How much is typical bonus for private group practice?

[Karying14]

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Hi there,
For outpatient group practice, basically general physiatry and performing emgs, what is the typically bonus? Is 20% of anything excess of 500K too low or typical? For example, if I collect 600K, then the bonus would be 20% of 100k, which is 20K. I have heard bonuses for general physiatry from 30%to 50% for excess over 500K. I also heard that in the first few years, sometimes you may not even meet the bonus, so therefore I was told by a colleague to not worry too much about the bonus system. Any experience or input appreciated. thanks

 

[eljefe]

Hi there,
For outpatient group practice, basically general physiatry and performing emgs, what is the typically bonus? Is 20% of anything excess of 500K too low or typical? For example, if I collect 600K, then the bonus would be 20% of 100k, which is 20K. I have heard bonuses for general physiatry from 30%to 50% for excess over 500K. I also heard that in the first few years, sometimes you may not even meet the bonus, so therefore I was told by a colleague to not worry too much about the bonus system. Any experience or input appreciated. thanks

Since no bites--From a newbie who recently took an outpatient private practice pain/spine position...

This is a tough question and is going to vary based on your base, benefits, ancillary income potential the group may have a stake in (PT, imaging, ASC facility fees if you do injections, etc.), and group overhead. Not too mention if this is partnership track versus employee (your buy-in for partnership may be being underpaid the first couple years in hope of seeing much bigger returns later...)

If your overhead is 50% (likely on the high side, but easy for math)...

Assume base of $200K and benefits of additional $50K= total compensation $250K. With 50% overhead, you pay for yourself with $500K in collections. If your bonus is 50% above 500K in collections and your overhead is 50%, you basically eat what you kill. This is assuming all collections come directly from your professional fees.

If your bonus is 20% above 500K with 50% overhead, once you start collecting (which might be a few years down the road), someone is going to make a lot of money off you in just your professional fees. Not to mention any passive income you are missing out on...

It seems pretty common from the offers I have seen to not even have a production bonus your first year (but still a good base). Once you are established in year two, you should be able to hit your bonus or the contract may be needed to be renegotiated...

Another thing to ask about is how the referrals are divided in regards to payor source. If you are getting only Medicaid while the senior physicians are seeing private insurance, you may work harder but collect a lot less. That is were an RVU based bonus system can be a better deal...

 

[PMR 4 MSK]

It is honestly so variable as to say there is no "typical" bonus. Every practice is different.

You best bet is to get a pro-forma of anticipated billings, collections and salary+bonus, and then run the numbers both conservative and liberal. Then look at the numbers.

No one has ever defined "what is fair" in medicine for an employee. If you are a full partner, you get a full share of the profits, and a full share of the risks. And believe me, most docs in partnership underestimate their risks, particularly to litigation.

How much should you employers make off your work? As much as you are willing to give. How much should you make? As much as you can. Everyone's meeting point is different.

In the end, you'll be happiest with a group that treats you well, pays you what you consider fair, and leaves you alone to practice medicine the way you want to do it. Focus less on the money than what your life and career will be like.

You'll hear that a lot, but it often takes years to believe it.

 

[Karying14]

Thanks for input!

 

[RUOkie]

In the end, you'll be happiest with a group that treats you well, pays you what you consider fair, and leaves you alone to practice medicine the way you want to do it. Focus less on the money than what your life and career will be like.

You'll hear that a lot, but it often takes years to believe it.

It is stil important to know the details and OP, I commend you for paying attention to it on the front end. My first job out of residency was as an employed physician with a bonus structure. It is correct that reaching the bonus is hard year one because of the time involved to build a reputation as well as the time between billing and collecting.

When I finally got a chance to look at the books when I was offered partnership, I discovered that I did not want to be a partner in that group. I did not like the way expenses were calculated for the partners as opposed to the employees. (the expense formula changed significantly between the two groups so there was incentive for there to always be new doctors doing lots of work) Because of this there was rapid turnover, the partners got rich, and the reputation of the whole group suffered. (I understand that this practice has changed the way they do business since then).

If I had known what things were like on the front end, I would not have taken that job (which in hindsight would have been an even bigger mistake, I learned more about the business of medicine there than I have elsewhere. That first experience is why I have a sucessfull solo practice)

 

[Josh1]

A question from a med student: where do private practice get most of their referrals. I've an interest in PM&R but I've never seen anyone go there from a family practice office and I don't have my rotation for a bit. Do you have to be associated with a hospital to get patients in private practice? How does that work?

 

[PMR 4 MSK]

Depends on your type of PM&R practice. If you do primarily inpt rehab, pts are referred for inpt rehab, reviewd by you or staff for appropriateness, and then admitted with you as attending, or in some places, as consult with an internist as primary attending.

For outpt work, you can get referrals from primary care, ortho, neuro, rheumatology or even self-referrals.