First year guarantee model w/ big hospital system

[Nonphysiologic]

Hello all I am wondering if anyone here has had experience with this model. I was approached by a hospital system stating they may have an opportunity to develop a pain program with the set up being they give me a guaranteed first year salary and provide overhead the first year while I build the practice as part of a great neurosciences system (neurosurgery, neurology, pain, pmr, etc) and then after that first year its eat what you kill. Anyone have experience in this kind of set up? Is it usually successful? Anything I should know before considering it?

Thanks

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[painj]

It may be a better situation if you could do a two year "drawer" instead of the guaranteed salary. With a drawer, you are paid, and then essentially when collections come in, it goes back to the "drawer owed" With this, you will still be guaranteed a certain salary, but if things go really well and you collect over what you owe-you would receive your compensation for the collections.
The scary thing on the year two with going into a full collections based model, is you don't know if the work will be there to enable you to receive a high enough compensation especially where the program is new and you are building from the ground up. With the same set up (drawer) year two, you are safe in getting at least the agreed upon salary-but if things are going really well-and you don't need to borrow from the drawer-you would still make your full compensation as the model proposed. (all collections based) The overhead may need to be discussed further as to what is expected second year-but again with the drawer model, it splits everything appropriately anyways.

 

[Ferrismonk]

I would be very clear about what you're "eating". Is this a RVU model? Percentage of collections? Is the hospital retaining the facility fee for procedures and/or office? Who covers the overhead in year two? I've ran across many hospitals who offer "eat what you kill" agreements, but they mean professional fee only. That's a HUGE difference in your pay.

 

[BobBarker]

I think straight RVU with a base salary is the way to go.

 

[drusso]

Ask them what they estimate your "Physician Enterprise Value" or provider production proforma to be--ie how much revenue will be you be bringing to the table in terms of facility fees, SOS differential, lab services, imaging services, referrals to profit center service lines, etc.

They might pretend that they don't know this number (Oh, we don't bench our provider performance like that) but they are lying. They know it. They know it because it would be negligent business practice to bring on a new service line without a sense of what the service line will produce. Once you get them to commit to that estimate (it will probably be on the order of millions of dollars), then use that as an anchor to bargain for "how much you're worth." Think about it: If you're creating $5 million dollars of value for the health system but they are only giving you $500K, then that just doesn't feel fair. They might say, "Oh, but our overhead is so large and we have all the sunk costs of bringing you on, marketing, equipment, etc." To wit, you should say, "That's not my problem."

Also, imagine things going terribly wrong...imagine the deal being horribly awful, How will you get paid for revenue they billed (value you created) that was not collected or "left on the table" in the event you went your separate ways? HOPD A/R's can be nortoriously large and hospital revenue cycle can be very long. You definitely want some commitment that you won't be left "high and dry" in the event that they completely mis-manage this deal or "unknown-unknown's" make it a non-starter.

Finally, what's your out? Non-compete? Is it reciprocal?

 

[Agast]

Do they want you to do inpatient pain management consults? If so I would pass.

 

[EtherBunny]

Hello all I am wondering if anyone here has had experience with this model. I was approached by a hospital system stating they may have an opportunity to develop a pain program with the set up being they give me a guaranteed first year salary and provide overhead the first year while I build the practice as part of a great neurosciences system (neurosurgery, neurology, pain, pmr, etc) and then after that first year its eat what you kill. Anyone have experience in this kind of set up? Is it usually successful? Anything I should know before considering it?

Thanks

Best approach:

1. Wrvu based compensation with a guaranteed salary for 2 years (not one) is ideal. If your productivity exceeds your guaranteed base pay during that 2 year period, you get paid based on production.
2. You should not be responsible for overhead, that’s the hospital’s responsibility.
3. Set the base pay at a reasonable level (~$400,000).
4. Make sure that your wrvu conversion is fair (at least $60)
5. Hospital covers your malpractice premiums and CME. Tail insurance coverage should be provided by the hospital. They should subsidize your health insurance premiums as well.
6. Make sure the noncompete is reasonable.
7. Pay very close attention to the details surrounding termination of contract. You will need a reasonable exit strategy just in case things don’t pan out the way you anticipated.
8. Get everything that matters to you in writing. Verbal promises don’t mean a damn thing.
9. Assume that the hospital administration will try to take advantage of you.
10. Demand transparency in financial reporting and get this in writing. You should have full access to itemized lists of your monthly charges and revenue. Keep a separate file with your own list of these charges to make sure the reports are accurate (see #9).
11. Make it crystal clear to the administration that you will NOT be an opioid dumping ground. You will have full autonomy in terms of patient selection for your practice.
12. Make sure that any bs quality bonus that the hospital tries to negotiate with you is NOT based on Press Ganey scores.

Good luck.

 

[BobBarker]

It’s all about the conversion factor. You will be as busy as you want to be.

 

[Nonphysiologic]

Wow this is all real solid advice. Thanks so much!


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[BobBarker]

You have to be aware of everything. I have caught around $150,000 in mistakes. Always remedied after being explained at an elementary level within 60 days.

 

[painfree23]

You have to be aware of everything. I have caught around $150,000 in mistakes. Always remedied after being explained at an elementary level within 60 days.

What type of mistakes?

 

[BobBarker]

A lot of different things but mostly related to failure to adhere to the contract as it was slightly different than the PCPs contracts or employee incompetence.

 

[clubdeac]

You probably want at least a $65/wRVU...that's more reasonable than $60.

 

[tmvguy03]

I am a little over a year into my pain/spine practice. It is a multidisciplinary clinic in a larger academic center, although we function as a private practice within the larger entity and are “off campus” at an affiliated hospital. I have caught tens of thousands of dollars in lost revenue from a number of different reasons. Things are turning around now though because I did the following:
1. Make a list of the CPT codes you are billing, I think I use around 20.
2. Get a written spreadsheet from the revenue manager for the contracted rate for each CPT for each payor (is BCBS/Cigna/Medicare etc)
3. Have your Office manger/coder provide you with a monthly updated Charges/receipts by patient—this usually lags so 2 months ago should have been collected
4. Make sure you are being reimbursed at the contracted rate

It will be useful information for contract negotiation next year when I can show undercollection probably of>100k.....