Is this a good salary offer?

[doc1107]

70K with 10% bonus after $200,000 collected. What questions should I ask? Thanks

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[krabmas]

what city or state is this? It may be difficult to live in NYC but OK in Kentucky.
What is the average cost of living in this location?
Is your malpractice insurance covered?
Are your state license fees covered?
Are your state association and APMA fees covered?
Is ACFAS or ABPS fees covered?
Do you get any CME money? Is this for travel as well or just admission to the conference?
What is the call schedule like? For the practice? For the local hospitals?
Do you have dedicated OR days? Do you have control over your schedule?
What is the buy-in/partnership potential and fee?
Do you like and trust the people hiring you?
I'm sure there are more things that I am not thinking of at the moment that others will be able to fill in...

There are many questions to answer besides just the base salary plus incentives.

Your happiness is more important than the big number. For some people the big number makes their overall happiness, but not for most.

 

[jonwill]

I agree with Krabmas however, in my opinion, that is a horrible deal. You have to produce 500K just to make 100K or am I understanding this wrong??? A low base salary is not a big deal as long as you have good incentives. Up that percentage to 35% after 200K and you're getting somewhere. I understand the costs incured by a practice when they hire a new associate but come on! There may be extenuating circumstances but I'd be suprised if ANY of the attendings on here would think that is very fair.

 

[347932]

What Krabmas said.

BUT...this type of question is impossible to answer without the intimate details of the deal. There are way too many factors (as have been discussed many times before) to be able to accurately assess what the deal is really about. My best advice is get a good attorney in the area where you are considering practicing in, who practices medical contract law and ask him or her. They will be able to help you much more than we can. Good luck.

 

[PADPM]

I agree with all the comments above. It also depends what YOU are bringing to the table. You haven't discussed YOUR credentials or training.

Krabmas brought up excellent points regarding a lot of unanswered questions that will give more regarding the "total package". That $70,000 base can turn out to be significantly more when all the numbers are added up. However, I am also in agreement with Jonwill that after $200,000, 10% is absurdly low.

The percentage based incentive in some areas is becoming a dinosaur and is also a very tricky issue. In some areas, there are a lot of capitated contracts (I'm not going to re-explain that issue, so if you don't understand capitation, please research that term). If you are treating a lot of capitated patients, YOU LOSE!!! There is no real equitable way to increase your income if you are working on an incentive based bonus.

Secondly, depending on the business mindset of your potential employers, some can greatly limit your bonus incentive. What happens if YOU end up treating many of the post op patients (there is a ZERO fee for many post op patients for a global period). What if you end up dispensing orthotics for a lot of patients that your boss fabricated a few weeks prior? We don't charge patients to pick up orthotics.

Many times this isn't "planned" to screw you, but as the new associate you have more open time slots to see these patients. Our practice no longer pays on a "bonus" system for these exact reasons. Although most of us have "our" own patients, there is always a cross over. We don't track numbers (we do but we don't!). We know what each doctor produces, but we also know that sometimes I will make an orthoses but one of my partners will dispense them. My partner may perform a P&A and I may see them for follow up, etc.

If this happens with a new associate who is working on an incentive bonus, it could hurt the associate.

These are ALL factors that must be considered. You MUST know the characteristics of the practice and understand what you are signing completely.

As per Kidsfeet's recommendation, you need to utilize an EXPERIENCED attorney who is familiar with medical contracts and an accountant. This is NOT a time to use a friend or relative because it's free.

 

[Feli]

I agree with the above that 10% of colections is very low. Incentive generally kicks is at 2-3x base... since by that point, the associate has "earned" their base. So, a $70k base with incentive starting at $200k (2.86x base) is also lower end for the associate but well within the normal range.

A typical associate incentive would be 20-40% of collections... since the practice overhead is roughly 50% of collections; it won't tend to get at or above that point. Many contracts might do a tiered system: ie 25% incentive after you bring collections of 3x your base and then accelerators to 30% at 4x base, 35% after 5x base, etc. That lets the partners skim a bit (that "bit" gets smaller and smaller as the associate gets busier and harder working), and it also encourages the associate by letting them keep most of what they're bringing in after certain thresholds.

I also definitely agree with getting a medical attorney to review your contract. Esp if you are getting a job in an area you plan to stay (you like the area, spouse has a good job, you bought a house, etc), it's very important. If you are single, renting, no real ties to the area, etc... it's not *as* critical to avoid an overly restrictive contract which may effectively kick you out of the city if things don't work out, but you still don't want to settle for less when it comes to the compensation.

 

[347932]

Secondly, depending on the business mindset of your potential employers, some can greatly limit your bonus incentive. What happens if YOU end up treating many of the post op patients (there is a ZERO fee for many post op patients for a global period). What if you end up dispensing orthotics for a lot of patients that your boss fabricated a few weeks prior? We don't charge patients to pick up orthotics.

I have very intimate experience with this and it is truly something to be very conscious of. Some visits can not be billed for and if you are seeing many of these, this is NOT adding to your generation of income.

Also, be wary if suddenly your boss is seeing all the new patients, as s/he hired you to take over his palliative care patients so S/HE can open up the schedule to see the better paying visits/patients. This is a trap many young associated fall into.

There are so many issues with incentive type situations that may or may not work in your favor. As I've recommended numerous times before, do your homework. Know what you're getting yourself into or you'll have no one to blame but yourself.

 

[347932]

One other thing, I'm not an attorney but also have intimate knowledge of how this goes. Non-compete clauses are virtually impossible to impose legally anymore. There have been some changes in recent Stark Laws that apply to professionals seeking an employment position, as non-compete clauses can be proven to limit your capacity to make a living, which is how it is being fought now.

Yes, if you sign something, you may be subject to follow the guidelines you agreed to BUT, you can fight this particular clause relatively easily these days.

Also, if you were "recruited"by your now employer, Stark Laws now protect you 100% as I understand it. It is relatively easy for a new doctor to prove that he or she was in fact "recruited" for the position they now hold. Answering any type of solicitation for employment is considered "recruited".

Check with your lawyer(s) about this.

 

[janV88]

That offer doesn't make any sense at all.

You are gauranteed $70k + 10% of over $200k.

So let's just say you bring in $200k. You get paid $70k. That's 35% of what you bring in.

If you bring in $100k...that's 70%.

But then once you have brought in over $200k (and start making your employer money), why would your employer now start to give you only 10%?

For some reason this employer is giving you less incentive to make him/her more money...

 

[347932]

That offer doesn't make any sense at all.

You are gauranteed $70k + 10% of over $200k.

So let's just say you bring in $200k. You get paid $70k. That's 35% of what you bring in.

If you bring in $100k...that's 70%.

But then once you have brought in over $200k (and start making your employer money), why would your employer now start to give you only 10%?

For some reason this employer is giving you less incentive to make him/her more money...

$70K + other benefits=$100K

Overhead usually= 50% therefore need to bring in $200K for employer to break even.

10% after break even seems very low. I understand it to be between 25%-40% after break even point in most incentive type deals.

Again, its very hard to really estimate this without knowing what else is involved in the deal. Maybe benefits = $50K or more. Who knows?

 

[janV88]

$70K + other benefits=$100K

Overhead usually= 50% therefore need to bring in $200K for employer to break even.

10% after break even seems very low. I understand it to be between 25%-40% after break even point in most incentive type deals.

Again, its very hard to really estimate this without knowing what else is involved in the deal. Maybe benefits = $50K or more. Who knows?

So taking into account other possible benefits not mentioned by the OP would make this offer even more lopsided.

I just don't understand why an employer would make this offer. It exposes them to huge losses if the employee does not reach the $200k mark but offers little incentive for the employer to make more than $200k.

 

[347932]

So taking into account other possible benefits not mentioned by the OP would make this offer even more lopsided.

I just don't understand why an employer would make this offer. It exposes them to huge losses if the employee does not reach the $200k mark but offers little incentive for the employer to make more than $200k.

If the employer can't assure that this new employee will bring in AT LEAST $200K in their first year, this relationship is doomed before it begins.

Please remember, in an employee position, it's the employer's responsibility (for the most part) to make sure the employee is busy in the office. If an employer is considering bringing someone in and for that person, as an employee, to generate their own patient load, particularly in the first 2 years, again, the relationship is doomed from the get go (in general for a new doctor right out of residency).

Do your homework.

 

[ItsGavinC]

I'll remind the OP that $70k after taxes is very difficult to live on, at least in my opinion. I think this is even more true if you have any type of student loan payments at all. You are looking at about $4k a month when all is said and done. Sounds like a lot but it isn't.

 

[Foot Doc]

decent base salary should be $80-90K with 30-35% of collections.

 

[janV88]

If the employer can't assure that this new employee will bring in AT LEAST $200K in their first year, this relationship is doomed before it begins.

Please remember, in an employee position, it's the employer's responsibility (for the most part) to make sure the employee is busy in the office. If an employer is considering bringing someone in and for that person, as an employee, to generate their own patient load, particularly in the first 2 years, again, the relationship is doomed from the get go (in general for a new doctor right out of residency).

Do your homework.

I agree with what you are saying that the employer should have enough patients to keep the associate busy and hit the $200k mark but even if this is so, there's no guarantee that the associate will perform well and/or the patient's might not like him/her and the employer might lose patients. There is still risk on the employer's part regardless of how busy the current practice is.

My point was that there is little incentive for the employee to generate more income if he/she is actually receiving a smaller cut of what is billed once they reach over the $200k mark.

Let's say the employee generates $200k. They are then paid the base of $70k.

Now let's say the employee generates $400k. They are not paid the base of $70k + 10% of $200k = $90k.

Theoretically the employee worked twice as much (to generate double the revenue) but only received 28.6% more income (20k/70k).

It's as if the employer does not want his/her employees to generate more income. I would question the employer's business acumen and go elsewhere.

 

[347932]

decent base salary should be $80-90K with 30-35% of collections.

 

[doc1107]

Thank you all for the reply!

I have been in practice for about 2 years. Worked one year in the VA, and then one year for my uncle in law. That was why i don't know much about negotiating since I haven't really worked in a real private practice.

The job offer is in a small city in the Midwest so cost of living is very low.

I thought the 10% after 200 k was sort of low but I wasn't sure. Also I did a 24 months surgical residency.

 

[347932]

I agree with what you are saying that the employer should have enough patients to keep the associate busy and hit the $200k mark but even if this is so, there's no guarantee that the associate will perform well and/or the patient's might not like him/her and the employer might lose patients. There is still risk on the employer's part regardless of how busy the current practice is.

My point was that there is little incentive for the employee to generate more income if he/she is actually receiving a smaller cut of what is billed once they reach over the $200k mark.

Once again, if the employer doesn't have enough work for an employee, they have no business getting an associate.

As an employee, you are required to show up to work, and see the patients assigned to you. If you are lazy, don't get along with the staff, the patients don't like you for the most part, cause issues with patient retention, chances are, you won't last long enough to have to worry about having to make more than the your base salary.

Yes, its somewhat a matter of incentive, BUT if you work hard, are likeable, you will surpass you're minimum, if the deal is real and there is an over abundance of work in that office, so in your contract you need to have a fair shake at making more money. Maybe, this practice is so busy, the employer needs you to cover $900K of collections. Sound better now? We don't know the particulars of the deal, so we can't say for sure.

 

[347932]

Thank you all for the reply!

I have been in practice for about 2 years. Worked one year in the VA, and then one year for my uncle in law. That was why i don't know much about negotiating since I haven't really worked in a real private practice.

The job offer is in a small city in the Midwest so cost of living is very low.

I thought the 10% after 200 k was sort of low but I wasn't sure. Also I did a 24 months surgical residency.

Make sure there is plenty of work to go around at this office or you will get hurt. Trust me.

 

[janV88]

Once again, if the employer doesn't have enough work for an employee, they have no business getting an associate.

I was agreeing with you there.

As an employee, you are required to show up to work, and see the patients assigned to you. If you are lazy, don't get along with the staff, the patients don't like you for the most part, cause issues with patient retention, chances are, you won't last long enough to have to worry about having to make more than the your base salary.

Yes, employees are expected to perform BUT there is still a chance they won't. There is still risk on the part of the employer. I am speaking from the employer's point of view.

Yes, its somewhat a matter of incentive, BUT if you work hard, are likeable, you will surpass you're minimum, if the deal is real and there is an over abundance of work in that office, so in your contract you need to have a fair shake at making more money. Maybe, this practice is so busy, the employer needs you to cover $900K of collections. Sound better now? We don't know the particulars of the deal, so we can't say for sure.

No that is not better at all. $900k in collections still amounts to $140k/yr. That's a ton of work ($900k in collections) compared to the salary.

I'm sorry if my point is not coming across in my posts but to me it just doesn't make any sense to give the employee upwards of 50% of collections for the FIRST $200k and then only give 10% of collections after $200k.

 

[347932]

Yes, employees are expected to perform BUT there is still a chance they won't. There is still risk on the part of the employer. I am speaking from the employer's point of view.

You will know within one month if you're new employee is worth your investment. If not, then its just a matter of damage control and "GTFO of my office"

No that is not better at all. $900k in collections still amounts to $140k/yr. That's a ton of work ($900k in collections) compared to the salary.

Hiring an employee should still be a profit generating situation for the employer. I do agree that 10% is rather low, especially in this situation. That being said, making $140K your first year out is nothing to sneeze at. To make things more even and fair, have a clause in the employee contract that can have you and your employer revisit the matter after the first year. If you can truly keep up and work to generate $900K in collections your first year, you DESERVE much more than 10% and any reasonable employer should be stumbling over themselves to keep you. You're right, that is A LOT of work.

I'm sorry if my point is not coming across in my posts but to me it just doesn't make any sense to give the employee upwards of 50% of collections for the FIRST $200k and then only give 10% of collections after $200k.

Agreed.

As above (had to put this in to allow a post).

 

[dpmgrad]

Make sure there is plenty of work to go around at this office or you will get hurt. Trust me.

I agree with most of the previous postings. In addition to what Kidsfeet said above, I think that you would also want to take a look at the payor / insurance mix that you may potentially be seeing. If majority of the patients that you will see are HMO patients with capitation or are patients with insurance that do not pay well, it would be harder for you to reach the bonus stage.

 

[PADPM]

I agree with most of the previous postings. In addition to what Kidsfeet said above, I think that you would also want to take a look at the payor / insurance mix that you may potentially be seeing. If majority of the patients that you will see are HMO patients with capitation or are patients with insurance that do not pay well, it would be harder for you to reach the bonus stage.

Agreed, see my post above where I mentioned that exact issue.

 

[newankle]

70K with 10% bonus after $200,000 collected. What questions should I ask? Thanks

Unbelievable pods are still trying to take advantage of their young like this. This has to be a podiatry practice because no ortho or multispecialty group would come up with these type of figures. For goodness sake one of the physician assistants in our group last year took home $245K! His agreement is all incentive based - no base salary and no insurance, CME, perks, etc.. Tell him sorry, not interested.

 

[347932]

Unbelievable pods are still trying to take advantage of their young like this.

You have no idea.

 

[PADPM]

Unbelievable pods are still trying to take advantage of their young like this. This has to be a podiatry practice because no ortho or multispecialty group would come up with these type of figures. For goodness sake one of the physician assistants in our group last year took home $245K! His agreement is all incentive based - no base salary and no insurance, CME, perks, etc.. Tell him sorry, not interested.

Let's back off a little. The "pods still trying to take advantage of their young" is really getting old.

First let's fully understand that you (Newankle) are in a very unique situation. You have stated your situation many times, and you are apparently at the top of the earning curve in the situation you are in as a shareholder in your orthopedic group. And I know you will agree that it's safe to say that physician assistants TAKING HOME $245,000 is a very rare exception.

You simply can not compare the earning potential of an orthopedic practice with a podiatric practice. There is NO comparison. Period.

Sorry Newankle, you are in an amazing situation, but you have not owned your own podiatric practice. There IS a difference.

But I'd like to digress and make it very clear that there are those in ALL medical professions that attempt to take advantage of their young, not just DPMs. We just like to complain about it the most.

However, in some geographic areas it has become more and more difficult to make a decent living, and making high offers to new associates 'ain't so easy.

Kidsfeet had the opportunity to visit my/our practice. He will tell you what the practice is all about and how many docs we have, the size and quality of our office(s) and how busy we are. And despite being the largest and busiest practice in the entire region, WE can't make any supreme offer to a new associate, though we would make a fair offer. We (the partners) are earning less than the prior years due to increased over-head, decreased reimbursements, increased malpractice premiums, etc, etc. We have a payroll of about 40-45, which may not be large to you, but is pretty large for a podiatric practice, and WE aren't in the position to offer a huge starting salary, but we aren't taking advantage of anyone. It's simply the facts.

The other cold hard fact is that not every graduate is going to get your type of offer. The hospital based positions, orthopedic group positions are going to be the most competitive and will have less and less openings as they begin to fill over the next few years.

So I congratulate you on your success, but in reality, there's not many PAs taking home a quarter million dollars a year, and similarly, there aren't that many DPMs trying to eat their young.

 

[newankle]

You have no idea.

Really? Explain please?

Facts:
Base $70K plus 10% above $200K provides no incentive to associate to work hard but if he works hard and produces, the boss will make $ off him. This salary structure screams of a guy looking for a new associate to pawn off the stuff he doesn't want to do and help decrease the call burden. And I'm so sick of hearing how you have to take into account the "perks" like CME allowance, cell phone allowance, malpractice premium, health insurance, etc. I was an associate in a podiatry practice and saw all the financials so I know exactly what that costs and how overhead changes by adding an associate and how it differs in small versus large practices and I know how much I brought into that practice, how much I got, how much he got, and more to the point how much he made off of me. I may be relatively young but I constantly crunch numbers and look at this stuff so I'm very well aware, likely very much moreso than you.
If in that structure the associate brings in decent collections, he will be dissatisfied and leave.
If base is $70K and incidentals is about $20K that first year and the practice runs at approximately 50% overhead (which is good but this guy does sound cheap) then...
If associate brings in collections of $300K he gets $80K and boss makes $200K off him (minus change in overhead).
If associate brings in $400K he gets $90K and boss makes $290K off him (minus delta overhead).
If associate brings in $500K he gets $100K and boss makes $380K off him (minus delta overhead), and so on and so on you get the idea.
So who doesn't think that is taking advantage of someone? Why not?

And FYI what my personal situation is has absolutely no bearing on the validity of this argument - whether it is fair or not. And yes I've seen this scenario many times before.

 

[dtrack22]

I don't want to put words on KF's mouth but I think he meant "you have no idea" to mean he's in agreement and he's experienced and or seen this scenario played out plenty of times. That would make more sense given his professional history and time as an associate.

I don't get what newankle's work situation has to do with the post either and I think his last post was spot on in terms of the OP's offer.

I also think that PADPM's situation is rare. I would be curious to hear some rough numbers regarding starting salaries/incentives for their associates but understand the desire to remain anonymous and not divulge the inner workings of the practice. Geography must play a huge role as I've seen practices where second and third year associates are $190k (not counting benefits) and a busy day for the partners is 40 patients. I've never witnessed someone work as many hours for as little money as a lot of the east coasters on this site claim. It makes me wonder, where approximately is your job offer coming from doc1107?

Let's be honest, the reason many of the older pods got into medicine was because it was a prestigious career with an opportunity to make big $$. Is anyone really surprised that those individuals (who have seen the $$ decline lately) would take advantage of a young doc who really just wants to pay off his/her student loans? People in my generation didn't go into medicine to make money. If we wanted a nice house, fast car, and hot wife we would have been business majors. And because we don't expect to get rich quick, I'm sure many are easily taken advantage of...$100k looks great to a 30 year old buried $200k+ in debt. I'm sure this is the case for all medical professions but some of the numbers thrown around on this board and in certain newsletters look like starting salaries for a PT...I don't know a recent allo-grad who could say the same for their offers.

 

[hematosis]

Whenever the topic of salary talk/shpeel comes around on these forums and people discuss the idea that sometimes older pods take advantage of newer graduates (as clearly illustrated in this example), I notice that padpm gets very defensive and puts his guard up. I don't understand. how come you get so upset? It just makes me wonder that you are probably doing the same thing and therefore when other people think the salary is lowball you get the urge to become defensive about it... just my thought and i don't mean any disrespect.

 

[PADPM]

Whenever the topic of salary talk/shpeel comes around on these forums and people discuss the idea that sometimes older pods take advantage of newer graduates (as clearly illustrated in this example), I notice that padpm gets very defensive and puts his guard up. I don't understand. how come you get so upset? It just makes me wonder that you are probably doing the same thing and therefore when other people think the salary is lowball you get the urge to become defensive about it... just my thought and i don't mean any disrespect.

Newankle,

I am NOT condoning the offer originally mentioned. If you read my post, I said it was ridiculous.


dtrack,

I am certainly not claiming poverty. I'm just saying we work hard, and probably should be earning a lot more, but geography does play a role. If you want to know if our practice is successful, just ask Kidsfeet.


hematosis,

First of all, once again as Kidsfeet will attest to, I'm not "that old", I'm simply attesting to the fact that the idea that older DPM's eat their young has been over stated. And once again if you read my response originally to the post, I said the offer of 10% over 200 K was ridiculous.

Although you don't "mean any disrespect", you made a significant inference. Our practice doesn't offer "lowball" offers as I have already stated. And IF any practice does, you always have the ability to ignore the offer. Simple as that. You can't be taken advantage of if you don't want to be.

 

[dtrack22]

PADPM,

I've never doubted the size/success of your practice. I guess my post was me thinking out loud and making the point that every podiatrist who posts has a "unique" situation due to geographical considerations. Even guys with a lot of experience aren't experts on "the norm" anywhere outside of where there practice is located. Average starting salary in NJ is different than average in Texas.

 

[PADPM]

PADPM,

I've never doubted the size/success of your practice. I guess my post was me thinking out loud and making the point that every podiatrist who posts has a "unique" situation due to geographical considerations. Even guys with a lot of experience aren't experts on "the norm" anywhere outside of where there practice is located. Average starting salary in NJ is different than average in Texas.

I've never professed to be an expert, but I have been in practice for quite a while and don't have my head buried in the sand. I have friends/colleagues who practice across the country and former students and residents that also practice across the country who have confided in me and I've reviewed their contracts. So I am aware of the differences geographically.

My point was certainly obviously misunderstood. Newankle IS in a unique situation, and stating that a PA in his practice takes home a quarter million dollars a year has no relevance. I'm truly happy that he has found success, but orthopedic practices can not be compared to even the most successful podiatric practices.

Additionally, as per my other posts, I went on to explain that incentive based contracts can often be "dangerous" IF there are capitated contracts involved or if you are going to be seeing post op patients, orthotic check ups, etc., etc. I also stated that the offer originally mentioned with a 10% bonus with income generated over $200 K was ridiculous, but everyone seemed to forget I mentioned that fact.

I'm not an "old timer" and in actuality I personally was screwed by an old timer, but so were several of my MD friends. So that's not unique to podiatry, though it's constantly mentioned.

And as I've also stated many times, even if a group or doctor offers an insulting low ball offer, no one has to bite on that offer. The offer is only bad if someone accepts the offer.

The fact remains that most insurance reimbursements are at an all time low, and we have no bills that have decreased over the years. Our rent/mortgage has not decreased, our payroll has not decreased, our utilities have not decreased, our supplies costs haven't decreased, etc. Although we are busy, we are working harder for the same income we made years ago. That's not a complaint, it's simply a fact. I know many docs who would love to trade places and be as busy as our practice. We are fortunate and work hard to maintain our practice, but the money doesn't grow on trees, and to bring in a new associate, income must be generated prior to the ability to pay the "big bucks" though we do offer a fair package. And if the potential new associate doesn't believe it's fair, he/she has the opportunity to say "no thank you".

 

[347932]

I don't want to put words on KF's mouth but I think he meant "you have no idea" to mean he's in agreement and he's experienced and or seen this scenario played out plenty of times. That would make more sense given his professional history and time as an associate.

Thank you dtrack. That's exactly what I meant.

Just to add my $0.02. New doctors in every medical specialty can get lowball offers. It happens all the time, but obviously, since we are podiatrists, we only know about what happens to our colleagues and not everyone else. It happens to everyone in medicine. Even in the high powered specialties. It is more rampant than people think. As PADPM mentions, the way around these offers, is to not accept them. Simple. The only reason anyone feels they get "eaten" is because they let it happen.

When I was finishing in residency, I got all kinds of offers where I did my residency from the local guys. They thought working for them would be my dream job, and wanted to start me at $30K with very little incentive. They got very offended when I not only declined their offer, but outright asked them if they were out of their minds (not in those words and very politely). Yes this was 10 years ago, but those types of offers (scaled to inflation of course) are still around. You want these terrible offers to stop? They won't, but YOU can just ignore them.

 

[PADPM]

Really? Explain please?

Facts:
Base $70K plus 10% above $200K provides no incentive to associate to work hard but if he works hard and produces, the boss will make $ off him. This salary structure screams of a guy looking for a new associate to pawn off the stuff he doesn't want to do and help decrease the call burden. And I'm so sick of hearing how you have to take into account the "perks" like CME allowance, cell phone allowance, malpractice premium, health insurance, etc. I was an associate in a podiatry practice and saw all the financials so I know exactly what that costs and how overhead changes by adding an associate and how it differs in small versus large practices and I know how much I brought into that practice, how much I got, how much he got, and more to the point how much he made off of me. I may be relatively young but I constantly crunch numbers and look at this stuff so I'm very well aware, likely very much moreso than you.
If in that structure the associate brings in decent collections, he will be dissatisfied and leave.
If base is $70K and incidentals is about $20K that first year and the practice runs at approximately 50% overhead (which is good but this guy does sound cheap) then...
If associate brings in collections of $300K he gets $80K and boss makes $200K off him (minus change in overhead).
If associate brings in $400K he gets $90K and boss makes $290K off him (minus delta overhead).
If associate brings in $500K he gets $100K and boss makes $380K off him (minus delta overhead), and so on and so on you get the idea.
So who doesn't think that is taking advantage of someone? Why not?

And FYI what my personal situation is has absolutely no bearing on the validity of this argument - whether it is fair or not. And yes I've seen this scenario many times before.

Sorry,

I don't understand your math. I also don't understand your comment that you're very aware of the situation, and likely more so than me. Once again, I've never claimed to be a practice management guru, but as a partner in a fairly successful practice for quite a while, I'm confident that I know what I'm talking about.

I'm also a little confused about your math. If an associate is paid 80K and his collections are 300k, can you please explain the remainder of your math and how the boss makes 200K off of him and what "minus change in overhead" means. We don't pay our new associate 80 k, but I can tell you that if a new associate brings in 300K and was paid 80K, we aren't making anywhere NEAR 200K. So please enlighten me on your math and definitions.

And also let me know if there is a problem with a practice earning a profit after hiring an associate? The practice is taking the financial risk, paying the bills and paying a guaranteed salary, etc., prior to the generation of ANY income by the new associate. As I've stated many times, no practice is hiring a new associate to "break even". It is a business.

There is certainly a difference between a practice taking advantage of a new hire and simply adding to the bottom line. As a doctor and an adult, a new associate never has to be taken advantage of if the offer is not to his/her liking or advantage.

 

[347932]

Facts:
Base $70K plus 10% above $200K provides no incentive to associate to work hard but if he works hard and produces, the boss will make $ off him. This salary structure screams of a guy looking for a new associate to pawn off the stuff he doesn't want to do and help decrease the call burden. And I'm so sick of hearing how you have to take into account the "perks" like CME allowance, cell phone allowance, malpractice premium, health insurance, etc. I was an associate in a podiatry practice and saw all the financials so I know exactly what that costs and how overhead changes by adding an associate and how it differs in small versus large practices and I know how much I brought into that practice, how much I got, how much he got, and more to the point how much he made off of me. I may be relatively young but I constantly crunch numbers and look at this stuff so I'm very well aware, likely very much moreso than you.
If in that structure the associate brings in decent collections, he will be dissatisfied and leave.
If base is $70K and incidentals is about $20K that first year and the practice runs at approximately 50% overhead (which is good but this guy does sound cheap) then...
If associate brings in collections of $300K he gets $80K and boss makes $200K off him (minus change in overhead).
If associate brings in $400K he gets $90K and boss makes $290K off him (minus delta overhead).
If associate brings in $500K he gets $100K and boss makes $380K off him (minus delta overhead), and so on and so on you get the idea.
So who doesn't think that is taking advantage of someone? Why not?

And FYI what my personal situation is has absolutely no bearing on the validity of this argument - whether it is fair or not. And yes I've seen this scenario many times before.

What you are also NOT taking into account is that it is likely that your new boss is reducing his load somewhat to accommodate having a new doctor around. Even in the busiest of practices there is a trade off in this regard. The first year or two it is likely the profit margin is rather low for your new employer, which is why it hurts so badly to hire someone and them not working out within 6 months.

There are so many factors in this new relationship to take into account, which is why its such a legal nightmare when/if the relationship deteriorates.

In these types of situations its rare that x+y=z. It just doesn't work out that way.

 

[newankle]

Sorry,

I don't understand your math. I also don't understand your comment that you're very aware of the situation, and likely more so than me. Once again, I've never claimed to be a practice management guru, but as a partner in a fairly successful practice for quite a while, I'm confident that I know what I'm talking about.

I'm also a little confused about your math. If an associate is paid 80K and his collections are 300k, can you please explain the remainder of your math and how the boss makes 200K off of him and what "minus change in overhead" means. We don't pay our new associate 80 k, but I can tell you that if a new associate brings in 300K and was paid 80K, we aren't making anywhere NEAR 200K. So please enlighten me on your math and definitions.

And also let me know if there is a problem with a practice earning a profit after hiring an associate? The practice is taking the financial risk, paying the bills and paying a guaranteed salary, etc., prior to the generation of ANY income by the new associate. As I've stated many times, no practice is hiring a new associate to "break even". It is a business.

There is certainly a difference between a practice taking advantage of a new hire and simply adding to the bottom line. As a doctor and an adult, a new associate never has to be taken advantage of if the offer is not to his/her liking or advantage.

PADPM,

Sorry I couldn't respond earlier but being busy at work prevents me from surfing the web. My last post you are referring to was not really directed towards you but rather KIDSFEET as I took his "You have no idea" comment literally and did not understand he was trying to agree with me. Sorry. The last part about my personal situation having nothing to do with this was meant for you in particular. However since you felt the need to comment, here goes...

About the math...
Let's assume this is a solo practitioner/owner adding a new associate who collects $300K.
A = overhead of owner (the overhead before adding associate)
B = additional overhead of new associate
C = total overhead at end of year with added associate
So the additional overhead of new associate B = C - A

The money the owner makes off the new associate at the end of the year equals associate's collections ($300K) minus associate's salary ($80K) minus the incidentals (likely malpractice, health insurance, CME allowance, and maybe cell phone bill which I approximate to be around $20K) minus the above referenced B (additional overhead of new associate).
That B may be deceiving. When adding an associate to a solo practitioner that number will be higher than when adding to a larger practice with multiple practitioners. This B is the the medical supplies, office supplies, advertising, DME/materials costs ie all the new resources used by the new associate. That means the money the owner makes off the new associate equals $300K-$80K-$20K or $200K minus B. One may think that if the practice overhead is running at say 50% then the owner is making $200K x 0.5 = $100K off the associate but the ADDED overhead for that new associate (B) is far less than 50%. The big thing that increases overhead is not so much added supplies but rather added personnel/office staff. So in the situation we're discussing I think the owner makes about $140K off the associate. This disparity only increases as the associate brings in more in collections given the bonus incentive percentage of 10%. Hopefully this makes more sense to you and please explain to me where I may be wrong.
As for your statements about the practice earning a profit, taking financial risk, etc I've personally not seen a podiatry practice lose money on adding an associate assuming they don't overpay on the base salary. You need a base salary to live off of/pay bills but most new associates I think would be just fine with a lower base and higher bonus structure giving an incentive to work hard and collect big. That's a win-win situation making money for both the associate and the practice owners and all are happier.


KIDSFEET,

As far as the owner reducing his load to take in a new associate...
That owner has no business adding a new associate if he cannot support them and remain just as busy as before. The reason to add a new associate is to bring in new skills/services that maybe the owner does not offer or some owners actually want to slow down and are looking for an associate to buy-in (retirement) and it doesn't hurt to have someone else to share the practice and ER call and decrease the burden. My first boss seemed to want me for all of these reasons and he actually collected more money personally and saw more patients once I joined than he had ever before.

 

[PADPM]

Newankle,

I certainly agree that no practice should hire a new associate if the practice can't afford that doctor, or to attempt to build the practice if the practice isn't already busy enough to afford the salary of that new associate.

I do understand your math, and agree that if office overhead is already running at approximately 50%, adding a new associate does not add to the overall overhead "again", since it does not increase the rent, utilities, etc. However, this is once again where geographic area does play a significant role. When we hire a new associate, we prefer to purchase an occurrence vs. a claims made malpractice policy, and those policies run about $20,000 to $25,000. That alone exceeds your projected $20,000 cost in addition to salary. APMA dues are almost $2,000, ACFAS dues are about $400, ABPS dues are about $550 and each hospital runs around $500 per year in our area. That does not include CME allowance. I'm not sure where you practice, but health insurance for a family of 3-4 is at LEAST 2,500-3,000 dollars monthly. Additionally, we provide a dedicated assistant for each associate/partner in our practice which does add to the overhead. It's an additional salary while the associate/new doc has hours. So, in our area we are already up to about $60,000 in addition to the doctor's salary, and I haven't even thought about incidentals.

Once again, I believe we are agreeing on more than you realize. I don't believe any doctor should be low balled on an initial offer. I do agree that adding an associate doesn't increase all your overhead, but there are some significant additional costs that will vary in different areas. Even support staff salaries will differ in various locations.

Some areas are heavy on capitation which hurts income, and some areas have greater reimbursements. These are all factors that enter into the picture. Our practice offers what we believe is a fair starting offer/package to our new associates. We understand that an unhappy associate isn't productive and isn't good for the practice or for anyone involved.

Yes, there are always a-holes that will attempt to take advantage of the young docs.....and that will never change. Hopefully these young docs will be smart enough, and not desperate and will refuse those insulting offers.

 

[347932]

PADPM,


KIDSFEET,

As far as the owner reducing his load to take in a new associate...
That owner has no business adding a new associate if he cannot support them and remain just as busy as before. The reason to add a new associate is to bring in new skills/services that maybe the owner does not offer or some owners actually want to slow down and are looking for an associate to buy-in (retirement) and it doesn't hurt to have someone else to share the practice and ER call and decrease the burden. My first boss seemed to want me for all of these reasons and he actually collected more money personally and saw more patients once I joined than he had ever before.

Honestly, you clearly do not run your own office and also don't understand the intricacies of the right reasons for bringing on an associate.

It gets to a point where you start turning away new patients to accommodate your "regulars". This is not necessarily done consciously, but to maintain your name in the community with your current patient load.

You have to then decide if its more beneficial to do this vs. hiring someone else to to help out. It is a delicate balance which only a good accountant can clue a practitioner on. Its NOT just about "OMG I'm soooooo busy".

At that point its a matter of balancing who your new associate sees so you don't alienate your current patients and your referral sources. This change over usually takes a couple of years before the current patients, new patients and referral sources are all comfortable with "the new guy/gal".

I do agree that adding new skills to an office is a bonus, but that is getting less and less the case. Whether you want to believe it or not, maybe we do things with new plates and screws, but the days when the young hotshots were doing things way beyond the last generation or two of Podiatrists is way behind us. When its time for me to potentially think about bringing someone into my practice, they won't have one thing I do,and its invaluable. Experience. And they won't be all that better trained than I was when I came out of residency. I had three years like you did right?

Everyone thinks it's a no brainer when it comes time to add another doctor to the fold. It's not. It takes careful planning and it takes time to make the relationship work for everyone. Realistically, unless you've been there done that or helped others to do it successfully, you can't make assertions as to what's it like. You can't. I'm not trying to be an ass. I'm being realistic.

 

[newankle]

Kidsfeet,

#1 - Yes I do help run my own office as far as making decisions since I am an equal partner and on the executive committee of the practice. I do have experience with hiring as we recently hired 3 new practitioners which I had a part in. How many associates have you hired?

#2 - Why is it that you get to decide what the 'right reasons' are for bringing on a new associate?

#3 - No I didn't have 3 years when I came out. I did a 4 year program.

#4 - You said 'you can't make assertations unless you've been there done that.' Well now I can say I've been on both sides - being recruited and hired and recruiting and hiring as well as being a partner and helping run a practice. What else would you like me to do before you should 'approve' me to comment? Apparently I still must not have enough knowledge or experience.

 

[347932]

Kidsfeet,

#1 - Yes I do help run my own office as far as making decisions since I am an equal partner and on the executive committee of the practice. I do have experience with hiring as we recently hired 3 new practitioners which I had a part in. How many associates have you hired?

#2 - Why is it that you get to decide what the 'right reasons' are for bringing on a new associate?

#3 - No I didn't have 3 years when I came out. I did a 4 year program.

#4 - You said 'you can't make assertations unless you've been there done that.' Well now I can say I've been on both sides - being recruited and hired and recruiting and hiring as well as being a partner and helping run a practice. What else would you like me to do before you should 'approve' me to comment? Apparently I still must not have enough knowledge or experience.

Firstly, I don't have to "approve" of anything. This is an equal and open forum for us to share ideas. Whether I agree or disagree with you is irrelevant on whether you feel I "approve" of anything.

Run a practice by yourself and start it from nothing in an area where you know absolutely no one and have no support systems around you. Generate your own patients and knock on doors and shake hands to generate your own referral base to feed your family. Struggle through tough times when patients cancel left and right because they can't make their co-pays. You then wonder how you're going to pay your staff and don't cash your own paycheck so your receptionist will show up after pay day. Then we'll talk.

I've help colleagues' practices in more ways than I care to share frankly. How much have you done for your podiatric colleagues in that regard? I help them because I like to think I can add something and they think I have something positive to share. And you?

Good on you for doing 4 years. I felt that 3 years gave me the skills and confidence to go out and start in practice.

I don't get to decide what the "right" reasons are to hire an associate. My attorney and accountant do.

Being in an Orthopedic practice and hiring associates/partners is NOTHING like it is when you're on your own and have to count every penny and patient before you make a decision like this. You DON'T know and never will know what that's like. Don't confuse what you have with what most of the rest if us have to deal with. If you try to equate the two it only minimizes your opinion in my eyes. Why do you even care of what I approve or disapprove of?

 

[Foot Doc]

Kidsfeet,

#1 - Yes I do help run my own office as far as making decisions since I am an equal partner and on the executive committee of the practice. I do have experience with hiring as we recently hired 3 new practitioners which I had a part in. How many associates have you hired?

#2 - Why is it that you get to decide what the 'right reasons' are for bringing on a new associate?

#3 - No I didn't have 3 years when I came out. I did a 4 year program.

#4 - You said 'you can't make assertations unless you've been there done that.' Well now I can say I've been on both sides - being recruited and hired and recruiting and hiring as well as being a partner and helping run a practice. What else would you like me to do before you should 'approve' me to comment? Apparently I still must not have enough knowledge or experience.

do you think a 4 year program prepared you more than a 3 year program? Or did it just take you that extra year to get the required surgical numbers?

 

[PADPM]

I obviously can not speak for Newankle, but I'm confident that an extra year of training can only be of benefit. I doubt if the extra year was simply to reach his numbers.

The only 4 year programs I'm aware of (that doesn't mean more don't exist) are Presby in Philadelphia and Temple in Philadelphia. I don't know much about the Temple program, though I did hear that one of the hospitals where they did cases closed and they had to scatter a little. I believe the Presby program is 4 years because of a strong medical rotation early on with less surgical emphasis in the first year, similar to a traditional "intern" year in allopathic medicine. I'm not sure, but I thought that the residents also used to spend some time in Europe for AO training.

I'm not sure that at the end of a strong 3 year program the graduate is any less prepared or competent than a 4 year graduate, I simply believe it's the way the program is structured and the philosophy of the training.

 

[newankle]

I obviously can not speak for Newankle, but I'm confident that an extra year of training can only be of benefit. I doubt if the extra year was simply to reach his numbers.

The only 4 year programs I'm aware of (that doesn't mean more don't exist) are Presby in Philadelphia and Temple in Philadelphia. I don't know much about the Temple program, though I did hear that one of the hospitals where they did cases closed and they had to scatter a little. I believe the Presby program is 4 years because of a strong medical rotation early on with less surgical emphasis in the first year, similar to a traditional "intern" year in allopathic medicine. I'm not sure, but I thought that the residents also used to spend some time in Europe for AO training.

I'm not sure that at the end of a strong 3 year program the graduate is any less prepared or competent than a 4 year graduate, I simply believe it's the way the program is structured and the philosophy of the training.

I agree with PADPM. I chose my program for the things it offered that others did not. For me mainly the additional rotations giving me additional skills, discipline, and quality of attendings.

 

[that1guyfromFL]

Run a practice by yourself and start it from nothing in an area where you know absolutely no one and have no support systems around you. Generate your own patients and knock on doors and shake hands to generate your own referral base to feed your family. Struggle through tough times when patients cancel left and right because they can't make their co-pays. You then wonder how you're going to pay your staff and don't cash your own paycheck so your receptionist will show up after pay day. Then we'll talk.

And you walked uphill both ways in the snow to your office every day!

I've help colleagues' practices in more ways than I care to share frankly.

Then why bring it up?

Frankly, I don't see what relevance these comments have to the rather interesting discussion of when and why to hire a new associate that others are trying to have in this thread.

Everyone is an expert in their own mind, just share your opinion on the topic at hand and move on.

The posturing really doesn't help your credibility.

 

[347932]

And you walked uphill both ways in the snow to your office every day!

Then why bring it up?

Frankly, I don't see what relevance these comments have to the rather interesting discussion of when and why to hire a new associate that others are trying to have in this thread.

Everyone is an expert in their own mind, just share your opinion on the topic at hand and move on.

The posturing really doesn't help your credibility.

Newankle was questioning my expertise on these matters in his post. I am merely responding and pointing out that I have MUCH more experience than him in these matters and may have much more insight than he does.

I'm not concerned with whether you think I'm credible or not. I'm not an expert in my mind. Others have identified me as having expertise in certain practice issues, and THEY seek ME out with questions and to help them. I'm not posturing. I live it. And you?

Just as an aside, I helped to run a medical business in Canada that was the first of its kind in Quebec. I served on its board and was integral in the decisions that ultimately led to our selling this company for three quarter million dollars within 8 years of its inception. The shares I sold helped me put a down payment on a home for my growing family and helped me to pay off ALL of my and my wife's student loans. What have you done in your pre-medical days?

If you don't see how this is pertinent to this topic you have a lot of learning to do. A medical practice is a BUSINESS now more than ever and if you don't know what you're doing, business wise, you will FAIL.

 

[347932]

And you walked uphill both ways in the snow to your office every day!

You have no idea what it takes to run a successful practice. As a pre-medical student you are showing your immaturity by mocking something you haven't the slightest clue about. Stick to the books and talk to me about this in about 12 years or so when you're in the thick of it.

Then why bring it up?

Frankly, I don't see what relevance these comments have to the rather interesting discussion of when and why to hire a new associate that others are trying to have in this thread.

Everyone is an expert in their own mind, just share your opinion on the topic at hand and move on.

The posturing really doesn't help your credibility.

As above.

 

[that1guyfromFL]

I am merely responding and pointing out that I have MUCH more experience than him in these matters and may have much more insight than he does.

I'm not concerned with whether you think I'm credible or not. I'm not an expert in my mind. Others have identified me as having expertise in certain practice issues, and THEY seek ME out with questions and to help them. I'm not posturing. I live it. And you?

Just as an aside, I helped to run a medical business in Canada that was the first of its kind in Quebec. I served on its board and was integral in the decisions that ultimately led to our selling this company for three quarter million dollars within 8 years of its inception. The shares I sold helped me put a down payment on a home for my growing family and helped me to pay off ALL of my and my wife's student loans. What have you done in your pre-medical days?

If you don't see how this is pertinent to this topic you have a lot of learning to do. A medical practice is a BUSINESS now more than ever and if you don't know what you're doing, business wise, you will FAIL.

Make a persuasive argument once in a while instead of attacking people who disagree with you, might be just what the doctor ordered.

Posture v. - to behave affectedly or unnaturally in order to impress others; "Don't pay any attention to him--he is always posing to impress his peers!"; "She postured and made a total fool of herself"

credibility n. - the quality of being believed or trusted

 

[dtrack22]

Newankle was questioning my expertise on these matters in his post. I am merely responding and pointing out that I have MUCH more experience than him in these matters and may have much more insight than he does.

Whoa...the conversation did NOT happen that way. Here is your post directed AT newankle

Honestly, you clearly do not run your own office and also don't understand the intricacies of the right reasons for bringing on an associate.

You are calling out newankle because you thought he simply worked for an ortho group. Turns out...

#1 - Yes I do help run my own office as far as making decisions since I am an equal partner and on the executive committee of the practice. I do have experience with hiring as we recently hired 3 new practitioners which I had a part in. How many associates have you hired?

so newankle has hired people (which is what the entire thread is about) and he simply asks for your credentials...since you already took a shot at his.

You go on to take shots at his experiences (trying to invalidate it) while boistering about your successes. Why belittle the fact that a podiatrist is a partner in an ortho group? Is it the norm? Of course not. But it is becoming slightly more popular/realistic and newankle's insight into hiring associates in an ortho group is JUST as valuable as your experience in this discussion...which again, just to remind everyone, steered towards when, why and how you should go about hiring an associate. PADPM currently has a large group practice, meaning when his group hires someone it is nothing like what "most of the rest of us have to deal with." I don't see you jumping on any of his posts. It makes you sound bitter/jealous that newankle works with orthos and you don't, and every accomplishment you drop on this thread is only going to add to that perception.

 

[Podman23]

So after everything is all said and done, salary + benefits + bonus. How rare is it for a 1st year associate out of residency to make less than 100K? 1/4, 1/10, 1/20? Just wondering what you all honestly think.

 

[PADPM]

So after everything is all said and done, salary + benefits + bonus. How rare is it for a 1st year associate out of residency to make less than 100K? 1/4, 1/10, 1/20? Just wondering what you all honestly think.

With salary, benefits, bonus, etc., it is rare NOT to make 100k. I can not place a number on how many, since I haven't read every contract in the country, but although many contracts may not initially pay a starting salary of 100K, with benefits, etc., the total package should reach that number the majority of the time.

Obviously, cost of living in the area and the practice demographics will also play a role in the remuneration.

This is NOT to incite controversey, but a sincere question for Newankle. I think your situation is fantastic and hope that it is the model for young practitioners in the future. However, for some reason I thought that in some states it wasn't possible for DPM's to officially be partners or part owners in a medical practice with MD's. I knew that it was possible to own shares in a corporation, but wasn't sure of the legality in some locations to actually be "partners" in some ventures with MD's. Do you have any idea what I'm referring to or am I mistaken?