Dr. Ice

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new to the job hunt...heres one offer I got...group consisting of one anesth pain, one nurse prac (and potentially me). 3 offices, about 30 min from each other, split during the week, 95% in office procedures...230k base for the first year, then the second year, base + 25% production over 500k billed. Plus the standard other stuff...4wk vaca, 401k, med/dental, 1 week cme. Call for hospital consults only shared amongst the three practitioners.

Im new to this, but doesnt the 25% production seem a little low??

Anyone have any comments or advice??

Thanks
 

ampaphb

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Depends if it is 25% of the gross, or the net.
 
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Dr. Ice

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Im assuming its the gross...

low?
 

knoxdoc

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I doubt its for over 500K billed, more likely collected. Nonetheless, you can do better.
 
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Dr. Ice

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what would be a reasonable production bonus?

40%?
 

ampaphb

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My memory is, you are in the NY metropolitan area. If the position is as well, it is a VERY competitive marketplace, and so your salary expectations need to be tempered accordingly.
 
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Dr. Ice

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its actually in eastern PA, close to northern NJ which I suppose is still a competitive marketplace...nevertheless...would 40% production be a reasonable request or would I be pushing it considering I will be a new grad out of fellowship??
 

ampaphb

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what would be a reasonable production bonus?

40%?
Assuming 50% overhead, 25% represents a 50 - 50 split of the remaining revenue. That is fairly typical.
 

PMR 4 MSK

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What about after the second year? If it's just for the second year, that's reasonable while you cut your teeth and prove yourself.
 
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Dr. Ice

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thats just for the second year, and then its negotioable after that.

Do most practices not offer a bonus structure from the start? Is it safe to say that most practices are hoping to just "break even" when they hire a new grad and that the bonus structure begins the second year of practice after one "proves themselves"?

Ive heard mixed answers. Some practices start their new hires with a bonus structure, say x% for collections over 500k, knowing that the new hires may not reach that collection level.

Whats the norm?

Thanks...
 

PMR 4 MSK

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There are many variations. There is no norm. Get a proforma so you know what the numbers translate to. Remember they set up the practice and have invested their time, money and credit rating to build their practice. They have been succesful enough and/or see an opportunity to expand. You should be expected to bill what you are worth, and they should make a reasonable profit off you in the beginning. After a couple years, it should be a cooperative effort. They should not take a percentage off the top outside of overhead/expenses just to line their own pockets after a couple years.
 

Disciple

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They should not take a percentage off the top outside of overhead/expenses just to line their own pockets after a couple years.
That all depends on location, and how competitive the area is though.

Right?
 

Jcm800

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thats just for the second year, and then its negotioable after that.

Do most practices not offer a bonus structure from the start? Is it safe to say that most practices are hoping to just "break even" when they hire a new grad and that the bonus structure begins the second year of practice after one "proves themselves"?

Ive heard mixed answers. Some practices start their new hires with a bonus structure, say x% for collections over 500k, knowing that the new hires may not reach that collection level.

Whats the norm?

Thanks...

some do, but it is very hard to actual make that number in your first year and often you are negative... so it is not unreasonble to not have a bonus potential, as it is very hard to reach it. But you could ask for one, there is no harm in it. if you dont achieve it, no penalty...
 
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Dr. Ice

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so far most of my sources tell me that 25% production bonus over 500k is low. Dont get me wrong, Im not all about the money...obviously the right working environment with like minded individuals is the most important thing. I just dont want to feel like Im being taken advantage of.

Some of my collegues seem to be getting production bonus offers starting year 1...others start year 2 with a 40% bonus structure. Thats sort of what Im basing it on. So, being new to this whole thing, what should I be asking the practice? What happens to the other 75% of my production? What does all this stuff really mean??
 

ampaphb

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so far most of my sources tell me that 25% production bonus over 500k is low. Dont get me wrong, Im not all about the money...obviously the right working environment with like minded individuals is the most important thing. I just dont want to feel like Im being taken advantage of.

Some of my collegues seem to be getting production bonus offers starting year 1...others start year 2 with a 40% bonus structure. Thats sort of what Im basing it on. So, being new to this whole thing, what should I be asking the practice? What happens to the other 75% of my production? What does all this stuff really mean??
Assuming 50% overhead, 25% represents a 50 - 50 split of the remaining revenue. That is fairly typical.

On the other hand, if it is 25% of the net revenue AFTER overhead, that is, indeed, low.

Go find out if it is 25% of net or gross, and then we can have an informed discussion.
 

Tenesma

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with upcoming healthcare/medicare changes in next 2-3 years, what ever contract you sign probably will need to be re-evaluated anyway...

i would counter-offer with 1 year of base salary, renegotiate at end of year 1... if no new contract for year 2 then you are allowed to open up an office across from theirs... :)D
 
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Dr. Ice

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Assuming 50% overhead, 25% represents a 50 - 50 split of the remaining revenue. That is fairly typical.

On the other hand, if it is 25% of the net revenue AFTER overhead, that is, indeed, low.

Go find out if it is 25% of net or gross, and then we can have an informed discussion.
the overhead is about 50%, and that would be excluding my salary. The bonus structure is based on net collections.

I guess, like you were saying, thats fairly typical??
 

Finally M3

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with upcoming healthcare/medicare changes in next 2-3 years, what ever contract you sign probably will need to be re-evaluated anyway...

i would counter-offer with 1 year of base salary, renegotiate at end of year 1... if no new contract for year 2 then you are allowed to open up an office across from theirs... :)D
This is good advice. My situation is a bit different in that I'm the first non-orthopod joining the group, but I wanted a buffer period to get an idea of how the billing/coding/collections would work for me.

Salary, with a bonus of 50% of collections that is above overhead (sliding scale, $450K at low, but can go higher as it is 50% of what I collect with a minimum threshold)