Private Practice Offer - Collections Compensation Model - Advice Needed!

[SpineDoc101]

Hello everyone,

I've read through a number of posts on the forum and see that there are a number of experienced physicians on here who provide excellent insight and guidance on certain topics. I am looking for advice on a PP contract offer. I'm currently a pain fellow, finishing up in June.

Location: In the south, about an hour or so from a major city. Growing population in this area. It appears as if this area has minimal competition for pain medicine and my potential employer is killing it out there after setting up shop about 1.5 years ago.

Practice: I would be joining one solo PP. One experienced physician will be coming onboard soon. Plans to expand to a couple locations nearby at this trajectory.

Pros:
-Getting involved early in a growing practice with lots of potential (Excellent volume from what I'm told, very decent payor mix)
-Growing population with relatively lower competition
-Learn regenerative medicine (which is a huge interest of mine)
-Learn any advanced procedures that I haven't learned in fellowship (and overall having experienced guys for guidance)
-Partnership buy in after 1 year

Pro or Con:
- Local ASC buy in opportunity but they've had a number of recent transitional situations with physicians. It is multi-disciplinary ASC (from I understand, this can actually increase overhead costs quite significantly and affect profits). I am unsure if buying in would be a good investment. My employer just bought in. I would really look into numbers when the opportnity presents itself (within 6-12 months depending on how much business I bring in). I won't blindly invest into it just bc it's offered.

Cons:
-Risk associated with a young practice with POTENTIAL that has not yet been fully realized (Bad business moves or purchases, expanding too fast, death, injury, new competition, difficulty with staffing)
-Location is an hour from a major city (honestly it's probably a relatively boring place to live without having to drive atleast an hour). But I'm okay with the location overall.
-Any APP/midlevel additions/supervision will not go to my collections

Offer:
-We loosely discussed some terms, nothing in writing. He's open to negoiating.
-First year, 350k base with a vague production structure. No thresholds or numbers mentioned. (Honestly, I haven't put much weight on first year structures throughout my interview trail with PP clinics. I'm looking for to be incentivized for productivity, am willing to work hard and am hoping to be efficient ASAP to make the big bucks.)
-After year 1, partnership buy in opportunity if all works out well on both sides - With production based compensation, 30% of gross collections. He told me that with 2mill collections my take home would be 600k and with 3mill collections my take home would be 900k. On top of that, distributions from partnership and ASC if buy in.

Questions:
1. Generally speaking, what are realistic total collection ranges for a high functioning, efficient physician?
Assuming no medicaid. Primarily favorable payor mix with lots of supplemental insurance. Seeing 30-40 patients per day, new patients and procedures only. APPs see follow ups. Emphasis on procedures, doing many advanced procedures like SCS, SIJ fusions, PNS, kyphos, etc.). From interviewing with PP groups, I gathered that roughly 1.8-2mill seemed to be the highest numbers I came across. Is this about right? Am I way off or just a bit off the mark?

I also want to be more conservative and consider that I might only be seeing 20-30 patients per day for a couple of years (or long term). Could this potentially equate to 1.2-1.5mill collections/year? He mentioned 2mill collections and 3mill collections in our talk like it was nothing. I would love some insight please as gross/total collections is what my compensation is based off of.

2. I want to negotiate the partner, production based compensation from 30% gross collections but I don't want to be too aggressive. I also don't know what is appropriate and fair for both sides. Gross collections is coming from solely my collections and would not include any APP supervision. To preface, compensation model the first year was 350k base with some vague/unmentioned production bonus. I don't care very much about the first year compensation structure, it was super average. My focus is beyond the first year.

What is a fair, realistic gross collection to negotiate for after a partnership buy in after that first year? I would personally feel satisfied with 50-60% of gross collections (with a goal of 1.5-2mill total collections yearly). This is about double the number he mentioned. Is this completely unrealistic from my standpoint? After making partner, is it reasonable to ask for 40% gross year 1, 50% gross year 2, 60% gross year 3 and beyond?

Should I instead suggest a tiered model where % collections increases as my collection increases?
For example, 30% gross up to 500k, 50% from 500k to 1mill, 70% above 1mill.
Is the above example realistic or fair? I want a favorable pay structure for myself that is also fair to the employer.
Does a tiered system like this safely cover overhead and also provide profits to the business while offering strong compensation model for me?

3. I am also considering just a one year contract with the base and vague comp structure for year one and then negotiating the buy in at the end of year 1. This allows us to feel each other out and also show my work ethic and value to the practice. Not sure if I should negotiate partner compensation structure now or later? Would I have more leverage later versus now? Also, if I negotiate partnership at the end of the year, I feel more inclined to negotiate a higher base now for year 1. This could shoot me in the foot later though as I want to negotiate a strong partnership collections structure. In the event that I accept terms that I feel are less favorable, is it also reasonable to try to re-negotiate my compensation structure in the future?

Advice, insight, recommendations are encouraged. Thanks!

---

Members don't see this ad.

 

[mdo1738]

Should I instead suggest a tiered model where % collections increases as my collection increases?
For example, 30% gross up to 500k, 50% from 500k to 1mill, 70% above 1mill.
Is the above example realistic or fair? I want a favorable pay structure for myself that is also fair to the employer.
Does a tiered system like this safely cover overhead and also provide profits to the business while offering strong compensation model for me?

Yes, you should do a tiered model. Percentage should be less while you’re meeting the fixed costs of your overhead (your contribution to all the fixed costs of the practice like malpractice, rent, staff salary, etc). Beyond a certain point of production/collections (I have not been in PP so I cannot tell you where that point would be really), you have met all those costs and your overhead should only reflect equipment/medication costs plus probably a small percentage profit for the practice

 

[RoloTomassi]

The way you split your cases between ASC and office will be a huge factor in all this

 

[TIVAndy]

20-30 pts per day you will be collecting less than a million without mid level

 

[Hoos2004]

Looking thru the collections based salaries reported on Marit (the MD salary sharing site that I started) - the average collections based total comp is $580k with avg % collections of 45% - which suggests total collections of ~$1.3M on an avg. The tiering model you are suggesting makes sense, and a friend of mine in IM has a similar tiered model, but the levels are not as dramatic (e.g., she has 21%, 23%, 25%). I don't know how realistic a 30/50/70 model might be - but might be worth negotiating a higher base tier of ~40+% and then step up from there.
Here's the link for all anonymized Pain salaries on Marit if helpful - Pain Management Physician (Anesthesiology) Salary (Apr 20, 2025)

 

[BoardingDoc]

You mention an ASC but don't say where you are doing your cases. This is singlehandedly the most important factor. If your employer just bought into the ASC and wants you doing all of your procedures there, your collections are going to be garbage and you're never going to make any money.

If you're doing everything in office, you can certainly make some money, but that 30% of gross revenue is something that can't exist going forwards.

The conversation I would have with them is to the extent of "30% of revenue obviously make sense for year 1, seeing as you're fronting me money for a base guarantee and then I need to clear all of my additional overhead expenses beyond that. Once I'm in a steady rhythm and making money, however, 30% obviously doesn't make sense. Assuming that partnership is a true open book, P+L model, then this can work." You also need to know what partnership buy in costs and whether or not this is an equal partnership or if some partners are more equal than others.

At the end of the day, my spidey sense is telling me that this guy doesn't want a partner, he wants to pay you as an employee for year 1 to protect himself (reasonable) and then wants a junior partner that he can keep making money off of going forwards (NOT reasonable if you are buying into partnership. If this is just a status change and you aren't kicking in a bunch of money, that's fine.)

My obvious followup question is: if this deal in fact is NOT a good one and the area is as ripe for expansion as you say.... why don't you just open up your own practice in the same general area and cut out the middleman?

 

[BoardingDoc]

20-30 pts per day you will be collecting less than a million without mid level

It'll be close, but they'll probably come out at over 1M.

I've got a spreadsheet with all the Medicare collections for various procedures and E+M codes that lets me predict income based on volume. 25 patients per day (70% 99214, 25% 99213 and 5% 99204) 4 days a week plus only a single day of 25 procedures with a fairly normal distribution of B+B procedures, 46 wks a year yields around 1.125M in revenue for a pure medicare population.

30 patients a day turns that into 1.35M.
20 turns it into 900k

 

[TIVAndy]

It'll be close, but they'll probably come out at over 1M.

I've got a spreadsheet with all the Medicare collections for various procedures and E+M codes that lets me predict income based on volume. 25 patients per day (70% 99214, 25% 99213 and 5% 99204) 4 days a week plus only a single day of 25 procedures with a fairly normal distribution of B+B procedures, 46 wks a year yields around 1.125M in revenue for a pure medicare population.

30 patients a day turns that into 1.35M.
20 turns it into 900k

remember also depending on the region there maybe around 20% differences in medicare reimbursement NY/SF >> rural/suburbs

 

[Status Sciaticus]

It'll be close, but they'll probably come out at over 1M.

I've got a spreadsheet with all the Medicare collections for various procedures and E+M codes that lets me predict income based on volume. 25 patients per day (70% 99214, 25% 99213 and 5% 99204) 4 days a week plus only a single day of 25 procedures with a fairly normal distribution of B+B procedures, 46 wks a year yields around 1.125M in revenue for a pure medicare population.

30 patients a day turns that into 1.35M.
20 turns it into 900k

is this based on a wRVU model or a % collections model?

 

[BoardingDoc]

is this based on a wRVU model or a % collections model?

This is what a office collects from Medicare. This has nothing to do with what the doc actually gets paid in the end.

 

[BoardingDoc]

remember also depending on the region there maybe around 20% differences in medicare reimbursement NY/SF >> rural/suburbs

Yes, that's definitely true. My regional reimbursement is higher than average. Certainly not the same as docs in Marin county get paid (I believe that's the highest paid region) but I'm definitely not on the Arkansas pay scale either.

 

[SpineDoc101]

You mention an ASC but don't say where you are doing your cases. This is singlehandedly the most important factor. If your employer just bought into the ASC and wants you doing all of your procedures there, your collections are going to be garbage and you're never going to make any money.

If you're doing everything in office, you can certainly make some money, but that 30% of gross revenue is something that can't exist going forwards.

The conversation I would have with them is to the extent of "30% of revenue obviously make sense for year 1, seeing as you're fronting me money for a base guarantee and then I need to clear all of my additional overhead expenses beyond that. Once I'm in a steady rhythm and making money, however, 30% obviously doesn't make sense. Assuming that partnership is a true open book, P+L model, then this can work." You also need to know what partnership buy in costs and whether or not this is an equal partnership or if some partners are more equal than others.

At the end of the day, my spidey sense is telling me that this guy doesn't want a partner, he wants to pay you as an employee for year 1 to protect himself (reasonable) and then wants a junior partner that he can keep making money off of going forwards (NOT reasonable if you are buying into partnership. If this is just a status change and you aren't kicking in a bunch of money, that's fine.)

My obvious followup question is: if this deal in fact is NOT a good one and the area is as ripe for expansion as you say.... why don't you just open up your own practice in the same general area and cut out the middleman?

Vast majority of procedures will be in office. ASC only for advanced procedures that would warrant an ASC.

He mentioned buy in partnership to be likely 10% ownership of fair market value.

I would love to hit up this area on my own... but honestly... I don't know anything about billing and insurance contracts/panels. That world is foreign to me at this time. Coming out of fellowship I don't feel comfortable setting up shop on my own yet. If I were even one year out, with more experience specifically with that part of medicine, I would highly consider going on my own.

 

[SpineDoc101]

The way you split your cases between ASC and office will be a huge factor in all this

The majority of cases will be in office with only advanced procedures that require ASC performed in an ASC.

 

[SpineDoc101]

remember also depending on the region there maybe around 20% differences in medicare reimbursement NY/SF >> rural/suburbs

Any good resources to learn about this topic?

 

[Hoos2004]

I've seen Milliman's data in the past for commercial rates relative to medicare. This article has some good benchmarks for each state

Commercial reimbursement benchmarking: Commercial payment rates for medical services as percentage of Medicare fee-for-service rates

We estimate the national commercial reimbursement payment rates increasing in 2024 to 190% of Medicare fee-for-service rates, up from 188% last year.

www.milliman.com

And you'll need to factor in payer mix as well to calculate the blended rate - this article has some good estimates

Hospital payor mix by state

Discover the hospital payor mix by state, providing insights into healthcare funding sources and trends. Stay informed about your region's healthcare landscape.

www.definitivehc.com

Finally, you'll need to factor in medicaid reimbursement rates which tend to be lower than medicare. I haven't used this but you might be able to find something online for your state

 

[BoardingDoc]

Vast majority of procedures will be in office. ASC only for advanced procedures that would warrant an ASC.

He mentioned buy in partnership to be likely 10% ownership of fair market value.

I would love to hit up this area on my own... but honestly... I don't know anything about billing and insurance contracts/panels. That world is foreign to me at this time. Coming out of fellowship I don't feel comfortable setting up shop on my own yet. If I were even one year out, with more experience specifically with that part of medicine, I would highly consider going on my own.

I would want to know more about this partnership buy-in. Are you getting 10% of the ASC if you buy in at fair market value and then getting entitled to 10% of the entire group's profits as well? Or is the ASC 10% an entirely separate entity and partnership means something completely different? If it's 10% of everything, this deal is dumb, see below. If they're separate deals, you need to figure out what partnership actually means.

If partnership = 10% of everything...

Assumptions:
- You two are the only 2 docs
- You're equally productive
- Other doc's "salary" is the same as yours
- Overhead is about 50%.
- Ergo, if you keep 30% of your collections, the group is keeping 20% of your collections as profit.

This effectively works out that a 10% buy in gets you a total of 34% collections instead of 30%.

Easy way to see it: you both collect 1M each.

Total revenue: 2M
Expenses = 1M
Your salary = 300k
His salary = 300k
Profit = 400k

If he owns 100%, he gets 700k, you get 300k.
If it's 90/10, he gets 660k, you get 340k.

340k = 34% of 1M.

you would also get 10% of APP profit, but that's likely a small number. You'd also get 10% of ASC profit which can be literally anything and it's hard to guesstimate.

I really hope that this isn't the scenario, but I've seen a bunch of PPs that don't have their finances truly together and you wind up with convoluted nonsense like this.

TL;DR: The ASC issue is obfuscating things. It's much easier to keep them separate. Talk about buying a 10% share of the ASC if you want to. More importantly, discuss what percent of collections you get to keep going forwards. 30% is way too low long term, regardless of whether or not you own shares in an ASC, and your % collections is the simplest and most effective term you can negotiate.

 

[SpineDoc101]

I would want to know more about this partnership buy-in. Are you getting 10% of the ASC if you buy in at fair market value and then getting entitled to 10% of the entire group's profits as well? Or is the ASC 10% an entirely separate entity and partnership means something completely different? If it's 10% of everything, this deal is dumb, see below. If they're separate deals, you need to figure out what partnership actually means.

If partnership = 10% of everything...

Assumptions:
- You two are the only 2 docs
- You're equally productive
- Other doc's "salary" is the same as yours
- Overhead is about 50%.
- Ergo, if you keep 30% of your collections, the group is keeping 20% of your collections as profit.

This effectively works out that a 10% buy in gets you a total of 34% collections instead of 30%.

Easy way to see it: you both collect 1M each.

Total revenue: 2M
Expenses = 1M
Your salary = 300k
His salary = 300k
Profit = 400k

If he owns 100%, he gets 700k, you get 300k.
If it's 90/10, he gets 660k, you get 340k.

340k = 34% of 1M.

you would also get 10% of APP profit, but that's likely a small number. You'd also get 10% of ASC profit which can be literally anything and it's hard to guesstimate.

I really hope that this isn't the scenario, but I've seen a bunch of PPs that don't have their finances truly together and you wind up with convoluted nonsense like this.

TL;DR: The ASC issue is obfuscating things. It's much easier to keep them separate. Talk about buying a 10% share of the ASC if you want to. More importantly, discuss what percent of collections you get to keep going forwards. 30% is way too low long term, regardless of whether or not you own shares in an ASC, and your % collections is the simplest and most effective term you can negotiate.

Thanks for your insight!

The partnership buy in would be only for clinic/medical practice. Potential ASC buy in is completely separate and I would assess the ASC's financials when and if that becomes an opportunity.

Actually, I think the way you laid it out is how it would work in terms of revenue, expenses and profit distribution. With his majority ownership (90% or 80%), he would get that majority in profits. The big point he pushes is that the volume and total collections would be high so the numbers end up being decent distributions, even at 10% ownership (plus "passive"). Also, there's going to be a 3rd guy (probably with ownership too) and the plans are to expand to a 2nd and 3rd location within the year (already has one satelite clinic in place with relatively high refferals coming from there). So hypothetically, 3 guys collecting ~2mill each, the distributions he says should be juicy.. His share much, much larger than mine lol..

Assuming 50% overhead, how much do you think I can negotiate up from 30% gross? Do you think 40-45% gross would be way too aggressive? That would leave him/the business with 5-10% of profits from my collections.

 

[SpineDoc101]

It'll be close, but they'll probably come out at over 1M.

I've got a spreadsheet with all the Medicare collections for various procedures and E+M codes that lets me predict income based on volume. 25 patients per day (70% 99214, 25% 99213 and 5% 99204) 4 days a week plus only a single day of 25 procedures with a fairly normal distribution of B+B procedures, 46 wks a year yields around 1.125M in revenue for a pure medicare population.

30 patients a day turns that into 1.35M.
20 turns it into 900k

this is extremely helpful, thanks!

 

[BoardingDoc]

Thanks for your insight!

The partnership buy in would be only for clinic/medical practice. Potential ASC buy in is completely separate and I would assess the ASC's financials when and if that becomes an opportunity.

Actually, I think the way you laid it out is how it would work in terms of revenue, expenses and profit distribution. With his majority ownership (90% or 80%), he would get that majority in profits. The big point he pushes is that the volume and total collections would be high so the numbers end up being decent distributions, even at 10% ownership (plus "passive"). Also, there's going to be a 3rd guy (probably with ownership too) and the plans are to expand to a 2nd and 3rd location within the year (already has one satelite clinic in place with relatively high refferals coming from there). So hypothetically, 3 guys collecting ~2mill each, the distributions he says should be juicy.. His share much, much larger than mine lol..

Assuming 50% overhead, how much do you think I can negotiate up from 30% gross? Do you think 40-45% gross would be way too aggressive? That would leave him/the business with 5-10% of profits from my collections.

Don't ask, don't get. I think you can certainly ask for 40-45% of gross. No guarantee they will say yes. That said, unless this is in some crazy desirable area or has some other way of easily pulling pain docs, I don't know why people would agree to 30% in perpetuity except via apathy towards money or naivete.

If I'm generating 2M in revenue, I would sincerely hope that my personal take home was close to 1M, and not 600k.