compensation formulas

[needledoc]

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Hello all

I am coming out of fellowship this summer and pondering compensation packages I have come across, please advice to the best of your experience, knowledge

I know that without knowing absolute numbers, specifically total revenue expected to generate, this question is hard to answer, but I am going to ask it anyway

One practice is offering compensation based on a formula like this:

First year
X00.000, I think the amount is competitive, compared to others in the area

Second year
X00.000 PLUS revenue generated by MD over (2 x X00.000) -50% (expenses) x 10%
Third year
X00.000 PLUS revenue generated by MD over (2 x X00.000) - 50%(expenses) x 20%

Lets say year 1 salary was 200K (just using as example)

for the formula will use then 2 x 200= 400K

second year income would be only 280K if revenue was 2M as follows:

200K + (2M - 400K = 1.6 M / 2) = 800K x 10% = 80.000 that is salary would be 280.000

Seems a very little productivity bonus for 2 M in revenue, isn't it? or maybe it is not? please advice people out there in practice

Other practices I have touched base with have mentioned their compensation model is a base for the 1st year and then the second year is base plus 40% of the revenue minus expenses. More straightforward and maybe more profitable, but again, without knowing absolute numbers for each practice it is impossible to know exactly

Again, without knowing my expected revenue it is impossible to know, but does anyone has a good idea what this all means, and how one formula compares with the other one?

What other formulas are out there?

Thanks

 

[bedrock]

Seems a very little productivity bonus for 2 M in revenue, isn't it?

That's optimistic to be expecting you'd generate 2M in revenue in your first year.

 

[lobelsteve]

Hello all

I am coming out of fellowship this summer and pondering compensation packages I have come across, please advice to the best of your experience, knowledge

I know that without knowing absolute numbers, specifically total revenue expected to generate, this question is hard to answer, but I am going to ask it anyway

One practice is offering compensation based on a formula like this:

First year
X00.000, I think the amount is competitive, compared to others in the area

Second year
X00.000 PLUS revenue generated by MD over (2 x X00.000) -50% (expenses) x 10%
Third year
X00.000 PLUS revenue generated by MD over (2 x X00.000) - 50%(expenses) x 20%

Lets say year 1 salary was 200K (just using as example)

for the formula will use then 2 x 200= 400K

second year income would be only 280K if revenue was 2M as follows:

200K + (2M - 400K = 1.6 M / 2) = 800K x 10% = 80.000 that is salary would be 280.000

Seems a very little productivity bonus for 2 M in revenue, isn't it? or maybe it is not? please advice people out there in practice

Other practices I have touched base with have mentioned their compensation model is a base for the 1st year and then the second year is base plus 40% of the revenue minus expenses. More straightforward and maybe more profitable, but again, without knowing absolute numbers for each practice it is impossible to know exactly

Again, without knowing my expected revenue it is impossible to know, but does anyone has a good idea what this all means, and how one formula compares with the other one?

What other formulas are out there?

Thanks

It's a shell game and a way to distract you from your work.
Don't think about formulas or compensation, think about caring for patients as best you can and doing what is right for them. You won't get a bonus in your first year and you don't deserve one. Ask for whatever your needs are plus $100k in year one. Ask for open books at the end of year one so you can see the trends in:
# of visits, # of follow-up, # new, # procedures. Break it down by month. In year two you compare the growth from year one as far as those numbers and charges per visit. Get needs plus $200k. Year 3 and on should be true overhead without fees for head doc's wife to run the billing company at 12% etc, then eat what you kill.

As a graduating fellow- you can concentrate on how much money you can make or how good a doctor you can become as a pain physician. The two are not the same thing and are mutually exclusive. Aim for 60% MGMA and better outcomes rather than 95% MGMA and WGAF.

 

[emd123]

Hello all

I am coming out of fellowship this summer and pondering compensation packages I have come across, please advice to the best of your experience, knowledge

I know that without knowing absolute numbers, specifically total revenue expected to generate, this question is hard to answer, but I am going to ask it anyway

One practice is offering compensation based on a formula like this:

First year
X00.000, I think the amount is competitive, compared to others in the area

Second year
X00.000 PLUS revenue generated by MD over (2 x X00.000) -50% (expenses) x 10%
Third year
X00.000 PLUS revenue generated by MD over (2 x X00.000) - 50%(expenses) x 20%

Lets say year 1 salary was 200K (just using as example)

for the formula will use then 2 x 200= 400K

second year income would be only 280K if revenue was 2M as follows:

200K + (2M - 400K = 1.6 M / 2) = 800K x 10% = 80.000 that is salary would be 280.000

Seems a very little productivity bonus for 2 M in revenue, isn't it? or maybe it is not? please advice people out there in practice

Other practices I have touched base with have mentioned their compensation model is a base for the 1st year and then the second year is base plus 40% of the revenue minus expenses. More straightforward and maybe more profitable, but again, without knowing absolute numbers for each practice it is impossible to know exactly

Again, without knowing my expected revenue it is impossible to know, but does anyone has a good idea what this all means, and how one formula compares with the other one?

What other formulas are out there?

Thanks

Dude. When you're asking questions of this magnitude, it's best if you spend $800 on a lawyer that specializes in physician contracts. And trust me, I hate giving money to lawyers, but you need one.

 

[Tenesma]

2 Million revenue in 2nd year??? how do you figure??

 

[bedrock]

2 Million revenue in 2nd year??? how do you figure??

That's optimistic to be expecting you'd generate 2M in revenue in your first year.

That's what I was thinking. If this guy did a pain fellowship because he thought he'd be bringing in 2 million a year, the real world will be a harsh awakening, unless he is really just a "needledoc"

 

[Jitter Bug]

Lets say your base is 250K year one. Year two you have to earn over 500K in A/R to be eligible for bonus. Let's say you do 1M A/R-take away 50% overhead from your overage, you're at 250K. 10% of 250K is 25K. Now you've made 275K once you bring in 1M in A/R.

That ain't bad. Perhaps you are being unrealistic. Jobs that pay a new grad like a rock star usually have a reason (think of Conrad Murray and the crap he ended up doing for his money).

 

[specepic]

It's a shell game and a way to distract you from your work.
Don't think about formulas or compensation, think about caring for patients as best you can and doing what is right for them. You won't get a bonus in your first year and you don't deserve one. Ask for whatever your needs are plus $100k in year one. Ask for open books at the end of year one so you can see the trends in:
# of visits, # of follow-up, # new, # procedures. Break it down by month. In year two you compare the growth from year one as far as those numbers and charges per visit. Get needs plus $200k. Year 3 and on should be true overhead without fees for head doc's wife to run the billing company at 12% etc, then eat what you kill.

As a graduating fellow- you can concentrate on how much money you can make or how good a doctor you can become as a pain physician. The two are not the same thing and are mutually exclusive. Aim for 60% MGMA and better outcomes rather than 95% MGMA and WGAF.

Respectfully disagree re: 1st and second year pay. I bonused at 6 months into my first job and they were still making a killling on me. I was making a respectable base too. Physcians often undervalue their own work and employers can take advantage.

I do not disagree re: focusing on quality care

 

[Tenesma]

agree w/ specepic... it is possible to get a bonus in the 1st year - but uncommon

agree w/ Lobel... most hires - especially ones who are a bit challenged re: self-marketing - will typically not be able to generate enough collections the first year to even cover their costs --- not to mention that some 1st year hires are also dealing w/ significant delays in collections because of credentialing issues...

and who uses AR to calculate payments - that is one of the most mis-leading practice data pieces ever - i don't care about AR, I care about collections.