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Coming up with a .75 FTE proposal for my practice

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  • Coming up with a .75 FTE proposal for my practice

    I've raised the idea of going PT with my practice and was asked to come up with a "manifesto" to propose to the group.

    In the short discussions i've had about this option, there was raised the difficulty of having to fraction out the benefits etc.  I was thinking to just find what (my benefits X 0.75) equals and just subtract it from my fractional salary, but wasn't sure if there is a simpler or better way of dealing with this.

    Aside from this, I'm really not seeing how it's much more complicated and requiring of a "manifesto".  But their use of this term makes me concerned they're going to make it more difficult than I would like.

    My goal would be to present this to them in the next month or so with the idea of going PT starting in May 2020.

    Has anyone had made this kind of proposal to their group?  Any thoughts or advice particularly from someone who has gone through this is greatly appreciated.

  • #2
    Are you employed, or an owner?

    If you’re an owner, what is the business structure?

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    • #3
      Owner in S corp

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      • #4
        When our planning clients cut down, they typically get to keep bene’s (health ins, for example) as long as they’re working at least .6 FTE. Granted, this is in the case of larger employers who have set guidelines and have had this situation arise.

        As an owner, your status should carry at least some weight in leaning toward keeping bene’s. It sounds as if you may be the first in the group who has latched on to this concept of work-life balance when you’re FI but want to continue with your career. Hopefully, you will set an example for others. If you work with a financial planner, I would highly encourage you to engage him/her in helping you present a solution.
        Our passion is protecting clients and others from predatory and ignorant advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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        • #5
          Can get sticky as an S Corp with shareholders working part time because distributions must be proportional to ownership. Can create conflict between full timers and part timers.

          If total comp to you still includes full benefits, and you maintain a full share ownership, your salary is driven down which may be fine but of course you still must maintain a reasonable salary for IRS standards.

          The end result can create conflict in that it is in the best interest of those working and earning the most to increase distributions.

          By contrast to you working less but still need to be paid a reasonable salary you may not have “room” for the same high distribution amount without pushing salary unreasonably low.

          Are you planning to sell down a portion of your ownership?

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          • #6





            When our planning clients cut down, they typically get to keep bene’s (health ins, for example) as long as they’re working at least .6 FTE.
            Click to expand...



            Yeah, I feel like this is a bit of nickel-and-diming going on, but for multiple reasons wasn't terribly surprised they brought this up in these early negotiations.

            Not sure if this is typical and if not, maybe I should maybe push back on it.  Particularly since I'm consistently one of the top (if not the top) RVU producers in the group and my skill set is broader than all but one in the group.  However, one thing going against me would be I've chosen for the most part to not get involved in administrative duties except when called upon (which is rarely).

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            • #7




              Can get sticky as an S Corp with shareholders working part time because distributions must be proportional to ownership.

               

              Are you planning to sell down a portion of your ownership?
              Click to expand...


              I didn't realize this would cause such a conflict.  I was hoping I could sell down .25 of my ownership and that would have the desired affect with regards to the distributions.

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              • #8
                Proportionally selling down your ownership in the Corp should take care of the potential distribution issue, but brings to the forefront the issue of whether you as a 0.75 shareholder still have a full say in group decisions, and of course how much are you to be paid for the partial buyout.

                Such issues are probably not addressed in your current shareholder agreement.

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                • #9
                  Not everything is just math. Two small examples.

                  a) 100 docs vs 10 docs group size with one changing to .75
                  b) Result 99.75 docs vs 9.75 docs, now the rest want .75
                  c) Result 75 docs vs 7.5 docs

                  The unit of measure is the problem that is created.
                  •Docs is a physician .
                  •Time is days, hours, minutes .
                  •Compensation is dollars (down to pennies).
                  FTE assumes a large population.
                  In case b) it would be a scheduling matter for the .25 spread to 99 other physicians or to 9 other physicians. Possible but the impact on the 9 is much more significant.
                  In case c), it blows up. The 100 group would now hire 25 new docs and the 9 group would hire 2.5 . Chew on this, are they hiring FTE .75 or 1.0? Throw in that all days and hours are valued the same with some being realistically dreaded.
                  The reality is FTE .25 is a unit of measure that impacts the remaining doctors, potentially significantly.

                  Alternately, what would it cost you to hire a .25 FTE to pickup the slack? Manifesto or policy, expect a “haircut” greater than 25%, on benefits and compensation. It can be done, some have required phase outs for partners. That would be planned replacement of a FTE. Impact on the group is known and absorbed by the group.

                  Suggestion would be to focus FTE plan that would be available to all but absorbs 100% of the fixed costs,

                  This is similar to phasing out call requirements for older physicians. Demographics can penalize younger physicians and create a toxic workload. Attempt to find an equitable solution. It’s more than just math.





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                  • #10
                    In addition to the S-corp distribution issues raised above, you're fractional math overlooks a fundamental issue that arises with these part time arrangements

                    Let's say your 1.0 FTE total comp is currently 500k cash and 100k benefits.

                    You want to go to 0.75 FTE, but maintain full benefits. 600k x 0.75 = 450 - 100k benefits = 350k cash

                    3/4 comp for 3/4 work, sounds fair to you, right? However (and while it depends on the group structure and needs), you probably also need to pay some sort of part-time 'tax' as having the luxury of working less than full-time is a non-monetary benefit that is only made possible by the fact that others are willing to work full-time. Again, depends on your group structure, needs, call and odd hours work obligations, etc.; but this is something that you should address openly.

                    Odds are if everyone in your practice wanted to go 3/4 time for 3/4 comp, things wouldn't work out. So, that non-monetary benefit needs to be accounted for.

                    Also, care needs to be taken that you still do your fair share of non-work work things, like meetings, tumor boards, etc. A frequent issue that arises is that the part-timer checks out and does even less of the practice building/practice maintaining work that doesn't show up in the productivity numbers. Certainly there are exceptional people that actually are more invested in the practice as a less than full-timer since they have extra time to do such things, but that's generally not the case.

                    Best to address all those issues openly from the outset so expectations are set for both sides of the deal.

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                    • #11
                      I'm just an employee so I cant comment on how it affects an owner in an S-corp, but regarding benefits when I worked out my .6 FTE deal with my group, I received the same health benefits and 401k match. However, I have 1 week less vacation, lower CME reimbursement, and less of a company deferred comp contribution- more than 0.6 less. I argued to try to get 0.6 of their CME reimbursement and def comp but was denied, as they were likely afraid of many employees following my path, and they also felt call takers deserved a slightly higher benefit for having to give up holidays and weekends.  Was I a little disappointed? yes, but in a negotiation there is always a little give and take, and I understand they were also a little disappointed in me dropping to 0.6 FTE with no call, so we came to an agreement that benefit both of us as much as possible and moved forward.

                      I'm not sure if he comments here, but I remember hearing a podcast with "crispy doc" who described how he successfully lobbied his ER group to cut down to something like 0.7 FTE, it would be worth a listen.

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                      • #12
                         




                        Has anyone had made this kind of proposal to their group?  Any thoughts or advice particularly from someone who has gone through this is greatly appreciated.
                        Click to expand...


                        I have done this and it will likely take a lot of time and energy to get this done especially if your the first one in the group. To get buy-in from those you have to convince, the plan must to take into account both your needs and those of the rest of the group. Tim, ZZZ and billy all have good considerations in their posts.




                        The reality is FTE .25 is a unit of measure that impacts the remaining doctors, potentially significantly.

                        Suggestion would be to focus FTE plan that would be available to all but absorbs 100% of the fixed costs,

                        This is similar to phasing out call requirements for older physicians. Demographics can penalize younger physicians and create a toxic workload. Attempt to find an equitable solution. It’s more than just math.
                        Click to expand...


                        This is exactly how it went down in my former group. Cutting back meant absorbing 100% of the benefits within the reduced FTE, so your effective compensation is actually less than your FTE status. If your group has a call schedule, that turned out to be the biggest sticking point to craft a workable plan in my group. Nobody wants to suck up extra call, so those that did wanted appropriate compensation. Your group may have other non-call issues but the dynamics could be the same, i.e. extra compensation necessary (not always $).

                        This process will likely take longer than you expect. If there are other like-minded docs in your group, brain-storm with them and craft a plan that works for everybody. Yes, you will likely need a "manifesto" and it will probably got through several iterations before an acceptable compromise is reached. Keep this in mind, your other partners and colleagues aren't necessarily against you going to .75 FTE, but they don't want to be inconvenienced by the change either.

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                        • #13
                          this isn't exactly my world but... i think i would sort of decline to do this.

                          just be fair, if you are 0.75 FTE you should get that ratio of anything there is to share.

                          this just seems like a weird request. i think my manifesto would be "i would like to not work full time and be paid proportional to what i work. /end manifesto."

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                          • #14
                            I am a 20+ year partner in my group, and when I proposed my 0.6 FTE part-time arrangement a couple years ago, I added the cost of all of the benefits to the salary (plus bonus) and offered to take 60% of the total package. It was a good deal for all parties, and my partners quickly agreed.

                            When I first joined the group in the mid-90’s, we had a senior partner who worked 50% and took 50% salary/bonus but 100% benefits (including retirement plan contributions). This rubbed many of the associates and junior partners the wrong way as he was getting about 75% the total compensation.

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                            • #15
                              @MPMD

                              "this isn’t exactly my world but… i think i would sort of decline to do this."

                              -- And the partners, in turn, may decline your request to work less than full-time. The OP is the one who wants a modified schedule, it should be incumbent upon the OP to show the rest of the group what that means and how that works.

                              “i would like to not work full time and be paid proportional to what i work. /end manifesto.”

                              -- To which the partners pay respond, "we don't want to work extra nights, weekends, and holidays to cover for you going part time. /end discussion of part-time role"

                              As Tim pointed out, the details matter, different story if it's a 100 doc practice vs. and 8 doc practice. OP hasn't provide those useful details, but I'd venture to guess it's a smaller practice, hence the request for 'show us how think this works for you, and for us.'

                              It's not a weird request at all. It's actually good for the OP and the practice, better to sort through the proposed schedule and compensation changes and ensconce them in a contract.

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