NP Private Practice Income

[neurotic_cow]

Hello all!

I'm sure this has been discussed before but I couldn't find anything recent. I am considering joining a neuropsych (adult) private practice where my income would be 50% of accounts receivable. I would be responsible for doing my own testing and a minimum of 30 billable hours per week. All test materials would be provided. No health insurance. Is this pretty standard for NP private practices? Should I run far far away? To me, based on a few calculations I did based on the current CMS rates, it doesn't seem financially beneficial compared to say, a position in a hospital setting, unless I do a lot more work. Not trying to act like I don't want to work, but just curious what the typical split is and what I might expect to bring in for seeing about 5 full evals a week. Thanks in advance.

---

Members don't see this ad.

 

[WisNeuro]

Bluntly, you're getting screwed. Plenty of places are willing to screw you with a 50/50 split and still give you benefits. This is, simply put, a terrible job offer.

 

[neurotic_cow]

Bluntly, you're getting screwed. Plenty of places are willing to screw you with a 50/50 split and still give you benefits. This is, simply put, a terrible job offer.

Thank you, I appreciate your bluntness! This is what my gut was telling me as well, but I wasn't sure because I don't know much about how compensation works in private practice.

 

[WisNeuro]

Thank you, I appreciate your bluntness! This is what my gut was telling me as well, but I wasn't sure because I don't know much about how compensation works in private practice.

No worries. Yeah, unless you're in a super saturated area (and even then) this is a pretty raw deal. Locally, there are a couple places that re almost always hiring neuro people for 50/50 splits, and also have benefits. Not great benefits, but t least they are there.

If you have some money available, you're better off starting your own PP. If you don't, I'd recommend looking for a VA or hospital based job for some stable income while you plan out a PP. There are a lot of better options than that job, at least in most areas.

 

[psych.meout]

Sorry they were trying to take advantage of you. The only way this would be a worse deal is if you were a contractor.

 

[WisNeuro]

Sorry they were trying to take advantage of you. The only way this would be a worse deal is if you were a contractor.

In this situation, I suspect they are trying to hire as a 1099, but may be running afoul of employment law considering how much they are dictating schedule. Employers incorrectly classifying people as 1099 is more common than people think. A few large practices here have been hit with big fines in recent years for doing this.

 

[psych.meout]

In this situation, I suspect they are trying to hire as a 1099, but may be running afoul of employment law considering how much they are dictating schedule. Employers incorrectly classifying people as 1099 is more common than people think. A few large practices here have been hit with big fines in recent years for doing this.

Absolutely. I've heard about these arrangements all over the place and I still don't understand how they're legal. I guess maybe the practice owner can make the argument that they're not specifically dictating how the person is conducting an eval or providing therapy, but if you're controlling where and when it happens, they're using all your materials, and they rely on your paid employees for support staff, I don't know how these could legally be 1099 positions. But hey, I'm not an expert in employment law.

 

[borne_before]

I went to a place that had a 50/50 split. I lasted maybe 6 weeks before going back to my old, salaried, job.

Simply put - if they're cheaping out on you this much at the offer, what else are they slacking on? At a 70/30 split with benefits at 30 hours a week, they would still be making a pretty penny on your labor.

Basically, why do they need so much of your income? Greed? Poor money management? Both?

Dont do it dude.

 

[psych.meout]

I went to a place that had a 50/50 split. I lasted maybe 6 weeks before going back to my old, salaried, job.

Simply put - if they're cheaping out on you this much at the offer, what else are they slacking on? At a 70/30 split with benefits at 30 hours a week, they would still be making a pretty penny on your labor.

Basically, why do they need so much of your income? Greed? Poor money management? Both?

Dont do it dude.

Yeah, they have a flat (probably hourly) rate on any admin or support staff that you might use and rent, as well as some other fixed costs (e.g., testing materials), but the biggest expenditures are going to be labor, both testing and the psychologist level assessment stuff, and they're taking a whopping 50% of your billing and have a minimum hour expectation. It's very clearly greed and abuse.

And there's no way that this would qualify as an independent contractor position, so if they're trying to make OP a 1099 worker, then they're further abusing OP and breaking the law.

 

[Sanman]

Absolutely. I've heard about these arrangements all over the place and I still don't understand how they're legal. I guess maybe the practice owner can make the argument that they're not specifically dictating how the person is conducting an eval or providing therapy, but if you're controlling where and when it happens, they're using all your materials, and they rely on your paid employees for support staff, I don't know how these could legally be 1099 positions. But hey, I'm not an expert in employment law.

Simple, anyone who knows anything about employment law isn't taking a 50% cut unless they are desperate. Those that except often don't know much about employment law and sticking up for their rights.

 

[psych.meout]

Simple, anyone who knows anything about employment law isn't taking a 50% cut unless they are desperate. Those that except often don't know much about employment law and sticking up for their rights.

That's kind of what I thought. Isn't it probably graduates of diploma mills who didn't get an accredited internship and have very limited options for employment, so they're willing to accept deals like this just so they don't have to move somewhere else (especially a highly rural area) or try to start their own practice?

Also, I'm highly skeptical that someone who is desperate enough to accept a position like this is adequately trained to be doing neuropsych. They probably had an assessment practicum or two in grad school, but wouldn't be eligible for boarding and even with an accredited internship they probably would have trouble finding legit neuropsych jobs.

 

[Sanman]

That's kind of what I thought. Isn't it probably graduates of diploma mills who didn't get an accredited internship and have very limited options for employment, so they're willing to accept deals like this just so they don't have to move somewhere else (especially a highly rural area) or try to start their own practice?

Also, I'm highly skeptical that someone who is desperate enough to accept a position like this is adequately trained to be doing neuropsych. They probably had an assessment practicum or two in grad school, but wouldn't be eligible for boarding and even with an accredited internship they probably would have trouble finding legit neuropsych jobs.

Not necessarily just bottom of the barrel grads, but quite often new grads that don't know any better. I had a few offers with similar splits before happening upon a better one. I didn't have any real connections close to home and had to do a lot of networking on my own in order to get a job in the area close to family. Not much cash and loan payments coming due means people get desperate.

 

[psych.meout]

Not necessarily just bottom of the barrel grads, but quite often new grads that don't know any better. I had a few offers with similar splits before happening upon a better one. I didn't have any real connections close to home and had to do a lot of networking on my own in order to get a job in the area close to family. Not much cash and loan payments coming due means people get desperate.

That's a very good point. One of my criticisms of my doctoral program and several others where I have friends (so that I have specific knowledge of what it's like there) is that there's very little to no focus on the business side of things and all the career counseling is just about academia or working in an AMC or VAMC environment. At the request of students who are interested in these other careers, more recently we've had some speakers come in to talk to us about private practice, which has been helpful and enlightening, but it's mostly in the context of someone who is TT faculty getting a side gig for a day or two a week at an established private practice, so there's less information than someone who started their own practice or handles any part of it other than direct clinical side.

 

[PikminOC]

In this situation, I suspect they are trying to hire as a 1099, but may be running afoul of employment law considering how much they are dictating schedule. Employers incorrectly classifying people as 1099 is more common than people think. A few large practices here have been hit with big fines in recent years for doing this.

Who does this.need to be reported to?

 

[PikminOC]

I went to a place that had a 50/50 split. I lasted maybe 6 weeks before going back to my old, salaried, job.

Simply put - if they're cheaping out on you this much at the offer, what else are they slacking on? At a 70/30 split with benefits at 30 hours a week, they would still be making a pretty penny on your labor.

Basically, why do they need so much of your income? Greed? Poor money management? Both?

Dont do it dude.

Will they also be providing supervision? Is op green?

 

[WisNeuro]

Who does this.need to be reported to?

Depends on how the state laws are set up, Dept of Revenue (or equivalent) is usually the one who picks it up during routine audits. But, depending on the duties laid out to departments, could fall under dept of health or labor if someone wanted to report it outright. Not sure it'd rise to clear outright ethical violation to the Board. Many places simply don't understand the distinction between contractor and employee, usually small to medium practices. The large practices probably know, but risk it anyway as they make more money off the exploitation with pretty minimal fines for their situation.

 

[WisNeuro]

I went to a place that had a 50/50 split. I lasted maybe 6 weeks before going back to my old, salaried, job.

Simply put - if they're cheaping out on you this much at the offer, what else are they slacking on? At a 70/30 split with benefits at 30 hours a week, they would still be making a pretty penny on your labor.

Basically, why do they need so much of your income? Greed? Poor money management? Both?

Dont do it dude.

At 70/30, it really depends on payor mix and what the CoL is around that practice. If business costs are pretty low, they could still make a hefty profit. If the cost if business is high, 30 hours for an assessment practice at 70/30 could be a tight margin for the business. In recent years, assessment has been hit harder than therapy for reimbursement. Add in the cost of testing materials and forms, and the margins are tighter for assessment than therapy. Scheduling costs are lower as there are fewer patients, but that labor cost is usually minimal anyway. So, I'd have more leeway in the 60-70 ranges of splits, but 50/50 is an absolute non-starter for me.

 

[borne_before]

Independent Contractor Defined | Internal Revenue Service

Review the definition of an independent contractor and related tax obligations.

www.irs.gov

Independent contractor (self-employed) or employee? | Internal Revenue Service

Learn how to determine whether a person providing a service to you is an employee or an independent contractor.

www.irs.gov

Who does this.need to be reported to?

My wife had this BS done in her first job. The form is called SS-8. But to be clear, once that is submitted, there the bullet has left the barrel.

 

[PsyDr]

1) That "accounts receivable" clause is a not good. As a contractor, you have to invoice for your services. How do they propose to accomplish that under the "accounts receivable" condition? Would you have access to accounts receivable? If they are very good, it's possible they have a very structured way of doing this. If they don't, then...

2) "Billable hours" are different than "being in the office". What are their expectations for when you are in the office? Are you free to test for two days, and then write from home the rest of the week? Or do they expect you to be there from 9-5? Do they expect you to sit through meetings? Take patient calls? Those are not billable.

 

[neurotic_cow]

Thank you everyone for your thoughts and discussion, it is extremely helpful! As psych.meout mentioned, I wish we had covered more of the business side of neuropsychology/psychology in graduate school because I literally have no idea how any of it works. I'm very thankful for the opportunity to consult with individuals like yourselves who have experience in this area, because otherwise I probably would have considered taking the position, not knowing any better. I had a gut feeling that it was a bad offer but didn't know for sure. I'm definitely going to be turning it down.

 

[Sanman]

Thank you everyone for your thoughts and discussion, it is extremely helpful! As psych.meout mentioned, I wish we had covered more of the business side of neuropsychology/psychology in graduate school because I literally have no idea how any of it works. I'm very thankful for the opportunity to consult with individuals like yourselves who have experience in this area, because otherwise I probably would have considered taking the position, not knowing any better. I had a gut feeling that it was a bad offer but didn't know for sure. I'm definitely going to be turning it down.

I feel there is largely a chicken and egg problem with teaching this stuff in grad school. Namely, there are a few academics that are concerned with or immersed in running a full-time private practice. Those that are running successful practices are often not interested in the academic side of things. There is relatively little money in teaching compared to running a successful business. I know this is the issue at our VA when we like to plan didactics for interns and post-docs. I am one of the few with previous PP experience and the few others that had some recently quit their job to go full-time PP.