Fair contract?

[Medicalretina]

Hi

I am looking at joining a multispecialty ophthalmology group in a very large northeast city. The practice has only one office. My contract is for a guaranteed 250,000 with 45% of collections over $500,000. Partnership is in 2 years with buy in being $75,000. Is this a fair contract? The practice's overhead is 50%. What is a reasonable overhead in ophthalmology? What is a reasonable buy-in? Thanks.

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[odieoh]

Hi

I am looking at joining a multispecialty ophthalmology group in a very large northeast city. The practice has only one office. My contract is for a guaranteed 250,000 with 45% of collections over $500,000. Partnership is in 2 years with buy in being $75,000. Is this a fair contract? The practice's overhead is 50%. What is a reasonable overhead in ophthalmology? What is a reasonable buy-in? Thanks.

That sounds like a very well run practice from an overhead standpoint. I think most practices run closer to 60% overhead, and 70% is not unheard of.

Judging by your username, you are medical retina? I don't know about contracts for subspecialists. For a general ophthalmologist that would be a very nice arrangement. And the buyin is 75k, or 750k? 75k seems like a decent deal, depending on whats all involved-- is that just for "goodwill," or is that your actual amount to own a portion of the practice including equipment etc?

 

[Visionary]

Sounds almost too good to be true. $250k with 45% over $500k is remarkably generous, even for medical retina, and a buy-in of only $75k is practically unheard of. The overhead is low, but believable. I can't help but think we're missing some information here. If your base is $250k, your productivity goal is $500k, and the overhead is 50%, they are basically paying you as a partner right off the bat (i.e., $500k x 50% = $250k). If you don't make the goal, they lose money. If you exceed the goal, they only stand to make 5% of your collections over $500k. Doesn't make sense.

 

[orbitsurgMD]

A lot depends on what the practice owns. If the equipment is depreciated and the practice office space is rented and not part of any equity in the purchase, and there is no AR you are "purchasing," the only remaining factor is goodwill, which anymore is of debatable value with threatened cuts and other practice climate uncertainties. Another thing is whether you are buying into debt liabilities or other downstream obligations such as prearranged buyouts of senior partners that may be fixed above market rate.