn't deliver a safe anesthetic without a CRNA bailing them out if their life depended on it.

 

[Scotty_G]

PSAI move to Vegas. There you can form you own group easily and have your own surgeons once you demonstrate your value. It's the wild west there and each group has their own select group of surgeons they deal with.

 

[Psai]

PSAI move to Vegas. There you can form you own group easily and have your own surgeons once you demonstrate your value. It's the wild west there and each group has their own select group of surgeons they deal with.

I meant for op. If the amc can't recruit enough docs because they just remade their own group, what's to stop the new group from picking up where the old one left off? It's not like we're forming widgets, the amc just bought an association and the rights to it so why not just create a new association

 

[sevoflurane]

From what I understand they are offering a sign on bonus to non partners so they can keep staff while they drive the market down for new hires.

You might think about 500k sign on bonus and rationalize it into a decent salary even if you are getting 300k a year. The problem is all the new hires will have no bonus and you have set a low market for them.

These guys are not giving away free money.

No and Yes. The group doesn't "have to" give any non-shareholder a sign on bonus for 500K. It is a gesture of good will in most cases when it does happen.
Heck if you have six non shareholders and you are a greedy group in a great location, you just split up 3 mil btw/ the group shareholders. I don't like this tactic, but it happens ALL the time. The AMCs have a locums department that will turf out locums as needed and if push comes to a shove you negotiate a higher salary for "new recruits" or you work harder and increase the FTE yearly income until you get the staff you need. Staffing has been a problem with some mergers, no doubt. It's all up to the group and their particular contract, but basically... there is a pool of $$$ and you split it up amongst 80 FTEs or 74 FTEs if 6 decide to leave. Group size has a lot to do with the overall outcome.

For the most part however, you are right. New recruits are hired at a lower salary until the new contract is renewed. The market will be the ultimate negotiator however and some groups are thoughtful enough to keep a hiring pool of funds to meet market demands. To be greedy is a doomsday scenario for any group IMO.

 

[G-Man82]

ICU fellowships out of anesthesia are more commonplace now. I think you would be able to land one without to much difficulty.

All the PP places I interviewed at were run by AMCs: USAP, American Anesthesiology (owned by Mednax), and TeamHealth. I think the AMCs recognize this and try to integrate CCM practices with their anesthesia practices.

If the same group is also running the ICU, does that make them harder to get rid of?


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[urge]

No and 1 Yes. The group doesn't "have to" give any non-shareholder a sign on bonus for 500K. It is a gesture of good will in most cases when it does happen.

2 Heck if you have six non shareholders and you are a greedy group in a great location, you just split up 3 mil btw/ the group shareholders. I don't like this tactic, but it happens ALL the time. The AMCs have a locums department that will turf out locums as needed and if push comes to a shove you negotiate a higher salary for "new recruits" or you work harder and increase the FTE yearly income until you get the staff you need. Staffing has been a problem with some mergers, no doubt. It's all up to the group and their particular contract, but basically... there is a pool of $$$ and you split it up amongst 80 FTEs or 74 FTEs if 6 decide to leave. Group size has a lot to do with the overall outcome.

3 For the most part however, you are right. New recruits are hired at a lower salary until the new contract is renewed. The market will be the ultimate negotiator however and some groups are thoughtful enough to keep a hiring pool of funds to meet market demands. To be greedy is a doomsday scenario for any group IMO.

I don't follow you.

1 Do you think it is the PP group giving him the money? I seriously doubt that. It is the AMC group so he stays at a below market salary.

2 So by your logic, in a 75 person group each getting a million to sell their partnership, if only 1 person stays he gets 75 million?

3 All it is is a sign on bonus from the AMC so that people sign at below market rate.

 

[BobBarker]

I think this sounds awful and I am really sorry for you. Pain fellowship and go to an underserved area and you can make bank with no call. And the hospital will love you and do whatever it takes to make you happy or you can do it all in your own office.

 

[deleted480308]

I meant for op. If the amc can't recruit enough docs because they just remade their own group, what's to stop the new group from picking up where the old one left off? It's not like we're forming widgets, the amc just bought an association and the rights to it so why not just create a new association

this is the same thing I keep saying to the EM forums... if people simply refuse to work for the corporate groups, the corporates lose their contracts and the democratic groups take over. The trick is, the corporates have enough money to offer some silly locums rates to people willing/needing to "scab" in the meantime. It would take a really unified front to do this and with student loan debts and spouses used to cash flow, the odds of it are small

 

[sevoflurane]

I don't follow you.

1 Do you think it is the PP group giving him the money? I seriously doubt that. It is the AMC group so he stays at a below market salary.

2 So by your logic, in a 75 person group each getting a million to sell their partnership, if only 1 person stays he gets 75 million?

3 All it is is a sign on bonus from the AMC so that people sign at below market rate.

1) That's exactly how a lot of these deals work. It's a forwards earnings sale with a multiple and if you have a non-shareholder you can give them part of the pie in order to retain them.

2) You get X amount. Divide it up however you see fit btw/ shareholders that stay, but the current group needs to come up with the staff.
That is why a group with CRNAs usually does better. They have 75 people doing the work, but only 20 get the buyout amount.

3) Sign on bonus does come from the AMC, but often it comes out of the funds the of the deal.
From that point on, there are no "sign on" bonuses. New members to the group don't typically get sign on bonuses.

You are selling down to 300k, 350k, 400k, etc... the more you sell down the more the buyout.
The less you sell down, the higher your salary and the easier it is to hire.

 

[urge]

1) That's exactly how a lot of these deals work. It's a forwards earnings sale with a multiple and if you have a non-shareholder you can give them part of the pie in order to retain them.

2) You get X amount. Divide it up however you see fit btw/ shareholders that stay, but the current group needs to come up with the staff.
That is why a group with CRNAs usually does better. They have 75 people doing the work, but only 20 get the buyout amount.

3) Sign on bonus does come from the AMC, but often it comes out of the funds the of the deal.
From that point on, there are no "sign on" bonuses. New members to the group don't typically get sign on bonuses.

You are selling down to 300k, 350k, 400k, etc... the more you sell down the more the buyout.
The less you sell down, the higher your salary and the easier it is to hire.

1 Agree

2 Don't follow you. Let's say there are 75 partners with a 3yr exclusive contract with the hospital and they decide to sell. The AMC has to buy them out. All of them, not the ones who stay. They all own a piece of the pie even if they decide not to stay.

3 Better to talk as a Buy Out and Sign on bonus separately so the lines don't get blurred.

 

[IlDestriero]

1 Agree

2 Don't follow you. Let's say there are 75 partners with a 3yr exclusive contract with the hospital and they decide to sell. The AMC has to buy them out. All of them, not the ones who stay. They all own a piece of the pie even if they decide not to stay.

3 Better to talk as a Buy Out and Sign on bonus separately so the lines don't get blurred.

Re 2, he was referring to CRNA team practices with 20 Physician partners and 50 CRNAs. The same can be said for practices with many on a long partner track and/or many non partner physicians. The only people that are owed anything are the owners. The full partners.
One of our fellows wisely decided not to join a group that had "partner from day 1" with "fair and equal pay and call" but it was really owned by a single anesthesiologist that called himself the "chief of anesthesia". That would be a great group to sell out, though he's probably making more now as is by stealing from all his "fair and equal" employees every day.


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Il Destriero

 

[Planktonmd]

Re 2, he was referring to CRNA team practices with 20 Physician partners and 50 CRNAs. The same can be said for practices with many on a long partner track and/or many non partner physicians. The only people that are owed anything are the owners. The full partners.
One of our fellows wisely decided not to join a group that had "partner from day 1" with "fair and equal pay and call" but it was really owned by a single anesthesiologist that called himself the "chief of anesthesia". That would be a great group to sell out, though he's probably making more now as is by stealing from all his "fair and equal" employees every day.


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Il Destriero

That "chief" is a very common character in anesthesia groups especially in the southeast.
He probably golfs with the hospital's CEO and his fourth wife is the business manager of the group!

 

[sevoflurane]

2 Don't follow you. Let's say there are 75 partners with a 3yr exclusive contract with the hospital and they decide to sell. The AMC has to buy them out. All of them, not the ones who stay. They all own a piece of the pie even if they decide not to stay.

Not true.

When you buy a "share" of your company stock, that means you are worth what ever you bought the share for. Typically $1000-2000.
The shares are worth EXACTLY that until you sell to an AMC. If the majority of the group votes to sell, then that is what will happen. Part of the deal of selling is that you STAY on for 3, 5, 7, 10 years (usually 5-7). If you leave before the sale, then you get your 1-2k/share back- NO buyout for that person. If you stay, then you stay for the duration of the initial contract.
AMCs don't just give you 2 million bucks and say "thanks" unless they have the man power in place to take over a 75 member group (hardly ever). If they do have the man power in place, then don't think for a moment you'll be getting 2 big ones per partner just to walk away. That is a rarity in how these deals work.

For most (if not all) of these BIG sales, you are committed for 5-10 years. If you sign up for less time, then guess what... you get less of a buyout.

If you decide to go, you get nothing.

 

[Man o War]

I am currently in similar shoes as you. I am 1 year out from residency, although I make less and work more than you. I was given the ol' bait & switch, much like you. Do you have a fellowship? I didn't want to do a fellowship, but I am now thinking of using this as an opportunity to do a fellowship.

Just curious which fellowship you're thinking of going back for?

 

[Mountainman12]

Keep in mind that wherever you go next, there is a good chance the group is either in conversations with an AMC or Hospital administrator or will be having that conversation at some point in the future. At that point you may be in the same boat your are in now, albeit hopefully, with a buyout clause in your contract.
Sometimes, the hospital directly contracts with an AMC and cuts out the group you are currently working for, leaving you zero on the table. Something to consider. Nothing is 100% bullet proof as you have unfortunately learned."

I don' really understand why there is so much pressure on groups to sell (beyond the obvious reason of big pay out to the share holders). If a group has a good relationship with a hospital and surgeons, won't it betray their trust when they sell out? Is there any sound strategic reasoning for selling? I want to believe that its more than a "I'm getting mine and f--- those who follow me."

 

[BLADEMDA]

I don' really understand why there is so much pressure on groups to sell (beyond the obvious reason of big pay out to the share holders). If a group has a good relationship with a hospital and surgeons, won't it betray their trust when they sell out? Is there any sound strategic reasoning for selling? I want to believe that its more than a "I'm getting mine and f--- those who follow me."

If a group is getting a subsidy, any subsidy, there may be pressure by hospital's CEO/CFO to eliminate that subsidy. In addition, the hospital CEO may demand more services which actually increase the work, decrease the quality of life without giving the group a dime. This type of pressure along with the political noise in Washington D.C. to keep slashing reimbursements makes every group consider selling out to hedge their bets.

Any group which needs a subsidy from the hospital and is already feeling the pain may decide to sell out. In addition, other groups may see an opportunity to start their own AMC which gives them a 50% buyout combined with 50% ownership of the new AMC.

 

[sevoflurane]

I don' really understand why there is so much pressure on groups to sell (beyond the obvious reason of big pay out to the share holders). If a group has a good relationship with a hospital and surgeons, won't it betray their trust when they sell out? Is there any sound strategic reasoning for selling? I want to believe that its more than a "I'm getting mine and f--- those who follow me."

Two Words: Risk Transference.

You are only one CEO away from having your salary cut or being consumed by the hospital as an employee (look around... how many services in your hospital are hospital employees?) Even worse: your contract is sold to an AMC- coulda woulda isn't worth anything at that point.
I have gone through major contract losses and acquisitions over my career. I have seen groups run out of town in the past. It sucks.
Managing that risk deserves serious consideration.

Furthermore, the compliance headaches that are coming down the pipeline will require serious staff and PP resources:

https://www.cms.gov/Medicare/Qualit.../MACRA-MIPS-and-APMs/MACRA-MIPS-and-APMs.html

I get it. I've never been part of an AMC, and frankly, I'm not a big fan of them. Never have been. I've been a private practice guy my entire career and absolutely 100% love it.

The landscape is and has been changing.... and I can't blame groups for selling early as the last ones to the table won't have much to eat.

 

[IlDestriero]

They sell for cash now, at reduced tax rates, vs an uncertain future. If an AMC comes knocking and you don't play ball, you may find yourself bidding against them the next time your contract comes up for renewal. AMCs can probably run leaner with lower overhead, and leverage their size to get better insurance rates. That means that if they want your practice, they can almost certainly underbid you and still make money. That's the fear. Sell now for $2M or lose the contract next year and get nothing. Obviously a strong group that happily provides all necessary services with little to no subsidy would be harder to take over. That's when they do joint takeovers with EM, and other shady techniques to get your contract.


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Il Destriero

 

[BLADEMDA]

Two Words: Risk Transference.

You are only one CEO away from having your salary cut or being consumed by the hospital as an employee (look around... how many services in your hospital are hospital employees?) Even worse: your contract is sold to an AMC- coulda woulda isn't worth anything at that point.
I have gone through major contract losses and acquisitions over my career. I have seen groups run out of town in the past. It sucks.
Managing that risk deserves serious consideration.

Furthermore, the compliance headaches that are coming down the pipeline will require serious staff and PP resources:

https://www.cms.gov/Medicare/Qualit.../MACRA-MIPS-and-APMs/MACRA-MIPS-and-APMs.html

I get it. I've never been part of an AMC, and frankly, I'm not a big fan of them. Never have been. I've been a private practice guy my entire career and absolutely 100% love it.

The landscape is and has been changing.... and I can't blame groups for selling early as the last ones to the table won't have much to eat.

 

[GravelRider]

Just curious which fellowship you're thinking of going back for?

I miss the heart room from residency, but I have an IM background and did a lot of MICU in that residency, so CCM may make more sense. I was hoping to get away without doing a fellowship, but the writing is on the wall now that they are pretty mandatory for people in training now. If your first job out of residency doesn't work out then it's a good excuse to put in another year.

 

[Noyac]

They say most will average 350K post buy out. Salary would be very low like 160K but you make the difference by working the premium hours outside of 7-3 M-F.

Worst deal I have seen.
Worse than my first gig day one out of residency.
Run Forest, Run.

 

[deleted171991]

Worst deal I have seen.
Worse than my first gig day one out of residency.
Run Forest, Run.

And invest in a fruit company.

 

[Mman]

Not true.

When you buy a "share" of your company stock, that means you are worth what ever you bought the share for. Typically $1000-2000.
The shares are worth EXACTLY that until you sell to an AMC. If the majority of the group votes to sell, then that is what will happen. Part of the deal of selling is that you STAY on for 3, 5, 7, 10 years (usually 5-7). If you leave before the sale, then you get your 1-2k/share back- NO buyout for that person. If you stay, then you stay for the duration of the initial contract.
AMCs don't just give you 2 million bucks and say "thanks" unless they have the man power in place to take over a 75 member group (hardly ever). If they do have the man power in place, then don't think for a moment you'll be getting 2 big ones per partner just to walk away. That is a rarity in how these deals work.

For most (if not all) of these BIG sales, you are committed for 5-10 years. If you sign up for less time, then guess what... you get less of a buyout.

If you decide to go, you get nothing.

Not true. When the group gets their lump sum, it is up to the individual group to decide how to distribute it. The AMC does not care if a former partner gets their full share and then leaves after 6 months instead of staying for X number of years. Why would they? They will hire somebody new at the same salary the former partner was making (after the buyout).

If a group determines that they only want the people that fulfill the entire duration of contract to get the same share, they have to set up a legal arrangement for that ahead of time. The lump sum buyout is showing up for immediate distribution on day 1 and once distributed it is gone. You would have to have some sort of clawback provision to recover already distributed money.

There is no getting "less of a buyout" from the AMC if you leave early because the cash is already in your account.

 

[sevoflurane]

Not true. When the group gets their lump sum, it is up to the individual group to decide how to distribute it. The AMC does not care if a former partner gets their full share and then leaves after 6 months instead of staying for X number of years. Why would they? They will hire somebody new at the same salary the former partner was making (after the buyout).

If a group determines that they only want the people that fulfill the entire duration of contract to get the same share, they have to set up a legal arrangement for that ahead of time. The lump sum buyout is showing up for immediate distribution on day 1 and once distributed it is gone. You would have to have some sort of clawback provision to recover already distributed money.

There is no getting "less of a buyout" from the AMC if you leave early because the cash is already in your account.

Because they just dropped 125 million to buy out your practice! You don't just replace a group that has been serving an area for 30+ years. You can't just plug in one anesthesiologist to replace the guy who has been cultivating relationships for a long time (especially if we are talking about 70 anesthesiologists). That is a lot of money to put on the line. Major changes to an existing group could be seen very negatively by the surgeons, the hospital system, etc. If major (negative) changes occur, then the contract is not renewed and then goes to someone else and suddenly the 125 million they just dropped to buy out the group is gone. AMCs are a lot smarter than they used to be.

I know a lot of people who have recently been bought out. They ALL have anywhere between 3-7 years. And yes... there IS a clawback provision.

 

[sevoflurane]

Furthermore... how hard do you think it is to hire a qualified anesthesiologist for 350k in a community where the going rate is 600K?
It's not as easy as you may think... especially when the employer is an AMC.

 

[Mman]

Because they just dropped 125 million to buy out your practice! You don't just replace a group that has been serving an area for 30+ years. You can't just plug in one anesthesiologist to replace the guy who has been cultivating relationships for a long time (especially if we are talking about 70 anesthesiologists). That is a lot of money to put on the line. Major changes to an existing group could be seen very negatively by the surgeons, the hospital system, etc. If major (negative) changes occur, then the contract is not renewed and then goes to someone else and suddenly the 125 million they just dropped to buy out the group is gone. AMCs are a lot smarter than they used to be.

I know a lot of people who have recently been bought out. They ALL have anywhere between 3-7 years. And yes... there IS a clawback provision.

The clawback provision is from the group, not the AMC. The AMC doesn't care. We turned down both Mednax and NAPA and neither of them cared how soon a partner left.

 

[Mman]

Furthermore... how hard do you think it is to hire a qualified anesthesiologist for 350k in a community where the going rate is 600K?
It's not as easy as you may think... especially when the employer is an AMC.

It really doesn't matter. Just because the AMC is offering $350K doesn't mean they can't afford to pay a ton more if they had to. They are already generating more revenue (via higher contracted rates) than the group they replaced so they can just pay locums until they find enough people to staff it full time. The bigger ones also have internal locums from other locations they can use to cover for a short time.

 

[sevoflurane]

It really doesn't matter. Just because the AMC is offering $350K doesn't mean they can't afford to pay a ton more if they had to. They are already generating more revenue (via higher contracted rates) than the group they replaced so they can just pay locums until they find enough people to staff it full time. The bigger ones also have internal locums from other locations they can use to cover for a short time.

That is exactly what I'm trying to get at. If you are a group that does everything (peds, trauma, cardiac, high risk OB, etc)... getting a bunch of locums could be a disaster with regards to contract renewal. Yes, the bigger ones do have a pool of locums, but not enough to replace 70 subspecialty trained FTEs.

Why would the group ever want a clawback?

We obviously have had different experiences.

 

[deleted162650]

Question: When a group agrees to x dollars up front in exchange for y salary for z years, doesn't each partner sign that contract? Isn't each partner then bound by those terms, and if you took the money and ran wouldn't you be in violation of that contract with the AMC? Wouldn't you be setting yourself up to get sued? I have no experience with these things so I'm just trying to figure out how it works as well.

 

[Mman]

That is exactly what I'm trying to get at. If you are a group that does everything (peds, trauma, cardiac, high risk OB, etc)... getting a bunch of locums could be a disaster with regards to contract renewal. Yes, the bigger ones do have a pool of locums, but not enough to replace 70 subspecialty trained FTEs.

Why would the group ever want a clawback?

We obviously have had different experiences.

Pretend scenario. 10 docs, $30M from the AMC in exchange for 10 year contract at $250K each. The $30M is paid up front as a lump sum to the group to distribute however they want, presumably they do so equally to all 10. From then on out, each doc is working for $250K per year. If a doc leaves, the AMC hires a replacement at $250K per year. Same cost to AMC.

The group wants a clawback so the other 9 docs don't feel screwed by the guy leaving right away. If he/she knew they were leaving right away, then the $30M could be split amongst the remaining 9, not all 10, so they'd each get more ($3.3M instead of $3M).

And yes, the AMC can replace 70 subspecialty trained FTEs. They don't have to replace all with internal options, they can afford to pay a locums company short term. And remember, not everybody is leaving because they have noncompete clauses that limit where they can work geographically and presumably most have family ties to their present location.

Mednax and NAPA explicitly told us they don't care if somebody leaves early from their contract, so long as they don't violate the noncompete part of it. That's really the only part they care about.

 

[Mman]

Question: When a group agrees to x dollars up front in exchange for y salary for z years, doesn't each partner sign that contract? Isn't each partner then bound by those terms, and if you took the money and ran wouldn't you be in violation of that contract with the AMC? Wouldn't you be setting yourself up to get sued? I have no experience with these things so I'm just trying to figure out how it works as well.

Sort of. The group negotiates a lump sum buyout and each partner signs for a salary of Y for Z years. But like any other job, you are free to quit and leave prior to the end of the contract as long as you provide adequate notice.

 

[GravelRider]

Pretend scenario. 10 docs, $30M from the AMC in exchange for 10 year contract at $250K each. The $30M is paid up front as a lump sum to the group to distribute however they want, presumably they do so equally to all 10. From then on out, each doc is working for $250K per year. If a doc leaves, the AMC hires a replacement at $250K per year. Same cost to AMC.

The group wants a clawback so the other 9 docs don't feel screwed by the guy leaving right away. If he/she knew they were leaving right away, then the $30M could be split amongst the remaining 9, not all 10, so they'd each get more ($3.3M instead of $3M).

And yes, the AMC can replace 70 subspecialty trained FTEs. They don't have to replace all with internal options, they can afford to pay a locums company short term. And remember, not everybody is leaving because they have noncompete clauses that limit where they can work geographically and presumably most have family ties to their present location.

Mednax and NAPA explicitly told us they don't care if somebody leaves early from their contract, so long as they don't violate the noncompete part of it. That's really the only part they care about.

If there is a new contract and you don't sign, I would think the noncompete would be null and void. You can't apply the old contract to the new situation. If not, that's worth fighting in court because that is some wicked anti-trust law violation bullsh@t.

 

[Mman]

If there is a new contract and you don't sign, I would think the noncompete would be null and void. You can't apply the old contract to the new situation. If not, that's worth fighting in court because that is some wicked anti-trust law violation bullsh@t.

No, I'm saying you sign the contract for however many years, collect your share of the buyout and then quit before the contract is up (whether that's in 3 months or 3 years). The noncompete is still valid because you signed the contract. What I'm saying is the AMC doesn't care if you quit before the contract is up so long as you aren't violating the noncompete from the AMC.

Any noncompete clause you had with the previous group is obviously over.