Partnership track and buy-in of $900K

[sevoflurane]

Let’s say AMC is gone and not allowed or you had a guaranteed part of buyout based on percentage of completion of partnership track....how much higher would you go than 120k?

Depends on the total “partner package”.

A guaranteed part of a buy out isn’t so sweet as you won’t “own” shares and therefore you will be taxed very differently. Part of the allure of a buy out is getting a lump sum that is taxed at 20%.

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[sevoflurane]

The big Phoenix group had a 5 year partnership before they sold. Didn’t go so well for a lot of people.

I never even considered such a greedy buy in structure.

 

[anes121508]

In today’s climate I think some sort of protection against buyout is a given ....any other thoughts on buyin number relative to partner earnings?

 

[Mman]

If it’s a ‘buy-in’ you should get a refund if you don’t become a partner. If you pay 600k for 2/3 of a share in the practice but you end up with 0% of the practice you have been robbed.

our buy in is paid back over time from future distributions as an interest free loan from the practice. I don't think any practices require an actual lump sum of cash as a buy in.

 

[Mman]

The list doesn't go on and on. The list doesn't even go. Built what practice? Anesthesia practice? The practice was given to you by the hospital.
If you want to compete with me, I will compete. And I will WIN. But, I am not allowed to compete because of exclusivity of the contract.
This isnt a dental practice where it truly is built.

You have literally no idea what you are talking about. Like none. Please stop spouting off about things you obviously do not understand.

1) office space
2) office staff
3) commercial contract rates
4) anesthetists
5) pain clinic locations and staff
6) hospital contract
on and on and on

Hospitals don't give out anesthesia contracts, they are earned. They are earned by building trust with surgeons and administrators over decades. They are earned by helping the hospital solve problems.

Insurance contracts also aren't handed out like candy. Our commercial rates are roughly 2-3x higher than what some random doc would be able to negotiate for themselves. You aren't that special because you have no negotiating power. We've been out of network with all kinds of insurers over the last several decades and that was both very painful to us at the time and very beneficial down the road.


on and on and on

 

[Man o War]

our buy in is paid back over time from future distributions as an interest free loan from the practice. I don't think any practices require an actual lump sum of cash as a buy in.

Yes, this. I’m not aware of any PP that requires you to write a check.
The only thing that normally requires a cash lump sum is facility ownership. They will usually have price per share based on a formula that is normally some multiple of the last distribution per share or an average of the last several.

 

[Man o War]

I realize that’s a hard thing to advise on. That’s why I tried to create an example thy eliminated AMC buyout , eliminated risk of partner pay changing, elinatwd risk of losing contracts, eliminated risk of not making partner and made it a 100% even Steven group other than finances. What’s a starting point in that scenario?

The best you can hope for is a refund on your buy in IMO. There is inherent risk in any investment, so l don’t think any group is going to mitigate that for you. We have no plans to sell out, but we include language in our contract that we will reimburse a buy in if that were to occur. We do not reimburse a buy in if a person does not make partner because of their own issues related to competence, job performance, etc.
We aren’t trying to rip anyone off though....I realize there are some that are so I understand people’s hesitation. It’s a risk for sure.

 

[nimbus]

Another consideration is that in partner heavy groups, the buyin hurts the nonpartners much more than it helps the partners. Early in my career I was in an 18 person group with a 2 year 20% buyin. While I was on partner track the 20% buyin off my top line revenue was significant. After I became partner, the contribution of the lone associate was hardly noticeable after it was split among 16 other partners.

 

[Mr.S]

You have literally no idea what you are talking about. Like none. Please stop spouting off about things you obviously do not understand.



Hospitals don't give out anesthesia contracts, they are earned. They are earned by building trust with surgeons and administrators over decades. They are earned by helping the hospital solve problems.

Insurance contracts also aren't handed out like candy. Our commercial rates are roughly 2-3x higher than what some random doc would be able to negotiate for themselves. You aren't that special because you have no negotiating power. We've been out of network with all kinds of insurers over the last several decades and that was both very painful to us at the time and very beneficial down the road.


on and on and on

Sure they are earned. Keep telling yourself that.
Tell that to the folks in Charlotte where 100 docs lost their job with six month notice. Those same docs were there 38 years.
And please don't insult me, the TOS on sdn prohibits that.
Thanks in advance.

 

[Mman]

Sure they are earned. Keep telling yourself that.
Tell that to the folks in Charlotte where 100 docs lost their job with six month notice. Those same docs were there 38 years.
And please don't insult me, the TOS on sdn prohibits that.
Thanks in advance.

Charlotte docs were working for Mednax. The docs that earned that contract sold it out to an AMC.

Thanks for playing. I am not insulting you personally, I'm insulting your uninformed opinion on this issue.

 

[Mr.S]

Charlotte docs were working for Mednax. The docs that earned that contract sold it out to an AMC.

Thanks for playing

Oh thats right! I did read that the new group is so much better and it was the right decision. Sorry didn't get to you sooner.

 

[Mman]

Oh thats right! I did read that the new group is so much better and it was the right decision. Sorry didn't get to you sooner.

LOL

 

[Mr.S]

You have literally no idea what you are talking about. Like none. Please stop spouting off about things you obviously do not understand.

I understand quite well the dynamic(s) at play. You are the one who is absolutely and positively clueless as to what you are talking about. PLease stop!!

 

[anes121508]

Sure they are earned. Keep telling yourself that.
Tell that to the folks in Charlotte where 100 docs lost their job with six month notice. Those same docs were there 38 years.
And please don't insult me, the TOS on sdn prohibits that.
Thanks in advance.

I was somewhat hesitant in posting because of fear that this thread would take this route. I understand there are different opinions out there. Im assuming a buyin is required and my question is how much. I understand if 1$ is too much in your opinion, but let’s not go back and forth throwing out blows at each other. My question stems from a real interest in how the buyin is determined by the group and how the person buying in should evaluate the buyin from mainly an economical standpoint. I’m trying to eliminate as many of the variables that create risk and look at it like a business person would.

To all you guys gals in pp groups, how has your group determined that X is the the fair buyin for the group? (From a numbers and market forces standpoint).

Also, how do you guys/gals feel about a percentage of partner earnings vs a set salary amount? How does the trend of partner earnings play a role?

 

[okayplayer]

Mr. S, please don’t apply to my group. You would not do well here.

 

[Mr.S]

I was somewhat hesitant in posting because of fear that this thread would take this route. I understand there are different opinions out there. Im assuming a buyin is required and my question is how much. I understand if 1$ is too much in your opinion, but let’s not go back and forth throwing out blows at each other. My question stems from a real interest in how the buyin is determined by the group and how the person buying in should evaluate the buyin from mainly an economical standpoint. I’m trying to eliminate as many of the variables that create risk and look at it like a business person would.

To all you guys gals in pp groups, how has your group determined that X is the the fair buyin for the group? (From a numbers and market forces standpoint).

Also, how do you guys/gals feel about a percentage of partner earnings vs a set salary amount? How does the trend of partner earnings play a role?

Just simply ask the following question to see if they're playing fair with you. I understand the buy-in! What is the buy out if I were to seperate?
See what they say. Do I get my share of the accounts receivable for a period of time? DO i get my buy in back?

 

[Mr.S]

Mr. S, please don’t apply to my group. You would not do well here.

Why don't you think I would do well?

 

[AdmiralChz]

If you want to compete with me, I will compete. And I will WIN.

Uhhh... come again? What are we competing on?

We won’t be competing, we just won’t be hiring you with your attitude towards physician-owned practices. Easy pass.

Honest question - are you for real or are you a trolling contrarian?

 

[AdmiralChz]

Charlotte docs were working for Mednax. The docs that earned that contract sold it out to an AMC.

Not only that, but they had been warned for months/years about several concerns regarding their practice structure - very high out-of-network billing for local residents and unwillingness to cover more locations chief among them. This wasn’t some folksy mom-and-pop practice...

 

[anes121508]

Just simply ask the following question to see if they're playing fair with you. I understand the buy-in! What is the buy out if I were to seperate?
See what they say. Do I get my share of the accounts receivable for a period of time? DO i get my buy in back?

That’s interesting. I guess when you buy a share of a dividend paying stock you collect dividends then when you decide to part ways you sell and get back whatever someone is willing to pay for it. I spoke with one group when I was looking around for a job who said you get your buyin back when you leave the group. What does everyone think about that?

 

[B-Bone]

What's fair, while fun to argue about, is kind of irrelevant with regards to job offers. It's supply and demand. Place with a 5 year, 7-figure buy-in? If people didn't want the job/location, they wouldn't ever hire anyone. If you don't think it's fair, vote with your feet. I had a three year track at my job with income differential of > $1,000,000 over that period. Lower starting salary than I've ever seen on SDN. I did it because the job was worth it, and the thirty years i'll (hopefully) get as a partner more than makes up for that three years, both financially and from a job satisfaction standpoint. I made that 7 figures back (compared to a "good" non-partner track job offer) in about 3 years. My track was "fair" in that it's what everyone in the group has done for the past 40 years. It's still "fair" for the people currently on the track, though the track's salary has been bumped up a bit to keep us competitive with the local market.

 

[Mman]

I understand quite well the dynamic(s) at play. You are the one who is absolutely and positively clueless as to what you are talking about. PLease stop!!

Well considering I am the one that took a job with a "partnership track" and a "buy in" and ended up way ahead of you financially, I'm fairly certain your advice on this topic is poor.

All the great jobs have a buy in. That's why they are the great jobs. Nobody is letting you make that kind of money just because you have a pulse and showed up to work.

 

[Mman]

That’s interesting. I guess when you buy a share of a dividend paying stock you collect dividends then when you decide to part ways you sell and get back whatever someone is willing to pay for it. I spoke with one group when I was looking around for a job who said you get your buyin back when you leave the group. What does everyone think about that?

we buy out partners who leave or retire. The buy out calculation is the same as the buy in calculation. Effectively your buy in is an interest free loan to your future self at the buy out whenever you leave/retire/die (to your estate).

 

[Mman]

Why don't you think I would do well?

because you can't take over a major hospital by yourself. You need a group to do so.

 

[Mr.S]

Well considering I am the one that took a job with a "partnership track" and a "buy in" and ended up way ahead of you financially, I'm fairly certain your advice on this topic is poor.

All the great jobs have a buy in. That's why they are the great jobs. Nobody is letting you make that kind of money just because you have a pulse and showed up to work.

You are absolutely and positively clueless and I cant believe you wrote what you just wrote.

 

[Mman]

You are absolutely and positively clueless and I cant believe you wrote what you just wrote.

you advise people not to take partnership track jobs and pay buy ins. I did and it worked out spectacularly.

I literally can't believe somebody so jaded with the job market would actually offer advice to anybody.

 

[chocomorsel]

Why are you all wasting time arguing with a troll? I don’t even think he’s a physician. Just likes do ruffle people’s feathers.

If he is a real doc, looks like he’s a litttle...a helluva narcissist.

People like that always think they are right and know everything. Can’t be bothered to learn anything cuz they are so stinking smart.

I was married to one.

 

[Mr.S]

you advise people not to take partnership track jobs and pay buy ins. I did and it worked out spectacularly.

I literally can't believe somebody so jaded with the job market would actually offer advice to anybody.

I am not advising people not to take partnership track jobs. I am just saying be very wary of these. Especially now with the acquisition of medical groups by hospitals and mega corporations. Why? Because,(think about this) why would a group bring on another partner, when they dont have to? They can just have employees and keep replacing them. The supply of anesthesiologist will support this. And this was the reputation of many groups in the 90s and 2000s and even still exists today. You can refute me all you want but the anesthesia groups historically did not and still dont have a great rep. If it worked out for you, great, I dont begrudge you. Have at it!

 

[Mr.S]

Why are you all wasting time arguing with a troll? I don’t even think he’s a physician. Just likes do ruffle people’s feathers.

If he is a real doc, looks like he’s a litttle...a helluva narcissist.

People like that always think they are right and know everything. Can’t be bothered to learn anything cuz they are so stinking smart.

I was married to one.

MS. morsel.
WHy are you calling me a narcissist? That is NOT very nice.

 

[Mman]

I am not advising people not to take partnership track jobs. I am just saying be very wary of these. Especially now with the acquisition of medical groups by hospitals and mega corporations. Why? Because,(think about this) why would a group bring on another partner, when they dont have to? They can just have employees and keep replacing them. The supply of anesthesiologist will support this. And this was the reputation of many groups in the 90s and 2000s and even still exists today. You can refute me all you want but the anesthesia groups historically did not and still dont have a great rep. If it worked out for you, great, I dont begrudge you. Have at it!

Why would we take on partners? Because that is how we became great and how we want to remain great. I do not want to hire cogs in a wheel. I want to hire great physicians who can help grow and lead us to even greater heights. Offering partnership allows us to attract and retain the best of the best.

We could hire random docs all day long without bring in a partner. We pay our nonpartner physicians way more than comparable AMC jobs pay. But we will still be bringing in partner after partner because that is what we need.

 

[anes121508]

What's fair, while fun to argue about, is kind of irrelevant with regards to job offers. It's supply and demand. Place with a 5 year, 7-figure buy-in? If people didn't want the job/location, they wouldn't ever hire anyone. If you don't think it's fair, vote with your feet. I had a three year track at my job with income differential of > $1,000,000 over that period. Lower starting salary than I've ever seen on SDN. I did it because the job was worth it, and the thirty years i'll (hopefully) get as a partner more than makes up for that three years, both financially and from a job satisfaction standpoint. I made that 7 figures back (compared to a "good" non-partner track job offer) in about 3 years. My track was "fair" in that it's what everyone in the group has done for the past 40 years. It's still "fair" for the people currently on the track, though the track's salary has been bumped up a bit to keep us competitive with the local market.

I think this is a very real world post.

Appreciate it much.

I think you hit the nail on the head with a few things :
1. it’s market driven
2. Fairness has more to do with what those before them also agreed to pay into the group
3. The individual needs to decide if it’s worth it to them personally from a financial and clinical standpoint

One interesting point is that you have recently bumped it up to keep competitive with local market. How did you decide the amount to increase the salary? Is your market dominated by AMC or pp or a mix?

 

[okayplayer]

Why would we take on partners? Because that is how we became great and how we want to remain great. I do not want to hire cogs in a wheel. I want to hire great physicians who can help grow and lead us to even greater heights. Offering partnership allows us to attract and retain the best of the best.

We could hire random docs all day long without bring in a partner. We pay our nonpartner physicians way more than comparable AMC jobs pay. But we will still be bringing in partner after partner because that is what we need.

You young guns out there should listen to Mman. He is dropping some valuable knowledge from the perspective of where you want to be down the road.

 

[anes121508]

we buy out partners who leave or retire. The buy out calculation is the same as the buy in calculation. Effectively your buy in is an interest free loan to your future self at the buy out whenever you leave/retire/die (to your estate).

I remember interviewing with a group who did just this.

I think this is interesting and to play devils advocate, can one argue that the group is profiting from the work of the non partner and using that profit as an interest free loan to support the group and then the group pays back that amount years down the road after inflation? Not trying to be an ***hole, just for conversation sake and to learn how the situation is viewed.

Also, I’d imagine groups that pay out retiring partners affects the income of the current partners, unless it’s one in and one out , same price paid, and paid over same duration? And the ratio of buy in to partner pay matters?

Let’s say I buy into a 10 person group with partner pay of 500k average over last 3 years. Pretend buyin Is 1 million over course of 4 years. (250k/yr). Right when I make partner, 4/10 partners retire. We haven’t hired anyone new because we just lost two surgery centers and we can’t justiy the staff. Now 7 partners have to split 1 million/yr for the next four years to pay out the 4 retired partners at 250k/yr. If each of the remaining partners are still generating 500k /yr in profits That leaves each of the 7 partners with 142k to burden and now take home pay is 358k for next 4 years. It seems like the only way around the loss in partner pay is by working more and generating more profit or by hiring non partners at exact same buy in as those before them. Hence the “this is what the buyin has always been” response? In this scenario if the original buyin of the group was not 200% the yearly partner income, and was only 40% , then the remaining partners would take less of a hit when those 4 retired. That means the buyin amount relative to yearly income of the partners matters right? Also plans of the current partners when you join?

I apologize if I’m an idiot and way off base here. Just trying to learn how this stuff works.

 

[deleted171991]

There can be great partnerships at $900K buy-in, and crappy ones at $10K. One should look at the entire package. One should learn how to value businesses (it's not that hard).

Also, one should learn psychology and negotiation techniques. Groups are run by partners, who are humans, with human strengths and weaknesses. Yes, greed is one of them, but so can be realism. They are not dumb; they won't offer you a good deal just because you "deserve" it.

Try looking at the forest, not the trees. Take some perspective, as when intubating. You'll see more, and better.

How can you get the best deal? The same way as when buying a car: do your homework, have multiple offers competing against each other, and be flexible (so you can walk away from bad deals and find better ones in a different make/model or market).

 

[deleted171991]

I remember interviewing with a group who did just this.

I think this is interesting and to play devils advocate, can one argue that the group is profiting from the work of the non partner and using that profit as an interest free loan to support the group and then the group pays back that amount years down the road after inflation? Not trying to be an ***hole, just for conversation sake and to learn how the situation is viewed.

Also, I’d imagine groups that pay out retiring partners affects the income of the current partners, unless it’s one in and one out , same price paid, and paid over same duration? And the ratio of buy in to partner pay matters?

Let’s say I buy into a 10 person group with partner pay of 500k average over last 3 years. Pretend buyin Is 1 million over course of 4 years. (250k/yr). Right when I make partner, 4/10 partners retire. We haven’t hired anyone new because we just lost two surgery centers and we can’t justiy the staff. Now 7 partners have to split 1 million/yr for the next four years to pay out the 4 retired partners at 250k/yr. If each of the remaining partners are still generating 500k /yr in profits That leaves each of the 7 partners with 142k to burden and now take home pay is 358k for next 4 years. It seems like the only way around the loss in partner pay is by working more and generating more profit or by hiring non partners at exact same buy in as those before them. Hence the “this is what the buyin has always been” response? In this scenario if the original buyin of the group was not 200% the yearly partner income, and was only 40% , then the remaining partners would take less of a hit when those 4 retired. That means the buyin amount relative to yearly income of the partners matters right? Also plans of the current partners when you join?

I apologize if I’m an idiot and way off base here. Just trying to learn how this stuff works.

Disclaimer: I am not a partner. Have never been/will probably never be (I hate OB).

I think your calculation is off because the buy-in/out is too high. As an investment, IMHO, it shouldn't be more than about 3 times the difference between partner and non-partner salary (so about 600K in your case), given the volatility of anesthesia group contracts nowadays.

If volatility didn't matter, and you'd think about the partnership as owning part of a business for decades, you wouldn't care that much that your income dropped for a few years in exchange for a bigger share of the pie, would you?

 

[deleted171991]

you advise people not to take partnership track jobs and pay buy ins. I did and it worked out spectacularly.

I literally can't believe somebody so jaded with the job market would actually offer advice to anybody.

As with any investment, it depends on the deal. For some situations, he's right, for others you are. Come on, we've been through this, and we have all concluded that there are serious regional differences between markets, hence the glass can seem emptier or fuller.

All of you who disagree with the doom and gloom, consider yourself lucky! Not smart, but lucky.

 

[anes121508]

Disclaimer: I am not a partner. Have never been/will probably never be (I hate OB).

I think your calculation is off because the buy-in/out is too high. As an investment, IMHO, it shouldn't be more than about 3 times the difference between partner and non-partner salary (so about 600K in your case), given the volatility of anesthesia group contracts nowadays.

If volatility didn't matter, and you'd think about the partnership as owning part of a business for decades, you wouldn't care that much that your income dropped for a few years in exchange for a bigger share of the pie, would you?

Here is the calculation: scenario where non partner receives 50% x 4 years. Assuming steady 500k partner pay, 250k non partner pay. 500k-250k=250k. 4 year track X 250k = 1 million. Buy in is 1 million in form of income reduction over 4 years. Why do you think it’s off?

- “It shouldn’t be more than 3 times the difference between partner and non partner”

What would you recommend the max difference between partner and non partner be? I guess percentage based would be more accurate?

I’ll apply the above recommendation to the following two scenarios:
1. Partner pay 600 , non partner 300. Difference is 300. Multiply the difference by 3 and you have 900 max buy in. Makes track 3 year maximum.

2. Partner pay 600. non partner pay 500. Difference is 100. Multiply the difference by 3 and you have 300 max buy in. Makes track 3 year maximum.

Both scenarios have maxed out the reccomended 3X the difference between partner and non partner. Same partnership pay. Same track duration. Obviously scenario two is better, which means that you also need to take into consideration the percent of partner pay that the non partner gets right?

 

[deleted171991]

Personally, I am looking at this as an investment. Risks vs benefits, margin of safety etc. So, as long as it's stipulated that the group guarantees that I make my buy-in back (both if it gets sold, if the group loses the service contract, or if I leave before making partner), the buy-in number is pretty debatable and up to the group and the market. This usually does not happen, because groups want to make money on their partnership track people, whether they end up making partner or not, and don't like to guarantee anything to new people.

So, if there are no such guarantees, one could work for much less for 3-4 years and then lose all the difference to partner pay, if the group gets sold or loses the contract/profit upon renewal (happens more and more). That's why I chose the number 3 (or less). We are talking about the P/E for buying into the ownership of a small business with (many times) just one major customer.

These are all theoretical discussions. It's the local market reality that matters (A LOT) and changes all these variables. It also matters how big and solid the group is, and what other choices the candidate has.

Again: I am not speaking from experience, just saying how I would approach the financial merit of buying (i.e. investing) into a group. Anywhere there is an AMC around, I would tread very carefully.

 

[deleted50478]

While I think you should be paid back if you are underpaid during partnership track only to not make partner after 3 years, I don’t think you typically have much room to negotiate.

As long as you aren’t severely underpaid (relative to what an employed doc would make not relative to what the partners make), you don’t have anything to lose (except the chance to start a partnership track somewhere else).

I think the best you could hope for in negotiation is to have them agree to make you a partner (or not) after one year but to continue your buy-in after that. They get all the same benefit and you take less risk. If they won’t do that, you have to wonder if they really plan to add a partner or if they want to make money off of a string of partnership track employees who never make partner.

 

[anes121508]

Personally, I am looking at this as an investment. Risks vs benefits, margin of safety etc. So, as long as it's stipulated that the group guarantees that I make my buy-in back (both if it gets sold, if the group loses the service contract, or if I leave before making partner), the buy-in number is pretty debatable and up to the group and the market. This usually does not happen, because groups want to make money on their partnership track people, whether they end up making partner or not, and don't like to guarantee anything to new people.

So, if there are no such guarantees, one could work for much less for 3-4 years and then lose all the difference to partner pay, if the group gets sold or loses the contract/profit upon renewal (happens more and more). That's why I chose the number 3 (or less). We are talking about the P/E for buying into the ownership of a small business with (many times) just one major customer.

These are all theoretical discussions. It's the local market reality that matters (A LOT) and changes all these variables. It also matters how big and solid the group is, and what other choices the candidate has.

Again: I am not speaking from experience, just saying how I would approach the financial merit of buying (i.e. investing) into a group. Anywhere there is an AMC around, I would tread very carefully.

I like a lot of the points you make in here especially how you start by saying you look at this as an investment. I see it the same way. Lots of factors to consider I guess.

 

[anes121508]

While I think you should be paid back if you are underpaid during partnership track only to not make partner after 3 years, I don’t think you typically have much room to negotiate.

As long as you aren’t severely underpaid (relative to what an employed doc would make not relative to what the partners make), you don’t have anything to lose (except the chance to start a partnership track somewhere else).

I think the best you could hope for in negotiation is to have them agree to make you a partner (or not) after one year but to continue your buy-in after that. They get all the same benefit and you take less risk. If they won’t do that, you have to wonder if they really plan to add a partner or if they want to make money off of a string of partnership track employees who never make partner.

You mentioned how one may not have much to lose if you aren’t being paid severely less than an employed doc. Lets say you are not a new grad and you are working for amc. You could buy into a practice but that would mean taking a 33% pay cut and working a few more hours and calls. But by the time you are partner 3 years later, the upside recoups the losses after 1.5 years of partner pay. And significantly outpaces the amc job. Worth it right?

What I’m taking away is that everything is relative and depends how those different factors stack up against one another’s. Depends on your current situation, depends on the buyin, depends on partner pay, depends on stability and history of group, depends on supply and demand. It’d be unfair to say that just because a buy in looks steep, that it’s not worth it, correct? Multiple factors should be considered And fairness really has nothing to do with it. Is that accurate?

 

[B-Bone]

I think this is a very real world post.

Appreciate it much.

I think you hit the nail on the head with a few things :
1. it’s market driven
2. Fairness has more to do with what those before them also agreed to pay into the group
3. The individual needs to decide if it’s worth it to them personally from a financial and clinical standpoint

One interesting point is that you have recently bumped it up to keep competitive with local market. How did you decide the amount to increase the salary? Is your market dominated by AMC or pp or a mix?[/QUOTE]

We bumped our (flat) starting salary up by 25% after having it set for ~15 years. We talked to friends at a few local groups and found out what they were offering. We're in the market ballpark for starting salaries now, but still the lowest starting in town. That said, we have the highest partner pay in the market by a fair bit. Market is mostly PP (~8 groups in the metro), one hospital covered by an AMC, and a few employed positions (University, VA, GI centers)

 

[nimbus]

I think this is a very real world post.

Appreciate it much.

I think you hit the nail on the head with a few things :
1. it’s market driven
2. Fairness has more to do with what those before them also agreed to pay into the group
3. The individual needs to decide if it’s worth it to them personally from a financial and clinical standpoint

One interesting point is that you have recently bumped it up to keep competitive with local market. How did you decide the amount to increase the salary? Is your market dominated by AMC or pp or a mix?

We bumped our (flat) starting salary up by 25% after having it set for ~15 years. We talked to friends at a few local groups and found out what they were offering. We're in the market ballpark for starting salaries now, but still the lowest starting in town. That said, we have the highest partner pay in the market by a fair bit. Market is mostly PP (~8 groups in the metro), one hospital covered by an AMC, and a few employed positions (University, VA, GI centers)[/QUOTE]


One question that should be asked is if the high partner pay is dependent on the buyin of associates or if it’s intrinsic to the practice based on high volume, efficiency, and unit value. Obviously it is often a combination of both. In a situation where there is low turnover, everyone could be a partner and no one is there pitch in the buyin. Or the partner income could fluctuate based on how many people are in the partner track.

 

[drdan4]

You have literally no idea what you are talking about. Like none. Please stop spouting off about things you obviously do not understand.

1) office space
2) office staff
3) commercial contract rates
4) anesthetists
5) pain clinic locations and staff
6) hospital contract
on and on and on

Hospitals don't give out anesthesia contracts, they are earned. They are earned by building trust with surgeons and administrators over decades. They are earned by helping the hospital solve problems.

Insurance contracts also aren't handed out like candy. Our commercial rates are roughly 2-3x higher than what some random doc would be able to negotiate for themselves. You aren't that special because you have no negotiating power. We've been out of network with all kinds of insurers over the last several decades and that was both very painful to us at the time and very beneficial down the road.


on and on and on

No offense, but try to be more humble. Most Private Practices are ninety days away from an AMC take over. And that AMC can get better commercial rates than you ever could after a decade of "negotiations." All it takes is a change in one or more Administrators...I have been there.

Also, the value of an Anesthesia group lies in it's ability to attract quality new recruits. Partner track candidates are better quality than CRNAs or Day Physicians. Administrators look at this stuff. We couldn't get anyone to come in my last gig (bad area, poor payor mix) and soon enough an AMC swooped up the contract with false promises. You need good Partner track people more than you lead on.

There's an age where it's worth taking the risk. Also, our Partner track guys get 150-200k more than the nearest AMC offer in their first year so it's a no brainer.

 

[Hoya11]

Here is the calculation: scenario where non partner receives 50% x 4 years. Assuming steady 500k partner pay, 250k non partner pay. 500k-250k=250k. 4 year track X 250k = 1 million. Buy in is 1 million in form of income reduction over 4 years. Why do you think it’s off?

- “It shouldn’t be more than 3 times the difference between partner and non partner”

What would you recommend the max difference between partner and non partner be? I guess percentage based would be more accurate?

I’ll apply the above recommendation to the following two scenarios:
1. Partner pay 600 , non partner 300. Difference is 300. Multiply the difference by 3 and you have 900 max buy in. Makes track 3 year maximum.

2. Partner pay 600. non partner pay 500. Difference is 100. Multiply the difference by 3 and you have 300 max buy in. Makes track 3 year maximum.

Both scenarios have maxed out the reccomended 3X the difference between partner and non partner. Same partnership pay. Same track duration. Obviously scenario two is better, which means that you also need to take into consideration the percent of partner pay that the non partner gets right?

I'm a partner in a PP group in the NE.

There are lots of different ways to define "buy in"

Is it sweat equity (on a partnership track at reduced income for x years) , is it actually money paid to the practice when becoming partner (very weird IMO)? is it both?

One thing I will comment on is the math above, its too simple..

You have to look at the "buy in" from a real world perspective.

Buy in does NOT = Partner income - Partner track income X years to partner. That type of thinking assumes that you would otherwise be making Partner income. Meaning that you actually had another offer for the same as partner level income but turned it down, which most likely the candidate did not have such an offer.

You have to consider Buy in = Partner income - Highest other job offer X years to partner.
For example, when I was on the partnership track, I earned 250k. But I had another job offer for 350k. No where did I have an offer for immediately making 500k.

So I lost (350-250) 100k x 3 years to partner = 300k buy in.

Its NOT 500k (partner income) - 250k = 250k x 3 years to partner = 750k. Because you never had the 500k income to "lose" in the first place..

Personally, I think paying your way (unlike working your way) into a practice is very strange. I'm not going to write a check, I'm going to take income reduction for x years. Especially if I have already had income reduction for x years.

And lastly, to the people who are saying "our guys start out at 150-200k more than AMCs on the partnership track" I'm wondering how is that possible. If the AMC is paying 400k, your starting them at 550?? Typically the decision is what I outlined above, a partnership track job at about 100k reduction from the other highest local alternative (which usually is an AMC paying 350-400k)

 

[narcotics999]

We bumped our (flat) starting salary up by 25% after having it set for ~15 years. We talked to friends at a few local groups and found out what they were offering. We're in the market ballpark for starting salaries now, but still the lowest starting in town. That said, we have the highest partner pay in the market by a fair bit. Market is mostly PP (~8 groups in the metro), one hospital covered by an AMC, and a few employed positions (University, VA, GI centers)

One question that should be asked is if the high partner pay is dependent on the buyin of associates or if it’s intrinsic to the practice based on high volume, efficiency, and unit value. Obviously it is often a combination of both. In a situation where there is low turnover, everyone could be a partner and no one is there pitch in the buyin. Or the partner income could fluctuate based on how many people are in the partner track.[/QUOTE]


25% bump is a lot. 15 years with no increase was a long time.

Did you have hiring issues before the bump and then ask your friends?

 

[dhb]

25% bump is a lot. 15 years with no increase was a long time.

25% more of 275.000 only gets you to 345.000 which is probably more in the AMC ballpark starting salary.

 

[nimbus]

One question that should be asked is if the high partner pay is dependent on the buyin of associates or if it’s intrinsic to the practice based on high volume, efficiency, and unit value. Obviously it is often a combination of both. In a situation where there is low turnover, everyone could be a partner and no one is there pitch in the buyin. Or the partner income could fluctuate based on how many people are in the partner track.

25% bump is a lot. 15 years with no increase was a long time.

Did you have hiring issues before the bump and then ask your friends?[/QUOTE]


Sorry the phrase in question was actually Mman’s quote. Not sure why it came out that way.

Edit: the quote/replies seem messed up today

 

[deleted171991]

I like a lot of the points you make in here especially how you start by saying you look at this as an investment. I see it the same way. Lots of factors to consider I guess.

Main factor is easy: What can you lose (especially when compared to your other options)? That's how I look at it. Only then do I look at what I can gain.

 

[anes121508]

I think this is a very real world post.

Appreciate it much.

I think you hit the nail on the head with a few things :
1. it’s market driven
2. Fairness has more to do with what those before them also agreed to pay into the group
3. The individual needs to decide if it’s worth it to them personally from a financial and clinical standpoint

One interesting point is that you have recently bumped it up to keep competitive with local market. How did you decide the amount to increase the salary? Is your market dominated by AMC or pp or a mix?

We bumped our (flat) starting salary up by 25% after having it set for ~15 years. We talked to friends at a few local groups and found out what they were offering. We're in the market ballpark for starting salaries now, but still the lowest starting in town. That said, we have the highest partner pay in the market by a fair bit. Market is mostly PP (~8 groups in the metro), one hospital covered by an AMC, and a few employed positions (University, VA, GI centers)[/QUOTE]

Makes sense and seems reasonable, appreciate the insight.