Incentive Bonus

[Redmen27]

I'm presently in contract negotiations for job that I really like. It's located in a very desirable city for my family, fairly small private practice with multiple clinics, physicians whom I got along well with during the interviews, etc. It has very good base pay, is heavily intervention based and during the interview process they informed me that the incentive bonus would be net collected over my base, minus overhead (40%). However, when I received the contract, they additionally subtracted my benefits (health, malpractice, and life) in the incentive bonus. Seems like they are trying to screw me since it doesn't make sense that if I break my base that I would have to 'pay' for these.

I was wondering if this is standard in many bonuses or if I should fight to have these either capped in the contract or totally removed.

Thanks.

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[axm397]

if it's eat what you kill type model - then yes, u have to cover your cost including malpractice premium, benefits, etc.

Net collections - base salary - overhead cost - any additional cost (benefits, direct expense, etc) = bonus.

are they going to do this on an annual basis or quarterly basis? if you end up net negative for the year, will they eat that or do you owe them?

 

[Redmen27]

The bonus is on a quarterly basis.

 

[bedrock]

could look at it from two perspectives. If I'm reading you right your bonus is 60% over a certain amount?, not 40%?

around 50% of collections is fairly common so if your 60% minus the malpractice, health insurance, ends up around 50% then that's decent. If it ends up 30 or 40% then that's much less attractive.

If you love the city, I would try to get them to increase the percent collections you get or eliminate one of the other items, malpractice, etc that would be deducted from your bonus.

 

[hyperalgesia]

I'm presently in contract negotiations for job that I really like. It's located in a very desirable city for my family, fairly small private practice with multiple clinics, physicians whom I got along well with during the interviews, etc. It has very good base pay, is heavily intervention based and during the interview process they informed me that the incentive bonus would be net collected over my base, minus overhead (40%). However, when I received the contract, they additionally subtracted my benefits (health, malpractice, and life) in the incentive bonus. Seems like they are trying to screw me since it doesn't make sense that if I break my base that I would have to 'pay' for these.

I was wondering if this is standard in many bonuses or if I should fight to have these either capped in the contract or totally removed.

Thanks.

I was presented with a similar situation at one time with a multispecialty group. I talked to several other physicians in the practice and they had the exact same thing in their contracts. The structure seems a little unusual to take those benefits out of the incentive pay but if that is the 'standard model' at the practice, so be it. They may have chosen to increase the base pay at the expense of the bonus pay to attract a certain type of physician. Or maybe some business/marketing person decided this was the best mechanism to get you to sign on. It may not reflect the good nature of the physicians at the practice. Regardless, you just have to decide whether this is still a good position for you, with the new reimbursement figures. Do the math. If so, you are not getting screwed. I'm not much of a negotiator though, I tend to take it or leave it. Especially when nobody knows anybody else. Everybody is suspicious, so I expect to take a hit initially and then recover it later when my value has been established.

 

[drusso]

If it's eat what you treat, then yes you pay for your own taxes, fringes, etc. Ask practice manager to explain rationale and then double check with accountant who does books for other practices.

 

[Tenesma]

dude... of course your benefits, health, malpractice, CME, etc are going to be subtracted....

that isn't being ripped off ... that is reality of private practice

if you had your private practice, where do you think the money comes from to pay those costs???

 

[Jcm800]

if you are young, healthy, and new to practice, those amounts will not add up to more than 20k a year for the first couple of years...is 20k a deal breaker? if it is, then maybe this isnt the best fit for you.

of the job offers i had, the ones that paid my malpractice, health insurance and CME, gave me much less incentive, the ones that had a 50/50 split or so after my salary deducted the above...so its kind of a wash.

its not unusual. its hard not to feel that you are being taken advantage of, because likely you are to some degree (no free lunch) but you will never really know, unfortunately, until you do it.

 

[SSdoc33]

if you are young, healthy, and new to practice, those amounts will not add up to more than 20k a year for the first couple of years...is 20k a deal breaker? if it is, then maybe this isnt the best fit for you.

of the job offers i had, the ones that paid my malpractice, health insurance and CME, gave me much less incentive, the ones that had a 50/50 split or so after my salary deducted the above...so its kind of a wash.

its not unusual. its hard not to feel that you are being taken advantage of, because likely you are to some degree (no free lunch) but you will never really know, unfortunately, until you do it.

health, malpractice, life insurance do not add up to just 20K. a good disability policy alone is 15K/year.

i agree that its often a leap of faith

 

[Jcm800]

health, malpractice, life insurance do not add up to just 20K. a good disability policy alone is 15K/year.

i agree that its often a leap of faith

you cant get a good disability policy right out of the gate...Health insurance for one person who is young and healthy can be 500-700/month, malpractice with no claims, for a new grad is gonna be maybe 8-9k per year, disability for 250k a year or whatever they will give you will be 500-700 per month...life insurance for a million or whatever, 100 bucks a month...

add that up, 2200 or so per month, comes out to 24k per year...roughly, for a NEW grad who is young and healthy. this is what was for me...

 

[OffPiste]

I'd be very interested in hearing everyone's thoughts on this practice setup where I've been offered a spot:

Anesthesia group looking to build pain practice, exclusive contracts at two ~300 bed hospitals (one in affluent area, other in less so but only gig around). Will do part time anesthesia until practice is busy.

Hospital based, hospital covering most costs of the clinic (C arm, etc, but also keeping facility fees)

Base 300K. 50/50% revenue sharing above base + expenses (malpractice/health). Second year incentive goes up to 70/30%.
Possibility to buy into ASC at some point where partners have some ownership.

??

 

[Tenesma]

two 300 bed hospitals... for that type of population, unless it is way over saturated, I doubt you will have to do part-time anesthesia... in fact, i would specify in the contract NO anesthesia call, NO OR responsibilities whatsoever - because the anesthesia group will beat you up if you don't set limits... or maybe a clause that if you are averaging >100 patients per week no more anesthesia call/OR time, unless you request it and they pay you 3k per call...

if the hospital is getting the facility fee, then technically they have to cover ALL the costs of the clinic.... so technically, in that situation, your only real expenses are 1) your salary 2) your health benefits 3) your malpractice 4) your membership/society dues 5) billing fee (%of collections usually between 5-6%)... and the rest should be yours...

who is sharing in the revenue?? and why?

you will hit your base of 300k within the first 12 months... who is profiting off of you?

 

[OffPiste]

Thanks Tenesma.

The anesthesia group (ie: partners) are profiting from the work. I would be employed by the anesthesia group not the hospital.

Also, the group will NOT be paying tail coverage in the event we separate, is this pretty standard?

Thoughts on fully hospital based? Initially my goal was to move the clinic into a private office once the volume could support this, and keep the inpatient work at the hospital (maximize higher reimbursement for office based procedures). But, the low/absent overhead in the hospital setting may not be that bad...

 

[PMR 4 MSK]

I'm presently in contract negotiations for job that I really like. It's located in a very desirable city for my family, fairly small private practice with multiple clinics, physicians whom I got along well with during the interviews, etc. It has very good base pay, is heavily intervention based and during the interview process they informed me that the incentive bonus would be net collected over my base, minus overhead (40%). However, when I received the contract, they additionally subtracted my benefits (health, malpractice, and life) in the incentive bonus. Seems like they are trying to screw me since it doesn't make sense that if I break my base that I would have to 'pay' for these.

I was wondering if this is standard in many bonuses or if I should fight to have these either capped in the contract or totally removed.

Thanks.

Mine is similar and it's a good deal. Someone has to pay it, and if they are paying you everything after OH, and insurance is not part of OH (in my practice it is not), then it should come out similarly.

You will likely find other things subtracted, that are normal medical business expenses - cell phone, car expenses, books, society/association memberships, travel, etc. You have these things paid by the corporation, then they come out of your productivity, pre-tax.

They are not trying to screw you, they are doing things logically.