Conversations with an orthopedic group

[dtrack22]

I'm not sure this deserves its own thread but who's gonna stop me?


So I was speaking with one of the owners of an orthopedic group last night. They are interested in adding foot and ankle and have no problem with Podiatry. I'll start out by saying, if you're looking to join an ortho group you should look for a) groups that don't already have an F&A guy and b) groups that don't take call, or at least don't have general ortho call as a requirement (ie look for groups that have general surgeons that do hand for the practice or practices who have family practice docs that did a sports medicine fellowship).

Back to the story. I've had limited experience with this in the past myself, it's mostly been stories from colleagues who work in MSG or Ortho group settings, but the difference between MSGs/ortho and podiatry could not have been more glaring. After I told him my current situation and why I would be interested in working with them, he said, "I don't mean to boast but I make plenty of money. I don't need to make money off of my partners and I would not need to make money off of you. Everyone in our group pays their share of overhead and then gets paid their share of the collections." There is also no non-compete even though they are legal in this state. They are still working on a way to reduce the new hire's overhead the first few months and/or get a hospital to chip in some money to help the new doc pay his/her overhead and him/herself a salary. Worst case scenario is you could have to take out a small business loan to cover these things for a few months. That puts the risk on the employee and takes it off of the employer, but at no point are they looking to turn you into their own revenue stream. The podiatrists I've worked for absolutely have done that...

This ortho group is hiring because a) they are all sending out foot/ankle and want to be able to offer the service to the patient's and their family members who are in the area and already coming to the clinic, b) to reduce some of their own overhead as 1 more doc will not increase many of the fixed costs and c) to help keep the physical therapists busy (they lease out office space from the group).

I don't know much about the group. They say they run lean and that overhead is lower than other ortho groups in the area. It may not end up being a good situation. That's not really the point. The point is that this orthopedic group is so comfortable with their own lifestyle, clinic, referral sources, etc. that they are willing to let you eat what you kill right off the bat and they don't care about restricting where you work if it doesn't work out. I have a good friend who works in a multi-specialty group where he gets 50% of his collections. There is no $85k base salary with 20% of collections once you've brought in $350k. There is no buy in that costs you hundreds of thousands of dollars to partner. I interviewed with 2 podiatry groups out of residency, one of which eventually wanted $600k to be a 25% owner of the practice and that did not include any of the real estate owned by the retiring doc. The other included ownership in the "surgery center" attached to one of the clinics, but was still around $500k.

It also makes for an interesting way to approach a contract with a podiatry group. Ask them what your share of overhead would be. Ask for the benefits you need (license, malpractice, association dues, CME, healthcare) and have them cook that into the overhead. Do not take a base salary and tell them you will pay your share of collections every month and every dollar after that is yours. In the third month of my current job I had 202 patient encounters (for the month). My revenue for that month was $30k. And a lot of that is revenue from the previous month when I was less busy. Lets pretend my share of overhead for the month was $20k (which is a very reasonable number). I would get $10k before taxes. That is thousands of dollars more than my actual base pay. In month 3. By month 8-9 my collections were around $45k, that would be $25k before taxes. In my situation the owners would still be making money off of me as their share of overhead decreases, and I contribute to their ancillary revenue streams (MSO prescriptions and labs, surgery center disbursements, imaging center disbursements, etc.). And since you are the one taking most of the risk, tell them you do not want a non compete even if it is legal in that state. I bet a whole lot of money they won't go for it.

Long story short, if you don't want to get paid 25% of your collections, don't work for a podiatrist. The mindset when hiring associates is just night and day difference between most MD/DO owned physician groups and those owned by DPMs.

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[ExperiencedDPM]

In reality, I’ve found that most very successful physicians do not retire young. There is a certain drive and ambition and personality type that has contributed to their success.

I’m involved with a relatively new venture (several years) and I am involved with orthopedic and neurosurgeons. These are all docs at the top of their game. Some are in their 40s and some in their 70s. Some of these docs made over a million a year and have significant wealth. But none are retired.

Again, it is all dependent on the personality.

 

[G0dFather]

I don't need to make money off of my partners and I would not need to make money off of you. Everyone in our group pays their share of overhead and then gets paid their share of the collections."

This is the way people should think, INVEST in your associates for the long run and itll work wonders for you and your patients.... instead of the yearly instability that goes on a majority of the time..... i just dont get this type of thinking

Lets pretend my share of overhead for the month was $20k (which is a very reasonable number).

No way man... way less, these people shaft you... they are full of it !! One of the best things about podiatry as a business is that the overhead is very manageable after the rent and payroll everything else is pretty insignificant and the revenue SCALES up exponentially with overhead staying put/fluctuating slightly .... when you were hired as an associate did they hire one or two other MAs with you ? my guess is no, did they increase their rent/RE expenses by hiring you ? my guess is no... what happened then, they started ordering more injectables and gauze ? lol such non sense these people love to peddle to new grads unfortunately... a new grad is nothing but a cash cow for a practice that they are unwilling to treat fairly

 

[dtrack22]

No way man... way less, these people shaft you... they are full of it !! One of the best things about podiatry as a business is that the overhead is very manageable after the rent and payroll everything else is pretty insignificant and the revenue SCALES up exponentially with overhead staying put/fluctuating slightly .... when you were hired as an associate did they hire one or two other MAs with you ? my guess is no, did they increase their rent/RE expenses by hiring you ? my guess is no... what happened then, they started ordering more injectables and gauze ? lol such non sense these people love to peddle to new grads unfortunately... a new grad is nothing but a cash cow for a practice that they are unwilling to treat fairly

I should have clarified. $20k a month would not be unreasonable in an ortho group. I used my collections because those are real numbers I had access to right away. It was just to show that even with that kind of overhead you’d still come out way ahead if you could forego a base and just pay the group your share of overhead. But $20k isn’t unreasonable in an ortho group. I’ve seen it, and honestly I could post all of the expenses that would get you up to that number pretty easilly. However, much like fixating on 60 year olds retiring...the accuracy of the overhead number is totally inconsequential to the point of the post.

As an associate you have to remember that when you start, “new patients” that you see aren’t necessarily new revenue to the practice. Those are patients that would have been seen most of the time by the partners wether you were there or not. You’re just bringing in the same revenue a week sooner. Sure, some patients who are told it’s a week or two to get in will go elsewhere. A majority will not. Until you develop new referral sources you aren’t bringing in a ton of “new” money, just moving up all of the AR. That being said a large majority of podiatry contracts and valuations have been total rip offs. Especially compared to pay/benefits offered by multispecialty groups and ortho groups.

 

[Carbon13]

In the third month of my current job I had 202 patient encounters (for the month).

Have you ever determined how many new patients are referral's from PCPs that were already sending to the DPM owner prior to your employment? How many of the new patients are self referred or found you on the internet? A majority of the patients these days seem to be self referred and bypass the PCP route. That would be an interesting question for some of the new practice owners. How many new patients are you picking up just on public marketing?

 

[dtrack22]

Have you ever determined how many new patients are referral's from PCPs that were already sending to the DPM owner prior to your employment? How many of the new patients are self referred or found you on the internet? A majority of the patients these days seem to be self referred and bypass the PCP route. That would be an interesting question for some of the new practice owners. How many new patients are you picking up just on public marketing?

The short answer is no. I haven't gone through and calculated exactly how many patients are referred from other docs and how many are self referred. I do try and glance at where they are coming from and of the patients I'm seeing in our clinic, it is probably around 30-40% being referred by another physician with most of those being from the PCP and the rest are friends/family or internet search.

That being said, most of my PCP referrals are still coming in with the owner of the groups name on them and getting dived up among everyone else. There are only a small % of the referrals coming in from primary docs and specialists that have my name on them. Of the internet search patients, those folks find us/me just because the website exists, so they would also be coming to this clinic regardless of whether or not my picture was on the website.

If you want a comparison between joining an established group and opening up cold in terms of patient volume and organic growth of truly new referral sources and patients that wouldn't have otherwise come in to the clinic, you can compare my month 3 with someone who started cold. I have a buddy who did that and in month three he had around 70-80 clinic encounters. So about 40% of what I did, and wasn't projecting to be up to 200 encounters until around month 8-9.