Best negotiating method

[SandmanMD]

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Long time listener, first time caller.
I would like your input on which is the best manner to negotiate a job offer for the period of time prior to partnership.

1) Percent of net collections
2) Percent of total collections
3) RVU

1. The downside of net collections is that if the employer runs a high overhead rate then I am essentially paying for that with my portion. Also, there is some fudge factor in the overhead is calculated.

2. The downside of total collections I see here is that once I agree for a set overhead rate, I would not benefit from any decrease in overhead or increase in efficiency. Also if I am the second physician to join the group, the overall efficiency should increase since overhead costs will now be divided by 2 physicians.

Which one of these methods would be the best to use when negotiating an offer?

 

[deleted131481]

I think it depends on many factors of the practice you're looking at. #1 lines up your incentive most closely with the practice as a whole.

 

[Laryngospasm]

Base salary with rvu based bonus will be the one least likely to give you headaches. If you go with only a percent after overhead you will most likely be losing money at first as you won’t even make enough to cover over head unless taking over someone else’s patients. If you do a collection based technique just make sure you have a salary guarantee at first.

 

[drusso]

Long time listener, first time caller.
I would like your input on which is the best manner to negotiate a job offer for the period of time prior to partnership.

1) Percent of net collections
2) Percent of total collections
3) RVU

1. The downside of net collections is that if the employer runs a high overhead rate then I am essentially paying for that with my portion. Also, there is some fudge factor in the overhead is calculated.

2. The downside of total collections I see here is that once I agree for a set overhead rate, I would not benefit from any decrease in overhead or increase in efficiency. Also if I am the second physician to join the group, the overall efficiency should increase since overhead costs will now be divided by 2 physicians.

Which one of these methods would be the best to use when negotiating an offer?

Do you want to be an owner? Then you better start thinking like one. That means having skin in the game and being exposed to both upside and downside risks. Here's how private practice compensation works:

Operating Revenue (money in the cash register)
- Fixed Expenses (rent, utilities, equipment, amortized debt, liability insurance, full-time employee cost, etc)
- Variable Expenses (part-time employee costs, marketing, supplies, consumables, professional services, etc)
----------------------------
= Net Collections
- Direct owner costs (retirement, CME, other direct expenses)
+ Direct owner other income (quality payments, ancillary service line distributions)

= Net, Net Collections

- TAXES

= Paycheck (what your wife spends AFTER taxes)

RVU's are health policy/accounting fiction that intentionally divorces and obscure the financial reality from employed MD's. The only thing that is real is dollars and cents. Just try to pay Joe the plumber with an RVU and tell me what happens.

Get used to getting paid last. And, in dark times not getting paid at all.

 

[SandmanMD]

Base salary with rvu based bonus will be the one least likely to give you headaches. If you go with only a percent after overhead you will most likely be losing money at first as you won’t even make enough to cover over head unless taking over someone else’s patients. If you do a collection based technique just make sure you have a salary guarantee at first.

Yes, I’ll be taking over for a physician who is leaving the practice due to family issues.

I’m looking at a one year partnership track.
My concern is that the practice will need some fine tuning to make it more efficient, and therefore was considering a percentage of total collections until I can get more involved in the business side and dial in expenses.

Assuming 50% overhead, I’d just have the remaining 50% to account for my cut and a small cut for the practice overall.

Or I can assume the overhead is not that unreasonable, and negotiate a percent of net collections.

 

[Ducttape]

Do you want to be an owner? Then you better start thinking like one. That means having skin in the game and being exposed to both upside and downside risks. Here's how private practice compensation works:

Operating Revenue (money in the cash register)
- Fixed Expenses (rent, utilities, equipment, amortized debt, liability insurance, full-time employee cost, etc)
- Variable Expenses (part-time employee costs, marketing, supplies, consumables, professional services, etc)
----------------------------
= Net Collections
- Direct owner costs (retirement, CME, other direct expenses)
+ Direct owner other income (quality payments, ancillary service line distributions)

= Net, Net Collections

- TAXES

= Paycheck (what your wife spends AFTER taxes)

RVU's are health policy/accounting fiction that intentionally divorces and obscure the financial reality from employed MD's. The only thing that is real is dollars and cents. Just try to pay Joe the plumber with an RVU and tell me what happens.

Get used to getting paid last. And, in dark times not getting paid at all.

how does one know whether the owner really is with taking on a partner? as much as you like to think so, I would hazard that most employed positions in private practice will not to lead to partnership and are not intended to do so.

i did ask specifically when i interviewed, and in one situation, after initial hemming and hawing, i was told outright that there was no partnership track. another offer there was the "you take over the practice when i retire in 2 years", but so vague as to be worthless.

 

[drusso]

how does one know whether the owner really is with taking on a partner? as much as you like to think so, I would hazard that most employed positions in private practice will not to lead to partnership and are not intended to do so.

i did ask specifically when i interviewed, and in one situation, after initial hemming and hawing, i was told outright that there was no partnership track. another offer there was the "you take over the practice when i retire in 2 years", but so vague as to be worthless.

You're right. It's like pledging a fraternity.

 

[paindoc007]

how does one know whether the owner really is with taking on a partner? as much as you like to think so, I would hazard that most employed positions in private practice will not to lead to partnership and are not intended to do so.

i did ask specifically when i interviewed, and in one situation, after initial hemming and hawing, i was told outright that there was no partnership track. another offer there was the "you take over the practice when i retire in 2 years", but so vague as to be worthless.

That’s the problem. I have multiple friends and colleagues who’ve been under the illusion that partnership would be there year 3-4, only to have the greedy partners make up garbage and not give it when the time comes. This seems to be the norm.

It is vital to do homework before joining a practice. How many new partners in the last x amount of years? May I speak w them? What are the reasons for denial of partnership? How often does that happen? That sort of thing

 

[drusso]

That’s the problem. I have multiple friends and colleagues who’ve been under the illusion that partnership would be there year 3-4, only to have the greedy partners make up garbage and not give it when the time comes. This seems to be the norm.

It is vital to do homework before joining a practice. How many new partners in the last x amount of years? May I speak w them? What are the reasons for denial of partnership? How often does that happen? That sort of thing

You're right. Becoming a partner is like getting "business married." It's a leap of faith. Some people are better off single.

 

[Laryngospasm]

You should also talk to other pain docs in the same area.. we often know all kinds of stuff about other practices. So do the device reps.

 

[SandmanMD]

You should also talk to other pain docs in the same area.. we often know all kinds of stuff about other practices. So do the device reps.

I will definitely reach out to one of the device reps. Those guys know all the dirt.

 

[bv123]

If it is a 1099 job with no salary guarantee, they pay for overhead - what is a reasonable % of collections to keep for yourself?

 

[bv123]

Procedures are done in ASC and you dont collect facility fee until they let you buy shares 2 years in