PP Questions

[PainApp2021]

Hi all,

I had a few other questions about negotiating for a small PP group. Currently there are only two docs in the group who are ortho, but they are potentially planning on merging with another ortho group that would include ortho spine.

1) They have multiple times said they want me to become a partner after two years. Should this be put into writing in the contract and if so, are there usually metrics that are outlined? How should it be worded such that it is fair for me and them?

2) The current pay is salary + productivity. Productivity is collections - overhead (said to be a little less than 50%) - "pay back" (unclear what this means-- MA for my practice? my salary?), and then 25% of the remaining profits. This 25% seems pretty low. Is that a normal percentage for a non-partner? Does the overhead number generally stay at a constant percentage, or is it calculated at the end of each period to determine the actual overhead (the more you collect, the overhead doesn't necessarily increase at a linear rate to be constantly 50%)?

3) Tail insurance is apparently not covered in the benefits. How does this generally work for a PP gig? I thought I've seen that as long as I'm not terminated "at cause", the practice should pay for it and if I decided to leave on my own, I would be expected to pay for it? If I ended up leaving, do other private practices ever (or generally) pay for nose insurance? What about community hospitals?

4) There wasn't a non-compete mentioned in the offer letter, but I imagine there will be one in the actual contract. The location is super rural and is 2.5 hours from the nearest large city. I don't intend on leaving the job, but if I did I would essentially have to move hours away for any job prospect versus the local hospital. That combined with not having tail insurance could be financially miserable.

I truly appreciate any input from you all.

Thank you!

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[Agast]

Find out what their collections include

In house PT? MRI? DME? ASC? If you utilize those do they count towards collections? Will you do in-office procedures or limit to ASC only?

 

[PainApp2021]

Find out what their collections include

In house PT? MRI? DME? ASC? If you utilize those do they count towards collections? Will you do in-office procedures or limit to ASC only?

Their collections include all of the above except ASC. I think the way it's worded is that as a non-partner I would only get collections of what I bill (and 25% after overhead and payback). All procedures are in clinic most likely.

 

[Ronin1]

You need some clarity regarding the payback 25%. It would be reasonable for them to be made whole for any advanced monies but you will not make anything if you are at a 75% overhead forever

 

[unchockey21]

I would take anything they say regarding partnership with a giant grain of salt, even if they put it in writing. If they’re absorbed by a bigger group before you make partner, that group is going to steer the ship. Some Ortho groups don’t believe in having pain as equal partners, or even partners at all. They may have a completely different set of metrics or expectations for partnership. They may say it’s a 3 year track but that track starts from your first official day as an employee of the new company.

 

[PainApp2021]

You need some clarity regarding the payback 25%. It would be reasonable for them to be made whole for any advanced monies but you will not make anything if you are at a 75% overhead forever

So I think it's actually much less than 25% (or 75% overhead) if I'm understanding it correctly. For the sake of simplicity, if I took in 1MM collections, 500k would be overhead, 500k would be my salary/"payback"? with no profit left over. If I took in 2MM collections, 1MM would be overhead, 500k "payback", thus 500k profit would be left. 25% of the profit would go to me which would be 125k to me and 375k to the partners, which would bring my income to 625k. Does that sound right or too aggressive on their part?

 

[vit8bsm]

the last pain doc i worked with in an ortho group just had a fixed % of collections he took home, i think it was 45%. so he collected 1.5mil and took him 675k. it's really not bad considering countless pain docs are employed getting paid 400k but their collections are wellll over a mil, sometimes 2m+

people do not realize that the base salary + % of profit bonus system is never in your favor because they ALWAYS **** with it to make themselves keep the big profit. it's just business. it's in your best interest to make it as simple as possible. if it seems like you working harder is making them more money than it's making you, the deal is bad. you gotta realize that when you pull in 2mm+ and your overhead is supposedly 1mm now, that's bull****. overhead doesn't double the harder you work. that overhead is technically their profit. so they're keeping that, and then 75% of the profit.

terrible deal.

I'd offer them to give you 40-50% of what you collect. they'll still be making money off you via

1) the 50-60% overhead isn't all overhead
2) having a pain doc in house brings more referrals in, bigger practice, they're more marketable
3) assuming they have ancillaries like PT DME ASC UDS to name a few - it only takes one of these to run well to make 6 figure profit

 

[Baron Samedi]

One thing you can do to mitigate risk is negotiate for a lower floor salary. Sometimes these PPs will offer you a massive advance(>500k "salary" but really it's debt) and it takes you years to pay it back and end up in the black. You can ask for a more modest one and delay buying the mansion to give yourself a bit more freedom to leave if it doesn't work out.

Also non-competes are variably enforceable depending on what state you work in. Worth researching.

 

[SC Tian]

I have chance knowing multiple ortho groups, to me this is not very fair compensation, especially if they merge with other group, there will be another negotiation where you can be screwed as well. The fair model I would think that is fair is once your productivity goes above your salary, you should be compensated as same as the other two ortho guys, productivity minus overhead.

 

[unchockey21]

it's in your best interest to make it as simple as possible. if it seems like you working harder is making them more money than it's making you, the deal is bad. you gotta realize that when you pull in 2mm+ and your overhead is supposedly 1mm now, that's bull****. overhead doesn't double the harder you work. that overhead is technically their profit. so they're keeping that, and then 75% of the profit.

terrible deal.

I'd offer them to give you 40-50% of what you collect. they'll still be making money off you via

This right here. Fixed vs. variable costs. Your major expenses (rent, c-arm, utilities, staff) are fixed and don’t increase as you’re filling your schedule. Your variable costs (needles, meds, supplies) go up as you’re more productive but they’re relatively cheaper compared to the fixed expenses. To adjust for this, our comp formula is keeping 40% of collections up to $800k in collections, 50% $800k-$1M, and 70% over $1M.

 

[Dr. Ice]

If you’re billing is somewhere between 180-225k/month, what would be considered reasonable collections/month?

Half office based, half asc. It’s complicated because I’m a shareholder at the asc which has not been productive (working on a solution to this) so I’m splitting my procedure volume in both sites.

The docs that are collecting 2 million..how are you guys doing it? Lots of stim and kypho? Amazing private payor contracts?

 

[callmeanesthesia]

If you’re billing is somewhere between 180-225k/month, what would be considered reasonable collections/month?

Half office based, half asc. It’s complicated because I’m a shareholder at the asc which has not been productive (working on a solution to this) so I’m splitting my procedure volume in both sites.

The docs that are collecting 2 million..how are you guys doing it? Lots of stim and kypho? Amazing private payor contracts?

Your collection ratio is very dependent on your charges and payor mix. I’m not quite at 2M collection but probably close. Crappy payors - low competition, basically everything is Medicare rates, so it’s a volume game. One full time and a couple part time PAs. Procedures done almost entirely in office including SCS trial and kypho. Lots of in-office RFA. Probably because of the crap insurance rates, it’s a very low competition environment.

 

[bedrock]

Your collection ratio is very dependent on your charges and payor mix. I’m not quite at 2M collection but probably close. Crappy payors - low competition, basically everything is Medicare rates, so it’s a volume game. One full time and a couple part time PAs. Procedures done almost entirely in office including SCS trial and kypho. Lots of in-office RFA. Probably because of the crap insurance rates, it’s a very low competition environment.

Close to 2 million in collections is quite good, particularly if doing this on mediocre contracts.

 

[callmeanesthesia]

Close to 2 million in collections is quite good, particularly if doing this on mediocre contracts.

High overhead too, so not as much of a baller as you’d think from that collections. Ortho group, large medical office building (sold off to PE which I wasn’t a part of), in office x-ray and MRI (produces a modest profit), large admin staff, etc.

 

[GoBeers]

Your collection ratio is very dependent on your charges and payor mix. I’m not quite at 2M collection but probably close. Crappy payors - low competition, basically everything is Medicare rates, so it’s a volume game. One full time and a couple part time PAs. Procedures done almost entirely in office including SCS trial and kypho. Lots of in-office RFA. Probably because of the crap insurance rates, it’s a very low competition environment.

what's your procedure volume and clinic volume daily?

 

[callmeanesthesia]

what's your procedure volume and clinic volume daily?

3.5 days procedures and 1.5 days clinic per week. Procedures about 24-30 per day. 15 minute injections with a few double booked per half day, and 30 minute RFA. I block off an hour for SCS trial and kypho when my schedule permits so I can take my time. Clinic, 15 min fu, 30 min new, prefer not to double-book but usually have a couple per day. Haven’t been able to get much faster than that for some reason. Most of the f/u patients I see were ones who need a recalibration of plan after an injection or two didn’t work, and many of the simpler new patients are seen by my PAs. No narcotic management so no med check appts.

 

[DrMDAware]

3.5 days procedures and 1.5 days clinic per week. Procedures about 24-30 per day. 15 minute injections with a few double booked per half day, and 30 minute RFA. I block off an hour for SCS trial and kypho when my schedule permits so I can take my time. Clinic, 15 min fu, 30 min new, prefer not to double-book but usually have a couple per day. Haven’t been able to get much faster than that for some reason. Most of the f/u patients I see were ones who need a recalibration of plan after an injection or two didn’t work, and many of the simpler new patients are seen by my PAs. No narcotic management so no med check appts.

Wow that’s a lot of procedures!

I’d like to learn more.

Do you have PAs do all new intakes or just follow ups?

 

[callmeanesthesia]

Wow that’s a lot of procedures!

I’d like to learn more.

Do you have PAs do all new intakes or just follow ups?

My PAs see new and established. I try to shunt the more complicated ones to myself but if they end up with someone who is very complex or want a second set of eyes on their imaging, they’ll come grab me to have a look. If I didn’t do it that way, patients would be waiting 2-3 months for a new patient appointment with me and would never be able to see me for a follow up. I have relatively more new patient and fewer follow-ups than a lot of pain groups because there are no opioid refills.

 

[DrMDAware]

My PAs see new and established. I try to shunt the more complicated ones to myself but if they end up with someone who is very complex or want a second set of eyes on their imaging, they’ll come grab me to have a look. If I didn’t do it that way, patients would be waiting 2-3 months for a new patient appointment with me and would never be able to see me for a follow up. I have relatively more new patient and fewer follow-ups than a lot of pain groups because there are no opioid refills.

Thanks for replying. May I please ask how you determine if they are complicated - is it a screening process? Certain referring physicians? Based on previous surgical hx? Etc

 

[callmeanesthesia]

Thanks for replying. May I please ask how you determine if they are complicated - is it a screening process? Certain referring physicians? Based on previous surgical hx? Etc

The referral packet is added to a queue in the EMR for me to review and determine whether I want to see the patient. I can then send it back to the referral coordinators to tell them to schedule the patient with me only, or next available.

 

[sdnuser001]

the last pain doc i worked with in an ortho group just had a fixed % of collections he took home, i think it was 45%. so he collected 1.5mil and took him 675k. it's really not bad considering countless pain docs are employed getting paid 400k but their collections are wellll over a mil, sometimes 2m+

people do not realize that the base salary + % of profit bonus system is never in your favor because they ALWAYS **** with it to make themselves keep the big profit. it's just business. it's in your best interest to make it as simple as possible. if it seems like you working harder is making them more money than it's making you, the deal is bad. you gotta realize that when you pull in 2mm+ and your overhead is supposedly 1mm now, that's bull****. overhead doesn't double the harder you work. that overhead is technically their profit. so they're keeping that, and then 75% of the profit.

terrible deal.

I'd offer them to give you 40-50% of what you collect. they'll still be making money off you via

1) the 50-60% overhead isn't all overhead
2) having a pain doc in house brings more referrals in, bigger practice, they're more marketable
3) assuming they have ancillaries like PT DME ASC UDS to name a few - it only takes one of these to run well to make 6 figure profit

Can you explain how having your salary as a fixed percentage of collections is any different than the base + productivity model?

Eg how is 250k + 50% bonus over 500k any different than 50% collections apart from the fact that that former option gives you a floor?

 

[Ducttape]

the base + productivity model is primarily useful when you are starting a practice, and when you are in a practice with high variability such as a high no show rate.