Private Pratice Support from Local Hospital

[dem4t]

I've heard of some openings for private practice that have the first year salary that is actually supported by the local hospital and not directly by the practice itself. Does anyone know how this works?

Also, I've met with a group who is fully supporting the first year income but stated that I could consider discussing things like sign-on bonus or loan repayment with the hospital. Again, how exactly does this work? Is the sign-on bonus paid to me directly from the hospital or does it get paid to the practice itself then to me? What are the tax consequences of either situation? Any insight would be appreciated

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[resxn]

I've heard of some openings for private practice that have the first year salary that is actually supported by the local hospital and not directly by the practice itself. Does anyone know how this works?

Also, I've met with a group who is fully supporting the first year income but stated that I could consider discussing things like sign-on bonus or loan repayment with the hospital. Again, how exactly does this work? Is the sign-on bonus paid to me directly from the hospital or does it get paid to the practice itself then to me? What are the tax consequences of either situation? Any insight would be appreciated

Great questions! As to the first question where the hospital provides the guarantee for the first year, you would be an independent contractor for the practice with which you'll work. Due to Stark law you will need to be completely independent legally from the practice--there can be some cost sharing but that first year is highly regulated. Some hospitals follow the Stark Laws to the T and some are more lax. Either way, there's a lot of paperwork to track. Usually, the guarantee is forgiven over time. The most common timeframe for forgiveness I've seen is 3 years. Let's say that you get a guarantee over $300k to make the math easy. This means that you'll be forgiven $100k/yr for the next 3 years. This is reported to the IRS as income, so you'll look like you're making $100k/yr more than you are. That means you'll be paying an extra $35k in taxes than you normally would. Not a fun amount.

I've never heard of the 2nd situation. Not sure how that would work or how the taxes would work. I'd love to hear anyone else's experience.