Go Private or Stay with Employer

[bababrown]

Fugue wrote:

35% would be considered low in my field as well (derm), that’s more PA level. If you have any entrepreneurial spirit being a true partner would likely be better for you financially.

It brings up an interesting point…what is a reasonable overhead in different fields? In derm 40% overhead is considered standard.

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I don't have any personal experience and that was the reason I was hoping to get some answers.
What I am hearing from my other IM friends, is for IM practices 30-35% is MAAAX. Efficient practices run around 25% leaving 65-75% take home. TBH, this sounds too good to be true. Again, I don't know better but I am very curious to any further inputs from someone who has been doing it firsthand.

[Tim]

•Urban/Suburban life styles in Boston vs Atlanta are substantially different. A lot depends on upon your personal flexibility.
•Taxes in Atlanta would actually be 3% higher.
Housing 22% and food 13% lower.
•Basically a 10% decrease in earnings provides the same standard of living.

Financially, the move is a no brainer, you will have more spending available. The real question is it a good opportunity in that market. If you are considering a contract review, that would be valuable input from a local healthcare attorney if you can find one that has local experience in the location. Intro conversation might include the overhead question and you get your answer for free. Survey comps won’t provide you with the contract negotiation points. Only you can judge the reliability of the work environment. The percentages are negotiable, you are looking for negotiating advice.
Going to be difficult to find.

[bababrown]

Kamban wrote:

bababrown wrote:

Here is the answer I got : overhead is 50-55% (including the staff needed to operate labs and imaging). From the left over 45%, the employer gets 10% and employee (me) gets to keep 35%. So the employing physician makes 10% profit off of my revenues on top of his earning. 

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So is this a single employer physician employing other physicians and PAs and NPs. If so, be very careful of this set up. He / She gets to rule like an overlord and you either follow the rules or you get out or thrown out. Worse if you have a non-compete. I worked for a single employer boss and would never do it again under any circumstance.

Basically it comes to how much you pay for the drugs, how many infusion nurses are there for the facility and their pay, how many lab and X-Ray techs are there, who reads the X-Rays and how much you pay them, how much doe the rent and utilities cost etc. On the other side is how much you get paid by Medicare and private insurgences for all that. The difference is profit.

Inquire around. See if other docs are happy. See if there is a revolving door turnover of physicians every year or two. You are better off joining a large hospital system in the South that might employ you with a higher pay and benefits. Look for hospitals that get 340b pricing for drugs. They get the most profit and hence might be willing to share more of it with you.

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Thanks for your input. The practice is exactly what you're describing- single physician employer.

My current job is with healthcare system that gets 340b at multiple infusion centers including 2 at which I infuse. That's a great point to guide negotiations, thanks again.

[Zaphod]

bababrown wrote:

Fugue wrote:

35% would be considered low in my field as well (derm), that’s more PA level. If you have any entrepreneurial spirit being a true partner would likely be better for you financially.

It brings up an interesting point…what is a reasonable overhead in different fields? In derm 40% overhead is considered standard.

Click to expand…

I don’t have any personal experience and that was the reason I was hoping to get some answers.
What I am hearing from my other IM friends, is for IM practices 30-35% is MAAAX. Efficient practices run around 25% leaving 65-75% take home. TBH, this sounds too good to be true. Again, I don’t know better but I am very curious to any further inputs from someone who has been doing it firsthand.

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It really depends on the type and size of practice. Even something marketing heavy like full cosmetic surgery wouldnt be over 60% unless they were just terrible business wise.

Theres a lot of variability in business skill, paying attention, and of course its higher with a single physician than a couple of them as many resources are shared while income goes up a lot.

Its not static. Though the numbers you were given seem high for a pretty low intervention specialty.

[Jack_Sparrow]

It sounds like a nice gig to me. I'm biased because I dislike the northeast and love the south so it would be a no brainer for me. As other have pointed out it doesn't sound like a "partner" gig where you will have a lot of control over business decision, hiring, business expenses, etc. Its nice to be compensated though based on profit sharing. There is always room later to negotiate more money, higher profit sharing percentage, becoming an actual partner. This way you get in the door and determine if its the right gig for you and if its not you can walk away and not have to worry about selling your business.

 

[bababrown]

Jack_Sparrow wrote:

It sounds like a nice gig to me. I’m biased because I dislike the northeast and love the south so it would be a no brainer for me. As other have pointed out it doesn’t sound like a “partner” gig where you will have a lot of control over business decision, hiring, business expenses, etc. Its nice to be compensated though based on profit sharing. There is always room later to negotiate more money, higher profit sharing percentage, becoming an actual partner. This way you get in the door and determine if its the right gig for you and if its not you can walk away and not have to worry about selling your business.

 

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Thanks. Your point is well taken. I have been able to negotiate 40% and 43% for year 2 and 3 respectively from 35%. Still evaluating pros and cons.

[jfoxcpacfp]

I will go out on a limb and presume, as a W2 physician, that you do your own taxes. Going from that to partnership is very different and no way would I recommend you base your decision on instinct or the raw numbers you are presenting. It is a fact that physicians are known for not being business-minded and spending too much on office and mid-level payrolls (the stories I could tell lol).

You need to engage the services of a CPA who is familiar with small practices to review the numbers. Even if it is for this one engagement only and you intend to go back to DIY taxes after this, you admittedly don’t know anything about this and you are stepping off a cliff if you don’t get a 2nd opinion.

FWIW, please be assured that I am not shilling for your business, which I try to avoid as a matter of practice, as we are closing to new clients on 10/31.