Hospital Employment: Collections Minus Expenses?

[Afob10001]

I tried searching but couldn't find a relevant thread. I was wondering if anyone has experience with a hospital employed job that compensates in "collections minus expenses." How exactly does this work in a hospital setting? The hospital is still getting the facility fee for each clinic visit (hospital clinic)/procedure - so I'm not really clear on what "expenses" are typically attributed to the physician.

Can anyone share their pay structure with this kind of system?

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[Laryngospasm]

This is mostly a private practice model in my area. Most hospitals are rvu based. This is almost certainly a way for the hospital to screw you. Good luck figuring out what their actual expenses are and what collection were. At least you can keep track of RVUs.

 

[BobBarker]

Costs based models don’t work in hospitals. They can make the costs whatever they want such as the “rent”
for your clinic space that they own.

 

[drusso]

Costs based models don’t work in hospitals. They can make the costs whatever they want such as the “rent”
for your clinic space that they own.

Can you expand on this comment? How is it possible that something "costs" more in one location versus another?

 

[drusso]

Your expenses should only be your direct costs like healthcare, retirement, salary, billing cost(?), work comp, malpractice. They should give you this info up front. The hospital gets all of the site if service so very little else should be a cost to you.

What about the physician's enterprise value? If but for the effort of the doctor, the variable expenses the hospital incurs wouldn't exist. Whose burden should those variable expenses belong to?

 

[callmeanesthesia]

I tried searching but couldn't find a relevant thread. I was wondering if anyone has experience with a hospital employed job that compensates in "collections minus expenses." How exactly does this work in a hospital setting? The hospital is still getting the facility fee for each clinic visit (hospital clinic)/procedure - so I'm not really clear on what "expenses" are typically attributed to the physician.

Can anyone share their pay structure with this kind of system?

The payer mix for the hospital is decent from my understanding (~50% private, 20% medicare, 15-20% worker's comp, <10% medicaid). Is this considered a good payer mix?

I haven’t encountered this pay structure at a hospital in my job search, just private practice so I don’t have another example of it to share but I agree with your line of thinking - they are collecting the facility fee, which is supposed to cover facility expenses, so unless they are offering you a piece of that why would they subtract expenses from your collections?
Do you have more details in the exact pay setup you can share? It’s possible this could be legit but at first glance it sounds like a way for them to profit off of your services while pushing expenses on to you. If the location or other factors are compelling though it may be worth having a lawyer look over the contract. Anti-kickback statutes may compel certain structures in which they have to charge you “fair market” rent and support staff wages.

 

[BobBarker]

The model of physician fees-expenses (costs) = physician payment.

They can decide what your share of rent and admin overhead is and make your profit 0 very easily.

 

[painfree23]

The model of physician fees-expenses (costs) = physician payment.

They can decide what your share of rent and admin overhead is and make your profit 0 very easily.

can't they tell you upfront rent costs?

 

[pastafan]

They have a million ways to add expenses to your clinic. I know an orthopod who was paid a flat salary but the hospital kept hitting him with "your clinic is losing $100,000 per year". They were making 6M from his surgeries. His "clinic" included administrative staff allocated to his accounting who never set foot in his clinic, etc. An RVU based payment scheme with guaranteed minimum, reasonable productivity bonus, etc. is the norm.

 

[BobBarker]

can't they tell you upfront rent costs?

No, they don’t have a fair way of doing it. They can just make up whatever number they want and change it annually. They will assign employees to you that you have never met. They have a RN assigned to me that works 2-3 days/week making my charts for procedure days. You would think that would come out of the hefty HOPD facility costs (and it does in the grand scheme of things) but they assign that cost to my clinic. The clinic admin gives themselves raises? Guess whose share of admin overhead expense goes up? Yours.

 

[geauxg8rs]

More info for you guys:

Expenses are listed as all expenses due to the physician: physician benefits (25-30k), malpractice premium (35-40k), admin fee/EPIC 15k, mgmt fee of 10% of collections (billing expenses), 20-25k rent for working 1 day at a satellite.

They should define the ohysician benefits. The malpractice seems too high.
What is an admin/epic fee? Why should you be paying it?
10% collections is high for billing. Can you hire your own billing people?
You should run the rent by several commercial realtors to find the real rent cost

Bonus calculated at Collections - expenses (above) - salary = net income *85% = bonus

Not sure why it's 85% of net collections as bonus.

Overall -does this seem reasonable? The collections will be lower than private practice presumably b/c pro fee is lower (hospital is getting facility fee except on days you are at satellite)

 

[geauxg8rs]

And now just saw the 85% what is that ?!!

 

[WailedOppossum]

Piggy backing on this, Currently a fellow.

I'm weighing several offers right now that I can't seem to grasp my head around. One offer allows me to collect 95% of all professional fees earned in a hospital setting (hospital covers all overhead). Another is a straight RVU based model starting at 50% MGMA and once above X amount, i get to a higher tier. Both these HOPD jobs are to start a practice and I'd be the only specialist in 50 mile radius and built in referral base so I expect to be filled within 6 months.

But I can't seem to fathom if these jobs are similar in compensation? Anyone have thoughts on this?


Finally I have an offer from a larger private practice group with an ASC and they are all fantastic people. They seem to all be happy but all their earnings seems to be lower than what i'm hearing from the HOPD.

Assuming I'd be happy at all these locations, can anyone comment as to which: HOPD vs private practice, is the way to go? and future proofing as well?

 

[afob100]

95% of all pro fees sounds amazing without having to pay any overhead (actually sounds too good to be true). Remember your pro fee will be lower in a hospital setting than if you were in true private practice (median in pp is around $704k collections and 75% is $861k).

So your median pro fee may be closer to $500-550k.

Also they may take out your malpractice or other benefits. But if not, this would be a good system.

What is the payor mix - and what is the % written off or not collected? These will heavily influence your collections.

In an RVU system, you dont really need to worry about these things. You just need to know the wrvu conversion factor (above $60 is very good).

 

[drusso]

Piggy backing on this, Currently a fellow.

I'm weighing several offers right now that I can't seem to grasp my head around. One offer allows me to collect 95% of all professional fees earned in a hospital setting (hospital covers all overhead). Another is a straight RVU based model starting at 50% MGMA and once above X amount, i get to a higher tier. Both these HOPD jobs are to start a practice and I'd be the only specialist in 50 mile radius and built in referral base so I expect to be filled within 6 months.

But I can't seem to fathom if these jobs are similar in compensation? Anyone have thoughts on this?


Finally I have an offer from a larger private practice group with an ASC and they are all fantastic people. They seem to all be happy but all their earnings seems to be lower than what i'm hearing from the HOPD.

Assuming I'd be happy at all these locations, can anyone comment as to which: HOPD vs private practice, is the way to go? and future proofing as well?

Be sure to ask the hospital HOPD folks about how they track your "enterprise value" and how you get credit for the downstream revenue you create for the hospital. In fact, you might want to print out this article and show it to them and for their reaction to it. Remember, at the end of day, the hospital is making money of you and they expect something in return.

A new formula to track the ROI of your employed physicians

When thinking about the financial performance of the employed physician enterprise for your health system, is your first instinct to focus on the operating loss of the medical group as a standalone business? While this is certainly an important part of the equation, it's by no means the whole

www.beckershospitalreview.com

 

[WailedOppossum]

95% of all pro fees sounds amazing without having to pay any overhead (actually sounds too good to be true). Remember your pro fee will be lower in a hospital setting than if you were in true private practice (median in pp is around $704k collections and 75% is $861k).

So your median pro fee may be closer to $500-550k.

Also they may take out your malpractice or other benefits. But if not, this would be a good system.

What is the payor mix - and what is the % written off or not collected? These will heavily influence your collections.

In an RVU system, you dont really need to worry about these things. You just need to know the wrvu conversion factor (above $60 is very good).

It would be without any benefits for sure. its purely the pro fees which seem to be quite a bit lower in a HOPD than office setting. major mix seems pretty good actually, mostly working blue collar with private insurance and medicare, not much medicaid. I'll have to ask about the % written off fee. I'm not too worried about the ROI but i'll clarify with them.

The wRVU is probably around 60 though i haven't negotiated final numbers. This location comes with all benefits covered as well so that may make up a large difference.

Finally, the PP is looking at 350k starting with incentive structure and partnership with ASC buy in at 1-3 years, with most making around 400K-500K with 8 weeks of vacation and full benefits and retirement matching not included in that figure.

 

[afob100]

Personally, I would go with the wRVU system - you get full benefits, don't have to worry about collections, and have more transparency in how you are paid (it is much easier to track your monthly wRVUs billed vs dollars collected). Like you said, the referrals are built in and you will always be busy. The downside is that you will never have "ownership" or shares in the practice.

Private practice usually pays less in the first couple years but has the potential to have high income and ownership in the future. There is of course more risk in this model- you are banking on the partners to be trustworthy and open with you in the long run. In 2 years, they can say "things didn't work out and we have to let you go." The first year or two- it will take time for your collections to build, so you may not reach any incentive the first year- realistically, you would probably make ~$350-400k tops.

In the HOPD job, you would likely make $450-550k long term (not huge variations) and in pp, you would likely have the opportunity to make $500-800k depending on how busy/efficient you are in the long run + ASC ownership (also understand that not all ASCs are profitable...I used to think having the opportunity to buy into an ASC was an amazing opportunity- until you actually look at the financials and determine if they are making money/utilized efficiently).

All of these sound like good options in any case- you are in a good position!

 

[drusso]

Personally, I would go with the wRVU system - you get full benefits, don't have to worry about collections, and have more transparency in how you are paid (it is much easier to track your monthly wRVUs billed vs dollars collected). Like you said, the referrals are built in and you will always be busy. The downside is that you will never have "ownership" or shares in the practice.

Private practice usually pays less in the first couple years but has the potential to have high income and ownership in the future. There is of course more risk in this model- you are banking on the partners to be trustworthy and open with you in the long run. In 2 years, they can say "things didn't work out and we have to let you go." The first year or two- it will take time for your collections to build, so you may not reach any incentive the first year- realistically, you would probably make ~$350-400k tops.

In the HOPD job, you would likely make $450-550k long term (not huge variations) and in pp, you would likely have the opportunity to make $500-800k depending on how busy/efficient you are in the long run + ASC ownership (also understand that not all ASCs are profitable...I used to think having the opportunity to buy into an ASC was an amazing opportunity- until you actually look at the financials and determine if they are making money/utilized efficiently).

All of these sound like good options in any case- you are in a good position!

How much do you worry about being controlled by the hospital and having a false sense of job security? It's so easy to get rid of an employed "at-will" MD but so much harder to "fire" an equity owner/partner.

 

[Ferrismonk]

Professional fee only isn't that great. That's roughly 1/3 of the outpatient office fee. Also will have to worry about payor mix.

50% MGMA starting out is good.

Honestly, I'm not sure where you are, but I'm in the midwest and haven't found many jobs that match the ones you listed. Good hunting.

Only caveat I would say is watch out for what they actually expect you to do. It's all sunshine and rainbows until they realize you're not bringing in 12K RVUs like they expected.

 

[EtherBunny]

I tried searching but couldn't find a relevant thread. I was wondering if anyone has experience with a hospital employed job that compensates in "collections minus expenses." How exactly does this work in a hospital setting? The hospital is still getting the facility fee for each clinic visit (hospital clinic)/procedure - so I'm not really clear on what "expenses" are typically attributed to the physician.

Can anyone share their pay structure with this kind of system?

Steer clear of this arrangement. Hospital can easily screw you by inflating expenses. Hospital employment should be wrvu based or get all of your professional fee collections with benefits, nothing else in the equation. The hospital will make plenty on the facility fees to cover expenses.

 

[afob100]

How much do you worry about being controlled by the hospital and having a false sense of job security? It's so easy to get rid of an employed "at-will" MD but so much harder to "fire" an equity owner/partner.

If you are bringing in a decent amount of rvu's (6000+), I doubt a hospital system would just let you go since they would lose money (the fat juicy facility fee on all your hardwork). Conversely, in PP- the partners could easily let you go in the first 2 years. Also, even after becoming partner, you then have to deal with the administrative headaches of actually running the practice. Secretary or MA quits? ...now YOU might have to find a replacement/interview them, etc. Honestly, no model is perfect. In HOPD, you headache source is the administrators. In PP, your headaches are from running the business.

OP, if you want to go home and not have to think about the business part of running a practice, then a hospital job is for you. You clock in, crank out RVUs, and clock out. If you consider yourself more entrepreneurial and want to run a business, PP is better. Find what works best for your personality.

 

[Ducttape]

How much do you worry about being controlled by the hospital and having a false sense of job security? It's so easy to get rid of an employed "at-will" MD but so much harder to "fire" an equity owner/partner.

its so easy to fire someone who works 2-3 years and is never made equity owner/partner. I daresay that happens as much as a HOPD firing an employee without cause.

I would be a little careful about the % collections. remember that, for visits such as E/Ms, that will mean you are making $50-100 for some of your medicare visits, and if there is a high percentage of E/M, your income will not be that high.

 

[DOctorJay]

1. PP if you like and feel like you can trust the group
2. wRVU hospital
3. I wouldn't do the percentage of collections based on the info you've shared

 

[Ferrismonk]

If you are bringing in a decent amount of rvu's (6000+), I doubt a hospital system would just let you go since they would lose money (the fat juicy facility fee on all your hardwork). Conversely, in PP- the partners could easily let you go in the first 2 years. Also, even after becoming partner, you then have to deal with the administrative headaches of actually running the practice. Secretary or MA quits? ...now YOU might have to find a replacement/interview them, etc. Honestly, no model is perfect. In HOPD, you headache source is the administrators. In PP, your headaches are from running the business.

OP, if you want to go home and not have to think about the business part of running a practice, then a hospital job is for you. You clock in, crank out RVUs, and clock out. If you consider yourself more entrepreneurial and want to run a business, PP is better. Find what works best for your personality.

Fwiw, I have a friend who did 6-7K RVU (while battling breast cancer) and was let go because she didn't meet the administrator's target. She made millions for them when you count the facility fees, MRIs ordered, in-house PT referrals, etc, but they didn't care. They only cared what the target was and if she met it.

 

[lobelsteve]

Fwiw, I have a friend who did 6-7K RVU (while battling breast cancer) and was let go because she didn't meet the administrator's target. She made millions for them when you count the facility fees, MRIs ordered, in-house PT referrals, etc, but they didn't care. They only cared what the target was and if she met it.

Bet that was not the reason why they let her go.

 

[drusso]

Bet that was not the reason why they let her go.

You have to always count the in-house revenue, $O$, and lab fees in the enterprise value calculation.

 

[thecentral09]

Fwiw, I have a friend who did 6-7K RVU (while battling breast cancer) and was let go because she didn't meet the administrator's target. She made millions for them when you count the facility fees, MRIs ordered, in-house PT referrals, etc, but they didn't care. They only cared what the target was and if she met it.

Agree with lobel, either that or she was in an extreeeemely competitive market, with significantly less production than her local peers and therefore very easily replaceable.
Truth is, there are not that many of us, and if we are making hospitals money they want us sticking around 99.9% of time

 

[drusso]

Agree with lobel, either that or she was in an extreeeemely competitive market, with significantly less production than her local peers and therefore very easily replaceable.
Truth is, there are not that many of us, and if we are making hospitals money they want us sticking around 99.9% of time

Don't you think hospitals will just terminate any doctor they don't like and buy another one at "Pain Docs R Us?" Plug and play.

 

[Ronin1]

Fwiw, I have a friend who did 6-7K RVU (while battling breast cancer) and was let go because she didn't meet the administrator's target. She made millions for them when you count the facility fees, MRIs ordered, in-house PT referrals, etc, but they didn't care. They only cared what the target was and if she met it.

Unless they were paying her for a base of 10000 wrvu equivalent

 

[Ducttape]

Don't you think hospitals will just terminate any doctor they don't like and buy another one at "Pain Docs R Us?" Plug and play.

and restart a pain program from the scratch every year, missing out on the juicy facility fees while building a new physician practice? er, no.

 

[SSdoc33]

Don't you think hospitals will just terminate any doctor they don't like and buy another one at "Pain Docs R Us?" Plug and play.

yawn

you are a one-trick pony

 

[WailedOppossum]

Alternatively, not sure what anyone thinks is a good salary point to negotiate with a hospital that is non-production based? In the 5 boroughs of NYC (more ideal location)? I've seen a lot about production based offers but if it comes down to a non incentivized position, what is a good starting point? 350k? 400? 450? the room for growth seems very limited without incentivization but just curious as to what ya'll think.

 

[Ferrismonk]

I'm in the midwest. Most non-production based spots I see are about $300-350. Keep in mind, even if you are straight salaried, you'll likely have RVU targets or other benchmarks you must meet anyway.

If you want straight salary with no concern over production, you're talking academia.

 

[drusso]

yawn

you are a one-trick pony

My Millennial Doctor Peers Think They're Walking Into a Crisis - Page 2

www.medscape.com

"I used to wonder why more of my millennial physician colleagues did not choose private practice as a career path and why so many were choosing hospital-based employment. A line I saw on Twitter sums it up: "Private practice is no longer about profitability. It's about financial sustainability."

 

[drusso]

yawn

you are a one-trick pony

How nonprofit hospitals get away with the biggest rip off in America

The term “nonprofit” hides what’s really going on.

www.medicaleconomics.com

"Nonprofit hospitals also use their tax-free surplus in more insidious ways. They use it to buy up independent medical practices in their communities, and turn independent doctors into employed physicians. This consolidation decreases market competition and increases the hospitals’ market power, meaning they can negotiate higher payments from insurers. It also allows them to layer in facility fees, which independent doctors don’t charge. These added fees cause costs to increase three to five times. Oh, and the taxes those previously independent medical practices used to pay into the community? They all come off the tax rolls. We pick up the slack."

 

[painfree23]

What’s a good salary for about 7000 RVUs in a big city/hospital practice? Have some incentives (rev-exp) but unlikely will hit it, so want a good base instead

 

[lobelsteve]

420

 

[Ferrismonk]

What’s a good salary for about 7000 RVUs in a big city/hospital practice? Have some incentives (rev-exp) but unlikely will hit it, so want a good base instead

420

This number probably isn't that far off, but I'm always shocked when I see it. I really is crazy the differences between hospital and private practice reimbursement. 7K RVU gets you maybe $300K in private practice.

Edit: I'm counting after overhead.

 

[DOctorJay]

This number probably isn't that far off, but I'm always shocked when I see it. I really is crazy the differences between hospital and private practice reimbursement. 7K RVU gets you maybe $300K in private practice.

Edit: I'm counting after overhead.

your private practice estimate also doesn't include ASC buy in or partnership, correct?

 

[drusso]

This number probably isn't that far off, but I'm always shocked when I see it. I really is crazy the differences between hospital and private practice reimbursement. 7K RVU gets you maybe $300K in private practice.

Edit: I'm counting after overhead.

Where does that difference come from?? $O$

 

[Ferrismonk]

your private practice estimate also doesn't include ASC buy in or partnership, correct?

Correct. In-office, employed. Similar to hospital, employed.

ASC buy-ins and partnerships are better thought of as investments (albeit ones that you can control), not employment.

 

[Ducttape]

yet if there is financial gain from either, should they not be counted if one is considering the entirety of the situation?

otherwise, are you not cherry picking what factors in your computation?

 

[drusso]

yet if there is financial gain from either, should they not be counted if one is considering the entirety of the situation?

otherwise, are you not cherry picking what factors in your computation?

Are you arguing for tying hospital-employed physician compensation to total physician enterprise value?

Do Most Hospitals Benefit from Directly Employing Physicians?

Physicians are expensive. What can hospitals do to make sure they’re getting a return on their investments? In this piece, the authors suggest five ways that hospital leaders should rethink their strategy for their physician enterprises: First, they should establish a clear strategic goal and a...

hbr.org

 

[mid|ine]

If you do a hospital wRVU model negotiate your base and $/wRVU separately.

If you are in a non-metro area, I would ask for 50+% MGMA as a base salary

I would ask for $/wRVU of 75+%. I don't know what these numbers are right now.

For example

Base salary

$400k

and

$75/wRVU

Bonus after wRVU exceep base. So in this case >5333 wRVUs starts getting a bonus. Ideally, calculate the bonus on a monthly or quarterly basis.

Get control over your days per week and hours per day worked, and say in hiring/firing.

Get a golden parachute in the contract, so they are not inclined to terminate your contract. You get money and non-compete goes away and they have to inform your patients where you are and give you your patient list.

I would also negotiate and auto renewal of the contract with COLA

 

[drusso]

If you do a hospital wRVU model negotiate your base and $/wRVU separately.

If you are in a non-metro area, I would ask for 50+% MGMA as a base salary

I would ask for $/wRVU of 75+%. I don't know what these numbers are right now.

For example

Base salary

$400k

and

$75/wRVU

Bonus after wRVU exceep base. So in this case >5333 wRVUs starts getting a bonus. Ideally, calculate the bonus on a monthly or quarterly basis.

Get control over your days per week and hours per day worked, and say in hiring/firing.

Get a golden parachute in the contract, so they are not inclined to terminate your contract. You get money and non-compete goes away and they have to inform your patients where you are and give you your patient list.

I would also negotiate and auto renewal of the contract with COLA

These hospitals must be dripping in money to afford these offers!

 

[mid|ine]

drusso, the first part is really how the wRVU model works, but I don't think most people get that at first. If you can manage to get them to calculate the bonus on a quarterly or monthly basis, you'll reach bonus territory sooner.

The second part is less likely to happen, but would give you some control and negotiation power. It would only happen in a rural hospital.

 

[Ferrismonk]

If you do a hospital wRVU model negotiate your base and $/wRVU separately.

If you are in a non-metro area, I would ask for 50+% MGMA as a base salary

I would ask for $/wRVU of 75+%. I don't know what these numbers are right now.

For example

Base salary

$400k

and

$75/wRVU

Bonus after wRVU exceep base. So in this case >5333 wRVUs starts getting a bonus. Ideally, calculate the bonus on a monthly or quarterly basis.

Get control over your days per week and hours per day worked, and say in hiring/firing.

Get a golden parachute in the contract, so they are not inclined to terminate your contract. You get money and non-compete goes away and they have to inform your patients where you are and give you your patient list.

I would also negotiate and auto renewal of the contract with COLA

Wow, somebody feels entitled. In my area, base is $300-350, M-F, 4 weeks vacation. Take it or leave it. After a year or so, usually switch to %collections or wRVU, around $60/RVU. Noncompete, buy your own tail, etc. You see how many patients your schedule allows dictated by others. If group owns an ASC, you'll have opportunity to buy in after a few years.

Or you can open up your own place and give opiates to your patients or you'll get no referrals. Everybody else is giving opiates so why refer to you?

I'm not being overly cynical, but I've been looking for the past year and that's all I see.

 

[bic_atlantis]

How hard do you have to work to hit 7000 RVUs?

 

[BobBarker]

How hard do you have to work to hit 7000 RVUs?

We went round and round about that awhile back. It is a very relaxed full time practice with ample vacation that only hits 7000. You can easily reach 7000 just seeing patients in the office and doing blind joints and TPIs.

 

[afob100]

We went round and round about that awhile back. It is a very relaxed full time practice with ample vacation that only hits 7000. You can easily reach 7000 just seeing patients in the office and doing blind joints and TPIs.

Any idea roughly how many clinic patients/procedures this is daily? i.e. ~20-22 clinic pts 3 days a week and 20 procedures/day for 2 days a week. Would that be ~7000 RVUs? 8000? Assuming 4-5 weeks vacation + CME