Partnerships in Private Pratice, Overhead, salaries, trying to eat what you kill

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bulldog

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So in the market to join a private practice group. Most groups I've interviewed with have either been 1 person, or 2-6 people groups.

I've had the following salary/structure presented:

1) Base salary supported by hospital in exchange for working at hospital for x number of years. If you leave early, you pay hospital back. The private groups generally like this to decrease the risk to them.
2) Fixed salary provided by group for first 1-2 years, then "eat what you kill"
2A) True partnership: There is a buy-in or sometimes free buyin where you'll get certain benefits of practice. At one group, once you made partner, you'll get certain percentages of group in relation to how much you contribute. In exchange, you'll get a "facilities" fee every month generated by the group's equipment/staff/etc.
2B) Pseudo partnership: After your 1 year of salary, you "eat what you kill", with an asterisk in the sense that the "owner" of group doesn't sell out portion of his company to his "partners". Instead, he charges his partners a facilities fee. i.e. At one place, the owner cardiologist takes 45% of all your earnings while you take 55% of the earnings. Two groups have presented this to me as a partnership, but it isn't what I consider partnership in traditional means.

What has been your experience with the main guy taking a cut for overhead? What is reasonable percent?

Also, how much would you value group providing disability, pension, health insurance? i.e. What is difference in salary between one group that provides the above benefits and one group that doesn't that would would still motivate you to sign with the higher paying group w/o benefits? i.e. are these "benefits" worth 10k/year, 20k/year, etc?

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ok so now you trained like 500 years and are boarded ni 7 different things and you have effectively been reduced to a .... glorified used car salesman
the #1 thing to keep in mind when looking for a job is all these hospital admin types and pracite partner types think
1) you are clueless about business of medicine
2) will think any salary over a 50K fellow salary is /big money/
and
3) they want to get as much work out of you for as little as possible while keeping all the profit you generate for themselves.
thats real important
lets read that again
3) they want to get as much work out of you for as little as possible while keeping all the profit you generate for themselves.

lets look at your options, im pretty much in the same boat
1) Base salary supported by hospital in exchange for working at hospital for x number of years. If you leave early, you pay hospital back. The private groups generally like this to decrease the risk to them.
CORRECT> YOU BECOME A SLAVE> FIND OUT HOW MANY PEOPLE RECENTLY BAILED> WHY NOT GET THE HOSPITAL TO SUPPORT YOU WHILE YOU BUILD YOUR OWN PRACTICE AN ADMIT TO THEM

2) Fixed salary provided by group for first 1-2 years, then "eat what you kill"
EAT WHAT YOU KILL IS SO SUBJECT TO SO MANY VARIABLES SUCH AS REIMBURESMENT RATES, COMPETITION, RVU CALCULATION FORMULAS> YOU WILL NEVER KNOW WHAT YOU MAKE, PATHETIC. WHAT IF FEE FOR SERVICE GOES. THAN WHAT?

2A) True partnership: There is a buy-in or sometimes free buyin where you'll get certain benefits of practice. At one group, once you made partner, you'll get certain percentages of group in relation to how much you contribute. In exchange, you'll get a "facilities" fee every month generated by the group's equipment/staff/etc.
RIP OFF. THEYLL DUMP YOU RIGHT BEFORE YOUR PARTERNER AND BRING IN A NEW FRESH GRAD AND NEVER MAKE ANYONE PARTNER. GROUPS ARE DYING NOW FROM IMAGING CUTS, NO ONE HAS MONEY TO BRING IN A NEW PARTNER ANS SPLIT UP THE RAPIDLY DIMINISHING PIE YE AGIAIN

2B) Pseudo partnership: After your 1 year of salary, you "eat what you kill", with an asterisk in the sense that the "owner" of group doesn't sell out portion of his company to his "partners". Instead, he charges his partners a facilities fee. i.e. At one place, the owner cardiologist takes 45% of all your earnings while you take 55% of the earnings. Two groups have presented this to me as a partnership, but it isn't what I consider partnership in traditional means.AGAIN WHY BE THEIR SLAEV< GO START YOUR OWN PRACTICE

What has been your experience with the main guy taking a cut for overhead? What is reasonable percent?
0 PERCENT YOU ARE A FREAKING CARDIOLOGIST NOT SELLING JUNK BONDS

Also, how much would you value group providing disability, pension, health insurance? i.e. What is difference in salary between one group that provides the above benefits and one group that doesn't that would would still motivate you to sign with the higher paying group w/o benefits? i.e. are these "benefits" worth 10k/year, 20k/year, etc? FOR EXAMPLE MY FELLOWSHIP CLAIMS ABOVE MY 50K SALARY THE HEALTH PLAN FOR ME MY WIFE AND MY 2 KIDS COST $22,000 THIS YEAR< AND KEEP IN MIND OU WILL START PAYING INCOME TAX ON ALL THIS THANKS TO OBUMMER. YOU CAN BUY YOUR OWN BENEFITS FROM ANY NUMBER OF SLOBS SELLING INSURANCE SOME EVEN ADVERTIISE ON PARK BENCHES,

In summary, you just trained 1/3 of your life to be a in demand specialist.
These options are pathetic.
I am not going to kill myself with call to make either a hospital administartor or a old senior partner who takes no call and golfs all day richer.
GO at it your own. Charge a VIP retnetion fee. You dont need these people. THey suck in the clueless and will pay you under 350K and tell you you are doing great and youll be generating 2 million a year for them. Think hard before you get screwed, find out in 2 years they wont offer you partner because or /culture clahses/ and then youll end up some disgruntled burnout working at the VA writing 50 page notes on teh 4 patients you see every day.

Get informed!
http://healthland.time.com/2013/02/20/bitter-pill-why-medical-bills-are-killing-us/

read this recent TIME article and see that insurance execs earn
Dude you need help
 
Thanks for generating this discussion. Very interesting to read.
 
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ok so now you trained like 500 years and are boarded ni 7 different things and you have effectively been reduced to a .... glorified used car salesman

Thanks for your input. Important to know how grim the outlook is. Obummer. haha
 
I am not quite sure why you are so down on his options. For example, in option 2b I think it is very reasonable for an employer to take 45% of his earnings. Its actually a pretty good deal. If he were to open up his own practice, he would spend between 40-60% of his earnings on overhead (40% if he doesn't get an echo tech/performs his own studies and has a bare bones staff with no NP, 50% being average, and 60% if he runs fat). So why is it so unreasonable for his employer to take 45% of his salary in exchange for office space, staff, equipment, access to referrings, call sharing, etc. You mention that if he grosses 2 million he will only take home $350K. Actually in this model, if he grosses 2 million he will take home 1.1million. Not too bad.

None of these options are BETTER than the other...they are all very different, offering very different advantages and disadvantages. You have to decide what is most important to you in a job.

1. Option 1: This is the safest option with a guaranteed hospital supported salary. But you will have the least amount of autonomy.

2. Option 2: This offers the most amount of autonomy. If you are purely eat-what-you-kill, you can work as hard or as little as you want without having to answer to anyone. Your partners won't care about you because nothing you do will generate income for them. But, you may feel a sense of competition with your own partners. There may be no sense of teamwork...every man for himself.

3. Option 2A: Often a good balance of teamwork and autonomy, depending in how they define "partner". Do you get an equal vote in decisions? Is call split equally? etc. I agree that there is concern that they could dump you just before you are eligible to become partner. Find out how many people they employed in the past 5-10 years and how many made partner. Of those that didn't, why not? Also, sometimes the buy-ins can be steep, which can really hurt if you are just getting out of debt.

4. Option 2b: see above.

They all sound fine, depending on what you are looking for. Good luck.


ok so now you trained like 500 years and are boarded ni 7 different things and you have effectively been reduced to a .... glorified used car salesman
the #1 thing to keep in mind when looking for a job is all these hospital admin types and pracite partner types think
1) you are clueless about business of medicine
2) will think any salary over a 50K fellow salary is /big money/
and
3) they want to get as much work out of you for as little as possible while keeping all the profit you generate for themselves.
thats real important
lets read that again
3) they want to get as much work out of you for as little as possible while keeping all the profit you generate for themselves.

lets look at your options, im pretty much in the same boat
1) Base salary supported by hospital in exchange for working at hospital for x number of years. If you leave early, you pay hospital back. The private groups generally like this to decrease the risk to them.
CORRECT> YOU BECOME A SLAVE> FIND OUT HOW MANY PEOPLE RECENTLY BAILED> WHY NOT GET THE HOSPITAL TO SUPPORT YOU WHILE YOU BUILD YOUR OWN PRACTICE AN ADMIT TO THEM

2) Fixed salary provided by group for first 1-2 years, then "eat what you kill"
EAT WHAT YOU KILL IS SO SUBJECT TO SO MANY VARIABLES SUCH AS REIMBURESMENT RATES, COMPETITION, RVU CALCULATION FORMULAS> YOU WILL NEVER KNOW WHAT YOU MAKE, PATHETIC. WHAT IF FEE FOR SERVICE GOES. THAN WHAT?

2A) True partnership: There is a buy-in or sometimes free buyin where you'll get certain benefits of practice. At one group, once you made partner, you'll get certain percentages of group in relation to how much you contribute. In exchange, you'll get a "facilities" fee every month generated by the group's equipment/staff/etc.
RIP OFF. THEYLL DUMP YOU RIGHT BEFORE YOUR PARTERNER AND BRING IN A NEW FRESH GRAD AND NEVER MAKE ANYONE PARTNER. GROUPS ARE DYING NOW FROM IMAGING CUTS, NO ONE HAS MONEY TO BRING IN A NEW PARTNER ANS SPLIT UP THE RAPIDLY DIMINISHING PIE YE AGIAIN

2B) Pseudo partnership: After your 1 year of salary, you "eat what you kill", with an asterisk in the sense that the "owner" of group doesn't sell out portion of his company to his "partners". Instead, he charges his partners a facilities fee. i.e. At one place, the owner cardiologist takes 45% of all your earnings while you take 55% of the earnings. Two groups have presented this to me as a partnership, but it isn't what I consider partnership in traditional means.AGAIN WHY BE THEIR SLAEV< GO START YOUR OWN PRACTICE

What has been your experience with the main guy taking a cut for overhead? What is reasonable percent?
0 PERCENT YOU ARE A FREAKING CARDIOLOGIST NOT SELLING JUNK BONDS

Also, how much would you value group providing disability, pension, health insurance? i.e. What is difference in salary between one group that provides the above benefits and one group that doesn't that would would still motivate you to sign with the higher paying group w/o benefits? i.e. are these "benefits" worth 10k/year, 20k/year, etc? FOR EXAMPLE MY FELLOWSHIP CLAIMS ABOVE MY 50K SALARY THE HEALTH PLAN FOR ME MY WIFE AND MY 2 KIDS COST $22,000 THIS YEAR< AND KEEP IN MIND OU WILL START PAYING INCOME TAX ON ALL THIS THANKS TO OBUMMER. YOU CAN BUY YOUR OWN BENEFITS FROM ANY NUMBER OF SLOBS SELLING INSURANCE SOME EVEN ADVERTIISE ON PARK BENCHES,

In summary, you just trained 1/3 of your life to be a in demand specialist.
These options are pathetic.
I am not going to kill myself with call to make either a hospital administartor or a old senior partner who takes no call and golfs all day richer.
GO at it your own. Charge a VIP retnetion fee. You dont need these people. THey suck in the clueless and will pay you under 350K and tell you you are doing great and youll be generating 2 million a year for them. Think hard before you get screwed, find out in 2 years they wont offer you partner because or /culture clahses/ and then youll end up some disgruntled burnout working at the VA writing 50 page notes on teh 4 patients you see every day.

Get informed!
http://healthland.time.com/2013/02/20/bitter-pill-why-medical-bills-are-killing-us/

read this recent TIME article and see that insurance execs earn
Dude you need help
 
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3. Option 2A: Often a good balance of teamwork and autonomy, depending in how they define "partner". Do you get an equal vote in decisions? Is call split equally? etc. I agree that there is concern that they could dump you just before you are eligible to become partner. Find out how many people they employed in the past 5-10 years and how many made partner. Of those that didn't, why not? Also, sometimes the buy-ins can be steep, which can really hurt if you are just getting out of debt.

How are people dealing with buy-ins? Upfront payment? Deferred compensation over a few years? Combination of the two? Anyone know if payment towards buy-in is tax deductible?
 
can you flesh out the details to how one could create a practice with VIP retention fee? How much could they charge reasonably and would this essentially cover overhead?
 
How are people dealing with buy-ins? Upfront payment? Deferred compensation over a few years? Combination of the two? Anyone know if payment towards buy-in is tax deductible?

This is a very complicated issue and I urge you to speak with a lawyer and an accountant with expertise in this area. In short, it all depends on what you are actually buying with your buy in, how large the practice is, how successful it is, and how competitive the area is. If your buy-in includes considerable tangible assets (such as land from multiple offices, equipment including Spect cameras, office furnishings) as well as considerable intangibles (such as full voting rights, equal access to referrings in very competitive area, large revenue stream, high level of efficiency with low overhead), this could be anywhere from from a few hundred thousand to over a million. If your buy-in includes only a fraction of the aforementioned, it could be less than a hundred thousand. If your buy-in only includes intangible assets, it is not uncommon to have no actual buy-in, but rather a sweat equity system in which the percentage of earnings that you keep gradually increases over a 3-5 year period until you reach "partner".

In general, the more tangible assets you are buying, the more likely it is that the practice will want the buy in up front. As I mentioned, the more intangibles you are buying the more likely it is for the practice to set up a deferred payment or sweat equity system. In general, buy ins are not tax deductible unless they only include tangible assets.

I found this article helpful: Type www.wadegold.com/negotiating into google browser and click on PDF.
 
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can you flesh out the details to how one could create a practice with VIP retention fee? How much could they charge reasonably and would this essentially cover overhead?

Why would anyone provide you a VIP retention fee? What are you offering that a "regular" doctor doesn't? Where will you find a clientele that is willing to pay for this? How much you can charge depends on how well you can answer these questions. Whether or not this will cover you overhead depends on what your overhead is, ie are you a PCP that just sees outpatients and does his own billing/answers his own phones or are you a cardiologist with a spect camera, nuclear tech, echo tech, NP, medical assistant, secretary, biller, office manager, etc.
 
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