ampaphb

Interventional Spine
10+ Year Member
May 13, 2007
4,352
723
New Orleans, LA
Status
Attending Physician
Ortho Group has enough sway with the community hospital that they are able to get them to cover salary of the interventionist they want to bring onboard. The hospital gains a tax advantage, I believe, by declaring there to be a need for pain management in the community.

Does the hospital outright cut the group a check, or is it a loan that the group ultimately has to repay?
 

Tenesma

Senior Member
10+ Year Member
15+ Year Member
Jun 11, 2002
5,332
127
Visit site
Status
Attending Physician
1) first thing that comes to mind: why can't the ortho group cover the doctor's salary - usually ortho groups have good income streams, and will likely make sure interventionist stays busy w/ cases... ?

2) this could be a smart move to get a pain doctor to the area without worrying about financial risks...

3) the hospital can do two things:

- they can provide a one-time stipend as a recruitement incentive --- that amount is usually 50-150k (depending on size of hospital and estimated need)

- they can provide a "guaranteed income" agreement close to the MGMA average starting salary for a pain dr for 1-2 years, that needs to be repaid out of collections, and whatever isn't repaid in first 1-2 years gets forgiven over time as long as doctor stays in town....

either way, the agreement usually stipulates that if the dr leaves town within a certain time-frame then the stipend or "income" will have to be repaid in full...

there are tax consequences as this check whether it is a stipend or a loan is considered earned income...

4) the ortho group benefits by not having to front up any cash - and they can actually be very nefarious with how they do it...

example: local GI group has the hospital "recruit" a new GI guy - the hospital provides the group 200k/year stipend - they pay him another 50k/year for a total package of 250k/yr - they then keep all of his collections over that amount - and if he stays in the area that loan gets forgiven.... so the GI group scores big time

now you can block this hiring if it will compete with your practice - just go to that hospital and tell them that you heard they are recruiting an interventionist --- tell them that you will provide those services at the hospital - that would make their "community need" disappear in thin air - however, if the ortho group is persistent the hospital can pretend that there is still need for growth...
 
OP
ampaphb

ampaphb

Interventional Spine
10+ Year Member
May 13, 2007
4,352
723
New Orleans, LA
Status
Attending Physician
so there is no cost to the group, and in the forgivable loan scenario you described, there is no cost to the interventionist if he stays the requisite 2-3 years, correct?

If that is the case, shouldn't the interventionist's bonus be based on collections minus expenses from the first dime collected? Or is there any justification for the ortho group to keep anything prior to that (other than abject greed, obviously)?
 

Tenesma

Senior Member
10+ Year Member
15+ Year Member
Jun 11, 2002
5,332
127
Visit site
Status
Attending Physician
it's always greed that comes first... the ortho group can structure the deal anyway they want - it would probably better for the interventionist to COMPLETELY bypass the ortho-group and sign the deal directly with the hospital...
 
OP
ampaphb

ampaphb

Interventional Spine
10+ Year Member
May 13, 2007
4,352
723
New Orleans, LA
Status
Attending Physician
OK, but other than greed, is there any legitimate reason the bonus shouldn't start from the first dime collected?
 

tchoupdoc

attending
10+ Year Member
Sep 3, 2007
116
23
Status
1) first thing that comes to mind: why can't the ortho group cover the doctor's salary - usually ortho groups have good income streams, and will likely make sure interventionist stays busy w/ cases... ?

(tired old comment): This depends on the market. I work for an ortho dept and see what the residents are signing for. 180k in Orlando, Fl, guaranteed by the group, for someone who will be sharing call (worth more to them, in other words.) Ortho's can be high maintenance, too, so though the income may be good, there may not be much in the bank.

3) the hospital can do two things:

- they can provide a one-time stipend as a recruitement incentive --- that amount is usually 50-150k (depending on size of hospital and estimated need)

- they can provide a "guaranteed income" agreement close to the MGMA average starting salary for a pain dr for 1-2 years...

I got pretty po'd at a hospital exec, offering a similar deal, who said that since I was pmr, I would of course be started lower than anesthesia. I thought he was talking about fellowship training (I'm not); no, he was talking about primary specialty.


either way, the agreement usually stipulates that if the dr leaves town within a certain time-frame then the stipend or "income" will have to be repaid in full...

And what about malpractice tail? That can be three years worth of premiums.

4) the ortho group benefits by not having to front up any cash - and they can actually be very nefarious with how they do it...

I guess they could argue that they are fronting clinic space, staff, billing and collections, and a built in referral base. But your example of the GI's was illuminating.

now you can block this hiring if it will compete with your practice - just go to that hospital and tell them that you heard they are recruiting an interventionist --- tell them that you will provide those services at the hospital - that would make their "community need" disappear in thin air - however, if the ortho group is persistent the hospital can pretend that there is still need for growth

My dept is working with a hospital on hiring a new surgeon with support based on community need. The "community need" is how hospitals can justify the hire on taxes and to the feds. Otherwise, they could be accused of hiring moneymaking specialties for the sole purpose of taking medicare to the bank.

It can work out in the doc's favor. The non-compete can be toothless-- how can they claim on the one hand that there is a need, but when the doc wants to leave that hospital and open up across the street, the need goes away?

What I find strange about this hypothetical from ampa: why would there be a community need for pain medicine? When is the last time you heard about a crisis in pain coverage in the local ED?
 
OP
ampaphb

ampaphb

Interventional Spine
10+ Year Member
May 13, 2007
4,352
723
New Orleans, LA
Status
Attending Physician
Actually, in the setting where the hospital supports the group's hire, they can not impose any non-compete as a result of Stark's provisions.

As for "fronting" office space, staff, billing and collections, those are accounted for in the charge they impose for overhead

Finally, the concept of "built in referral base" is one groups often tout. The truth of the matter is they typically get far more than they give. The patients remain in house, and are not at risk for being lost to anther practice. Ancillary revenues inure to the partners, rather than the employee. Plus, the partners typically demand their piece of flesh from your net collections. So is the built in referral base an advantage? Absolutely. but lets not kid ourselves, you are paying dearly for the privilege.
 

tchoupdoc

attending
10+ Year Member
Sep 3, 2007
116
23
Status
Actually, in the setting where the hospital supports the group's hire, they can not impose any non-compete as a result of Stark's provisions.

What I meant was the situation that tenesma alluded to-- not being the group's hire, being the hospital's hire. The hospital can't claim that the hire is justified because of community need, then claim the need disappears as soon as the doc wants to go across the street. As you know, hospital hired docs usually have pretty tough non-competes.

As for "fronting" office space, staff, billing and collections, those are accounted for in the charge they impose for overhead.

Okay, I stand corrected. I assume the ortho group has negotiated this as part of the stipend...so they get the hospital to put up 400k, pay the doc his guarantee, and put the difference in overhead?

Finally, the concept of "built in referral base" is one groups often tout. The truth of the matter is they typically get far more than they give. The patients remain in house, and are not at risk for being lost to anther practice. Ancillary revenues inure to the partners, rather than the employee. Plus, the partners typically demand their piece of flesh from your net collections. So is the built in referral base an advantage? Absolutely. but lets not kid ourselves, you are paying dearly for the privilege.

Agreed, a hundred percent.

And as far as the end run around the group, to the hospital? I guess this is now getting into a discussion of private solo vs group.

In an ideal world, the hypothetical ortho's will still send their patients to the doc. But you know as well as I that, at least in our community, they might instead send a patient across the lake rather than across the street, or even across the lake rather than downstairs in the same building, (happened to me with emg's) if it means more to their bottom line. Sure, it's illegal with goverment payers. And it happens all the time.

And no, I don't think everyone needs to work with orthopods. I don't think I could outside of academia (because of the behavior alluded to above.)

My big question remains unanwered: can pain medicine really be justified as a "community need" hire? Like a neurosurgeon or orthopedist?
 

Tenesma

Senior Member
10+ Year Member
15+ Year Member
Jun 11, 2002
5,332
127
Visit site
Status
Attending Physician
yes pain medicine can be considered a need... anything the hospital describes as a need is a need....

stark does make it pretty hard for hospitals to sign non-compete clauses, but they have figured ways around it... for example, there is no non-compete in the loan agreement, but a big non-compete in the medical directorship they try to suck you into... etc... also the hospital is usually the big gorilla on the block, and typically the powerful groups have a lot of sway in that hospital - so if you piss off the hospital by leaving and taking business with you, you may (not always, but often) piss off the larger/powerful groups (in terms of referrals etc...)