How Much Are YOU Actually Worth?

[coachB]

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

No, but if you're in it for the long haul, retire with pension, and factor in other benefits, you're probably not that far off.

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[bikERdoc]

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

From what I'm gathering, those days may be gone regardless if the entire world goes Team, Emcare, USACS, etc. The oligarchy of CMGs should be able price fix however they see fit. Most likely it will be fair for now, but who knows. Kaiser pension has always sounded reasonable. I don't have much faith in the system these days, but jobs are certainly aplenty.

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[two guys]

Thanks for the thread, it's been a good read.

That being said I completely disagree with your conclusion regarding the benefits of a non compete clause.

You are correct that they might serve as a slight bargaining chip to keep a contract. But, the non compete is extremely unlikely to do so. You argue that the incoming cmg will be motivated to negotiate with the group due to the non compete. They'll already be motivated to keep most of the crew anyway.

Non competes have no place whatsoever in emergency medicine. At best, in very spepcifc scenorias with small democratic groups they may benefit an individual very slightly. At worst (and most commonly) they give strength to cmgs and limit our ability to find our true market value and vote with our feet.

 

[Nikj]

Thanks for the thread, it's been a good read.

That being said I completely disagree with your conclusion regarding the benefits of a non compete clause.

You are correct that they might serve as a slight bargaining chip to keep a contract. But, the non compete is extremely unlikely to do so. You argue that the incoming cmg will be motivated to negotiate with the group due to the non compete. They'll already be motivated to keep most of the crew anyway.

Non competes have no place whatsoever in emergency medicine. At best, in very spepcifc scenorias with small democratic groups they may benefit an individual very slightly. At worst (and most commonly) they give strength to cmgs and limit our ability to find our true market value and vote with our feet.

Can you go more in depth and explain that statement, especially with the scenario given? Not disagreeing with it, but I just want to understand the downsides you are talking about.

In a situation where a CMG would have to choose between completely reworking an ED from the ground up in an extremely short period of time, or keeping some of the same staff, it would seem like the non-compete is quite a useful tool, and enables the group to continue to work in the interest of all the partners.

edit: also, in the scenario given, isn't the group using the non-compete to force the CMG to "buy" the remaining partners out and maintain stability for the remaining 3 months? They weren't trying to maintain the contract with the hospital.

 

[TrumpetDoc]

From what I'm gathering, those days may be gone regardless if the entire world goes Team, Emcare, USACS, etc. The oligarchy of CMGs should be able price fix however they see fit. Most likely it will be fair for now, but who knows. Kaiser pension has always sounded reasonable. I don't have much faith in the system these days, but jobs are certainly aplenty.

Sent from my SM-G935V using Tapatalk

A truly sad state of affairs!

I only hope that somehow, SDGs will sustain where they can and perhaps make a resurgence.

How? Who knows. Pipe dream? Looks that way.
But hope is all I have at this point.


I've worked for CMGs before and I was burned out in very short order. It was a terrible experience comparatively. Seeing 3+/hr to make the "good $" (still waaaay short of SDG pay). Getting graded on a per or basis on PG and paid accordingly.
It got so bad it affected my family life and overall mental health. And this was shortly after residency.

So we pondered options. Changing specialty was going to be extremely hard given we had 3 kids already at that time, but we were ready to do whatever it took. Things were that bad.

However, we took a risk with a SDG in another city and I cannot possibly explain how much of a positive impact that has made!!

Having seen both sides I know that the demise of SDGs is a loss to patients and hospital staffs alike.
Indeed CEOs likely know this to be true as well after the fact as I have seen CMG contracts just cycle from one to another. Likely failing on all of their "promises".
Extremely sad.

Thumb typed on iPhone.

 

[two guys]

Can you go more in depth and explain that statement, especially with the scenario given? Not disagreeing with it, but I just want to understand the downsides you are talking about.

In a situation where a CMG would have to choose between completely reworking an ED from the ground up in an extremely short period of time, or keeping some of the same staff, it would seem like the non-compete is quite a useful tool, and enables the group to continue to work in the interest of all the partners.

edit: also, in the scenario given, isn't the group using the non-compete to force the CMG to "buy" the remaining partners out and maintain stability for the remaining 3 months? They weren't trying to maintain the contract with the hospital.

The hospital knows damn well that EMGA is a sinking ship and is not interested in sinking money into legal fees to enforce a non compete. They also know damn well that the non compete can be revoked at any time by EMGA. Finally, they know damn well that 90 days isn't a lot of time for the docs at EMGA to find another job, get credentialled and possibly move.

Once a hospital has decided to replace a group they've already made the decision to put up with all the possible worst case scenarios that can go along with a group transition. That ship has already sailed. Of course they will be motivated to try to make the transition smooth and try to hire as many existing members as they can. Usually b/t 50-75% of the group ends up staying and signing on with the new group. The new group brings in some locums or their own group of firefighters for awhile.

We severely underestimate the willingness for hospital administrators to let the department implode for a few months. It's not that they don't care, it's just that they've decided (right or wrong) that the move is needed to meet whatever long term goal they have and they're willing to suffer the short term loss.

Non competes in this type of situation is essentially playing chicken with your own livelihood. It might work, but theres a lot more at risk in this situation for the individual physician than the hospital (and the hospital knows it).

 

[Nikj]

The hospital knows damn well that EMGA is a sinking ship and is not interested in sinking money into legal fees to enforce a non compete. They also know damn well that the non compete can be revoked at any time by EMGA. Finally, they know damn well that 90 days isn't a lot of time for the docs at EMGA to find another job, get credentialled and possibly move.

Once a hospital has decided to replace a group they've already made the decision to put up with all the possible worst case scenarios that can go along with a group transition. That ship has already sailed. Of course they will be motivated to try to make the transition smooth and try to hire as many existing members as they can. Usually b/t 50-75% of the group ends up staying and signing on with the new group. The new group brings in some locums or their own group of firefighters for awhile.

We severely underestimate the willingness for hospital administrators to let the department implode for a few months. It's not that they don't care, it's just that they've decided (right or wrong) that the move is needed to meet whatever long term goal they have and they're willing to suffer the short term loss.

Non competes in this type of situation is essentially playing chicken with your own livelihood. It might work, but theres a lot more at risk in this situation for the individual physician than the hospital (and the hospital knows it).

Maybe I'm missing something but most of what you mentioned are reasons why EMGA would retain the non-compete. After all the non-compete is with the group itself and the partners, not the hospital (I think right?)

In this scenario EMGA hedged the risk of not being brought on by the CMG because it would be extremely difficult to otherwise staff the ED. Worst case scenario like the OP mentioned, the Physicians would not find jobs in that 90 day period. But I'd imagine a great number of people at the hospital would be upset by a complete change in the ED.

By not having the non-compete, it completely gets rid of the negotiating power of EMGA, at least in this scenario.

 

[emergentmd]

Once EMGA knows their contract is up for bid, The writing is on the wall. Even if by the small chance they keep the contract by using their Non-Compete, they know their days are numbered.

The hospital may keep EMGA to keep medical staff calm, but EMGA will never be the same. Trust has been broken, EMGA will always look behind their shoulders, and the hospital will be in contract with CMGA to take over in short order working for a smoother transition.

Hospital will make it unbearable for EMGA by adding crappy contracts until EMGA will beg to be bought out.

The Noncompete for a SDG is just for leverage, will almost never be executed. Where are they going to get the money to sue docs? Once they lose their contract, the company collapses. Where is the money coming from to sue the doctor? Are the old partners who is not getting an income willing to throw money out the window?

Of course not.

EMGA is dead once the hospital puts the contract up for bid. A SDG will never set foot in that market again. No way a SDG would be able to get any large amount of docs to form a SDG.

 

[deleted109597]

Getting a job in 90 days is pretty easy, for any state you're licensed in.
Seriously, ERs everywhere are hurting, based on the eleventy billion emails I get every day.
For the record, for anyone listening, no, I don't want to be the medical director in Charleston, WV. Stop emailing me. (Now I feel better)

 

[Dr Mantis Toboggan]

Lol. I get those every day. I grew up there. I hated it. I'm not going back.

Getting a job in 90 days is pretty easy, for any state you're licensed in.
Seriously, ERs everywhere are hurting, based on the eleventy billion emails I get every day.
For the record, for anyone listening, no, I don't want to be the medical director in Charleston, WV. Stop emailing me. (Now I feel better)

 

[emergentmd]

Getting a job in 90 days is pretty easy, for any state you're licensed in.
Seriously, ERs everywhere are hurting, based on the eleventy billion emails I get every day.
For the record, for anyone listening, no, I don't want to be the medical director in Charleston, WV. Stop emailing me. (Now I feel better)

You Know EM must be short if they are advertising a directors job to someone they have no clue even sniffed an admin job.

When is the last time Microsoft sent out emails for a director's position opening? I just saw a director's advertisement offering 95K salary. 95K? to deal with admin/metrics? They need to double that for all the headaches

 

[Birdstrike]

https://media4.giphy.com/media/3ZLuUZ5UwDOfe/giphy.gif

 

[two guys]

Maybe I'm missing something but most of what you mentioned are reasons why EMGA would retain the non-compete. After all the non-compete is with the group itself and the partners, not the hospital (I think right?)

In this scenario EMGA hedged the risk of not being brought on by the CMG because it would be extremely difficult to otherwise staff the ED. Worst case scenario like the OP mentioned, the Physicians would not find jobs in that 90 day period. But I'd imagine a great number of people at the hospital would be upset by a complete change in the ED.

By not having the non-compete, it completely gets rid of the negotiating power of EMGA, at least in this scenario.

Either I'm not explaining it well, or you are missing something. It might just be the difference between having been through this exact scenario (I have) vs theory (possibly your situation).

The theoretical benefits of a non compete in this case are:

1. Discouraging the hospital from giving the contract to another group or CMG. While in theory this makes sense, in practice it does very little. The hospital knows that EMGA is unlikely to enforce this against its own members and that it's revocable. On top of this, the hospital is willing to let the whole department turnover. Look at Summa. You are overestimating the hospitals interest in a few months of patient care quality.

2. Encouraging the incoming group to bargain with former EMGA members. While it's true in theory that a non compete MIGHT help a little bit, it's kind of a moot point. The incoming group is ALREADY incentivized to bargain with former EMGA members. While the hospital might not care if there's a complete turnover, the new group or CMG would vastly prefer to have some institutional knowledge and save on recruiting costs. Non of the incentive for retaining former EMGA members comes from the non compete. It all comes from their actual experience. Could EMGA members possibly drive a slightly harder bargain if they negotiate as a group and threaten to retain the non compete? Sure. But probably not by much. The incoming group is a business, they're not going to pay outrageous amounts for what they view as a cog in the machine. Plus they've been through this before and know that EMGA will always eventually give in because the group members don't want to move their kids, their spouses job, etc.

We all either have direct experience with this or know people who have. Of all the situations that I'm aware of, I have NEVER heard of a group using it's non compete successfully. Everyone involved knows it's a completely empty threat.

So my point is, why would you make an obviously empty threat that has very little chance of helping you and more often than not limits our ability to vote with our feet and find a fair market value for our skills?

Who do you think is best at making deals? A bunch of businessmen (CMGs hospital CEOs, etc who went to school for this exact scenario) or 15 physicians who have very little business education?

 

[emergentmd]

Noncompetes in the hands of a SDG are essentially useless as they do not have the $$$ to enforce it.

Noncompetes in the hands of a CMG has some weight as they have the $$ to make an example of you and limit more docs from jumping ship.

regardless, we are going off topic. Once the Contract is up for bid, EMGA knows that they will never survive the long haul. EMGA can kick and scream, threaten non competes.... but at the end o the day they are powerless in this process.

This lies the big problem with the SDG. They have no property. They have very little influence. They are replaceable. This is why EM docs need to back the FSED model that will allow them to have the upper hand on the Hospital system. We control the $$$, the insured pts, then this is when we will have some influence.

Currently, SDGs have zero power in negotiation as we bring absolutely nothing tangible to the table.

 

[TrumpetDoc]

Interestingly once a contract goes to a CMG, ever notice how often the contract gets tossed between different CMGs??
CEOs are smart people. They should realize that the $&@ they are being sold is just that.

I wish that this would happen more: when a CMG contract goes up for RFP, it would be ground for SDGs to bid as well as the CEO would have first hand experience with the failure of a CMG??
In LV his happened when a local group took the contract from a large CMG and beat out all the big players too.

 

[GeneralVeers]

I wish that this would happen more: when a CMG contract goes up for RFP, it would be ground for SDGs to bid as well as the CEO would have first hand experience with the failure of a CMG??
In LV his happened when a local group took the contract from a large CMG and beat out all the big players too.

And then within one year the "local group" sold out to TeamHealth and the two guys who owned it pocketed $millions. Now TeamHealth can't staff their 100K plus visit sites. Also note that the "small group" (not a democratic one) was selected over the objections of all the ED physicians because one of their docs was the hospital chief of staff.

 

[TrumpetDoc]

And then within one year the "local group" sold out to TeamHealth and the two guys who owned it pocketed $millions. Now TeamHealth can't staff their 100K plus visit sites. Also note that the "small group" (not a democratic one) was selected over the objections of all the ED physicians because one of their docs was the hospital chief of staff.

Indeed. I remember this well.

However. What is reassuring, despite local partners of that group having pull, is that the biggest CMGs didn't get it at the RFP.
There are countless instances where a local partner or SDG former partner is in a sweet spot position in admin etc. only to loose out to the pitch and promises of the CMGs.

I only hope as above that more local groups will bid for RFPs of the CMG contracts and point out the meaninglessness of their pitches.
Some situations not withstanding, such as contracts that are $ pits and need subsidy. Those have. I power over the CMGs.

 

[RustedFox]

Its been over a week. Advance the plot, please.

 

[NinerNiner999]

A Vendor...

For this next part, EMGA will be waiting for their replacement to be chosen. Most of what has been mentioned previously regarding noncompetes is correct, and their only function at this time is to serve as leverage to negotiate on an individual level with the incoming group. Despite what one poster suggested above, Hospital Administrators cannot tolerate a single day without coverage in the ED, and will lean on whatever group wins the contract to ensure that things go smoothly from day 1. This is why division directors, regional directors, corporate physicians from outside of the hospital area, and anyone who can get credentialed will often start up a new contract. Locums are always a last resort because they are expensive, and don't look good to administrators who just signed a contract with a group to staff their department. The new group NEEDS members from the old group to be there on day one. They are already credentialed, know the medical staff, and are in a relatively easy position to retain. The new group needs to get their compensation right to successfully retain the old group, and there is an approach for this too (see future thread). Long story short, if EMGA stays united, the CMG who takes their contract will likely pay them a buyout fee to make it easier for them to stay on board. That is the whole basis of "enforcing" a noncompete clause. It is much more likely that individual buyouts from a noncompete will occur before a team of firefighters or locums are brought in on day one. There is one more often forgotten use for the non-compete, which will be explained below.

After a whirlwind RFP process, the hospital has three groups to choose from. CMGA, CMGB, and CMGC. Before advancing the plot, now is a great time to discuss how the bid process works, how CMG's function to create a bid, and how a decision is made. This is intended as a reference for the EP in all stages of practice, and is important to understand because this is how new "groups" are formed at a local level.

RFP = "Request for Proposal"

This is common in any business where a corporation is seeking a vendor for serve a function in their organization. The RFP could be for a housekeeping service, dining service, maintenance group, or, in this case, a group of emergency physicians. Hard reality point #1 - despite your education, sacrifices, residency issues, lawsuits, divorces, personal issues, and years of prozac prescriptions, you are nothing more than a member of the housekeeping team in the eyes of a hospital administrator. They don't know what we do, and can't look past the price tag on a thoracotomy kit to grasp the reason it is needed and how skilled we must be to use it. They need a department full of doctors, and are asking for proposals to fill that need. The only real "differences" that physician groups have in the eyes of an administrator is how they are going to make their hospital money. For example, if one CMG offers an excellent internal quality tracking system, compliance training, and has a model that rewards physicians on perceived superior care, they may stand out compared to another CMG that is known for consistent staffing without holes in the schedule. The hospital admin sees volume growth, CMS reimbursement for quality metrics, and forward thinking revenue as their goal - not who they have on the ground to get it. Ultimately the hospital administration doesn't care about how providers are compensated, if they are compensated, or who they recruit, as long as they fit well with the medical staff. Spoiler Alert: All groups accomplish the same task if a good director is on the ground. There is little to nothing that a CMG itself will do to fix a hospital - it depends on the team they put on the ground.

I have heard administrators ask contract negotiators - without specifically asking - if their providers are black because they would fit in with the black patient population. They ask if providers speak fluent english, because certain members of the medical staff in high positions of power don't like doctors they "can't understand." They have asked to hire a certain percentage of female providers, or male providers. Clearly, while these are all blatant violations of EOE laws, they are not technically employer violations at the contract negotiation level. These tactics and requests are wrong, but are nearly accepted universally by all CMG's as "part of the business." The answer is typically "we can hire whoever you want." CMG's have become masters of giving lip service and telling administrators what they want to hear. Administrators have become masters at trusting the groups they have had good experiences with, and forever banishing those they don't like. This is why leadership changeovers are dangerous for those in groups not liked by the new CEO. Hard Reality Point #2 - you can lose your contract just because the CEO doesn't like the blue and white logo on your paycheck.

The only other requirements, hard and fast, that all hospital administrators place on a new group is that the ED must be completely, safely staffed at the time of contract changeover - without exception. This isn't really their decision though. This is one of their conditions of participation with CMS.

The Proposal

Contract groups by and large market themselves as delivering better service than their counterparts. How this is done varies, and there is not much data to support any evidence that company A is better than company B in regards to quality, safety, or care. However, the companies that do stand out, and retain their contracts for a longer period, are those who are able to regularly visit their hospitals, interface frequently with administration, participate in local/regional hospital panels and committees, and make the hospital admin feel like they bought a "reliable" product. All companies have a standard pitch, and bring out their usual bells and whistles to dazzle administration. Company A may have a proprietary text messaging service that allows their providers to interact with other staff members. Company C may have an online patient referral portal that can be used in primary care offices to expedite referrals to their hospital. Whatever "tools" are presented in the pitch, these are usually all marketing tools to get the contract, and often come with an added expense after the first year of use. The people making the pitch sell the company, and are often the best at explaining what enhances their service line. The pitch team usually consists of the company or Division CEO, Upper level executives (President, Vice President), Regional Medical Director, Marketing director, and business/growth director).

Aside from the business/marketing talk, which is essentially a 30 minute explanation of who the company is and how it works, with the shiny toys it brings, there is a 15 minute explanation of any conflicting data used to create the proposal, the proposed coverage model and whether a subsidy (stipend) is needed. Today, unless the hospital is very low volume, or in a rural location where recruiting physicians will be difficult, it is understood that hospitals do not subsidize emergency groups. The final 15 minutes is usually a question/answer period, and an opportunity for the CEO to add any other relevant requirements. The bid is usually given by the highest ranking corporate member in the room, and if given verbally, submitted in writing after any last-minute adjustments are made in the meeting. This same process takes place for all three bidding companies.

As part of the RFP, and prior to the pitch, the hospital gives each bidding company a pro-forma, which details their reported volume, payer mix, case mix index (the variability in common diagnoses and frequency), number of active beds, and other data relevant to the hospital. This is a very shady process because often times this data is inaccurate, and requires additional legwork from the CMG to validate. For example, the hospital may report that the ED volume is 35,000 patients annually and an admission volume of 15,000. At first blush this would mean that the hospital has a 43% admission rate which, when viewed in the eyes of the CMG, means that at least 43% of their patients will qualify for level 5 billing. This can appear very attractive and, without validation, can be a common trap hospital administrators put out for groups to bite on. They may be reporting only medicare volumes, their data in the pro forma may be skewed from old data, or for whatever other reason, their number may be low. They may not be reporting their Left without being seen (LWBS) which could be very high due to high wait times. In actuality, their true department volume could be 45,000, which means that their actual admission volume is 33%, not the 43% that the group would have used to calculate their staffing needs and budget. Interestingly, in this scenario, the only people that actually have the easiest to compile and most reliable data are the members of EMGA, who know their pay mix, volume, admission percentage, and growth pattern better than even the hospital themselves. Fortunately, with the protection of their noncompete and their corporate confidentiality, they do not have any reason to share this information with anyone. Nor has the hospital asked them to.

There is nothing that a bidding group hates more than going into a bid proposal in the blind. In no specific order, below is a list of what a CMG needs to submit a bid. Keep in mind that, off the top of the entire process, there is a margin expected by most groups that must be met to proceed with placing a bid. Usually that is between 4-10%. If a group does not feel it will meet its margin after year one, they will likely choose not to bid, or ask for a subsidy expecting that other groups will find the same data and be in the same boat. If the bid takes place in a competitive market, they may extend their time window to make margin, or may take the contract at break even (or maybe a loss) to get their name in the market. CEO's are not necessarily dug in against a subsidy if the fair market analysis (as determined by the bids from other companies) shows that a stipend is needed.

The competitive bidding process is fair in that group A is competing against groups B and C, they may have all worked for each other at one time or another, and they are guessing what the other bids will be before they finalize their own. Again, without the correct data regarding payer mix, CMI, and volume, it is impossible to anticipate a margin, or other group's offer. In short, here are the things that all CMG's must consider in their bid:

1) Start up costs (locums, IT conversion, local administrative presence, travel costs, sign on bonuses, locums fees, etc.)

Compiling a bid takes a large amount of time and company resources usually within a region. The size of the CMG influences how many resources are consumed to create a bid. Larger CMG's (EMcare, Team) usually have teams within a division or region to weigh in on their individual areas. For example, The hospital uses Meditech as their EMR, and CMGA knows that extracting their data for billing and provider tracking takes at least 6 months, meaning that their AR will be several more months behind. Their local IT/Billing team will submit an estimate of their float cost to run the contract until revenue comes in. This is no different in the process that EMGA went through when they started up (remember that $1M loan they took out), except that the CMG corporation is large enough to front this cost themselves. They also know that their IT is internal, and billing is internal, and will cost a fraction of the EMGA rate. New startups require a lot of airfare, hotels, meals, recruiting, and administrative time on the ground, which adds up over the first 6-12 months. Sign on bonuses (such as student loan payoffs, noncompete buyouts, retention bonuses, CME, etc can add up very quickly. Usually, the hospital administration will reach out to the outgoing group and get a feel for who will stay and who will go. They will lean heavily on the group president, and possibly the medical director, to help with the transition and retention of the physicians. This will give the CMG's a rough idea of how many staffing holes they will need to fill. This can also become sticky because, in the case of EMGA, they are not making this as easy as the hospital or the CMG would like. At the end of the day though, EMGA is no less a corporation than CMGA and this is understood by all parties.

2) Actual patient volume

Nailing down the true patient volume is critical for everything. Specific coverage will be requested by the hospital, and is often unrealistic compared to the volume they give in the pro forma. For the 35,000 volume example above, the hospital may request 4 doctors and 3 midlevels daily, which would equate to an averaged coverage of 1.4 patients per hour. Hospitals always want more coverage, and CMGs always want less. This is why hospitals sometimes adjust their reported volumes and CMG's must get better data and present their case. There is an industry standard of 2 patients per hour that each CMG does advocate for.

3) Payer mix (what percentage of total volume will pay)

If a hospital is located in an inner city, they will probably have a bad payer mix. If a hospital is in a wealthy area full of retirees, they may have a better payer mix. If a hospital is in a medium sized suburban location with strong local business and a young median age, they will probably have an ideal payer mix. Why? Inner cities have no insurance coverage or cash, older people have medicare (lower reimbursement), and younger people with families who are employed have private insurance. Every CMG has a department that performs heat maps and data analysis to determine what the actual payer mix for a hospital is. Market share is considered, and if the hospital they are bidding on is not the preferred hospital in their market, their payer mix will likely be lower than the competition. In this case, the hospital has a goal to partner with the CMG to swing more volume to their hospital and improve their payer mix.

4) Insurance Blend

Larger CMGs have negotiated higher reimbursement rates from certain providers based on economy of scale. They may take insurance that the hospital does not, and again, they have an internal corporate team that identifies these payers, and can improve the appearance of their payer mix based on insurance rates that the hospital may not even collect.

5) Additional Resources for contract management

CMG's need to expect the unexpected. A new hire may quit after the first week, or be asked to be removed from the staff, or there may be a change in hospital coverage that changes the hospital's ability to provide services, requiring more coverage, or a change in their model. There is a budget buffered in for the unexpected. While this is often a small part of the overall budget for a CMG, this is the single biggest reason that hospital choose CMG's over SDG's. They have (or at least have the reputation of having) immediate manpower to cover their ER.

6) Provider pay

In the case of EMGA, this is a very easy and simultaneously difficult position for the CMG because they need members of EMGA to stay. At the time of the loss of contract, all physicians were partners in their own company, have additional accounts receivable rolling in for the next year or so, may have up to 2 years (or more depending on state) to be sued for malpractice, have potential tail expenses to maintain their insurance coverage for that time period, and were earning an averaged clinical rate including their partner bonus of just shy of $300 per hour. This was on an average of 2 patients per hour. THE CMG's WHO ARE BIDDING DO NOT KNOW WHAT THE CURRENT PARTNER PAY IS. They do know that the market rate at the competing hospital is $210/hr for days and $230/hr for nights. EMGA has two dedicated night providers. This will need to be factored into the bid and presented to the providers in such a way that they don't run away. The MLP rate is likely going to stay unchanged. CMGA is structured to pay their physicians as employees, which will add the cost of benefits to their numbers. CMGB is independent contractor status only (1099) and will not include benefits for physicians. MLPS are employee only. CMGC offers a choice of IC or W2 income for all providers. Each of these structures cause contract costs to vary dramatically.

7) Benefits

Due to its size and negotiated contracts corporate-wide, the CMG cost for benefits, outside of 401k match is around $6-10 per hour per providers who work full time. Benefits will not be offered for part time providers because they will not work their equivalent hours to justify the cost of their benefits.

8) Administrative Stipends

The hospital has asked for two positions to be filled - a Department Chairman and an Assistant Medical Director. They have made it clear that the current medical director cannot be considered for the position. This will add additional monthly overhead to the contract, and will likely be open to negotiation. It may also require additional recruiting.

9) Potential future costs

When a CMG comes in for free like they do in the ED, they are often asked to provide their services elsewhere in the hospital if they do a good job. Typically, this is the hospitalist service, which is often a budget killer, unless they take all admissions including those from private doctors in the community. In most places (especially this hospital example, which is a trauma center), the majority of admissions to the hospitalist service are self pay, which means they will likely not be paying their bills. After a certain point, there will be a time when hospitalist groups can turn a small profit as their service grows, but once their daily census grows beyond a critical point, a new physician needs to be hired, wiping away any gained income and potting them back into the red. As a result, these service lines are usually subsidized by the hospital, or by the ED group's profits. Nowadays, CMGs are considering future service line acquisitions in their EM bid to buffer the addition of a secondary startup.

10) Recruiting fees (can be very costly if multiple physicians are needed at the beginning)

Again, Airfare, hotels, recruiters fees, site visits take time, and money. Hiring a team to run the department may take a year. Shuffling members of the team to create a solid long-term group can take several years. These costs are also added to the bid.

11) Buyout Fees

See Above under startup costs and immediately below. These can be costly but very lucrative if done correctly.

12) Accounts Receivable

EMGA has accounts receivable that are probably 1 year away from being collected. Some may be even longer. There will be a few months after their contract ends where 70% of their outstanding revenue will come in. The remaining 30% will trickle in over the course of a year or so, and may require multiple negotiations back and forth between EMGA and insurers/collectors to be paid. These are owned by EMGA, and they will likely not have the resources to effectively hunt down payment from each delinquent account. There will come a time that their business operating costs no longer make sense, and when the time comes, they will wind up their company. The CMG knows this as well, but are in a different position in that if they lose their contract, they will still be functioning as a company and have the resources to collect their AR. In short, the CMG company who wins will try to do everything in their power to buy - at a reduced rate - the AR from EMGA, and exploit the weakened position of the partners to sell their future collections. EMGA knows what their AR is, and they each know what their share of total collections will be. They also know that there will come a time where collecting the remaining 30% will not be cost-effective in the long run. EMGA is considering that, once a contract has been awarded this will be up for negotiation.

So, here is EMGA's current dilemma:

There are three CMG's putting bid proposals together to take over their group and try to hire them. They want to maximize their AR but won't have the resources to collect 100% of what they are owed, their legal fees will continue to mount as they operate, and they each need a job (except for two providers who are going elsewhere). There are two side of the coin to look at their salary situation - the less the incoming group knows about their pay, the more pressure they will have to pay a higher rate to keep them on board due to the time constraints of the start-up date. Or, the more the incoming group knows about their current rate, the more they can pressure them with a take it or leave it approach with the likelihood that they will be forced to take the job or become unemployed.

As business-minded physicians, both CMG's and SDG's understand the importance of a good partnership, and know that getting things off on the wrong foot may lead to a good outcome in the short term, but possibly a bad relationship in the long run. In the world of Emergency Medicine, a few bad relationships can destroy even the largest of companies (read: EmCare). The CMG wants nothing more than to create a stable long term contract with a reliable low maintenance revenue stream that exceeds their margin. EMGA wants what they are beginning to realize they will never have: The ability to run their own group like they did, manage their own finances, and make decisions on the local level with the hospital directly. They also want to be paid what they earned before. Most of this is possible, and they are beginning to realize that if they are not part of the negotiation process with the incoming group, they may be stuck with what they get after all is said and done.

The hospital does not want any communication with EMGA other than routine day to day operation of the ED, and negotiating with the CMG's before the bid has been awarded will not be likely. It is possible that a bid may be submitted with bad information, which will reduce the salary threshold of the providers. The point is, once the bid is done and the contract has been awarded, the CMG has a finite amount of funds budgeted to make things work. EMGA has agreed to create a proposal to sell their accounts receivable to the incoming CMG, and is preparing themselves to negotiate buyouts. They have begun to take a realistic stance to the process as they wait for a decision. There remains a possibility that, after the contract has been awarded, and if the numbers match, the group may have an angle to sell their company assets to the incoming group.

More to come. Please share your thoughts and perceptions of this process. For nearly half of the viewers on this forum, this is how our jobs came to be...

 

[bikERdoc]

So good. Thanks for taking the time Niner. Any thoughts on why hospitals aren't moving more towards just buying these groups outright and employing that way. Seems that money could be made for the hospital that way. I understand they take risks in doing so, but not sure why we aren't seeing more of this model.

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Edit: instead of "buying" these groups, meant to just say take the contract and give it to their own staffed physicians.

 

[sum dude]

Noncompetes in the hands of a SDG are essentially useless as they do not have the $$$ to enforce it.

Noncompetes in the hands of a CMG has some weight as they have the $$ to make an example of you and limit more docs from jumping ship.

regardless, we are going off topic. Once the Contract is up for bid, EMGA knows that they will never survive the long haul. EMGA can kick and scream, threaten non competes.... but at the end o the day they are powerless in this process.

This lies the big problem with the SDG. They have no property. They have very little influence. They are replaceable. This is why EM docs need to back the FSED model that will allow them to have the upper hand on the Hospital system. We control the $$$, the insured pts, then this is when we will have some influence.

Currently, SDGs have zero power in negotiation as we bring absolutely nothing tangible to the table.

THIS. Only way for SDG's to compete is to open FSED's or in theory, doctor owned hospitals. Otherwise, will be really tough to continue model.

 

[deleted109597]

Doctor's can't own and work at hospitals. At least, not and accept Medicare/Medicaid.
We are a bit worried that they'll extend this to FSEDs as well. Maybe they'll be grandfathered, maybe they won't. It's not like I'm going to just trust the government.

 

[NinerNiner999]

So good. Thanks for taking the time Niner. Any thoughts on why hospitals aren't moving more towards just buying these groups outright and employing that way. Seems that money could be made for the hospital that way. I understand they take risks in doing so, but not sure why we aren't seeing more of this model.

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Edit: instead of "buying" these groups, meant to just say take the contract and give it to their own staffed physicians.

They are, but this will likely not be a sustainable model or generate the revenue a hospital thinks it will. EM groups, billers, and coders are very experienced with the intricacies of EM billing. Hospitals are notoriously cheap and poorly invested in the resources needed to collect what CMG and good Private billing companies can accomplish. It takes a lot of experience to identify and add the RVUs for multiple laceration repairs with multiple layer closures, X-ray interpretation, lab interpretation, etc. Multiply that by 4000 patients or so per month and you can easily see why billing for 10 orthopedic spine surgeries paying 40k each will take priority to the hospitals.

Some hospitals will hire a third party billing company to do this, but it will be at or near the private group rate, or at a reduced rate offered by a CMG. Some CMGs offer billing only services as a way to get a foot in the door for the provider contract. Either way, it won't be as lucrative as a group who's providers have a dog in the fight. The more a hospital pays for billing/loses by missed billing, the lower rate they will pay their physicians, and the harder it will be for them to keep their department full. The mentality of a salaried (or minimally incentivized) employee is much different than a good 1099 provider who understands their worth.

Then, depending on the type of hospital (for profit, not for profit) there may be a tax advantage for reporting unreimbursed care from the ED. If you add physician charges, that can increase the actual amount you can write off on the professional billing side, and even possibly drive the number too high to report a loss on the facility side. Sometimes it's a grey area between what qualifies as a "facility fee" and what qualifies as a "professional fee" when they are as intertwined as they are in the ED.

 

[GeneralVeers]

I've worked as a hospital employed physician before. My impression is that every provider was less efficient, and had a worse work ethic just due to the hospital environment of no accountability. We had a "medical director" in name only who was completely toothless, and could not make any impactful decisions regarding ED staffing, or ED workflow without approval from the hospital. I can easily see how a hospital would be able to extract far less income from running an ED versus a private CMG.

 

[deleted109597]

I agree. The only places I've worked where the physicians are employed are academic shops (and still a rarity) or throwbacks to 50 years ago.
At every single one of these, they ask the physicians to code charts. Either they don't know or they don't care that physicians as a whole are utterly terrible at this.

 

[Dr Mantis Toboggan]

It is illegal in my state (TN) for hospitals to employ emergency physicians, anesthesiologists, or radiologists (academic hospitals are exempted). At least with a CMG you are dealing with an entity that understands the specialty. The thought of working for some hospital administrator looking to make their bones, cut costs and climb the ladder literally gives me chest pains.

 

[VA Hopeful Dr]

It is illegal in my state (TN) for hospitals to employ emergency physicians, anesthesiologists, or radiologists (academic hospitals are exempted). At least with a CMG you are dealing with an entity that understands the specialty. The thought of working for some hospital administrator looking to make their bones, cut costs and climb the ladder literally gives me chest pains.

That is the case in many locations, so you will have Hospital Affiliated medical groups that serve the same purpose but stay clear of the law

 

[bravotwozero]

With regard to sign on bonuses - if you're getting market hourly rates in addition to the sign on from a cmg, why would the sign on bonus not be worth it financially?


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[GeneralVeers]

With regard to sign on bonuses - if you're getting market hourly rates in addition to the sign on from a cmg, why would the sign on bonus not be worth it financially?


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Because they aren't that much money when you think about it. To get a sign-on bonus most CMGs demand a 2 year committment out of you. If you figure 1400 hours per year, and average the bonus out per hour it doesn't make sense. The average bonus I've seen is about 20K. Averaged over 2 years it is essentially $6/hour over the market rate. I know of one place that offers $100K, and that is only $30/hour. Definitely not worth it to be "trapped" for 2 years, unless the other aspects of the job are fantastic.

 

[deleted109597]

If it's for one year, then sure. Maybe. But you want to be able to opt out in a hurry. If you're contractually obligated, you might not be able to sign up for bonus shifts either.
In the end, if you need money to pay the credit cards down, you've got to do what you've got to do. But it's not free money.

 

[shoal007]

I work in a hospital employee model. About half of the jobs in my state are this model. The hospital has billers, we use a 3rd party billing company to review our collections and our director has ability to implement and make changes. Although not as lucrative as a SDG, the benefits (pension, retirement, CME, healthcare, insurance) are much better than the previous.


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[da8s0859q]

I work in a hospital employee model. About half of the jobs in my state are this model. The hospital has billers, we use a 3rd party billing company to review our collections and our director has ability to implement and make changes. Although not as lucrative as a SDG, the benefits (pension, retirement, CME, healthcare, insurance) are much better than the previous.


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Which state? Always curious how things are done elsewhere.

 

[The White Coat Investor]

In the end, if you need money to pay the credit cards down, you've got to do what you've got to do.

There are so many problems with this sentence that I don't know where to start.

First of all, you don't pay credit cards "down" like there is some balance that is okay to carry.

Second, you don't use credit cards for credit. Do you also do Payday loans and title loans? You're a doctor for crying out loud. Even if you're a resident your income is in the top 50%. As an EM attending, certainly in the top 1-2%. Why would you need to borrow money for anything? Why not just use part of that $20-40K that gets deposited into your checking account every month to buy whatever it is you want?

Third, don't ever put yourself in a financial situation where "you've got to do what you've got to do." Life is too short for that. How long until the CMGs are in cahoots with the medical schools to force you to work for them?

 

[deleted109597]

I was referring to residents, many of which are paying a significant percentage of their income towards their incredibly high and high interest student loans, and are using credit cards, even if only for the move, to do just that.
Sure, they probably shouldn't have bought cars and houses during residency. But they did. And now they're stuck with a 2-3 month gap in pay from their last resident check to their first attending check. So what are they supposed to do?
They aren't making 20-40K a month.

I agree with your statement for me personally. Credit cards are there for my benefit. I've got a companion pass on southwest, I just received $700 in gift cards to lowes from another, and I've got 300,000 miles on another. I pay them off every month, but I use the points for my benefit. We aren't talking about me and you, and telling people standing on the side of the road with a gas can that they should have filled up with gas at the last exit isn't the greatest advice.

 

[bravotwozero]

In an SDG, if you're a partner, do you own shares in that company? So if/when you decide to leave/retire, or group gets bought out, you sell your ownership?

Is this correct or not even close?


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[TooMuchResearch]

In an SDG, if you're a partner, do you own shares in that company? So if/when you decide to leave/retire, or group gets bought out, you sell your ownership?

Is this correct or not even close?


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It's correct but highly variable.

 

[GeneralVeers]

Third, don't ever put yourself in a financial situation where "you've got to do what you've got to do." Life is too short for that. How long until the CMGs are in cahoots with the medical schools to force you to work for them?

At one of my part-time Vegas jobs there are plenty of "Grandpa" doctors in their 60's who are still doing EM. My understanding is that they have made some poor financial decisions in their lives, like credit cards, gambling, and multiple divorces, which force them to keep working well past their prime. It's annoying to work after, or alongside them as typically they refuse to use scribes, are inefficient at the EMR, and stop seeing patients 2 hours before the end of shift. Some of them even "take up space" meaning they sit at workstation for hours doing "charting" and not seeing patients, while forcing me to use a scribe or nursing computer to input orders.

 

[Birdstrike]

Man, I haven't been on SDN Emergency Medicine in a long time. I do have a blog that I may cook up for y'all, tonight, actually.

 

[TooMuchResearch]

Man, I haven't been on SDN Emergency Medicine in a long time. I do have a blog that I may cook up for y'all, tonight, actually.

Hey!

 

[RustedFox]

Last Author Post = February 18th.

Advance the plot, please.

 

[dchristismi]

Actually, this is how it happens. There's a lot of waiting, anxiety and stress. (You know, just defending Niner, who has done a phenomenal job with this thread.)

When my old group went through loss of contract, there was an exceptionally stressful 3 month period when we didn't know who was going to win the contract, and everything was in limbo.

 

[RustedFox]

Actually, this is how it happens. There's a lot of waiting, anxiety and stress. (You know, just defending Niner, who has done a phenomenal job with this thread.)

When my old group went through loss of contract, there was an exceptionally stressful 3 month period when we didn't know who was going to win the contract, and everything was in limbo.

You're right. I just want to turn the page in the book, see what happened.

 

[emergentmd]

The Book was completed once the Hospital put the contract out to bid. The writing was on the wall. SDGs almost never win the bidding war and if they do, they will constantly have the bullseye on their back. If the SDGs does win out, their existence will be forever miserable and within a few yrs would have wished they were bought out or lost the contract.

The best the SDG could hope for is a buy out and a CMG contract similar to what the SDG was making.

SDG - Be careful what you hope for. If you win the contract, your existence will be miserable.

 

[bravotwozero]

CMGs also have a bullseye on their back too, and often lose out contracts to other CMGs and SDGs


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[emergentmd]

CMGs also have a bullseye on their back too, and often lose out contracts to other CMGs and SDGs


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SDGs rarely if ever take a contract from a CMG. Good luck finding a true SDG banding together. You may have pseudo SDGs with one or two owners, but nothing that truly is a SDG.

CMGs lose contracts all the time and eat up others. They eat more than they lose. That is not a Bulls eye. That is called the economics of business.

Don't equate the Bulleye on SDGs with the "bullseye" on a CMG. Once a CMG loses a contract, they move on to eat up more. Once the SDG loses a contract, they become nonexistent.

 

[dav86]

SDGs rarely if ever take a contract from a CMG. Good luck finding a true SDG banding together. You may have pseudo SDGs with one or two owners, but nothing that truly is a SDG.

CMGs lose contracts all the time and eat up others. They eat more than they lose. That is not a Bulls eye. That is called the economics of business.

Don't equate the Bulleye on SDGs with the "bullseye" on a CMG. Once a CMG loses a contract, they move on to eat up more. Once the SDG loses a contract, they become nonexistent.

It is rare, but not impossible. I work for a true SDG. Everyone is a full partner after buy-in track and have a full vote. We all work at all hospitals. We all do pretty well. The buy-in track is rough for two years but once partner it's a pretty good life style. We took a contract from a large CMG last year and took another contract from the same CMG this Jan. The contract we took this Jan is a very lucrative contract and has a great payor mix. No idea how much longer our or other SDGs will last, but they can take contracts. CMGs have problems staffing hospitals all the time and it just takes the right situation and group to take advantage.

 

[NinerNiner999]

The winner of the contract has been announced. Between the 3 bidding CMG corporations, the winner was CMG#3, who came in with a zero stipend bid. A meeting has been scheduled in 1 week with the new group and the members of EMGA. The intent of this meeting is an introduction, over lunch, to discuss transition plans, and review hiring needs. There are 2 months left to recruit, contract, credential, and staff a full department of providers, and other than the timeline, which is known to EMGA, little other details about the group are known, except their name (not important for this thread - any large CMG will do). The members of EMGA are each getting as much information as they can about the group, and a conference call was held to announce the winner to the partners. The hospital has contacted the group president to make the formal announcement and asked for his leadership to help keep the team together. It appears he has been tapped by hospital admin to be the group's medical director.

More to come in a week.

 

[bravotwozero]

If I was one of the emga docs in the meeting, I'd be having choice words for cmg #3


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[GeneralVeers]

I really find it interesting that the hospitals never involve the existing physicians in the discussion as to which group to pick. You would think the hospital would ask physicians: "Are you more likely to stay if we pick group #1 over group #2?". Then they could go go back to whichever group the physicians pick, and tell them to sweeten the deal in order to be selected.

The hospital really should figure in disruption to current services due to loss of providers. It may take 6 months to get things running like normal. In the case of my own group who got kicked out, 3 years later and the new group STILL can't fully staff the ED.

 

[NinerNiner999]

I really find it interesting that the hospitals never involve the existing physicians in the discussion as to which group to pick. You would think the hospital would ask physicians: "Are you more likely to stay if we pick group #1 over group #2?". Then they could go go back to whichever group the physicians pick, and tell them to sweeten the deal in order to be selected.

The hospital really should figure in disruption to current services due to loss of providers. It may take 6 months to get things running like normal. In the case of my own group who got kicked out, 3 years later and the new group STILL can't fully staff the ED.

Great points. The hospitals intentionally keep the bidding process closed to avoid any risk of unfair bargaining or negotiations. To them, losing their leverage would be catastrophic (See Summa Thread regarding unfair bidding and risk to hospital admin) and potentially expose them legally. They also remove the outgoing group from negotiations because they know emotions will often overrule business decisions. They also don't trust many doctors. To the hospital CEO, they need a new car and are simply taking test drives before they buy.

Sadly, Hospital Administrators do factor in service line disruptions, and part of their decision to choose a group involves the group's reputation, resources, and staffing plan in case nobody from the old group stays. Their only priority is keeping the doors open, which they are federally required to do. They also take a tremendous risk with their political capital and the medical staff, because a poor transition or bad doctors can cost them their jobs (again, see the Summa thread).

There is nowhere to turn, and rarely anyone to trust in the bidding process. Every CMG will tell the CEO they are the best, share the same bells and whistles as the other groups, and give you their "best package." Every CEO will leverage potential future business, and make it very clear that they are in the driver seat of the car they are trying to buy.

CMG's will sell themselves out completely to win a bid, some without any honor. Some will mislead the CEO about their staffing ratios, others will promise services enhancements that they simply have no plans to deliver. Whatever it takes to get the contract. The doctors are a replaceable work force, and are never a selling point of any negotiations for a new startup. Think about that for a moment - a company is bidding on a proposal to staff a hospital with physicians, but can make no guarantee that the doctors will be good, reliable, hard working, or even fit the culture of the hospital. It is expected that they will staff the department - and that is all.

One of my prior contracts went through 80 physicians before the group stabilized at 15 physicians everyone liked. At the end of the day, the CEO decision is completely arbitrary, and whatever will reduce the likelihood of another contract change in the future, while maintaining and (ideally) growing volume. If there is anything hospitals hate the most, it is displacing groups that are already working well.