Another Contract Question

[CATS22]

Hello SDN,

I am currently a pain fellow that will be entering into contract negotiations. Needless to say I am very ignorant about this side of medicine. I am looking for a fair deal and just do not want to get screwed. I feel comfortable with the group but would like to get opinions from others. Moreover, I have done a fairly thorough search on this forum but I am still unsure as the incentive bonus is structured a little differently then what I have seen.

So here is the deal. NO partnership opportunity. Mderately desirable location (my wife is very happy to relocate to this city)

1st year: Base = 250K
Total Collections - overhead (which they state to be 50%). Subtract my base from this number and my bonus would be 50% of this.

Ex. Total Collections 800k (800 x 0.5) = 400. 400 - 250 = 150. 150 x 0.5 = 75k. 250+75 = 325K

2nd year: Base= 265k, my bonus is 60% instead of 50% in the equation above (OH is constant at 50%)
3rd year: Base = 280k, my bonus is 70% in the equation above

Benefits include Malpractice 15k, Health insurance 15k and investment match of 30k.
4 weeks vacation not including holidays and goes to 6 weeks at year 3.

Thank you for any input

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[hyperalgesia]

The numbers look good to me but I'm always wondering what happens if things go sideways. Can you legally continue to practice in the city?

 

[EdPierce]

just keep in mind that the only thing actually guaranteed here is base, and as far as base goes 250k is on the low side.

it might be hard to make more than your salary in your first few years and you could realistically be looking at zeros in those equations.

on the other hand if you are really productive and do a lot of volume and earn a lot of money the percentage that you keep seems very disproportionate to other numbers ive seen that usually give 1/3rd of collections, beyond a certain $ amount earned, as a bonus

 

[EtherBunny]

Hello SDN,

I am currently a pain fellow that will be entering into contract negotiations. Needless to say I am very ignorant about this side of medicine. I am looking for a fair deal and just do not want to get screwed. I feel comfortable with the group but would like to get opinions from others. Moreover, I have done a fairly thorough search on this forum but I am still unsure as the incentive bonus is structured a little differently then what I have seen.

So here is the deal. NO partnership opportunity. Mderately desirable location (my wife is very happy to relocate to this city)

1st year: Base = 250K
Total Collections - overhead (which they state to be 50%). Subtract my base from this number and my bonus would be 50% of this.

Ex. Total Collections 800k (800 x 0.5) = 400. 400 - 250 = 150. 150 x 0.5 = 75k. 250+75 = 325K

2nd year: Base= 265k, my bonus is 60% instead of 50% in the equation above (OH is constant at 50%)
3rd year: Base = 280k, my bonus is 70% in the equation above

Benefits include Malpractice 15k, Health insurance 15k and investment match of 30k.
4 weeks vacation not including holidays and goes to 6 weeks at year 3.

Thank you for any input

Well, average professional collections for a pain physician (per MGMA dashboard) is $700,000. So in year 3 you're looking at a compensation of $430,000 per year, not including fringe benefits, assuming that you're performing at or near the median nationwide. Basically you're giving up 30% of your net collections for life in order to have a guaranteed salary for 3 years. At the current levels of reimbursement, you will give up $2,600,000 over a career that spans 25 years.

 

[painchas]

Income averages are just that....... averages. Some providers are going to be on the high end of the bell curve based upon many factors including but not limited to payor mix ( a big one), efficiency (as big), alternative revenues streams such as DME, UDS, Stim numbers, rhizotomy numbers. Is the front office able to keep your block schedule full daily in a dynamic patient climate? The ability to operate efficiently and not have to sit around in an OR to start a case when one can be productive in the office is paramount.
An office based practice although it does not have a facitlity charge to be split between many non-productive MDs can make great production based upon efficiency. If the practice has a predominant private payor or comp mix you will do far better than those that have to get mixed up with the ER fallout. ie medicaid. If your offer mentions minimum expectations ask what those minimum numbers are based upon. You ideally want to be paid based upon production as you will have more control of income based upon your desire to work. You cant have lots of time off and still make big dollars. One or the other. Was that offer 3 years or 4???
Good Luck

 

[Ducttape]

Well, average professional collections for a pain physician (per MGMA dashboard) is $700,000. So in year 3 you're looking at a compensation of $430,000 per year, not including fringe benefits, assuming that you're performing at or near the median nationwide. Basically you're giving up 30% of your net collections for life in order to have a guaranteed salary for 3 years. At the current levels of reimbursement, you will give up $2,600,000 over a career that spans 25 years.

you are saying average collections is $700,000. how much is OH? if it is 50% of collections that goes for office staff, equipment, marketing, how are you getting $430,000 for compensation? wouldnt it be closer to $350,000, which is similar to his offer? (year 3, he is at roughly $389k/yr, assuming $700k collections, and adding bonuses)


if your numbers still allow you to argue that he is going to lose a lot of money over 25 year career, i would argue that, if he is not business savvy, that the potential future earnings are worth nothing if he goes bankrupt in the first year or two.


my concern - if no partnership option, then i might argue for no noncompete clause in the contract.

 

[SSdoc33]

there is more to a contract than the numbers youposted.

at first look, it seems pretty decent and pretty fair. for a relatively desirable city, your posted compensation is about right.

of course, the devil is in the details.

what happens if you only collect 400K your first year? that wont even cover your salary after OH is taken out. takes a while to get credentialed and get busy.

non-compete is a big deal if you plan to put down roots and stay in the area for a long time.

this is where it is important to know the types of patients the group has, the reputations of the practice, and the types of insurances / payor mix. if you get stuck with all the medicaid patients and the senior guys get all the better insurances, you will definitely have to work your tail off to make the numbers work.

 

[specepic]

Numbers matter but first make sure:

- you will be able to have the type of practice you want to have (how many pts per hour are expected, ehat kind of pts, payor mix, etc.)
- what is the groups opioid policy? etc

If you talk to most people who hate their first job, they are not complaining about pay, they are upset that they are being asked to do things they do not agree with from a medical/legal/ethical perspective

Go to the PMR forum and read the posts from a new grad there who hated his new job

 

[afdoc18]

Got a contract from the place I REALLY want to be. Small town. One guy there. Interviewed with him for 5 days. GREAT guy. During interview said "i'm thinking 2 years to partnership"
He's never drafted a contract or hired someone let alone with partnership options.
Contract says $300k for one year renewable if Employer chooses.
3weeks vacation
1 week CME
"once physician makes annual income of $600k she may then purchase half of the existing practice" which can be payed over 36 months
"after purchasing half of practice may then purchase half of ASC"

No mention of how I will be paid after the first year. It really looks like he took the sample AMA contract and made it one sided?
How should I approach this? Should I have my lawyer draw up something that says I want 80% off collections after first year or should I just call the guy and say there are a lot of things left out ie how long til partnership, how will i be paid after first year etc?

Thanks!