How Much Are YOU Actually Worth?

Discussion in 'Emergency Medicine' started by NinerNiner999, Jan 7, 2017.

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  1. emergentmd

    emergentmd 7+ Year Member

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    This must be a unicorn of a group. EMGA will just all work in the FSED without hiring by picking up extra shifts. All the Obamacare regulations/charting/metrics/Core measures/protocols are continually coming down the pipes and amazingly the EMGA has no change in productivity.

    Amazing group EMGA is.
     
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  3. NinerNiner999

    NinerNiner999 Senior Member 10+ Year Member

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    EMGA is designed, in this thread, to represent the ideal small democratic group with a single hospital contract. There is no FSED and no plans to expand facilities other than the renovation.

    Obamacare only impacts a small percentage of their patient volume, and they have managed to survive with negligible declines in reimbursement offset by bonuses for PQRS reporting and increasing volume. As mentioned, this is about to change.

    In addition to the ideal equity situation with this group, it should also be noted that, in addition to their regular clinical shifts, the group members also give their free time to attend regular department and practice meetings, which any strong, successful small democratic group should do at a minimum. In short, each member of the group is vested in its success, and understands the environment they practice in.

    This is not a practice composed of physicians with the mentality of "don't bother me on my day off." They are each understating of their individual contribution to the group as a whole and, as equal partners, wake up daily worried about the loss of their contract.

    How many ED providers today adopt this mentality?
     
  4. bravotwozero

    bravotwozero Chronically ambitious 10+ Year Member

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    Not many, and there's no good in having that mentality if you're in a CMG - even otherwise, because being invested does not prevent, or even minimize, the loss of a contract


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  5. emergentmd

    emergentmd 7+ Year Member

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    This thread has been great. I am lucky to be in Admin for about 10 yrs and have a good grasp of the majority of your posts. The new docs do not and this is enlightening. EMGA was common 10 yrs ago, but now a very rare animal especially in any decent sized city. I am sure they are still prevalent in the smaller communities with smaller hospitals where the medical community protects their own.

    We were an EMGA when I first was a partner 15 yrs ago. We were not printing money but made a good income, owned the group, independent with very little hospital interference.

    The past 10 yrs have seen non EM medicine detrimental affects to our pay that is out of our control.

    1. Decreased reimbursement - Have to Hire Mid levels
    2. Need more detailed charting to satisfy all the metrics, core measures, door to greet, pt satisfactions, etc - decrease productivity
    3. FSED, poor contracts in order to keep the good contracts - decreased pay, more difficult to hire
    4. Increased in benefits costs, health insurance premiums, etc


    All of these have made the headaches that comes with running a SDG eventually not worth it. Eventually every SDG will run into this wall where it is easier to sell out.
     
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  6. NinerNiner999

    NinerNiner999 Senior Member 10+ Year Member

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    I'm glad you enjoy the thread - I thought it would be worthwhile to post something everyone could follow, and understand why our specialty is morphing into what it is. The groups that once were may be again, but in different form. The take home point of all of these posts is that, while the "Rape of Emergency Medicine" can be attributed to CMG's who are consolidating for economy of scale, the real damage to our profession is from the healthcare system as a whole and its effects on emergency medicine.

    CMG's are necessary in todays world to buffer cost deficits and maintain a fair market value. This will be demonstrated in coming posts in this thread, but without global market consolidation, there is no way for small independent groups to survive market capitation, insurance rate renegotiations, multi-specilty staffing, recruiting and retention, and all of the other parts of hospital management that are required in todays world.

    Emergency used to have two arms - Healthcare Delivery and Billing. Physicians have the delivery part down, but are horribly equipped to perform the billing tasks needed to maximize revenue. So are hospitals. It used to be that scribbling a diagnosis on a piece of paper would suffice for payment. Now, with each component of the physician bill being scrutinized, groups have no problem paying a third party company to do their coding and billing. With CMS regulations and fraud reviews, it has almost become a requirement to hire these groups as a default insurance policy against fraudulent billing.

    Today, Emergency Medicine has three arms - Healthcare Delivery, Billing, and Practice Management/Integration. Clearly, the practice management and integration components are nearly impossible for most small democratic groups to manage. This third arm has become the specialty of CMG's, who market themselves on their ability to manage integration, provide multi-specialty care, and maximize hospital return on investment in other areas. This is the part of the equation that small democratic groups focusing solely on Emergency Medicine have no change to master, and must outsource in one way shape or form. Often times, this is accomplished by bringing on business advisors and consultants and trying to merge with other local subspecialty groups, which can be successful, but even in this scenario, income is diluted. In the end, in one way, shape, or form, practices are essentially paying for another company to outsource their management component, which is no different than paying someone to handle coding. The difference is, the coding is included in the management piece and bundled into a less "expensive" package. As a result, physicians typically take home 1/2 to 3/4 of the total CMG operating budget in the form of salary and benefits. 1099 status physicians can actually take home an even larger proportion, because their benefits are offset by hourly rate, which can be effected based on the size of the group (number of beneficiaries) and the type of business structure.

    It is interesting to consider that CMG rates have gone up exponentially over the past 5 years, partly in direct relation to the increased coverage provided by Obamacare, but mostly because ED physicians continue to drive market rate in unsaturated areas. Ironically, the consolidation of hospital corporations and insurance providers is helping our speciality by requiring ED board certification for their department staffing, which often prevents internists and family practitioners from working in hard to staff locations. As a result, rates are ratcheted up starting with locums rates, and then eventually to a dollar amount that seems to attract recruitment and prolongs retention. As was alluded to in a previous post, these locums rates are tenable for a short term, without difficulty, assuming there is volume to support it. When it is not, rates are supported by drawing from outside contracts or corporate coffers supplied by lower rates paid in saturated areas that are easy to recruit. Physicians in San Diego probably make 30-40% less than their counterparts in Parumph, Nevada because they are easily replaced with the next new EM grad willing to take their spot in a cool town full of young people. Also, regional reimbursement patterns and local healthcare marketplaces (i.e. medicaid rates) can differ dramatically, and even small differences in a local payer mix can drive major changes in regional rates.

    Small democratic groups are targets in large cities because they offer a contract with the potential to pay very low rates. Providers want to work there, and there is a line of people willing to get in the door. This is why it is impossible today to find the unicorn that EMGA is - they can't survive. Ironically, the numbers can be reversed in small towns (<3 hospitals) because there is typically no competition for jobs. CMG rates are higher in order to recruit anyone willing to work, and local group rates are lower - because they reflect the true market value of the location. In these cases, CMG buyouts are often very lucrative for the EM doctors there, and they can see their hourly rate increase dramatically. It is important to consider that once one CMG enters a local area, the rate can be changed for the entire area as a whole. In this example, there is no way that a local SDG can compete with the rates paid by a CMG, and either they would be bought by another CMG who can match their rates, or disband to go where the higher rates are paid. Not all buyouts are bad news, and, while not all are perfect, they are designed to match competitive local rates, and are often driven by the physicians to some extent.

    From the CMG perspective, the corporate goals and philosophy drive the momentum of the buyout. If CMGA has dreams to go public and sell an IPO, they will want to drive up their market share and reported income as high as they can. For them, the pin on a map may be more important than anything else, and they may be willing to take a loss on a few contracts in order to boost their overall market share. This happened with Emcare recently. Ask the folks at Envision who have rebranded and restructured their entire business portfolio to include surgery centers, private practice joint ventures, and construction in addition to their usual Hospitalist, Anesthesia, Radiology, and Emergency (HARE) offerings. Team Health appears to be taking a similar approach, and is selling themselves back to the same private equity firm that took them public. They will likely disappear from the public market for a while, and revert back to private equity, only to restructure, reinvest, and emerge with an even higher IPO in a few years. They may even change their name. Other CMG's are consolidating with each other (Hospital Physician Partners, Schumacher Group, ECI) to form larger combined corporations with the same intention - streamline, standardize, and generate equity that can be introduced to the public market. Smaller CMG's are probably best positioned to weather the storm because they don't have the desire to go public, keep their economy scaled to their size, and only accept contracts that will generate revenue for themselves, and provide a mechanism to reward the providers in some form. These groups are truly physician led and driven, and probably the safest. Interestingly, they are also the least likely to buyout another group, but a target from larger corporations wishing to consolidate at the corporate level.
     
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  7. emergentmd

    emergentmd 7+ Year Member

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  8. coachB

    coachB full fledged member 10+ Year Member

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    FSEDs are only the answer if you have a myopic, self-centered view of medicine. Yes, they may be a short term answer to improve your income, but they only add dysfunction and inefficiency to the system as a whole, eventually contributing to collapse, or at least profound inequality. Had payment models continued to trend in the direction of bundled payments, pay-for-peformance, etc, I expected an eventual dramatic shift from CMGs to hospital employee based systems as large health care systems developed the scale and incentive to manage more integrated care. However, with the current political climate, the future is anyone's guess.
     
  9. NinerNiner999

    NinerNiner999 Senior Member 10+ Year Member

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  10. emergentmd

    emergentmd 7+ Year Member

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    I am not going to reply here but please keep this on topic. There is many FSED threads you can troll
     
  11. coachB

    coachB full fledged member 10+ Year Member

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    ?
     
  12. Brorthopedic

    Brorthopedic

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    This may be the best thread I've read thus far on SDN
     
  13. migm

    migm 7+ Year Member

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    I'm on a partnership track in a group that sounds very similar to this. This is truly opening my eyes to many things. I have a few stupid questions.

    1. can you clarify and explain what your acronyms mean? i might be the only one who doesn't really know what they stand for or imply. sorry if that's pedantic (tried googling)

    2. how do i use this information to my advantage?
     
  14. Nikj

    Nikj NigelWhiskers 2+ Year Member

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    EMGA- Emergency Medical Group A ( fictional/anonymous group)

    CMGA- Contract Medical Group A ( fictional/anonymous group)

    SDG- Small Democratic Group

    FSED- Free Standing Emergency Department

    PQRS- Physician Quality Reporting System

    IPO- Initial Public Offering

    I think these are right
     
  15. NinerNiner999

    NinerNiner999 Senior Member 10+ Year Member

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    Those are all correct! I'm glad you guys are enjoying the thread.

    The only way to use this information to your advantage is to make sure that your partnership track is truly moving towards inclusion into an equitable partnership. Once you are a partner, you are an equal owner in the company, and that means you share equally in any value or debt of the company. Just make sure your buy in (if you have one) is equal to whatever debt they are expecting your addition to the partnership will pay down. Otherwise, you need to know how they calculated your buy in and where it is going. I've heard of some strange stories about buy ins being nothing more than bonus to the partners. That's not an equal start if you ask me.

    Also consider that if the group is being sued, or in any legal issues, you will be joining them, and listed as a party to any action. This is even if it was before your time. The company is the company and you are now an owner.

    Also make sure there aren't other "partners" in the group who have a larger share of the pie. If there are, understand why (maybe they funded the group and have a larger percentage of asset ownership, which is ok). Maybe they have a separate tier structure within their partnership which is not ok if they didn't tell you up front.

    Most importantly, if you don't have a buy in but instead paid through a "sweat equity" model with a reduced rate for several years, ask for an accounting of how much your lost income was and submit that as your cost basis for partnership. If you paid for it over 1-2 years by working at a reduced rate, you should not pay even more with higher taxes on your higher income for the first few years. Your group should be able to provide this for you and your accountant should find a way to report your cost basis with your annual filing. That way you will only be taxed on the bonus earnings above your basis, not the whole amount.

    Oh- and one more thing. Ask for a statement of your accounts receivable every quarter. Since collecting on your billing can take a few months, this is low hanging fruit for CMGs to use as a negotiating tactic if your group is bought out. This can be as high as $50-100k per partner. Make it clear to your new partners that, in the event of a buyout, you want it agreed that the AR goes to all members of the group separate from any valuation of the company. Often times the CMGs will buy your group, pay the company a lump sum of what the corporation is worth on paper, and transfer all future collections to themselves as the new owners. The AR can offset anything they spent to buy the group, meaning your group left a lot of money on the table, and they simply bought you at a very reduced price- then got a refund.

    Know your worth.
     
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  16. BAM!

    BAM! Senior Member 10+ Year Member

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    So if I understand this correctly, in an example:

    I get paid $250,000 per year as a "sweat equity" for 2 years, and the partners get paid $350,000 base pay + $50,000 bonus =$400,000. Then my cost basis for joining a partnership (filing K-1) would be $300,000 (2*($400,000 - $250,000)). So anytime after acquiring partnership status, the taxes on the annual bonus from the partnership would be $0, as long as the bonus doesn't exceed $300,000? Is this the only for the first $300,000 of bonus (possibly over several years)? Or is it every year the same?

    This seems really important to know and do correctly. Is this common practice?
     
  17. emergentmd

    emergentmd 7+ Year Member

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    I don't see how sweat equity could be used to set a cost basis. A cost basis is set when you pay $$$ for shares. Sweat equity is just taking a lower rate.

    I guess in the contract, it could state that your $100/hr will go towards your shares but I highly doubt any group would do this. By doing this, they are selling you something that they may not intend to give you when your partnership time comes or pay you off if there is a buyout.

    In your scenario, I don't think your sweat equity can be used as cost basis. You don't have a K1, property bought, etc....
     
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  18. bravotwozero

    bravotwozero Chronically ambitious 10+ Year Member

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    Is there any real benefit for the ed doc to go to the reimbursement and coding conferences, in terms of learning about collections? Has anyone ever been?


    Sent from my iPhone using Tapatalk
     
  19. BAM!

    BAM! Senior Member 10+ Year Member

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    Isn't that what NinerNiner999 is doing, or am I missing something?
     
  20. Arcan57

    Arcan57 Junior Member 10+ Year Member

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    Do you have a coder that provides feedback (most CMGs will)? Do you get paid based on RVUs (not hourly)? If the answers are no and yes then you need to learn the basics of coding and stay up to date on new developments. Conferences are definitely one way of doing that although not the only.
     
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  21. BetrayingChopin

    BetrayingChopin 7+ Year Member

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    Waiting for more sequels...
    Please shower my ignorant brain with more incredible insights and lessons.
     
  22. The White Coat Investor

    The White Coat Investor AKA ActiveDutyMD Partner Organization 10+ Year Member

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    Well this is interesting. I'd be curious to hear from somebody knowledgeable about this tactic, but I don't think your understanding is correct. Here's why.

    1) When you buy something, you do so with after-tax money. You earn the money, pay the taxes, then buy the thing.
    2) The price at which you buy it is the cost basis.
    3) When you eventually sell the thing, hopefully for more than you bought it for, you pay taxes on the difference between the sales price and the basis. You've already paid the taxes on the basis, so you don't have to pay them again. If you've held it for longer than a year, you get to pay at a lower long-term capital gains rate.

    However, what you are suggesting is that you can somehow avoid paying taxes on the basis when you buy the thing, then avoid paying taxes on the basis again when you sell it. I'm no accountant, but I have a reasonably good understanding of the tax code and this idea runs against a general principle found throughout the tax code that money you make is taxed one time--no more, no less.

    If you somehow sent the IRS the taxes on what you "paid" as sweat equity, your argument would carry more merit. But I'll bet you didn't do that.

    On a related note, I had someone email me the other day that told me his partnership expected him to pay taxes on his sweat equity when he bought in. I thought that sounded pretty lame, but I would argue that he could subtract that basis from his buyout when figuring taxes on his buy out. I certainly didn't pay taxes on my sweat equity buy in, so I don't plan to claim any basis on my buyout.
     
  23. NinerNiner999

    NinerNiner999 Senior Member 10+ Year Member

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    Of course the caveat is that I'm not an accountant, but as I understand it, once the group declares a buy in has occcurred (in the form of monetized sweat equity) they could pay tax on the income generated by such contribution. The person giving the buy in (cost basis) is responsible for the gains on the cost basis.

    As mentioned previously, this requires a contract detailing how the buy in is handled and who pays the tax. This is more commonly structured as WCI suggested, with the partner being responsible for massive taxes when he/she cashes out.
     
  24. The White Coat Investor

    The White Coat Investor AKA ActiveDutyMD Partner Organization 10+ Year Member

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    Massive? I would think having to pay tax on money you never received would feel far more massive than a percentage (and probably a small one given LTCG rates) of money you actually did receive.
     
  25. NinerNiner999

    NinerNiner999 Senior Member 10+ Year Member

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    Fair enough. Massive relative to the amount of buy in, ownership percentage acquired and whatever tax reduction strategies the group deploys to take on a new partner.
     
  26. RustedFox

    RustedFox We're all stars now. In the GOAT RODEO. 7+ Year Member

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    *Advance the plot, please*
     
  27. NinerNiner999

    NinerNiner999 Senior Member 10+ Year Member

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    ... a meeting, a promise, a baby, and a locums....

    The trauma center staffed by EMGA has done well, and hospital volumes have increased as expected - although throughput house wide, utilization of resources, and reimbursement has taken a significant hit due to the patient population that has been brought in. The ED has undergone a complete renovation and expansion, adding approximately 10 new beds combined with 4 major trauma rooms, which are primarily run by the trauma surgeons. As the trauma program has grown, the trauma surgeons have begun to voice their complaints about they patients being held in the ED, and the ED leadership has been involved in throughput initiatives to help alleviate the stack up of patients in the department. Despite the addition of 10 rooms, the additional volume has put a strain on the hospital's staffing capabilities, and a front door triage process has been tweaked to include a screening room for providers to examine patients and place them in the waiting room while they wait for inpatient beds. A whole house surge policy was considered, but due to limited physical space, and the delay of trauma patients who are increasing in house length of stay, there is no immediate solution to create beds without stepping on the cardiology and orthopedic floors for extra space. This was not taken well by those specialists, who already felt threatened by the hospital's focus on less lucrative trauma care, and they have begun to be selective on the patients that they evaluate in the ED. The orthopedists don't feel that they are getting their end of the bargain - they had expected a joint center to be opened - and feel that the majority of their call time is being spent on long bone fractures and trauma-related call. They are threatening to pull out of call, and one of the orthopedists is considering leaving altogether. The hospital CEO is being boxed into a corner due to volume he does not want, and shifting payor mix, and is becoming increasingly concerned with his anticipated shift to bundled payments and core measure withholding from CMS, which is now a major funder of his hospital. Seeing no alternative, the CEO agreed to subsidize orthopedic call coverage for trauma patients, and the orthopedists were pacified. This added to their budget loss, and would require justification to the board.

    And then, a phone conversation took place one night in the Emergency Department. One of the ED providers evaluated a walk-in patient who had an impacted and comminuted proximal humerus fracture with a concomitant scapula fracture. He was initially not forthcoming with his history due to the number of beers that he drank, but it eventually became understood that he was ejected from a vehicle driven by a friend of his. They did not call the police but instead brought him to the ED. The ED physician called the orthopedist on call for evaluation of the shoulder, who demanded that the patient be evaluated by the trauma surgeon due to the mechanism of the injury. The ED physician had already performed a thorough trauma evaluation, including Pan Scan, and felt comfortable clearing the patient for orthopedic management. The trauma surgeon was notified but stated on the phone to the ED doctor that the workup was appropriate and did not need trauma evaluation. The Orthopedist refused to see the patient until Trauma took over care - stating that if they get involved, at least he could get some reimbursement because the patient was uninsured. The administrator on call was notified, and happened to be the CEO, and while he could see both sides of the clinical situation, did not want to disrupt the orthopedic relationship any further, and asked the ED physician to contact the trauma surgeon again to help the orthopedist. The ED physician reiterated that the trauma surgeon had already declined to see the patient, and the CEO offered to call the trauma surgeon himself, which he did.

    Three weeks later, the ED medical director was called to meet with the CEO. Meetings like this were not unusual, especially since the CEO had many pokers in the fire and regular feedback from the ED was needed. This meeting, however had a much different tone than previous meetings. After the recent hospital Board meeting, it was determined that more providers were needed in the ED to support the trauma surgeons, and despite a previous interdepartmental agreement between ED and trauma, ED physicians would need to share management decision-making for all patients with traumatic mechanisms. Using the recent example with orthopedics, the CEO felt that patients could more readily be downgraded as non-trauma, reducing the amount of call pay the hospital would need to give to the orthopedists if they were cleared by trauma prior to being consulted. They would be required to see patients as part of their EMTALA call, and only serious trauma would cost him his call pay. The ED medical director was asked to meet with the Trauma chair and hammer out a process within the month.

    An emergency meeting was held with the partners at EMGA that night. EMGA was already facing a reduction in revenue due to their anticipated construction blackout, which occurred, passed, and as expected was replaced with higher volumes of lower-paying patients. This payor mix shift, however, proved to be more than they could handle, as patients that would have been placed in rooms and evaluated quickly were held in the waiting room without space for providers to examine them. The group had considered actually reducing coverage to compensate for the loss of volume, but were now facing an administrative request to add coverage, AND see patients less likely to reimburse them. Their reserve funds had been slowly depleted, and the news did not hit well. The group looked at their volume distribution, identified several hours of the day where they could justify added coverage, and identified their lowest threshold for margin. the EMGA board agreed unanimously to add 4 hours of coverage daily during peak volume hours, and agreed that providers would keep themselves available during shifts to assist with trauma patients. They agreed to present this model to the chairman of trauma surgery for consideration. They anticipated that they would have 3 years of reserve funds in place to continue with their bonus pay, and felt that any more than 4 hours of daily coverage increase would put them in the red. Economically, they had reduced their practice margin to 4%. They were not comfortable with the loss of their cushion, but were left with little choice, and little leverage with trauma surgery. They were also left without any leverage with the hospital.

    The next week, the two chairs met, and the EMGA proposal was not well received. The Trauma surgeons felt that the hospital was trying to undercut their service line, and felt threatened that the ED group was trying to take over their turf. They were able to understand the economics of the orthopedic call, but did not see how changing trauma and ED responsibility was the only answer. The Trauma chief was relieved that the ED team did not want a change, and, instead of demanding more coverage from the ED group, felt that bringing the call issue and trauma coverage issues to the medical staff would be a much better solution. Despite the CEO's request to find a solution for more coverage, both chairman felt that an alternative solution was a better option. The ED medical director met with the CEO to discuss the outcome of their meeting, and to prepare him for possible medical staff discussion of the issue. The CEO was less than pleased, and accused the ED medical director of working against him. He was concerned that discussion at the MEC (Medical Executive Committee) would open the discussion of pay for call to all specialties. Despite the meeting, the CEO instructed the ED medical director to add another physician shift to the schedule, and planned to meet with the trauma chairman separately. The ED medical director reassured that EMGA was on the CEO's side, and pledged to help in any way they could.

    Another EMGA meeting was called, and the group recognized that there was no choice in the matter. They knew the CEO, knew the change in the marketplace and pressures of the change, and felt this was a necessary request from the hospital, despite being comfortable with the volume they were already seeing. The group was currently seeing 1.9 patients per hour per provider, and adding one more shift daily would reduce this to 1.5-1.6 patients per hour. While they considered the reduction in productivity to represent a temporary break until volumes improved, they were reminded that their increased coverage would likely be taken over by increased time spent with trauma patients. They had no choice and added the coverage. At the end of the meeting, one of the partners revealed to the group that she was pregnant again and expected to deliver in 5 months. While the group cheered for her, the next question raised was how coverage was going to provided while adding another physician. She then revealed that she was hoping to move to part time status, and felt that the group should recruit for a second full time physician. At the end of the meeting, EMGA had identified that they needed to hire two new doctors, and take a massive reduction in profit margin.

    One week later, the hospital MEC met and the Chair of Trauma Surgery brought up the issue of orthopedic call. He mentioned in his discussion that both he and the ED chairman felt that expanded coverage was not needed, and that the entire situation could be alleviated if the pay for call issue was resolved with orthopedics. The CEO looked with disdain at the ED chairman, who interrupted the trauma chairman to inform the MEC that the group has already planned to add coverage despite the call situation and wished to be left out of call discussions due to conflict of interest. The CEO's worst fears were confirmed and the discussion devolved into additional specialties requesting pay for call. At the end of the meeting, the CEO pulled the ED chairman aside and accused him of colluding with the trauma chief a second time, and demanded additional ED staff be added to the next month's schedule.

    EMGA met for a third time that month, and decided that they would collectively each work 2-3 shifts more per month to cover the schedule until a replacement was found. They had a solution and had everything mapped out. The only problem was that they had 5 months to recruit, hire, credential, and start 2 new physicians before they each had to work 19-20 shifts per month to maintain coverage. Vacations were cancelled, and the budget was reviewed to hire a recruiter. It was estimated that recruiter fees were going to be 15% of the contracted salary of each new hire. They also considered hiring a locums physician to fill slots on short notice. With their partnership rate dipping below the $300/hour mark, they felt that a short-term solution would be to hire a locum tenens for the same amount ($300/hr cost with $50 to locums firm and $250 to doctor). This could also lead to them saving long-term recruitment fees and possibly even recruiting the locums to full time partner status. They felt that their partnership rate could be preserved, and would still be attractive to the locums, as it would be more than their rate, and they would essentially come out even. All they needed was more volume and non-trauma payer mix to begin to gain traction. The group approved funding for either option by one vote.

    The next day, the ED group president met with the hospital CEO to discuss their options. During that meeting, the CEO expressed his frustration with the orthopedic call situation, the trauma expansion, the payor mix, and, what he perceived to be his new problem - the ED chairman - who did not seem to be playing on the same team as he was. There was a very good discussion between both parties and the EMGA president was able to articulate the amount of work and planning the group had done to accommodate the CEO's requests. He was able to convince the CEO that the chairman was acting in good faith. Then, he presented his options to the CEO for adding coverage. He explained the group's economic situation, the changes that they made internally, and gave the CEO the option to recruit long term, and consider the addition of locums physicians in the short term. The CEO was amenable to the plan, but did not want to give anyone the perception that a less-than-qualified physician was going to be staffed in the ED. The decision was framed as part of the recruiting process, and the CEO liked the prospect of hiring a locums to work as a possible audition to a full time position in the medical staff. The group was given approval and engaged a locums company. The CEO agreed to fast track credentialing through the committee.

    Two weeks later a locums was interviewed and started to work on the new schedule. He was not very well accepted by a few members of the partnership, who were leery of an outsider working in their shop. The Locums had been around several locations in the country previously and was a good provider. He made one wrong call to the orthopedist on call to arrange outpatient follow-up and the CEO was notified that there was a new provider in the ED who didn't appear to know what he was doing. The Orthopedist was not used to receiving phone calls for routine outpatient referrals, and felt that the new ED doctor needed to be reviewed and replaced. The group president was notified, the ED chairman was contacted by the chief of surgery, and the CEO became concerned that the group was not going to be able to maintain their end of the bargain. While eating lunch in the physician lounge three days later, the pregnant ED partner was overheard by the CEO talking to another physician about her new baby bump.

    One month later, the EMGA president was given a 90 day notice of contract termination by the CEO and signed by the hospital board.

    No economic numbers to really report in this post - EMGA is done, and the real saga will begin - who will take their place, and how will they do it? Stay tuned...
     
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  28. BJJVP

    BJJVP 5+ Year Member

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    Maybe I am being dense, but how does adding ED physician coverage help this situation?
     
  29. NinerNiner999

    NinerNiner999 Senior Member 10+ Year Member

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    Great question, and part of the message. It doesn't, but for whatever reason, the hospital administrator's first solution is almost always to add more doctors from their contracted group. Sadly, adding more nurses is never on the table.
     
  30. RustedFox

    RustedFox We're all stars now. In the GOAT RODEO. 7+ Year Member

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    LOLZ.
     
  31. OccupyTheED

    OccupyTheED Attending Physician 5+ Year Member

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    @NinerNiner999 Excellent post. So in addition to who takes EMGA's place, I'm more curious as to what happens EMGA itself and their docs. Stay on with the new group/CMG? Disband?
     
  32. NinerNiner999

    NinerNiner999 Senior Member 10+ Year Member

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    Stay tuned. What would make the most sense from a business and political sense? The answers may surprise you.
     
  33. Arcan57

    Arcan57 Junior Member 10+ Year Member

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    Adding physician coverage is free in the contracted group model. You can definitely run into issues where required staffing > projected revenue causes the group to quit or hire substandard docs but up until that point squeezing the contracted group has no cost to the hospital.
     
  34. BJJVP

    BJJVP 5+ Year Member

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    The administrator's thinking still makes no sense to me. How would adding an extra ED physician fix a problem between the trauma surgeons and the orthopedics group?

    Problem: A pt has been stabilized and needs to be admitted. The trauma surgeon refuses the patient. The orthopedic surgeon refuses the pt.
    Proposed solution: Add another ED physician.

    What am I missing?
     
  35. Nikj

    Nikj NigelWhiskers 2+ Year Member

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    It sounds like the hospital didn't want this to turn into an on call pay issue across the entire hospital. Giving the ED physicians more Trauma rights (in the sense that they could determine a down-graded trauma) which would allow the ED docs to bypass the Trauma surgeons and clear the patient for ortho consult( I don't know how Trauma rights/laws work if this is even possible.) The Orthopods would still get reimbursed (so they are happy), but the hospital wouldn't have to pay as much. This would require the need of more providers with the new trauma rights. At the same time it would sweep the issue under the rug so it wouldn't go to the MEC, even though it would probably upset the trauma surgeons.

    I'm just giving my thoughts on what the CEO might have been thinking, its probably not on point.
     
  36. BJJVP

    BJJVP 5+ Year Member

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    I think I see it now. However, this seems unlikely to work, at least where I work for several reasons:

    1) Downgrading traumas is somewhat discouraged because it undermines the trauma criteria already in place. Also, as far as I am aware, it is usually not the administrator that gives "trauma rights." Most of these rules seem to revolve around ACS trauma center certification policies. Finally, even if an administrator could determine practicing "rights," I am not sure that would convince a non-collegial surgeon to change his/her ways.

    2) It really shouldn't require an extra ED physician just to be able to downgrade a trauma. The ED physician that is already in the ED and managing the patient in question could easily do that.
     
    Last edited: Jan 27, 2017
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  37. Arcan57

    Arcan57 Junior Member 10+ Year Member

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    Trauma was being managed by surgeon separate from ED.
     
  38. NinerNiner999

    NinerNiner999 Senior Member 10+ Year Member

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    The issue with arranging outpatient follow up is that the patients often don't pay, and the orthopedist knows that his name is now on the chart and he's on the hook.
     
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  39. BJJVP

    BJJVP 5+ Year Member

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    If that were true, then I could see the rationale. However, in the example given above by Niner, the ED physician was the one making calls to both the orthopedic and trauma surgeons. There was already an ED physician taking care of the pt. Adding another ED physician to help this situation sounds useless and unreasonable to me.
     
  40. Arcan57

    Arcan57 Junior Member 10+ Year Member

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    But pt had been mistriaged in the example given. Agree if it's the standard EP calls trauma scenario most of us are used to.
     
  41. emergentmd

    emergentmd 7+ Year Member

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    I think we are going off topic here guys. Lets focus on the broader picture painted by OP.

    The bottom line is the ED group is the easiest to influence, the lowest lying fruit, the easiest to push the hospital's agenda. Patient care means very little. It all comes down to revenue.

    DO you think the hospital cared much about Pt sats until about 5 yrs ago? They are hyper vigilant now b/c its tied to income. That goes with all of the obamacare metrics too. They dont give a flip about Sepsis, Cath Time, Door to greet, etc. They don't even know what all this even means. All they are about is being able to advertise good numbers and collecting all of the obamacare money.

    The easiest way to fix most of their metrics is through the ED b/c we see the majority of pts, put in the majority of orders, and carry the most metrics.

    When is the last time you heard a metric about surgical time from open to close? Sedation to intubation?

    There are two groups that are the lowest lying fruit and its the ED/Hospitalists.

    Do you think putting a ML in triage helps flow? It makes it worse. But that door to greet time sure looks good.
     
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  42. NinerNiner999

    NinerNiner999 Senior Member 10+ Year Member

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    EMGA

    So the group has been given their 90-day notice and things begin to happen pretty quickly. The hospital attorney is immediately notified and the contract with the hospital is reviewed for any loop holes. Despite the contract not scheduled to renew/end in 27 months, there is no violation to the terms of the contract. TAKE HOME POINT - any contract is only as good as it's termination clause. You can sign a 40-year contract but if there is a notice of termination section, that dictates how long the contract can last when things go badly.

    The board meets and considers their individual options, which are not initially as bad as they may seen for some members. Some managed to budget accordingly during their years of practice with EMGA, and some have lived paycheck to paycheck. These were the more vocal members of the group at the meeting, and were extremely concerned and angry at the hospital. The group has anticipates that have a few million dollars of revenue left through their 90 day period, and their accounts receivable will likely float them for several months after three group winds up (business term for the systematic closing of a business). Their worst case scenario is that none of them are permitted to stay at the hospital, and they must each relocate either to the competing hospital down the road or move altogether. They have no bargaining power in this position, and are not willing to entertain any further discussions with the hospital. The Attorney now serves as the default point of contact, and legal bills are now being added to the budget as a significant cost anticipated over the next several weeks.

    Most importantly, the group is looking at their current corporate structure and signed contracts, and the crux of the discussion is what to do with the individual non-compete clauses that were signed by each partner. The way EMGA sees things, business and personal issues aside, reality will dictate the individual plan, and some providers, will stay, some will go. They have decided for the time being that they will continue to keep their noncompetes in please to better position themselves for negotiations that will likely come. They have also agreed that it will be business as usual in the hospital until their 90-day period is up.

    HOSPITAL

    The CEO has engaged three competing Contract Management Groups (CMGs) to bid on their ED contract. Three groups were chosen at the request of the hospital board to provide a fair market comparison and for transparency in bidding. Typically, when a change is on the horizon, a good CEO already knows who they are going to choose, and this CEO is no different. He has decided on CMGA as his choice, but wants to make them jump through the hoops before he makes a final decision.

    Stay tunes for an inside look at the next steps in the process. Please give feedback, think about some scenarios, and wait. It's about to get real.
     
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  43. emergentmd

    emergentmd 7+ Year Member

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    I always crack up when groups spout how stable their group is because they just signed a 2 or 3 yr contract. Or how individual docs think they are secure b/c they just signed a 2 yr contract with the SDG/CMG.

    The bottom line is not the length of the contract but the days/months to terminate which usually is 3 months.

    Most ED groups are on a 3 month contract. That is it. If the hospital can terminate your contract in 3 months, then you are secured for 3 months. Bottom line.
     
  44. emergentmd

    emergentmd 7+ Year Member

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    This is what will happen. Bids go out. Hospital CEOs has essentially picked a replacement, but allows 3 CMG and EMGA to bid. He likely will chose CMGA but throws it out for bid so the medical staff feels that EMGA had a fair shake. Unless someone's bid is much better than CMGA, then its preordained.

    EMGA has essentially blown up. They will spout that they will enforce the noncompete but this is used as a ploy so CMGA will not pilfer all of the docs. What CMGA would like is to go in, keep most of the docs (especially the good ones - which is not hard to filter), and hire a few new docs/bring in some firemen. They want to avoid replacing all of the ED docs b/c its disruptive, and expensive.

    Alittle Chicken game starts with EMGA hoping the Noncompete will intimidate the hospital to award them the contract. This game has been played before and the CEO knows this won't work. CMGA has been awarded the contract, EMGA is worthless and eventually releases everyone from their noncompete. EMGA was a democratic group and obviously the partners want to stay in the area and vote to dissolve the noncompete. if EMGA is lucky, they will get a buyout but never guaranteed to avoid disruption.


    SO CMGA will give the EMGA docs a contract either as good or alittle better than their old one b/c its cost effective. 75% of the docs stay for many reasons. They bring in 25% new docs/firemen and there is very little disruption and the medical staff doesn't even blink.

    There goes another independent SDG who can't compete from a political, financial standpoint vs CMGA who comes in with many advantages. CMGA holds the trump card b/c they can carry the contract at a loss which is something EMGA could never do. CMGA knows that in time, this contract will be profitable given their advantages of scale.

    Moral of this story is no SDG is safe. You may think that you are safe but the incestrual relationship between CMG and Mega hospital will be too great.

    What did EMGA do wrong? Not much.

    Will patient care suffer? Probably alittle but the hospital doesn't really care b/c they have solved their financial shortfall.
     
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  45. NinerNiner999

    NinerNiner999 Senior Member 10+ Year Member

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    One week has gone by and the hospital administration has remained silent with EMGA. Several members of the medical staff have heard about the group's trouble and, despite their disappointment in the change, are powerless to reverse the course. The Chief of staff, a cardiologist who is friends with two members of the group is very concerned that he was not approached by the CEO to discuss the performance of the group. He felt that, at the minimum, members of the medical staff should have been consulted for their feedback before such a drastic decision was made. Nobody had any vested interest in seeing the ED group change hands - not even the orthopedists or the trauma surgeons. None of them anticipated the repercussions of their complaints, but, in interest of their own job security and reputations, none of them will make any effort to lobby to retain the group. The decision has been made, and now they must quietly (and awkwardly) interact with the outgoing group until a new group comes in to take their place.

    TAKE HOME POINT - even in the hands of a good medical staff, a good ED group is completely vulnerable to the unpredictable whim of a hospital administration. The medical staff can completely destroy your group without ever even knowing they are doing it. Ask yourself the last time a neurosurgeon ever had to read a thread like this one...

    The group members of EMGA have chosen to enforce their noncompete clauses. Two partners in good standing have decided that they are too angry to continue to work for the hospital that "fired" them, and have begun to look for other jobs. One of them is looking at a freestanding ED down the road, and within the restrictive mileage covenant of their noncompete clause. This means that despite the group's efforts to reinforce their noncompete clauses, this physician cannot apply to work at the other hospital without the express permission of the group.

    So here's the TRUE VALUE OF YOUR NONCOMPETE CLAUSE, and why it is good (and bad) to keep them in your contract:

    When you structure a noncompete in the manner EMGA did, and they lose the contract overall, it is to their advantage to enforce their noncompete. It can be a herculean task for a hospital to go through a 3 bid process, select a CMG, go back and forth on contracting, hire and credential new providers, and staff a department in 90 days. As it is in this case, the winning bidder will have 60 days to accomplish all of these issues. Anyone who has gone through the standard credentialing process knows that this alone can take 3 months to complete, and often requires temporary privileges to start immediately. This scenario gives EMGA a bit of leverage because they are already known entities that have hospital privileges and can work. By remaining bound to their individual non-compete clauses with their company, any new group who hires these physicians will need to either (1) violate the noncompete and hire them while risking litigation from EMGA, or (2) buy out the physician from their non-compete by paying the company directly to release the noncompete clause. It is completely at the discretion of the company to release a physician from a non-compete clause. This is most appropriately done with a signed legal release from company A to company B. In a sense, CMG's trade the hard working emergency physician as a free agent, and can actually profit on the sale of the physician to the other group.

    In this case, having a non-compete when the hospital wants you is a great thing. On the flipside, if you are not wanted at the hospital, you won't be able to work there, and you may not be able to work anywhere else based on the terms of your noncompete clause unless you get a waiver and release fro your company to do so. If the group doesn't like you, they may not give you this permission and, if they really don't like you, they can sure you if you violate their agreement. This scenario is where some of the leverage for EMGA ends. They have no interest in spending any more of their money than they have to because they are going out of business. If they were a strong company, still had a contract, and a partner left, it may be worthwhile to them to pursue legal remedy, but not in this case.

    In short, it is good to have a noncompete clause as a partner with a SDG because they are most likely to be in a position to be acquired/lose a contract, and in a position to negotiate directly for themselves. It is bad to have a noncompete with any CMG or as a SDG employee because there are often more than one in an area (and they are often competitors) and, if your buyout price is too high in the event of a contract change, you could be too expensive to be bought out. You lose all of your negotiating power.

    **CMG Spoiler Alert**
    The "signing bonus" or "relocation bonus" that you may be offered in this scenario is simply a way for the group to budget their recruiting expenses into a different category for accounting, and often comes out of the total amount they may have saved in the event of a buyout/noncompete/group acquisition. Greedy groups won't offer you anything. Less greedy groups may throw you $10k for each category if you sign for two years (and make their staffing less of a headache). If your group has been bought by a CMG, ask for a signing bonus. They can only say no, but they are still taking your money.

    On a side note, it has always interested me how we, as humans, are traded and sold because we can make someone else a profit. Again, know your worth.

    EMGA has added their estimated accounts receivable and had their accountant begin a valuation of their company. The following items are factored in to provide a valuation:

    INCOME:

    Patient care (90 days)
    Accounts receivable (9 months-2 years depending on claims and reviews sent back and from from insurers)
    Insurance refunds
    Decreased Staffing Costs


    EXPENSES:

    Legal fees
    Wind up costs
    Severance Payments
    401(k) matches
    Benefits

    It was determined that the corporation's current net worth was approximately 1.5 million dollars, and anticipated income stream over the next 6 months would yield an additional $500k from accounts receivable. The Board placed a value in their corporation of $2 million dollars or, divided equally, $200k for each of the 10 partners. Next, the group had a frank discussion about what scenarios would be involved in the case of a new group coming in. Two of the group members had already declared that they were going to leave the hospital regardless of circumstances. They anticipated that the medical director, who wrongly served as the CEO's scapegoat for change would also not be permitted to stay. This left 7 physicians of the 10 who could likely be recruited by the CMG if they came in.

    EMGA was now in a very interesting corporate position. Given the 60 day timeframe the hospital was left with, they knew the CEO did not want to leave his ED unstaffed. They also knew that 60 days would be nearly impossible to staff without them. In a way, they were in the driver's seat to possibly turn things around for the short term benefit of the majority of their members. If they could sell their group's AR to the incoming CMG (minus the unwanted providers) they could recuperate more of their operating income in the form of a leveraged buyout. Alternatively, if they pursued individual hiring with the CMG, they could each negotiate their own individual buyout price for their noncompetes, and the company could distribute their total collections from the CMG to its members, effectively selling themselves out as individuals and retaining their company. Doing so may require them to sell their individual accounts receivable as well. A third option would be to sell out their non-compete restriction at a lower price, and allow EMGA board members to retain full rights to their AR. The only questions was how to handle the 3 providers who were definitely not staying. They also had midlevel providers, who were employees (and not entitled t0 distributions), but who could also be sold to the CMG based on release of their noncompete.

    Business is Business.

    EMGA agreed to permit the three leaving members to resume their local job search, and the three physicians agreed that they would not sign a release and waiver until the expiration of the hospital contract. This would give them a fair chance to consider all of their options. It would also allow them the ability, as partners and owners of the group, to share any distributions from EMGA during windup. They agreed to stay on as board members of the company, and this generous offer from the company permitted them to work clinically anywhere else they chose. Again, EMGA is a rare group where everyone gets along. In most group environments, these changes tear apart relationships, cause legal action between partners, and can be tied up for years in court, leaving both parties with nothing but legal bills in the end.

    EMGA knows their value, and have agreed that any income due to their company will be equally shared by the 10 partners. The worst case, as EMGA sees it, is that nobody will stay, they will all be replaced, and they will slowly collect the remainder of their AR while looking for new jobs and possibly relocating to another city or state. The best case is that they will have individual buyouts or a negotiated group buyout for release of their noncompetes. They don't see sale of the group as a viable option because the up front costs will be too large and not desirable for a CMG to turn a short term profit, and the hospital likely will not want any resemblance of the old group still running things. They will want a clean break.

    EMGA has again positioned themselves nimbly and made some smart decisions. The next few weeks are going to be very interesting...
     
  46. Doctor J

    Doctor J Libelous. 7+ Year Member

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    I'm not sure what to add here aside from the fact that this is an incredibly interesting thread and I'm following it to it's conclusion. Excellent stuff.
     
  47. Old_Mil

    Old_Mil Senior Member 10+ Year Member

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    This substantiates my subjective feelings as to how the move from private practice medicine to the corporate practice of medicine has adversely affected physician salaries over time.
     
  48. sum dude

    sum dude MD 7+ Year Member

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    Good points except most non-competes fall through, depending on what state you are in. Also, if the group is dissolved, who is going to fund a legal challenge to individual non-competes? What I have heard is some groups leave a poison-clause where they get a buyout if they lose the contract with hospital, and that gets paid by incoming group (eg 50k per physician replaced), which is usually chump-change to some CMG's.
     
  49. bikERdoc

    bikERdoc

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    This thread has been sobering and enlightening. I think it highlights some of the major flaws of our specialty. I wish they started teaching this stuff back in med school, would've been way more useful than trying to memorize the Krebs cycle.

    Obviously, I think most younger attendings reading this, like myself, are wondering where does it go from here? My group went through a buyout last summer and much of this is still fresh on my mind. So far I plan to continue on with the new group because frankly I love my location and the job was great both before and after the buyout. Paychecks come from somewhere different now and there is a pervasive Walmart feel that still hasn't completely set in. Will be interesting where things go.

    In my mind, democratic groups are dead in any remotely nice living location, especially close to major cities. If that's the case, how does working for a hospital run ED compare to CMG? Is that gonna be the answer for those not wanting to spend their career working for Walmart? I suppose Kaiser comes to mind as well, but that's a whole different beast.

    Sent from my SM-G935V using Tapatalk
     
  50. BAM!

    BAM! Senior Member 10+ Year Member

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    You're not going to make $350/hr working at Kaiser.
     
  51. Retart13

    Retart13 SDN Bronze Donor Bronze Donor 5+ Year Member

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    Very interesting thread, especially from a MS4's perspective. What are some of the long term outcomes for EM then? Will salaries be normalized to CMG rates in certain geographic areas? Will we all become employees sooner or later? Or will the CMGs have too much overhead to remain competitive for medium sized democratic groups to take over again?
     

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