How much is an ED contract worth?

[alphaholic06]

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I know this varies based on factors like volume, payor mix, and location, but how much can a group make for staffing an ED?

 

[The White Coat Investor]

I know this varies based on factors like volume, payor mix, and location, but how much can a group make for staffing an ED?

That's a very interesting but vague question. Let me answer it with the specifics from my ED, and then let you try to generalize that.

We don't get anything "for staffing the ED" except the opportunity to bill for the work we do. After expenses, that works out to $200-250 an hour for the docs.

Now, if you buy a contract, and pay docs $150 an hour, then perhaps you can get an extra $50-100 per doc-hour worked "for staffing the ED", but then you'll become a parasite and only get docs willing to work for a parasite.

Some EDs are so desperate they have to pay a group to come in and work the ED above and beyond what they can bill. Our hospital isn't that desperate.

 

[alphaholic06]

ActiveDuty thanks for your reply. The reason I ask is that I'm from a fairly small town in the midwest, and the ED here is currently run by a CMG, but the hospital administration is unhappy with them. Apparently, this group staffs the ED with FM and IM trained docs. Since that time the medical staff is unhappy, wait times have increased, and the ED has developed a bad reputation within the community which has led to a dropped in visits. I bumped into one of the adminstrators who told me this, and said they be willing to revisit who staffs their ED if they could get an EM trained doc to run the ED. So I'm wondering how much could I make from taking this on a couple of years? This ED sees about 50k per year, with a 75/25 medicare/private payor mix.

 

[EM_Rebuilder]

ActiveDuty thanks for your reply. The reason I ask is that I'm from a fairly small town in the midwest , and the ED here is currently run by a CMG, but the hospital administration is unhappy with them. Apparently, this group staffs the ED with FM and IM trained docs. Since that time the medical staff is unhappy, wait times have increased, and the ED has developed a bad reputation within the community which has led to a dropped in visits. I bumped into one of the adminstrators who told me this, and said they be willing to revisit who staffs their ED if they could get an EM trained doc to run the ED. So I'm wondering how much could I make from taking this on a couple of years? This ED sees about 50k per year, with a 75/25 medicare/private payor mix.

The bolded part is your problem. Its VERY difficult to attract high quality BC/BE EM physicians to 'small midwest towns'... or small southern towns, and many other smaller places in America....

That ED probably has that issue because it cannot attract the folks there; a large CMG ends up with it and sends FM/IM/retired OBs/rotating intern year completion only/moonlighting residents/etc to the area because that is honestly all they can get. The physicians tend to not care much about CMS targets, PG scores etc, and only care about the next pay check or holding out to the last minute and asking for higher hourly rates. I think your plans/idea are noble and I hope I live long enough to see high quality Emergency Care in all of rural America, but I have my doubts...

I love small town America and espically small town Texas. I was from smaller town Texas; when I looked at a job though, the larger town with the larger referral center won out to me....and thats the typical thing that happens to majority of EM folks.

 

[alphaholic06]

The bolded part is your problem. Its VERY difficult to attract high quality BC/BE EM physicians to 'small midwest towns'... or small southern towns, and many other smaller places in America....

That ED probably has that issue because it cannot attract the folks there; a large CMG ends up with it and sends FM/IM/retired OBs/rotating intern year completion only/moonlighting residents/etc to the area because that is honestly all they can get. The physicians tend to not care much about CMS targets, PG scores etc, and only care about the next pay check or holding out to the last minute and asking for higher hourly rates. I think your plans/idea are noble and I hope I live long enough to see high quality Emergency Care in all of rural America, but I have my doubts...

I love small town America and espically small town Texas. I was from smaller town Texas; when I looked at a job though, the larger town with the larger referral center won out to me....and thats the typical thing that happens to majority of EM folks.

Rebuilder, thanks for the reply. I definitely understand that one of the major problems will be recruiting EM train docs to the area. I have two ideas to help overcome this, at least initially. First, two guys that I went to med school, who are also from the state, are also currently training in EM. Secondly, there is a residency program in the state and programs in neighboring states. I would try to recruit heavily from these programs particularly the one in our home state, as they have a number of residents from the state.

 

[Birdstrike]

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[deleted109597]

The bolded part is your problem. Its VERY difficult to attract high quality BC/BE EM physicians to 'small midwest towns'... or small southern towns, and many other smaller places in America....

Hell, it is hard to attract BC/BE physicians to moderate sized towns, much less small towns. The Rio Grande Valley, which has problems of course, has a metropolitan population of more than 1 million, can't attract EM trained people. It takes someone getting a foothold and running with it. Nobody wants to take checkout, or worse, work beside a subpar IM/FM doc in a busy ED.
Underserved areas are underserved because of one of two reasons. Either nobody wants to live there or they aren't paid enough. You only have to fix one.

 

[The White Coat Investor]

I disagree with the above advice. The key to developing a long-range plan is not to exploit others by becoming the CEO and trying to determine how much you can skim off the work of others. If you want to create something wonderful, start a small democratic group. Yes, push for that huge stipend from the hospital so you can get residency trained EPs. But focus on treating people right. If you build a great democratic group with great compensation and a great lifestyle, you can get good EPs, even in a crappy location. Especially if the hospital kicks in a few hundred thousand every year to make up for the 75% medicare issue (yuck.) BTW, you need to know the percentages of medicaid and "self-pay." They're far more important than the medicare percentage.

 

[Birdstrike]

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[alphaholic06]

Thanks for all the replies. I definitely realize what a great opportunity this is. I'm giving it a lot of thought. What is involved in actually setting up a group? What are the logistics? I know I'll need to recruit other docs. I'll have to hire a billing and coding company, set up 401ks, malpractice insurance, health and disability insurance. I'm sure that I'm missing a lot of things.

 

[deleted6669]

. I'm sure that I'm missing a lot of things.

You need to hire a bunch of experienced em pa's as well so instead of 3 docs per shift you can staff 1-2 docs+ 2 pa's for less than the cost of 3 docs and see more pts.
treat the pa's well and they will make you a lot of money.At my primary job we staff 7 pa shifts/day and make the md partners $2.5 million/yr in profit after all our salary and benefits are paid.

 

[The White Coat Investor]

A true "democratic group" shares not only the profits but the pain. Lots of times, EM docs want to "punch in punch out" and dont want to share in their portion of the administrative duties of a "democratic group" yet when it comes to profit share time they want "democracy". For a guy that spends a whole career, building a large physician group, managing it, attracting practitioners to an under served hospital system, there should be a reward. It doesn't have to be exploitative. If the CEO is providing a service, ie business management, that no one else in the group has the skills, taken the risk, desire or motivation to provide, there's value to that. If its up front and honest, it's not exploitative. The deal being spelled out as such, ie, you the employee (and junior shareholder) pay an administrative fee of let's say "X"%, and therefore have your fair share of the administrative portion done for you, it's fair.

When it's "sold" as democratic, yet it's a lie and the guys at the top are skimming, and the books are closed, and still requiring the underlings to share in the management responsibilities, then it's exploitative. If its honest, it's not.

How do you make a 50+ doctor group "democratic"? All 50 docs vote on every business decision, all 50 docs do one fiftieth of the contract negotiations, one fiftieth of the payroll? The guy that built the group over a 30 year career has no seniority over the guy who was a resident 6 weeks ago? This might work for a 5 doc group of a 10 bed rural ED, but not the large multi specialty group I described.

I don't agree with exploitation of new hires or new grads to a group, but to be at a group 20 or 30 years and have no benefit of seniority, at all, is also sheer madness. No other business, industry or specialty even pretends to work this way. Many surgical groups will have in their contracts, "no ER call after 20 years" in the group, but in the ED no nights after 15 years in a group is blasphemy? I don't get it.

My point in the above post was not that he should exploit anybody, but that if he spent a 20 year career building something of value, that is a high quality mutispecialty group of doctors to an underserved area, there could be reward. Such a group does NOT have to be exploitative and predatory.

There would have been no iPhone without Steve Jobs (rich guy CEO)
No automobiles for the masses without Henry Ford ( rich guy CEO)
No Facebook without Zuckerberg (rich guy CEO)

Another alternative- democratic group, everything up front and honest, no benefit to seniority, but you pay the guys who want to do the administrative work a stipend? How much? The market price (i.e. whatever it takes to get someone to want to do it.) Same thing for nights. Determine the stipend using the market. Nights not covered with a 10% differential? Make it 20%, or 30% etc. The guys in our group who do the lion's share of the admin work get 3 night-shifts credit for it. The guys who do all nights have a 50% differential over those who do days. It's fair, it's democratic, and it's not exploitative.

A large group needs to pay someone to make the little decisions whether it is a managing partner or a committee. The big decisions can be made by majority vote. Is it unwieldy? Sometimes. But it's also fair.

I don't deny there's not a business opportunity for the OP. But I don't think it's the right model for EM. And I think most trouble docs are the clock-in/clock-out type.

 

[gman33]

I'm a MS4 still trying to learn about my future business.
I a non-trad student, with significant management experience in another industry.

Not sure what is wrong with someone else making a profit off of your work if there is value added on both sides of the equation. The "employer" needs to make it a better situation than what I could have come up with on my own.

If OP gets a good contract and develops the business to make it profitable for other docs, what's wrong with him making some money?

Does every group need to be democratic?
I'm sure a lot of docs just want to work shifts and cash a paycheck.

I guess the question is what is a "fair' amount for someone else to take.
You don't want someone else stealing all of your professional fees.
I get that part.

What am I missing? Any good resources I should check out?

 

[Birdstrike]

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[The White Coat Investor]

http://www.aaem.org/rem/The_Rape_of_Emergency_Medicine.pdf

The problem is that business and medicine don't mix well. The clock-punchers don't realize how much they're being exploited by the kitchen schedulers. Plus, the business owner's incentive is towards the bottom line rather than the patient. You get the cheapest docs/mid-levels you can get away with using. Who cares about the liability? That all rests on the employees.

A business is much stronger when the entire group cares about it. I would also argue medical care is better when a democratic group provides it rather than a contract group.

 

[Birdstrike]

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[gman33]

I've read parts of "Rape" and have talked to several of my attendings about the topic.

I hadn't given too much thought to the impact to patient care.
Probably why business and medicine don't mix too well.

Just want to have my eyes open when I start to look for a job in a few years.

 

[EctopicFetus]

Great thread...

A few thoughts.. You really need to understand your payor mix. You also need to discuss what percentage the hospital is gonna make you have in Managed care contracts.

If you are at 75% medicare/medicaid then your opportunity to make a little more money is really gonna be limited with the remaining 25%.

IF you want to hire good people get the hospital to pay for signing bonuses for people you hire. They have to work for 1 yr or so to get that bonus.

Treat people well and fairly. Pay them well and you should be fine.

Im a partner in democratic private group its great. I love my group. I am always willing to help as are others.

 

[deleted65604]

I'd consider myself a clock-pusher, not because I don't care, but because I have a family to feed. It is easy to be idealistic early in your career. It is hard when your kids threaten mutiny and your wife breaks down crying because you are moving your family yet again because, "What they are doing is unjust!"

I would happily break a strike if it meant security for my family, even at the cost of giving in to the hospital's unreasonable demands or hiring on with another group that poaches my current contract.

I love the idea of playing hardball with the hospital and with corporations as Birdstrike advocates. However, as an individual, you have a lot to lose and usually little to gain by playing games of chicken. Market forces will determine our wage ultimately, and that is good. If market forces weren't involved in staffing ER's there would be a lot of empty ER's and inadequate ER medicine. Generally, hospitals aren't going to let your group's contract go and hire another group unless they know that you are taking advantage of them, not playing nice with the rest of the medical staff, or not putting out in quality measures.

 

[Birdstrike]

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[The White Coat Investor]

There are other ways to avoid getting into the contract fight. For example, a non-compete agreement that specifies that if someone else gets the contract NO ONE IN OUR GROUP, or any of the groups associated with it (half the docs in town), can then work in that hospital. We've ensured that we CAN'T jump to the new group. Seems like we're hurting ourselves by limiting our freedom, right? But no, in actuality, it protects our contract. If we lose the contract, the new group has to have 15 docs ready to work now. That's a tall order, even for a big group. And the quality of docs they're going to bring in to cover that? Pretty low. It won't take the hospital long to realize their mistake.

Also, getting active with the medical staff and building relationships with admin are key. If your group is running a great ED and making the hospital money, there's little reason to fire you. If admin, the medical staff, and the patients are happy, you're not going to lose your contract.

 

[alphaholic06]

There are other ways to avoid getting into the contract fight. For example, a non-compete agreement that specifies that if someone else gets the contract NO ONE IN OUR GROUP, or any of the groups associated with it (half the docs in town), can then work in that hospital. We've ensured that we CAN'T jump to the new group. Seems like we're hurting ourselves by limiting our freedom, right? But no, in actuality, it protects our contract. If we lose the contract, the new group has to have 15 docs ready to work now. That's a tall order, even for a big group. And the quality of docs they're going to bring in to cover that? Pretty low. It won't take the hospital long to realize their mistake.

Also, getting active with the medical staff and building relationships with admin are key. If your group is running a great ED and making the hospital money, there's little reason to fire you. If admin, the medical staff, and the patients are happy, you're not going to lose your contract.

I've heard a lot about non-competes, but I've never seen it put in terms of protecting a democratic group. This is good information.

 

[Apollyon]

I've heard a lot about non-competes, but I've never seen it put in terms of protecting a democratic group. This is good information.

My first job in SC had a non-complete clause with the same rationale. As I was told, if EmCare wanted to roll in, they would have to do so with 60 docs right up front. That was unlikely, which helped secure our contract.

 

[The White Coat Investor]

I've heard a lot about non-competes, but I've never seen it put in terms of protecting a democratic group. This is good information.

Yea, it was really funny during negotiations. They initially asked for a very broad, probably unenforceable non-compete. But when I got the lawyers out of the way and talked to the docs, they only cared about protecting the contract. They didn't care so much about me going to another ED in town if I quit or was fired. So we rewrote the clause in a way both of us were happy.

 

[Birdstrike]

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