Contract Negotiations

[ml2001]

Good Morning:

I'm currently doing an interventional Physiatry fellowship and started to look into jobs being offered. There is a practice that I'm interested in as there is lot of future growth, but I'm not sure how solid the initial year contract looks like. I will be getting a lawyer to take a look into the contract, but was wondering if you guys think this is a reasonable one that they are offering:

• Base salary: $65,000/year ( about $5400/month). As an interventional physician, I believe it will be hard for me to be in negative, but there is no negative carryover next month if I don't make enough collections to cover my base salary.

• Monthly Bonus: 28% of collections/payments billed by me after taking out my base monthly salary of $5400. This percentage goes up as you stay longer with them. I don't know what the maximum percentage though at this point. What are typical monthly collections for a typical interventional Physiatrist? I know this is highly variable and depends on the region, but was wondering what the number is on the west coast? I have heard about an average of $50,000/month in payments for them in this area.

• Overhead: Everything is covered by the practice except for some special services. I'm don't have the information yet on what these specialty services are. I'm waiting for this information to be sent to me yet. The existing docs in this practice do all typical procedures like ESI's, discograms, RFA's, EMG's, Fluoro guided joint injections, Ultrasound guided injections. So, I don't think these will be considered special services. The only additional thing I will be doing is Spinal Cord Stim trial/placements that they don't do currently. There won't be many of these anyways and the SCS placements would be in an ASC/hospital. So, I'm not that concerned about the extra charge for this.

• Partnership: This is also open, but I'm not sure how long I will have to stay with them to buy/work in. Knowing the practice and the primary founder of the practice, I'm sure he will have no objection for me to become a partner. So, this is not a deal breaker for me.

Hoping to hear you inputs into this. Thank you very much...


-ML

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[PMR2008]

You should repost this on the pain board as well.

I am kind of in a similar position as well. Very exciting group with tons of potential of growth. I am thinking more risk more reward in my case.
The offer I have is a guaranteed salary which is higher than yours, partnership in 1 year and "eat what I kill model" (they have an overhead of 35-40% so my bonus above base is technically 60-65%) and my non compete clause lets me practice 5 miles outside the current main office, so if I want to leave after 1 year I can. I had them run typically numbers for me and I had them show all the accounting and collection books so I could get an idea of how the ship is running.

I guess my advice is that even if you know someone personally if is not in the contract it is not legally binding. In the end money will dictate things not personal connections. It is a very scary and stressful process and it is essential to have an excellent lawyer and accountant.

 

[Gauss]

• Monthly Bonus: 28% of collections/payments billed by me after taking out my base monthly salary of $5400. This percentage goes up as you stay longer with them. I don't know what the maximum percentage though at this point. What are typical monthly collections for a typical interventional Physiatrist? I know this is highly variable and depends on the region, but was wondering what the number is on the west coast? I have heard about an average of $50,000/month in payments for them in this area.

This is really the meat of your salary so you have to look closely at their payor mix and reimbursements. Generally, desirable west coast urban areas reimburse crap, are full of restrictive HMO/ACO's, and there are always others out there to undercut and bill less for services. And what are your obligations to these payors, meaning how much of their medicaid/ low reimbursing HMOs do you have to take? How much choice will the practice give you in selecting those patients? Will the payors even authorize your procedures, aka Noridien? I can't get an SCS approved with one of my major payors. Ultimately, if you cannot control and choose what will pay your salary you will have to live with an extremely low income.
What are the benefits? Don't underestimate that part, you're not getting any younger. What about autonomy and schedule flexibility - are you independent or their b!*ch?
Are you going to be their chronic opiate addiction dumping ground?

 

[eljefe]

I would make sure you have adequate guaranteed procedure time from day 1 and that you will be doing all the procedures on all of your patients (not table setting for the other guys). Also need to know how new patients to the practIce are divided up among the group. Additionally, are you going to start from scratch or inherit some patients from the other guys. Inherited patients usually need meds and only meds. How are they going to market you?

Base of 65k with 28% collections seems pretty low, I am assuming they ramp up collection percentage real quick, but without patients it doesn't matter what percentage they offer you. Unless the group is overwhelmed with fresh patients that they want to send your way, you are going to be hungry for a while.

Something more like 200-250k base, full benefits, and 28% above 400-500k collections would be a much better contract IMO and leave them with the risk... Transition to more pure production after yr 1 or 2

 

[RUOkie]

Base of 65k with 28% collections seems pretty low, I am assuming they ramp up collection percentage real quick, but without patients it doesn't matter what percentage they offer you. Unless the group is overwhelmed with fresh patients that they want to send your way, you are going to be hungry for a while.

Something more like 200-250k base, full benefits, and 28% above 400-500k collections would be a much better contract IMO and leave them with the risk... Transition to more pure production after yr 1 or 2

THIS!! If they are paying you such a low base (my wife is a Bachelors level OT and gets offers daily for $90-125K/yr!) they have NO incentive to get you patients. I would take a higher base salary and lower incentive for year one, and change the ratios over the terms of the contract. Otherwise you will be very hungry for 6-8months.

(Expect $0.00 collections for months 1-3. Your AR will grow over the first year and then should plateau)

 

[Jitter Bug]

Agree, you won't have any collections for a few months because of the billing cycles, and this assumes they have you added to all the insurance plans on day #1. Otherwise the delays could be longer.

I'd ask for a 12 month salary guarantee, then you can start going to either base plus productivity bonus or just productivity.

5400 a month doesn't even cover my student loans.

PS don't assume the founder will have no objection to you being partner. Get it in writing what is the timeframe for consideration (usually at least 2 years) and the criteria for being approved.

 

[PMR 4 MSK]

One of the biggest problems with such a low base is that this is what any financial applications will see as your salary. Say you are looking at puchasing a $300K house. Not gonna happen with a $65K salary.

28% of collections after salary. Is the salary taken out before or after that 28% is calculated? That is very important.

E.g. Collect 10K. (50K - 5400) * 0.28 = $12488 bonus/month, * 12 months = $149,856/year bonus, + 65K = $214,856 total.
(50K* 0.28) - 5400 = $8600 Bonus/month, * 12 months = 103,200/year bonus, = $168,200.

 

[ml2001]

Thank you very much for all your replies. I have had a discussion with the primary founder of the practice after reading your posts. The practice is basically opening a brand new satellite clinic in a very under served area where he expects me to hit the full load in about 2-3 months. A full means about 25-30 patients/day. I will be the only physician there at this turn key satellite clinic now and in the future.

However, I had the same concern as you all guys have mentioned about the base being so low. So, I have requested him to modify the contract to start with a preset higher base with production bonus after I hit a certain target at least for the first six months so that I can break into the new location and his practice without being too concerned about the finances.

I have also asked them to clarify in the contract how the ramping up of the percentage bonus would be done.

About partnership, I did ask them to clarify in the contract when and how this will happen. This is a gentlemen who has been practicing interventional Physiatry for close to 40yrs and is a very easy going, not looking to get you, and not someone who is a power/money hungry guy. I have great respect for him. However, I did ask him to clarify the partnership track so that I know exactly what I'm getting in.

I will have to clarify on how the base salary is deducted (before or after calculating the percentage).

Lemme know if you guys have any other suggestions.....

 

[eljefe]

Try to get ahold of some of the guys that have left the group and talk to them

You never fully know what you are getting into until you start. Respect is great, but get as much as you can in writing. If this guy has been practicing for 40 years, he should have a pretty good answer to just about anything... everyone is looking to make money off you regardless of how it appears. Everyone...