Preferred Type of Employment Position

[neurolddoc]

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For those interested in private practice, which of the two models has the most appeal? This is in the context of a less than 10 physician single specialty neurology group.

A) An employed position with a guaranteed salary and a productivity bonus. This would be a full time position but could be structured with some flexibility in terms of hours. The level of compensation would be defined,predictable, and guaranteed. The employee would not have to worry about administration of the practice.

B) A position with an initial multi-year period of employment with a guaranteed base salary and productivity bonus followed by an opportunity to become an owner in the practice. For the initial employed period, the base salary and/or productivity bonus would be smaller than in option A but at the end of the employed period the individual would be able to buy an equal share of practice ownership for a modest amount (having earned sweat equity during the employed term). Thereafter, the newly minted shareholder would share in the responsibility of running of the practice and be subject to the risks of owning a business. (Everybody and everything else gets paid before you do).

I'm just curious what the sentiment among Neurologists coming out of training these days is.


(And yes we are looking for a neurologist to take the place of someone retiring in July 2013. We are in the suburban Washington DC area. PM me for details if interested.)

 

[bustbones26]

For those interested in private practice, which of the two models has the most appeal? This is in the context of a less than 10 physician single specialty neurology group.

A) An employed position with a guaranteed salary and a productivity bonus. This would be a full time position but could be structured with some flexibility in terms of hours. The level of compensation would be defined,predictable, and guaranteed. The employee would not have to worry about administration of the practice.

B) A position with an initial multi-year period of employment with a guaranteed base salary and productivity bonus followed by an opportunity to become an owner in the practice. For the initial employed period, the base salary and/or productivity bonus would be smaller than in option A but at the end of the employed period the individual would be able to buy an equal share of practice ownership for a modest amount (having earned sweat equity during the employed term). Thereafter, the newly minted shareholder would share in the responsibility of running of the practice and be subject to the risks of owning a business. (Everybody and everything else gets paid before you do).

I'm just curious what the sentiment among Neurologists coming out of training these days is.


(And yes we are looking for a neurologist to take the place of someone retiring in July 2013. We are in the suburban Washington DC area. PM me for details if interested.)

Depends on the individual.

Some enjoy a structure where they don't have to worry about administrative stuff while others want some control.

The big questions for an applicant to consider:

1) What is the buy in?

Will it cost and arm and leg to buy in? What are the responsibilities with buying in?

2) What are the damages for breaking a contract?

I.e. if I sign say a three year contract, what will happen if I leave after two years? Payback salary guarantee with insane interest? No complete clause?

3) What are the secondary costs for my guarantee?

Do I have to buy a bazillion dollar life insurance plan and make the employer the beneficiary since they gave me a salary guarantee

4) Where are my patients coming from?

I once heard of a practice that would give all of the newbies medicare/medicaid patients. The newbies then had difficulty making money to pay overhead, so senior docs "cut them a break" on overhead expenses so long as the newbie covered their call for them. I.e. all medicare/medicaid patients, on call virtually 24/7, while senior partners spend the weekends playing golf, on a fishing boat, etc.

To answer your question, again, depends on the applicant. Some may want nothing at all to do with running a business, while some may invite it. Offer both options.

 

[typhoonegator]

Certainly not an expert on outpatient private practice (I am literally not even close to any of those things) but the general sentiment I have for new grads is they would take option A hands down in the current climate. I think the sociopolitical changes in the medical system that are occurring and remain on the horizon have made a lot of people risk averse, particularly those who don't yet have much experience in the private realm.

While the rational argument might be that B is a better option for the neurologist looking to stay put for a prolonged period, the relative portability and lack of personal stake in option A will probably outweigh any perceived financial benefits.

It's sort of like renting vs. owning in a volatile housing market. If you're in it for the long-run, then you're dumb to rent. But when you see people who make poor decisions taking a bath on their purchases, it's much easier to justify. Once you get some experience and you see how things work, you are more risk tolerant.

Perhaps a combined plan would work? A five to seven year structured build-up without buy-in, then a sit down with the partners and a frank discussion at that point. You wouldn't be able to offer as low a buy-in in that case, because you'd be paying this person better for the first 5-7, but still combines some of the relative strengths of both options. If s/he doesn't want to buy in at that point, no problem, offer a continued slower build up to a max of take-what-you-make (minus overhead) and they can decide for themselves.

 

[danielmd06]

I personally went with Option B.

I was in love with the group I was joining, the geographic location, the scope of practice I was being allowed, and the long term benefits of the practice were just too phenomenal for me to believe. It also helped that I was able to pick up as medical director fresh out of fellowship in this position, too.

In a different set of circumstances, particularly if the location wasn't desirable for an applicant, I could completely understand others choosing Option A.

I am a long-term decision kind of person. Even in the current political climate. Permanence matters to me. I didn't want to be one of the majority of applicants that moves to a different job within 3-5 years of starting their first. I tend to think very carefully about all variables for a prescribed amount of time, and then when I make a choice I commit fully and almost never change my mind afterwards.

 

[neurologist]

I'd probably prefer option B, as long as I was planning to stay in the area long term.

But, as another poster noted, I'd want a lot of above-the-table disclosure as to the details.

Also, out of curiosity, what do you do with the "buy in" money?

 

[neurolddoc]

The "buy in" money, actually purchase of stock in the corporation, from the corporation itself, is a nominal amount. It goes into the general cash account and eventually gets distributed out to shareholders.

My thought about some of the practices alluded to by Bustbones, (salary "payback" for leaving early, life insurance purchase to offset salary guarantee) is "holy crap" what a bunch of jerks they must be. If and employee leaves, s/he leaves, no more salary paid. The A/R that comes in after departure makes up for fronting the salary in the beginning before the receivables started to come in.

Most all contracts will have a non compete.

The comment about Medicare patients is interesting. My practice would run smoothly and profitably if I had 100% Medicare. Straight forward claim submission, automatic forwarding of claims to secondaries, payment in 14 days. Payment is about as good and in some cases better than commercial insurance but that may just be a reflection of how bad reimbursements are in my area.

 

[neurologist]

My practice would run smoothly and profitably if I had 100% Medicare. Straight forward claim submission, automatic forwarding of claims to secondaries, payment in 14 days. Payment is about as good and in some cases better than commercial insurance

Yeah, I've always wondered about that.
People bitch and moan about the government a lot, but they do tend to pay their bills on time . . .

And yeah, you must have crappy local commercial insurers . . . 🙁