Career choice help

[Newbiebbq]

Hi everyone,

Was hoping for some advice.

Currently at an academic institution with a comfortable lifestyle and pay. Overall the job is ok, stable, not burning out and could last for awhile.

Was recently in touch with a colleague at a large private specialty practice (50 docs), where one of the docs is retiring. Would likely see many more patients with longer hours but the potential income is about 50 to 60% increase in pay.  The downside would be a pay cut until ramped up/partnership and buy in completed for 4-5 years.

With the changes going on (including macra, etc.) and the likelihood that reimbursements will stay flat (at best), I'm wondering if this might be something worth pursuing. One might argue if the risk needs be to taken, but I would like to make more and build up some savings so I can choose to work and not have to work.

Thoughts and advice would be greatly appreciated.

 

[squirrel]

It all depends.  Sometimes the grass is not always greener.  As someone who worked in academics briefly (did a fellowship) then went to community medicine, you may have a tough transition.  Whether you want to admit it or not, you are likely highly dependent on the residents for your work flow (note writing, phone calls, following up on that CT prior to disco, chasing down the nurses for task completion, etc).  Going to a non-academic practice you will suddenly be doing all this yourself, and you may be seeing even less pts/hr or RVU/hr than even you predict.

Now this can be overcome but would likely take a little bit of time.  With that said, though, you may find the job is a bit different.  If you are comfortable and enjoy your job, currently there is a lot to say for that.  However, if there is a decent financial incentive and you could build up more savings that is definitely something to bring to the equation.  However if you are not saving a lot now, ask yourself is it your income or is it your spending?  You may expand into that new income quickly and find yourself in the same scenario, with potentially less job satisfaction?

Just my 2 cents.  I feel you should enjoy your job first then let money entice you second.  Thats just my opinion and I am sure others on this forum will disagree.  However even as an academic MD you should be grossing over 200k easily. If you are not saving a significant amount on that income (both tax deferred and non, then maybe you have a spending problem).  If not making that much then maybe that lends more credence to the argument to the higher paying job. The other point I would make, is often docs who like academic medicine, don't enjoy private and vice-versa.  The job is just different. Neither is better and I think people gravitate to one or the other.

[Newbiebbq]

Thanks, squirrel. I'm currently single and have been able to save a significant chunk of it into index funds, and I'm not concerned about expanding into the new income. I would like to reach financial independence as soon as possible, so that it can be a choice to work instead of a necessity.

I hear people say only take the risk you need to. I'm not sure I need to as I am paid decently and have an acceptable lifestyle. It would be an easier decision if I didn't currently have a job (particularly one that I am satisfied with), but the draw of more pay and more autonomy in a partnership model is appealing.

My main concern is whether that extra 50% in pay is worth the risk given the current environment in medicine, coupled by the fact that I would have to take a pay cut for the next 4-5 years until partnership/buy-in is complete. Obviously, there's the risk I'm not offered partnership either.

Would appreciate any advice, particularly if there are folks that were in similar situations.

[M]

There are several variables to investigate further before making the leap from your academic job to private practice.  First, and most important, what is the culture at the private practice?  Are most of the docs grinding it out, working late hours, and expected to "suck it up," or is there an emphasis on work/life balance?  Talk to some of the newer hires there, in addition to the more seasoned partners, to try to tease that out.  Another way to get a sense of how hard-driving the culture is would be to see what proportion of docs there work part-time or job-share (i.e. is it strongly discouraged?).  Next, what does the leadership structure look like?  Is it physician-run or run by MBA-types?  If it is physician-run, are the docs who run it practicing at least 1/2 time?  If they are no longer practicing, that is a red flag.  It doesn't take long for a non-practicing doc to lose touch with the pain of being on the front-lines when handing down big edicts.  If it's run by MBA-types, please tread cautiously.  While it's possible to have doctor-friendly administrators, that friendliness can disappear when the group is struggling financially.  The answer is often, "see more patients."

I'm concerned for you, in that you say you'd have to take a pay-cut for 4-5 years before reaching partner status.  That would suggest an almost pyramidal structure, in which the partners are raking in more cash than the provisional docs.  This means that you will be busting your butt, with the only benefit being a carrot dangling out 4-5 years in front of you.  In my experience, it is more standard to have a two-year track to partnership.  In addition, when I joined my group ten years ago, I had a salary floor for two years, but I was able to out-perform that floor within the first six months, so I got paid based on my production.  I don't like this idea of you grinding it out so that your partners can make more money.  That clearly incentivizes them to push you harder, which could make that "autonomy" you seek quite elusive.

Another point: I'm not sure where you live, but I assume if there is an academic institution there, it's not a tiny town (though I guess it's possible).  Anyway, my point is that a private practice group of 50 docs is not large.  In fact, it's tiny in today's environment of consolidations.  In a group this small, I would be sure to ask about their financials, in great detail.  Most small-medium groups in my region are having the same conversation internally, which goes something like this: "Our reimbursements are flat, and in some cases, declining.  Our expenses are going up.  If we continue on this trajectory, we'll be out of business within a few years.  We need someone to buy us."  Most groups in my area are being bought, mine included.  So this partnership track you'd be on could be meaningless if your group is bought within the next 3 years.  Not only will you take a pay cut and feel like an employee for the first three years, but you'll stay that way after being bought by a larger group.  If you can make it to partnership, though, your "shares" in your group could be worth a lot of money if your group is bought, so consider that as a potential upside.

My opinion is, if you like your academic job enough, stick with it.  I don't think the 4-5 year partnership track is reasonable, nor do I think it is reasonable for you to take a pay cut.  When docs transition to private practice, the idea is to make MORE money, not less, and that should start immediately.  I worry that the success of the private group will depend on recruiting more and more newbies to support more and more partners, until the whole kitty is so diluted that they realize they have to change the reimbursement structure, which means the partners at that point in time will take a huge hit.

I'd be happy to field any follow-up questions; just let me know.  Best of luck to you!

[VagabondMD]

"My opinion is, if you like your academic job enough, stick with it.  I don’t think the 4-5 year partnership track is reasonable, nor do I think it is reasonable for you to take a pay cut."

 

I completely agree with this. In the current reimbursement environment, an academic job that you know and like might be the best place to be.

[The White Coat Investor]

4-5 years is a long partnership track. What is the buy-out?

[AlexxT]

 

Newbiebbq wrote:

With the changes going on (including macra, etc.) and the likelihood that reimbursements will stay flat (at best), I’m wondering if this might be something worth pursuing.

Click to expand...

This sounds like a reason to stay where you are.  Medicine is moving more to the employee model.   You're moving in the wrong direction.  There's no guarantee that you'll earn more.  The only guarantee is that you'll earn less for 5 years.  I would think that you'd be better off in the academic position which likely has more guarantees.

Did you run all the numbers?  Add up the costs of relocation, and the lost income and lost investment opportunity cost, and the lost benefits ( Perhaps I'm wrong, but I'm assuming the academic position has more in the way of life insurance, health insurance, malpractice coverage, asset protection through the university, pension, reimbursements for license fees, etc, dues.  Also consider state and local taxes, cost of housing, schools etc ).  How much real difference will there be in disposable income when all is said and done?

Consider the risk that the group may implode, split, be bought out with hefty payments to partners ( i.e. not to you ).  I have seen several young physicians left out in the cold when the practices they joined fell apart or were taken over by hospitals.  In fact, in one case, a surgeon had just left a really nice academic position to join a group.  Within a year, the mentor died, the practice was sold to a hospital, but this doctor  wasn't offered a job by the new employer, and they couldn't get their old, very desirable job back.

[SValleyMD]

Personally I wouldn't touch any "partnership tract" right now ESPECIALLY one that long.. In my opinion groups are dangling carrots to get a slice of your income until things blow up (at least in my field)..

Unless u can go and get your cash in a fee for service model right now, I wouldn't leave your good set up for the hassle and hustle of a private set up that doesn't let u keep everything.

[Newbiebbq]

Thanks everyone for your replies. Very helpful. The benefits are moderately better at the current position but there would be no relocation so taxes, etc. would stay the same. Currently single with no kids. Current position can put 36k pretax into retirement accounts but would be able to put 53k pretax at the new position, so more pretax space. Current position however is set up for mega back donor Roth.

Yes, the duration until partnership seems long, and it's partly because the buy in process takes time (percentage of collections every year goes to chipping it down until paid off). If a partner leaves the practice, the partner sells their position to the incoming doc, the value determined by what they paid to buy in and annual collections.