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Production bonuses and incentive

Discussion in 'Ophthalmology: Eye Physicians & Surgeons' started by plasticbuddy, Aug 4, 2011.

  1. plasticbuddy

    plasticbuddy Member
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    When there is a production bonus offered and it says something to the effect of:

    "30% of revenue generated over 2x salary"

    does that mean 30% of what you bill for surgeons and facility fee or just the surgeons fee?

    ie cpt 66984 cataract extraction by phaco or ecce
    $700 surgeons fee
    $700 facility

    ie: if you did 300 cataract surgeries do you multiply 300x$700 or 300x($700+$700) to figure the revenue generated for the bonus calculation

    what percentages (25-40%?) and multipliers (2.0x-3.0x) are normal?

    thanks for your help guys, its much appreciated!
     
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  3. J-Rad

    Physician Moderator Emeritus 15+ Year Member

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    Moving to Ophtho.
     
  4. eyehope

    eyehope Junior Member
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    It's best to ask the practice, because it may vary. I would say that in general the facility fee is not included in the bonus calculation (Just like any optical sales are not included in the bonus calculation). Also, 300 cataracts is an optimistic number for a first year associate. In the first few years, you will generate more from your professional clinic fees - unless the practice is a cataract factory.

    Average is probably around 30% at 3x to 3.5x salary.
     
  5. cme2c

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    Would be just surgeon fee. Otherwise, would likely be illegal. A direct bonus for taking your cases to certain facility is not good.
     
  6. Bgladney

    10+ Year Member

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    The facility fee is what your hospital or ASC receives. If you have ownership there, you could capitalize on it.

    As far as bonus structures, the multiplier should be based on the overhead of the practice. It is typically called the "breakeven point" for the simple fact that it should be the point where the practice does not lose any money for having you there in the practice, but does not generate a profit.

    For example, if your entire income package equals $150K, and the practice runs a 50% overhead, you need to collect $300K in total collections in order to "breakeven". After that, you should receive a bonus of an collection in excess of that mark. The percentage can range but 30% is the norm.
     
  7. Bgladney

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    2 = 50% overhead
    2.5 = 60% overhead

    Anything over 3, you should be questioning. Might be legit (very high overhead) but chances are, the practice is generating a significant profit from you.

    2.5 x the base is the norm.
     
  8. orbitsurgMD

    orbitsurgMD Senior Member
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    That would be a bad deal or a practice with out of control overhead and sub-par management, no matter how they present themselves. Run, Forrest, Run.

    Most do not include anything outside what you collect in making bonus calculations. Surgery centers are usually separate corporate entities and separate business ventures. The profits would be shared with you from a surgery center only if you were a shareholder in the center. Otherwise any payment to you would be a kickback. If they were a Medicare contractor--hard not to be in ophtho--it is a violation of Stark II and a federal crime. Hope you like your cellie.

    The estimates of 2-2.5x base (not malpractice insurance premiums or other overhead expenses--one practice I interviewed with tried to add recruitment costs to that figure) after which you would get a percentage of collections, and it would probably be less than the overhead break point, to give the owners a buffer since they are carrying you, at least at the beginning, also so that you have an incentive to buy in when the time comes to do that; there should be an extra margin coming to you at buy in for you to finance your purchase without taking a big hit in income.
     

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