When would you take 55/45?

[hamstergang]

I was offered a job at a new outpatient group psychiatrist practice, and the offer was for a 55/45 split (of collections? not positive). I searched on here and more or less only found threads talking about 60/40 or better. I'm wondering if there are some factors that would make 55/45 still fair and attractive, or if I should push back.

Here's what I like and why I think it may be ok:

• W2, with benefits including malpractice
• Cash only and expensive practice so income would still be very high
• I know and trust the owner, I expect to learn from him
• I can start very small and grow as much or as little as I want while still keeping my hospital-based clinic job
• There's some room for growth and more income if we get more CAPs or child/adolescent therapists and create a Child Division I could run
• There will be an admin as things grow (practice is still very new but I have no doubt this is coming)
• Nice office (from a physical perspective)
• Convenient location for me

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[splik]

If they are charging $1000/hr (as some CAPs do) and you wouldn't be able to get that rate on your own (i.e. $450/hr net) then it might be reasonable. But otherwise I think 55/45 shows bad faith. 70/30 is standard, 60/40 could be justified in certain circumstances but this is too low. And of course you should always negotiate. Ask for 70/30 and go from there.

 

[calvnandhobbs68]

Yes, figuring out what 55/45 works out to as an hourly rate matters. You also need to really run the numbers on what exactly they're providing you.
- For instance, you mentioned you already have a hospital based clinic job, so I assume you already have the potential to get medical/dental insurance through that job.
- Malpractice is fairly negligible for most areas of the country for psychiatry (<10K/year, often much less than that), so while you can factor that in, it usually isn't a huge factor.
- If it's cash only, they have minimal overhead (it doesn't even sound like they have any office staff yet from the post....)
- Sounds like they provide an office but office space is plentiful right now (I drive by 5-7 office lease signs every day on the way to work right now), you can rent office space for pretty cheap

So what exactly are they giving you for that 45% they're taking off the top and what's keeping you from opening up a competing cash only practice a mile away? How large of a group is this? The main benefit you get from joining a cash only practice is reputation and front loaded referrals if this is a well known group since it can take a while to get a cash only practice busy enough to quit your main job starting on your own.

I would agree though to not bite at the first offer and counteroffer them 70/30, you might be able to end up somewhere in the 65/35 range.

 

[trophyhusband]

I was offered a job at a new outpatient group psychiatrist practice, and the offer was for a 55/45 split (of collections? not positive). I searched on here and more or less only found threads talking about 60/40 or better. I'm wondering if there are some factors that would make 55/45 still fair and attractive, or if I should push back.

Here's what I like and why I think it may be ok:

• W2, with benefits including malpractice
• Cash only and expensive practice so income would still be very high
• I know and trust the owner, I expect to learn from him
• I can start very small and grow as much or as little as I want while still keeping my hospital-based clinic job
• There's some room for growth and more income if we get more CAPs or child/adolescent therapists and create a Child Division I could run
• There will be an admin as things grow (practice is still very new but I have no doubt this is coming)
• Nice office (from a physical perspective)
• Convenient location for me

If my wife asked me this question my response would be "do they have gold plated toilets in the bathroom?" If the answer was no I'd tell her to pass.

Edit: Sorry, that was pithy and maybe not especially helpful. I'd explain that it's W2 so 80/20 and maybe 70/30 isn't entirely realistic 65/35 or 60/40 probably is. She's in a market where the cash pay rate can never ever reach the $1,000/hr rate splik mentioned but at the market rate here 5% is worth ~$30k. So ratchet that up for higher paying markets. What exactly are you receiving for all that money?

 

[TexasPhysician]

I would ignore the percentage and focus on hourly rate.

I have zero interest in working at a private clinic that gives me all the low paying Medicaid patients at 90% of collections.

If I can live at my ideal location and be biking distance from a clinic paying me 50% of $800 cash rate, it is a deal.

It takes 0 effort to attract low paying insurance patients. It may take thousands of advertising dollars monthly to attract high end cash pay patients. High end patients may demand better customer service with more staff answering phones. Decor may be much more expensive. It adds up.

 

[michaelrack]

Assuming your hospital job's w2, that would lower the value of this job being w2 to you,

 

[Username2015]

An accountant I spoke with said 60/40 is pretty common in mental health for a W2 job while 70/30 is common for 1099.

 

[hamstergang]

So what exactly are they giving you for that 45% they're taking off the top and what's keeping you from opening up a competing cash only practice a mile away? How large of a group is this? The main benefit you get from joining a cash only practice is reputation and front loaded referrals if this is a well known group since it can take a while to get a cash only practice busy enough to quit your main job starting on your own.

What I'd be getting is mostly that the practice already exists. It's a newly renovated, newly furnished building. There's already a website and advertising. While this business is new, the owner isn't, and he has a good reputation and connections. I can join without having to front any money, and I can slide out of my old job and into this one at the pace I want.

I have no intention of starting my own private practice at this time. While I could most likely eventually make more on my own (once I had enough patients to cover the start up costs and some fixed overhead), it's not something I want to do.

That said, I shouldn't give away money in perpetuity just because I'm not starting my own practice today. And I appreciate all the responses, even though I'm only replying to this one.

 

[clausewitz2]

I can join without having to front any money

Unless it comes with an ownership stake of some sort, no private practice should be asking you to pay them to be allowed the great privilege of generating revenue for them. This is not really a thing.

 

[hamstergang]

Unless it comes with an ownership stake of some sort, no private practice should be asking you to pay them to be allowed the great privilege of generating revenue for them. This is not really a thing.

I mean compared to starting my own practice.

 

[Merovinge]

An accountant I spoke with said 60/40 is pretty common in mental health for a W2 job while 70/30 is common for 1099.

Common, as in the basically the worst possible split you should accept. Maybe if you are a new grad, don't have connections, and need them to generate the referrals and they offer supervision then this is a reasonable split. All the other MD's who employee other MD's on a split model in my area off those rates at a minimum and 80/20 is not uncommon for 1099.