Realistic salary for private practice

[smalltownpsych]

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He bought rental homes then he leased them to himself? I don’t understand what you mean by that

Bought the houses as a private individual or maybe a separate llc and then had the treatment program that he owned lease then from him or his other company. That way when he sold the treatment program, he still owns the properties and is still getting paid monthly leases.

Right, that's very different from reinvesting the excess capital into the practice itself. Again, whether you own the business which then owns real estate vs. whether you own the real estate in a separate business by drawing out the profit is a legal/accounting issue, not an overall financial strategy issue. The main financial strategy is your big picture asset allocation: do you believe that your own business has a higher growth potential/return on capital than some other instrument you might invest?

Tread carefully is different from being slow. You need to be careful yet decisive. Write out the projections on Excel. In a separate column, model out capital return if you invested in the alternative (ETF, real estate). What is the alpha and what is the beta. Then make a decision. Then execute. A lot of physicians don't do any of that work, and just go with their gut, and then realized that they made all kinds of errors years later.

This is not to say that you shouldn't ultimately go with your gut. Your gut helps you evaluate non-financial aspects of decisions, but you need that Excel in front of you THEN you incorporate these aspects. If you don't know how to make that Excel then you should hire someone to go through it with you.

Again, appreciate the great info. I like the way you put that part about following your gut and the numbers. I do the numbers in my head a bit too much so should use spreadsheets a bit more to improve that aspect of my planning.

As I am sure you will agree, I want to clarify the gut thing, people confuse that with following your emotions, but it is actually more about utilizing the intuitive aspects of cognitive functioning that tend to be more of an aspect of right hemisphere functioning. Left hemisphere is going to gather the data and crunch the numbers and the right can see the big picture and not get lost in the details. Good integration between these two aspects of cognitive function are essential. The limbic system should not have much of a role on business decisions. Had a good talk with a patient who is a very successful businessman along those lines the other day, except I told him that his limbic system needed to be part of the picture when understanding his relationships and how to enjoy life.

 

[Stagg737]

@dl2dp2 Thank you so much for talking about these topics related to the economics of the psychiatry market. Is it safe to say that the best way to learn these terms, calculations, and approaches to finance are best learned simply by starting your own private practice?

The older I get, the more I realize that simply reading these things is no replacement for living through them and having to make decisions that ultimately impact your quality of life, vs. back-of-napkin calculations and daydreaming.

What would you recommend to a medical student graduating with ~210k in debt with aspirations for running a solo or solo + one admin staff practice?
Options I'm considering are

• Wait till loans are paid off to begin building practice
• Pursue PSLF and simultaneously start private practice on the side while slowly accumulating 120 qualifying payments?
• Part-time work immediately after residency or so that one has the energy to start the private practice?
• Moonlighting during residency to pay off the loans more quickly, network, and hustle to get a better idea of the psych business landscape locally

I'm partial towards the moonlight during residency and pay off loans early so that I can afford to work part-time once I am an attending and build the practice shortly after finishing fellowship. Planning to do a forensic psych fellowship.

Something else to consider would be working for a small PP where the owner is willing to mentor you on everything involved with running a practice. This could be more difficult and would require you to be transparent with your goals (eventually leaving to open a solo PP) and likely take a bit of a pay cut or personally take over some admin duties, but having the right mentor can be incredibly insightful.

 

[forchinet121]

Bought the houses as a private individual or maybe a separate llc and then had the treatment program that he owned lease then from him or his other company. That way when he sold the treatment program, he still owns the properties and is still getting paid monthly leases.

Again, appreciate the great info. I like the way you put that part about following your gut and the numbers. I do the numbers in my head a bit too much so should use spreadsheets a bit more to improve that aspect of my planning.

As I am sure you will agree, I want to clarify the gut thing, people confuse that with following your emotions, but it is actually more about utilizing the intuitive aspects of cognitive functioning that tend to be more of an aspect of right hemisphere functioning. Left hemisphere is going to gather the data and crunch the numbers and the right can see the big picture and not get lost in the details. Good integration between these two aspects of cognitive function are essential. The limbic system should not have much of a role on business decisions. Had a good talk with a patient who is a very successful businessman along those lines the other day, except I told him that his limbic system needed to be part of the picture when understanding his relationships and how to enjoy life.

Who is living in the houses?

 

[rjs2131]

As we're discussing various PP scenarios - for those who have experience with group PP settings, what has been your experience with negotiating a higher split? There's a good degree of risk taken by the practice early on but once a new psychiatrist has joined and established their value over a few years (i.e. consistent patient panel + generating significant income), wondering how to approach these conversations.

 

[Candidate2017]

As we're discussing various PP scenarios - for those who have experience with group PP settings, what has been your experience with negotiating a higher split? There's a good degree of risk taken by the practice early on but once a new psychiatrist has joined and established their value over a few years (i.e. consistent patient panel + generating significant income), wondering how to approach these conversations.

There's no risk to a PP owner if you're a 1099, as opposed to employed. PP owners who use 1099 psychiatrists just need a "prescriber" to bill away. A large clinic already has a huge waiting list, and they can fill your schedule from day 1 but for your inability to see 8 new a day.

 

[forchinet121]

There's no risk to a PP owner if you're a 1099, as opposed to employed. PP owners who use 1099 psychiatrists just need a "prescriber" to bill away. A large clinic already has a huge waiting list, and they can fill your schedule from day 1 but for your inability to see 8 new a day.

Why are you unable to see 8 new a day? If you’re scheduled for 8 hours are they gonna just leave slots empty?

 

[ObsequiousAplomb]

Why are you unable to see 8 new a day? If you’re scheduled for 8 hours are they gonna just leave slots empty?

Do you really want to see 8 intakes in a day? Several days in a row? Have you ever done it? It's not something I would volunteer for.

 

[Liquid8]

Do you really want to see 8 intakes in a day? Several days in a row? Have you ever done it? It's not something I would volunteer for.

Can remember seeing 5 new patients on my first day of private practice, being absolutely knackered and knowing it was not sustainable going forward.

 

[forchinet121]

Do you really want to see 8 intakes in a day? Several days in a row? Have you ever done it? It's not something I would volunteer for.

No I would prefer to see 3 patients per day and be paid for 30, but that’s not reality. If you’re new how are they gonna fill your day? Are they gonna give you 3 intakes for 8 hours?

 

[Psychresy]

I personally don't feel overwhelmed seeing a bunch of news back to back. Maybe I'm money motivated, but every new means more time in my clinic schedule that will be consistently filled. Which means I can start increasing prices sooner and feel comfortable I'll still have patients to fill when others drop out.

This is totally contrary to salary jobs (or residency) where more effort doesn't equal anymore pay.

 

[smalltownpsych]

Who is living in the houses?

Residents in the treatment program. There are private pay residential treatment programs all over the country of various types from small, home based to more institutional style. Transitional living with various types of supports for aftercare is part of that as well and is likely more the niche that I am aiming to fill.

 

[ObsequiousAplomb]

No I would prefer to see 3 patients per day and be paid for 30, but that’s not reality. If you’re new how are they gonna fill your day? Are they gonna give you 3 intakes for 8 hours?

3-5 intakes, a number of overflow follow-ups for their patients that might end up as transfers to you, time to learn more about the system and adapt to your space, and letting you go home in less than 8 hours. It's private practice. Would you really join one that wants you to run out the clock from day one?

 

[BiscoDisco]

How bad is this deal? I think I already know but humor me.

21 patients per day x 5 days a week x 48 weeks + no holidays, 300k per year. 1099. no benefits.

 

[ObsequiousAplomb]

How bad is this deal? I think I already know but humor me.

21 patients per day x 5 days a week x 48 weeks + no holidays, 300k per year. 1099. no benefits.

Very bad. That's ~$60 per encounter if you actually see that many people every day.

 

[rjs2131]

How bad is this deal? I think I already know but humor me.

21 patients per day x 5 days a week x 48 weeks + no holidays, 300k per year. 1099. no benefits.

To put into context a little (lots of variables to consider of course) - I’m attempting to hit ~300k + benefits in PP with 12 follow-ups/day, 4 days/week, 48 weeks. I’m sure there are others that are doing better than this.

 

[vanfanal]

I see 6 new follow-up's virtually on Fridays for a one time consultation from community PCPs. I render and assessment a series of steps the PCPs can follow. Took some time and some work flow optimizations, but I find it quite doable. I actually like those days as they're stimulating I don't have to worry about follow-ups, though if I wanted it's a nice way to pick certain patients for a niche private practice.

But alas, I'm going the VA.

 

[AnesvsPsych]

To put into context a little (lots of variables to consider of course) - I’m attempting to hit ~300k + benefits in PP with 12 follow-ups/day, 4 days/week, 48 weeks. I’m sure there are others that are doing better than this.

Is this taking insurance or cash?

 

[splik]

How bad is this deal? I think I already know but humor me.

21 patients per day x 5 days a week x 48 weeks + no holidays, 300k per year. 1099. no benefits.

As a 1099 you aren't salaried so this would be employee misclassification (though the government isnt really interested in misclassification of physicians). So there should be an hourly rate or per visit rate. you dont get paid time off but you can set your own hours and take leave as desired (within reason). So that would work out as $59 per patient, or $156.25 per hour....

 

[Sushirolls]

Employees should be concerned about misclassification.
I know of one doc who was labeled 1099, but things went sour, the doc sued, and part of that was the misclassification, they got reamed enough in the courts that I believe they since changed all their 1099 over to W2.

Most physician 1099 IMO, don't pass the muster as actual 1099.

 

[BiscoDisco]

To put into context a little (lots of variables to consider of course) - I’m attempting to hit ~300k + benefits in PP with 12 follow-ups/day, 4 days/week, 48 weeks. I’m sure there are others that are doing better than this.

The practice owner alluded that starting a private practice right away would be too difficult because it would require 2-300k upfront costs and my reimbursement would be about 40% less than theirs. Essentially making it a losing proposition.

 

[Ironspy]

The practice owner alluded that starting a private practice right away would be too difficult because it would require 2-300k upfront costs and my reimbursement would be about 40% less than theirs. Essentially making it a losing proposition.

Unless you include purchasing property I cannot imagine how you would spend 2-300k opening a psychiatry private practice. They added an extra zero

 

[forchinet121]

The practice owner alluded that starting a private practice right away would be too difficult because it would require 2-300k upfront costs and my reimbursement would be about 40% less than theirs. Essentially making it a losing proposition.

The person that has a direct interest in you not starting a practice told you it would be cost prohibitive to start a practice? I’m shocked

 

[forchinet121]

Should be making over 600k seeing 20 patients a day

How many patients per day are you seeing

 

[calvnandhobbs68]

Employees should be concerned about misclassification.
I know of one doc who was labeled 1099, but things went sour, the doc sued, and part of that was the misclassification, they got reamed enough in the courts that I believe they since changed all their 1099 over to W2.

Most physician 1099 IMO, don't pass the muster as actual 1099.

Main reason physicians should be concerned about 1099 status is that they would have to redo those prior year taxes possibly as W2 if they were found to be W2 during that time.

I agree that there are certainly places that misclassify employees as W2 but if you're setting your own hours, taking time off when you want, setting what days you work, setting what patients you'll see/not see, being paid per patient visit/hour (rather than set salary), not receiving benefits and are clearly free to work for another practice if you wished, pretty likely you'd pass as 1099.

It's the places that try to pay people as 1099 but want them to act like W2 (ex. follow company rules/"handbook"/policies, be there X hours per day, follow the company dress code, see X number of patients per day) that tend to get in trouble.

 

[rjs2131]

Is this taking insurance or cash?

Insurance