Private equity starting salary

[visco]

I just received a verbal offer from a PE-owned practice and I was a little surprised at how low the base salary was (anterior seg, first job after fellowship, mid-sized city in the central US). I feel like it would be a competitive starting salary in a private practice, but I was under the impression base salaries were higher in PE due to the inability to attain partnership/equity and thus an overall lower earning ceiling. Curious what kind of offers people have received from PE and what people think is reasonable to expect. Thanks.

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[dantt]

I just received a verbal offer from a PE-owned practice and I was a little surprised at how low the base salary was (anterior seg, first job after fellowship, mid-sized city in the central US). I feel like it would be a competitive starting salary in a private practice, but I was under the impression base salaries were higher in PE due to the inability to attain partnership/equity and thus an overall lower earning ceiling. Curious what kind of offers people have received from PE and what people think is reasonable to expect. Thanks.

How long has the position been vacant? Some will offer a higher guarantee if there is an impending or recent departure and they'll lose a lot of patients if they don't get a body in there asap. If the position has been vacant for a few years, the patients will have gone elsewhere. Has the practice had their second sale? With interest rates high another sale js unlikely in the near term and so they're less likely to be willing to take a potential loss.

 

[mjohnsonets]

You'll need to reveal to us what the actual offer was for a real judgment here.

For reference, based on what you said: glaucoma, cornea, or anterior segment fellow, mid-sized city in the midwest

I would expect your offers from PE practices would be in the low to mid $300's. If you're glaucoma or glaucoma heavy ant. seg. maybe could solidly expect in the mid $300's. With a sign-on bonus or heavy negotiating, you may reach higher.

If you're comparing MGMA data, you are comparing apples to oranges. MGMA data is RVU-based and not a good comparison to private practice unless you're actively considering joining an RVU-based model, most likely a healthcare system or hospital.

Just to mention it here, there are some PE-backed/PE-like groups (pension funded directly) were there's an option buy into the surgery center you operate at directly as a traditional partner would. This provides partnership-like returns out of the surgery center which is where most of the money is made. There are more of these models coming up and they seem to bridge the gap between PE and traditional practice well. Some offer partnership in the actual clinic entity as well. It is not quite as dynamic of an investment/wealth-building tool as a traditional partnership but generally less hands-on management too.

 

[TheLesPaul]

You'll need to reveal to us what the actual offer was for a real judgment here.

For reference, based on what you said: glaucoma, cornea, or anterior segment fellow, mid-sized city in the midwest

I would expect your offers from PE practices would be in the low to mid $300's. If you're glaucoma or glaucoma heavy ant. seg. maybe could solidly expect in the mid $300's. With a sign-on bonus or heavy negotiating, you may reach higher.

If you're comparing MGMA data, you are comparing apples to oranges. MGMA data is RVU-based and not a good comparison to private practice unless you're actively considering joining an RVU-based model, most likely a healthcare system or hospital.

Just to mention it here, there are some PE-backed/PE-like groups (pension funded directly) were there's an option buy into the surgery center you operate at directly as a traditional partner would. This provides partnership-like returns out of the surgery center which is where most of the money is made. There are more of these models coming up and they seem to bridge the gap between PE and traditional practice well. Some offer partnership in the actual clinic entity as well. It is not quite as dynamic of an investment/wealth-building tool as a traditional partnership but generally less hands-on management too.

I'm not sure I would agree that most of the money is made from ASC for most people. Of course this depends on if you are talking about just ASC distributions or real estate as well. Returns on a well-run ASC tend to be great (25-50%), but are capped by how much you are allowed to invest based on how many partners there are, if there is a majority owner, etc. You might only be able to invest a couple hundred thousand in your ASC to become equal with the other partners. If your ASC gets sold when you are a partner, of course, that is different.

I feel like for most private practice docs who are doing really well, ASC income is about 10-20% of overall revenue.

 

[visco]

How long has the position been vacant? Some will offer a higher guarantee if there is an impending or recent departure and they'll lose a lot of patients if they don't get a body in there asap. If the position has been vacant for a few years, the patients will have gone elsewhere. Has the practice had their second sale? With interest rates high another sale js unlikely in the near term and so they're less likely to be willing to take a potential loss.

For the sake of remaining anonymous, I can say they have a definite and relatively immediate need to fill the position. They have not had their second sale yet, and it does not seem like one is imminent.

 

[visco]

You'll need to reveal to us what the actual offer was for a real judgment here.

For reference, based on what you said: glaucoma, cornea, or anterior segment fellow, mid-sized city in the midwest

I would expect your offers from PE practices would be in the low to mid $300's. If you're glaucoma or glaucoma heavy ant. seg. maybe could solidly expect in the mid $300's. With a sign-on bonus or heavy negotiating, you may reach higher.

If you're comparing MGMA data, you are comparing apples to oranges. MGMA data is RVU-based and not a good comparison to private practice unless you're actively considering joining an RVU-based model, most likely a healthcare system or hospital.

Just to mention it here, there are some PE-backed/PE-like groups (pension funded directly) were there's an option buy into the surgery center you operate at directly as a traditional partner would. This provides partnership-like returns out of the surgery center which is where most of the money is made. There are more of these models coming up and they seem to bridge the gap between PE and traditional practice well. Some offer partnership in the actual clinic entity as well. It is not quite as dynamic of an investment/wealth-building tool as a traditional partnership but generally less hands-on management too.

Mid 200s. Fairly typical incentive bonus structure with base salary guaranteed. Additionally, there are some investment opportunities after certain benchmarks are achieved, but this seems to be basically in the form of stocks that would pay out at the time of a second sale. As far as I know, no opportunity for ongoing returns from the surgery center.

I not familiar with MGMA data, but I do not think my earnings will be RVU-based.

 

[MstaKing10]

Mid 200s. Fairly typical incentive bonus structure with base salary guaranteed. Additionally, there are some investment opportunities after certain benchmarks are achieved, but this seems to be basically in the form of stocks that would pay out at the time of a second sale. As far as I know, no opportunity for ongoing returns from the surgery center.

I not familiar with MGMA data, but I do not think my earnings will be RVU-based.

agree. seems low. especially for PE. If stocks are the only perk then move on. little surprising this is their best offer. of course devils in the details and maybe there are some other bonuses you are not aware of maybe?

 

[dantt]

Other thing is new graduates are unproven so may not justify a large base salary at the beginning when they are not yet ready to see patients/do surgery. There have been recent discussions about new grads who can't operate efficiently not being allowed to operate/being let go.

 

[docdoc2012]

How long ago did they sell? In the retina world starting salaries for many PE groups remained low and close to pre-sale until they realized they weren't attracting new grads (what's the incentive at that point?) Starting salaries have gone up by atleast 100k for most groups in the past couple of years.

 

[Dusn]

Mid 200s. Fairly typical incentive bonus structure with base salary guaranteed. Additionally, there are some investment opportunities after certain benchmarks are achieved, but this seems to be basically in the form of stocks that would pay out at the time of a second sale. As far as I know, no opportunity for ongoing returns from the surgery center.

I not familiar with MGMA data, but I do not think my earnings will be RVU-based.

That is pathetic. I sincerely hope that no new graduates would even consider such an offer.

 

[eyeeye_captain]

That’s an offer I would expect in a saturated area, which isn’t what you described. Even if it were a very favorable bonus structure, that’s on the low end. Those stock options have a not insignificant chance of becoming worthless. I guess if you’re geographically limited you can suck it up, but as you can see, most of us would pass.

I think @dantt may be correct that there’s a new grad tax here. I’ve definitely heard of folks washing out of a practice within their first year, and considering PE’s priority is the bottom line and maximizing productivity, they may be hedging their bets.

 

[mjohnsonets]

Mid 200s. Fairly typical incentive bonus structure with base salary guaranteed. Additionally, there are some investment opportunities after certain benchmarks are achieved, but this seems to be basically in the form of stocks that would pay out at the time of a second sale. As far as I know, no opportunity for ongoing returns from the surgery center.

I not familiar with MGMA data, but I do not think my earnings will be RVU-based.

This is on par with physician-owned practices. While I still come across some differences in physician-owned and PE group bonuses, many are at 30%.

Not sure what all the circumstances are around your search but you should be able to get a base salary higher than this from a PE group or one on par with this AND an opportunity for partnership from a physician-owned group. With the latter option, you'll want some PE sale protections in your contract though.

As some have mentioned the "new grad tax", I have heard of a growing number of newly graduated residents not cutting it in the OR in recent years. Might be a reverberation of low surgical numbers during COVID. It's always been happening but just seem to have heard it more often in 2022 and 2023.

 

[Slide]

Looks like we're in the phase of PEs really milking out practices and bottom line management.

OP I would keep looking if possible. Shares/stocks at this point aren't worth much in this higher interest rate setting.

 

[MstaKing10]

Looks like we're in the phase of PEs really milking out practices and bottom line management.

OP I would keep looking if possible. Shares/stocks at this point aren't worth much in this higher interest rate setting.

PE practices need new young doctors more than non-PE practices. Older docs are going to retire into the sunset since they were paid out in the PE buyout and young docs will take over busy practices. They recognize this which is why they are (usually) offering such competitive starting salaries.

I get the high interest rate argument but PE has access to huge sums at much lower interest rates that we would never have access to.

 

[dantt]

PE practices need new young doctors more than non-PE practices. Older docs are going to retire into the sunset since they were paid out in the PE buyout and young docs will take over busy practices. They recognize this which is why they are (usually) offering such competitive starting salaries.

I get the high interest rate argument but PE has access to huge sums at much lower interest rates that we would never have access to.

They will only do what they'll do. This is the real life part where the young prospective employee has to convince the employer they're worth the investment.

 

[visco]

How long ago did they sell? In the retina world starting salaries for many PE groups remained low and close to pre-sale until they realized they weren't attracting new grads (what's the incentive at that point?) Starting salaries have gone up by atleast 100k for most groups in the past couple of years.

I think it was about 3-4 years ago.

 

[visco]

They will only do what they'll do. This is the real life part where the young prospective employee has to convince the employer they're worth the investment.

I totally understand the "new grad tax", but I'm personally not worried about operating independently (credit to the training I've received and the awesome mentors I've had). I also understand that there will be a significant "ramp up" period where the company is losing money on me. The contract would be up for renewal annually, so there would be the potential for a salary increase after the first year, but this is far from guaranteed and feels like it would be heavily dependent on the economic state of the practice at that time.

Do you have any advice on how to negotiate a higher base? Obviously I'm going to have a lawyer look at the contract and they may be able to tell me what is reasonable to ask for based on contracts they've seen for similar positions. Should I aim high and expect them to meet me in the middle, or should I choose what I think is a fair offer and why and hope they agree?

Thank you all for the thoughtful discussion btw. At the very least it's been validating haha.

 

[eyeeye_captain]

 

[eyeeye_captain]

In all seriousness, you’re running (no pun) a real risk of not making their “benchmarks” and they’ll find a way to let you go at one of those yearly renewals. I doubt they’ll open the books and show you exactly what your numbers are - but that should absolutely be in your contract if they stipulate certain productivity goals. You have to know number of patients/surgeries and collections. Also make sure it’s spelled out what for cause and not for cause firing would be, with all non-competes etc. null if not for cause.

This offer keeps scaring me more. Next you’ll tell us you’d cover 10 offices and q2 call.

 

[TheLesPaul]

The 'ramp up' period where the company is "losing money" on you is much shorter than you think. Maybe 3 months.

 

[DarkHorizon]

Is this new grad tax thing specific to ophtho? What percentage of new ophtho grads can’t operate or need to be supervised closely? Just wondering because there’s no such thing in Ortho from what I understand. I suppose some very small percentage of grads would struggle but most operate independently from day 1. At least in my organization, there’s no difference between what we offer to new grads vs experienced surgeon. It’s an RVU based model and my organization sets the base salary to median rvus per MGMA x $/rvu. Anything over thst, you get a quarterly payback/adjustment.

 

[eyeeye_captain]

I hope “new grad tax” isn’t my SDN legacy. This may just be PE squeezing every penny out of that practice. My group starts everyone the same. As Matt said above, MGMA doesn’t really fly with ophtho since the majority of us are not hospital/system employees, although the general system is almost exactly the same with a base then quarterly bonuses once the collections have paid their wages. I’ll disagree a bit on a 3 month ramp up where the group loses money. Some states can take a miserably long time with licensing, and insurance boards can be at least as bad, so even if you take over for a doc who’s leaving, if you take a job that’s out of state you can have a slower trajectory.

No clue what the percentage of questionable surgeons would be, although I’m sure we all know someone who’s struggled. It’s in every field I would imagine. I’ve got a general surgery friend who told me he and his partners scrubbed for 6 months and a full year with 2 of their more recent new grads. Every single case. They let both go due to outcomes, cost, and logistics.

 

[mjohnsonets]

I hope “new grad tax” isn’t my SDN legacy.

eyeyee_captain comp model:

(Base salary - new grad tax) + 0.3(Net production - (Base salary x 3))

It has been formulated now.

 

[docdoc2012]

I don't think new grad tax is relevant for PE groups. PE groups are volume based and new hires usually ramp up extremely quickly and more than meet their base salaries at year 1. If a PE can't ramp you up quickly and guarantee you volume, why exactly would you even join given all the other sacrifices you have to make to do PE??

 

[Slide]

PE practices need new young doctors more than non-PE practices. Older docs are going to retire into the sunset since they were paid out in the PE buyout and young docs will take over busy practices. They recognize this which is why they are (usually) offering such competitive starting salaries.

I get the high interest rate argument but PE has access to huge sums at much lower interest rates that we would never have access to.

They have the money for now but the debt has to be serviced sooner or later with a non-ZIRP loan, which now has to be financed with true capital instead of free money with quantitative tightening in full swing. Second sales are drying up and if they occur will be a much lower multiple, hence my comment about being paid in shares instead of salary as useless. The largest PE firms will likely be ok short term due to having cash on hand but others are already feeling the pinch. The less profitable PE companies have already declared bankruptcy or are on the way (like Envision). For the larger ones, especially the specialties like retina, once the older guys start retiring en masse they're going to be in trouble since the newer graduating classes are now aware of PE's reputation. Also anecdotally, I've noticed PE firms gradually losing more niche specialists, which is only going to add to their issues. I doubt most of these PE firms actually want to manage the nitty gritty details of running multiple practices either, so I wager there's going to be significant turmoil in the next few years for them.

 

[RetinaDude]

On the AAO job site, there are A LOT of job postings with PE owned practices around the country.

What would be nice is if, after all the senior docs retire off with their mega PE money, there are now so many openings that new docs can come in and basically say “you need me way more than I need you so I want X dollars and I’m only working this many days per week”

 

[PLA2]

No, the private equity starting salaries are not good at all. Retina Consultants of America (RCA) has on their recruiting slide deck that they start at 400k for the first year, 500k for the second year, and 600k for the third year. Then you become "partner," where you get worthless "profit interest units" and class B stock.

Everyone was saying private equity would be better starting salary but it really isn't lmao

 

[dantt]

No, the private equity starting salaries are not good at all. Retina Consultants of America (RCA) has on their recruiting slide deck that they start at 400k for the first year, 500k for the second year, and 600k for the third year. Then you become "partner," where you get worthless "profit interest units" and class B stock.

Everyone was saying private equity would be better starting salary but it really isn't lmao

That sounds like a good starting salary to me...are many private practices starting their associates that high?
I heard RGW used to offer <200k. They would not suddenly offer double just because they're now PE owned.

 

[PLA2]

That sounds like a good starting salary to me...are many private practices starting their associates that high?
I heard RGW used to offer <200k. They would not suddenly offer double just because they're now PE owned.

Yes, the starting salaries from private practices are the same now. Or even if they're a little bit lower, there's a chance to be a real partner/owner, which is much much better.

 

[visco]

No, the private equity starting salaries are not good at all. Retina Consultants of America (RCA) has on their recruiting slide deck that they start at 400k for the first year, 500k for the second year, and 600k for the third year. Then you become "partner," where you get worthless "profit interest units" and class B stock.

Everyone was saying private equity would be better starting salary but it really isn't lmao

Can you elaborate on profits interest and why you think they are worthless as a form of equity in a PE company?

 

[LightBox]

Just start your own practice. The real money to be made with PE is if your practice was bought out a few years ago when multiples were super-high, and when 2nd bites actually occured (usually for >300% higher on the deferred rollover units).

 

[PLA2]

Just start your own practice. The real money to be made with PE is if your practice was bought out a few years ago when multiples were super-high, and when 2nd bites actually occured (usually for >300% higher on the deferred rollover units).

I'm wanting to start my own practice! Planning on it after fellowship

 

[PLA2]

Can you elaborate on profits interest and why you think they are worthless as a form of equity in a PE company?

Look at the recruiting slides. Profit interest units are only worth something if more practices sell to the PE group and more doctors join, and only when the entire group sells again.

 

[solitude]

No, the private equity starting salaries are not good at all. Retina Consultants of America (RCA) has on their recruiting slide deck that they start at 400k for the first year, 500k for the second year, and 600k for the third year. Then you become "partner," where you get worthless "profit interest units" and class B stock.

Everyone was saying private equity would be better starting salary but it really isn't lmao

what is the salary as "partner", are you saying it's 600k plus the stock and profit interest units?

 

[solitude]

On the AAO job site, there are A LOT of job postings with PE owned practices around the country.

What would be nice is if, after all the senior docs retire off with their mega PE money, there are now so many openings that new docs can come in and basically say “you need me way more than I need you so I want X dollars and I’m only working this many days per week”

I think this is already starting to happen to some extent. Long-term, people won't work for way less than their market value, that's just economics and common sense. To work 5 days a week in PP retina, high volume and driving around to satellite practices, for the numbers bandied about here, is not a sustainable business model for PE. At that volume, you could make more in academics or perhaps even a Kaiser type model.

 

[eyeeye_captain]

Saw that RCA offer. Assuming they don’t find a way to cut you to save 6 figures by getting a new hire, you’re at a salary cap with potentially worthless extra benefits, and they can work you into the ground for it.

 

[visco]

Look at the recruiting slides. Profit interest units are only worth something if more practices sell to the PE group and more doctors join, and only when the entire group sells again.

Can you provide a link?

 

[eyeeye_captain]

I think the single worst take I heard at AAO was a small discussion panel where a PE doc literally said “it’s a myth that there’s no equity in private equity”, then begged for the audience to apply to their 3 open jobs.

 

[dantt]

Yes, the starting salaries from private practices are the same now. Or even if they're a little bit lower, there's a chance to be a real partner/owner, which is much much better.

I guess that's true. However.

What proportion of people do you know join a private practice for a chance to be a real partner/owner and it works out? 75%? 50%? 25%? Is it more likely to work out in a large group with 5+ partners/owners (who have mostly cashed out) or a solo doc who's never had another doctor successfully buy in? There's lots of threads about this one In the recent past but it's been known for a long time. PE gets crapped on (perhaps justifiably) because it's a faceless corporation. Gentleman's rule to not crap on other practices. You'll have to ask the drug reps or the former associates for the real scoop (assuming they weren't forced to sign an NDA promising to never talk about their experience there).

 

[visco]

Another question: I heard the argument that with a lower base salary I may be able to achieve a production bonus sooner (the details of any kind of production bonus were not mentioned in the preliminary offer I received). For discussion's sake we can use the "@eyeeye_captain model" above (bonus = 30% of net collections after reaching 3x your base salary). With declining reimbursements and payers pushing back on coverage for services, what does it even look like to generate, let's say, $1,000,000 in collections in 1 year? I know it depends on the practice's overall net collections rate, but I would love to get a sense for what this looks like in a practical sense (ie, # of patients/day in clinic, # surgical cases per week, in-office procedures/lasers, testing/imaging, etc).

 

[eyeeye_captain]

Another question: I heard the argument that with a lower base salary I may be able to achieve a production bonus sooner (the details of any kind of production bonus were not mentioned in the preliminary offer I received). For discussion's sake we can use the "@eyeeye_captain model" above (bonus = 30% of net collections after reaching 3x your base salary). With declining reimbursements and payers pushing back on coverage for services, what does it even look like to generate, let's say, $1,000,000 in collections in 1 year? I know it depends on the practice's overall net collections rate, but I would love to get a sense for what this looks like in a practical sense (ie, # of patients/day in clinic, # surgical cases per week, in-office procedures/lasers, testing/imaging, etc).

That’s the @mjohnsonets model since he threw it out there and not me, but I’d call it pretty accurate for most PP groups. Lord knows he’s in touch with more groups than me.

WAY too many variables there. You can look up the Medicare fee schedules, which can give you a baseline for your per patient in your state. Your daily mix will never be the same, but you’ll likely have more new patients than your partners. Your surgery practice patterns will be completely different from mine as I’m retina, and there was an AAO talk this year about how we’re always at a net loss for vitrectomies. You’ll also bill far fewer procedures and imaging than a retina clinic. You can make up for it with premium lenses and MIGS, which I obviously avoid.

I could tell you exactly how many patients I would need to hit $1M in collections, but it’s not comparable given those practice differences.

 

[Slide]

I think the single worst take I heard at AAO was a small discussion panel where a PE doc literally said “it’s a myth that there’s no equity in private equity”, then begged for the audience to apply to their 3 open jobs.

Fits what I've heard from my friends. One of my friends told me she was low key begged to join a PE firm while in an elevator.

 

[MstaKing10]

I guess that's true. However.

What proportion of people do you know join a private practice for a chance to be a real partner/owner and it works out? 75%? 50%? 25%? Is it more likely to work out in a large group with 5+ partners/owners (who have mostly cashed out) or a solo doc who's never had another doctor successfully buy in? There's lots of threads about this one In the recent past but it's been known for a long time. PE gets crapped on (perhaps justifiably) because it's a faceless corporation. Gentleman's rule to not crap on other practices. You'll have to ask the drug reps or the former associates for the real scoop (assuming they weren't forced to sign an NDA promising to never talk about their experience there).

This.

Higher starting salaries in PE groups and no buy in leads to faster financial ramp up. The ceiling is probably lower than in PP (assuming you make partner…big assumption) but does the quick start make up for it? My buy in was complex but after the dust settled amounted to a solid six figures (and with my accountants help adding in some extras maybe bordering seven figures). I’m sure some finance wiz can answer that but I think it’s probably break even or invested well in favors of the PE offer.

 

[jd123]

This.

Higher starting salaries in PE groups and no buy in leads to faster financial ramp up. The ceiling is probably lower than in PP (assuming you make partner…big assumption) but does the quick start make up for it? My buy in was complex but after the dust settled amounted to a solid six figures (and with my accountants help adding in some extras maybe bordering seven figures). I’m sure some finance wiz can answer that but I think it’s probably break even or invested well in favors of the PE offer.

The numbers might break even over the course of a career (money up front vs higher earning later) but with PE, you will always be the employee of some MBA further up the food chain from you. Who knows what these groups will look like in 5,10,15 years. But if you become partner in a private practice group, you will be an owner and can basically do what you want. Yes, you have to answer to your partners at some level, but you are no one else’s employee.

Unless someone is severely geographically limited or has a lot of family money and doesn’t need to worrry about a good income, I don’t understand why a new grad would pick a PE job over a standard private practice job.

 

[mjohnsonets]

That’s the @mjohnsonets model since he threw it out there and not me, but I’d call it pretty accurate for most PP groups. Lord knows he’s in touch with more groups than me.

WAY too many variables there. You can look up the Medicare fee schedules, which can give you a baseline for your per patient in your state. Your daily mix will never be the same, but you’ll likely have more new patients than your partners. Your surgery practice patterns will be completely different from mine as I’m retina, and there was an AAO talk this year about how we’re always at a net loss for vitrectomies. You’ll also bill far fewer procedures and imaging than a retina clinic. You can make up for it with premium lenses and MIGS, which I obviously avoid.

I could tell you exactly how many patients I would need to hit $1M in collections, but it’s not comparable given those practice differences.

I will tell you the avg. comprehensive ophthalmologist collects about $1-1.3mil per year. If you have a heavier refractive cataract practice this can climb quickly. I know comp docs who do high-volume refractive cataract surgery and bill $3/4mil per year. As @eyeeye_captain said there are too many variables. I would generally tell you the likelihood of you hitting $1mil year one is low due to getting fully credentialed, ramp-up period, etc. If you're replacing a retiring surgeon, it's possible. Also as a new grad, do you have the surgical speed to actually do enough cases to hit that production? I know some docs in year one who don't want more than 6 cases per OR day, I know others fine with 15+ per day with 2 ORs set up.

 

[eyeeye_captain]

The numbers might break even over the course of a career (money up front vs higher earning later) but with PE, you will always be the employee of some MBA further up the food chain from you. Who knows what these groups will look like in 5,10,15 years. But if you become partner in a private practice group, you will be an owner and can basically do what you want. Yes, you have to answer to your partners at some level, but you are no one else’s employee.

Unless someone is severely geographically limited or has a lot of family money and doesn’t need to worrry about a good income, I don’t understand why a new grad would pick a PE job over a standard private practice job.

I think the break even point is around 10 years, not even counting the significant advantages you mention for PP. Some napkin math trying to be fair to both sides, using the unusually high RCA offer for retina. I’ll assume everyone is a new grad who likes their job and stays, and that PP is a 2 year track as it should be.

400/500/600 forever
300/400/buy in/probably 800

After 2 years, PP is down $200k, and how about we call the buy in $1M to make it a round number and maybe hamper them, plus loan interest. Except from what the PE guys say and your “shares” still run 6 figures, so we’ll call it $1M difference in income.

Say you’re debt averse like me, so you decide to throw cash at the loan and be done in 3 years, especially with current interest rates. $500k for 3 years considering taxes, so making $300k. You’re behind PE by $1.1M after 5 years while making likely at least $200k more thereafter. Ergo, you match their total earnings at 10.5 years down the line and start passing them. Quite possibly sooner as more than a few PE entities are teetering on bankruptcy (check the anesthesia and ER forums).

This is obviously overly simplistic, not taking into account taxes, investments, ASCs, overhead, etc. I can understand wanting to play the short game, especially if student loans are involved, but the long game is how you retire. And that’s with me using the upper end of the spectrum for the PE numbers so I’m relatively unbiased.

 

[docdoc2012]

I think atleast 50% of pp retina are atleast low 7 figures so 800 is a conservative estimate

 

[eyeeye_captain]

I think atleast 50% of pp retina are atleast low 7 figures so 800 is a conservative estimate

Given I’m on the record as anti-PE, I tried to make it overly fair to them. Top of the line PE salary, big PP buy in, low ball PP income. Still a big career long win for PP.

 

[RetinaDude]

When you consider retina has clinical income, drug rebate money, surgery center income, real estate income, etc…..many are making 7 figures, and plenty are making over $2M/year. Considering the ceiling for PE May be $800k and the ceiling for PP may be $2M+, that’s a lot to leave on the table for the PE docs. And I bet the PE retina doc is not cruising along seeing 20-30 pts per day, while the PP doc is seeing 60-80/day. The PE doc is working hard too because PE wants their workhorses so the mother ship can be fed (and eventually resold)

 

[percyeye]

Separate PE question. There are about 30-40 PE backed firms that are buying Ophthalmology/Optometry practices out there. The ultimate goal for these companies and vested Docs is to get that "2nd bite of the apple." But how many firms out there actually have the capability, especially in this current environment, are able to afford to buy someone with a 2nd bite? Goldman Sachs bought My Eye Dr for $2.7 Billion in 2019 but how many other places are willing to invest Billions$ into these other PE firms? 10-20? It has to be less than the total amount of actual Ophtho PE firms out there so that means there will be quite a few PE firms and vested Docs that won't ever get that 2nd bite.