What percentage of collections is typical to receiving when supervising a midlevel?

[JK]

Background: I am a relatively new attending (~2 years out of residency) in private practice dermatology (no partnership option). My income is based solely on percentage of collections (not an RVU based system). The owner is looking into selling to a PE group (which has it's own pros/cons but really isn't the point of this post). As such, I may have an opportunity to start training and subsequently supervising midlevels which I've always wanted to do professionally and financially. I would subsequently get a percentage of their collections for my efforts. The representative I spoke to said I would get 7% of whatever the physician assistant collected.

Question: What is a standard percentage to expect? I'm not even sure if this is negotiable yet, but I'm trying to get a sense if 7% is a reasonable figure or that figure should be higher. For instance, if it is reasonable, I may focus my negotiating efforts on other areas of the contract. If not reasonable, then I'll try and get a higher percentage.

Thanks

[SerrateAndDominate]

I think EntrepreneurMD may be able to give the best insight based on how he's mentioned his practices are set up.

I imagine midlevels would make a solid income stream (provided they aren't aiming for independence), but is it possible that well dries up with a PE buyout?

[Tim]

Do you have any idea of the revenue and comp (including benefits) , that is the profit to be split?
If the profit is 20%, they get 13% and you get 7%.
I think EMD pays a fixed salary. He indicated that he doesn’t have an incentive plan.

[MoneyMoth]

Background: I am a relatively new attending (~2 years out of residency) in private practice dermatology (no partnership option). My income is based solely on percentage of collections (not an RVU based system). The owner is looking into selling to a PE group (which has it's own pros/cons but really isn't the point of this post). As such, I may have an opportunity to start training and subsequently supervising midlevels which I've always wanted to do professionally and financially. I would subsequently get a percentage of their collections for my efforts. The representative I spoke to said I would get 7% of whatever the physician assistant collected.

Question: What is a standard percentage to expect? I'm not even sure if this is negotiable yet, but I'm trying to get a sense if 7% is a reasonable figure or that figure should be higher. For instance, if it is reasonable, I may focus my negotiating efforts on other areas of the contract. If not reasonable, then I'll try and get a higher percentage.

Thanks

7% is low. The benefit to the practice far outweighs the benefit to you so if 7% isn't negotiable, I would not agree to work with a midlevel. That percentage also typically drops once a PE group gets involved so you will definitely want to negotiate as high a % as possible. Those %s can also be structured just like your contract (above a certain collections amount, the % increases. There are certain procedures or codes that you may want to have structured at different %s. For instance, if your midlevel is going to be doing procedures vs just office visits)

Beyond money, it sounds like this is the first time you are working with a midlevel provider. Caveat: I'm not in dermatology. Have you asked your colleagues what it is like to work alongside a midlevel? In my experience, I've run the gamut working with complete newbies who need me to hold their hands (annoying, but I was willing to do it). I've worked with those who are grossly incompetent and highly overconfident (as dangerous as the legendary 2nd year resident. Any time I've agreed to work with a midlevel, I have it in the contract that I can terminate the working relationship with them at any time I deem necessary). I've worked with those who are the perfect blend of knowing what they can handle and when to stop and come grab me (either this is more common than I thought or I've had a string of good luck as I've worked with numerous midlevels who were able to do this. So don't be discouraged, there are plenty of great midlevels out there). Does any of that sound like something that would interest you? If there is someone who is brand new, would you be willing to work with them to mold them into a practice style you feel comfortable overseeing? Are you supervising midlevels on site or off site? Off site is a whole new dynamic that would make me very nervous but there are those who obviously have no problem with this.

Beyond just the straight %, there is also an opportunity to streamline your practice. For instance, if you wanted to do more lucrative cases, see a particular subset of patients, you may want to have the midlevel start taking on cases/patients that you no longer want to see as often. If your practice is structured in a way where this is possible, and the midlevel is willing to do it, I think there is wiggle room in the %.

[EntrepreneurMD]

Having been both employee and employer (currently employer), my perspective is very different than what it would have been if I was either/or. The reality is the numbers need to work for both sides. There is no standard percentage.

I would suggest, if possible, you find out from some local dermatologists what kind of annual revenues they expect to generate from an established mid-level's professional collections. I asked around. In my primary care practice and just considering professional collections (excluding ancillary revenues) $500K is an average expectation, $750K would need to be a highly productive mid-level, $1M is probably nearly impossible. Dermatology is certainly better reimbursed than primary care, I just don't know which procedures dermatology mid-levels can perform and/or first assist with that would generate revenue (Botox/lip fillers, aesthetics/facials, etc.). Based solely on differences I've seen regarding salary compensation for mid-levels between primary care and dermatology, it would seems the thresholds in collections would be reasonable to assume 25-40% higher collections. As this is not scientific, I mentioned getting more concrete numbers from a dermatologist that may be open to discussing this with you.

7% may or may not be low. 7% of $750K is $52.5K/mid-level which objectively seems to be reasonable compensation. Probably can't hurt to ask for some more and if declined they should be able to give you some idea of the basis for their 7% number, perhaps above that they may be in a financial crunch. Your employer has to cover the mid-level's salary and EMR costs, as well his/her support staff, their benefits and expenses (employer taxes, supplies, paper, toner, computers, furniture, rent, etc.) and then split the remaining profit with you. Expenses are greater than most employees think so I appreciate the dual perspective, helps maintain objectivity. The employer usually gets a little more of the profit because if the provider's revenues fail to cover expenses, they take the loss risk not you. They also have to cover the shortfall the first 2-3 years a new provider starts, not you.

You're young and one day it may or may not be for you, but I would tell you it's good to ultimately become the employer.

[JK]

Thanks for all the replies, especially MM and EntrepreneurMD. Surprisingly, it's hard to find good data for a lot of this information but will work on negotiating and see what ultimately I can get after I get the full contract. But as MM suggested, there's a lot to think about in terms of getting the right individual for the job...just like any employee. Can sometimes be more headache than it's worth. But supervision likely would be onsite and I would have some say over the personnel I'm overseeing.

[hightower]

I know this is slightly off topic, but when I found out my wife was going to a dermatologist and being seen by a NP/mid-level, I was quite PO’d. She’s switching practices to see a physician. I mean, to me it makes no sense that a subspecialty who has historically kept their own numbers of providers low (in an effort to maintain higher patient load/revenue I would assume) is now using mid-levels to handle their high workloads. Wouldn’t it make more sense to increase the number of physicians by offering more residency spots rather than give NPs easy access to a coveted MD specialty? Am I the only one that finds this ridiculous? To me it seems there is a real risk of hurting the profession by allowing mid-levels to practice with much much less training. Sorry if this is a rant, I’m just trying to wrap my head around this. I get why NPs make sense in an unpopular specialty like Primary Care where there arent enough docs who want to do the work. But to do this in a highly desirable specialty like Derm seems like a slap in the face to docs who would have preferred derm but couldnt get in due to so few residency spots. And for the record, I am not one who wanted to go into derm (personally dont like touching people that much haha)

[mkintx]

I mean, to me it makes no sense that a subspecialty who has historically kept their own numbers of providers low (in an effort to maintain higher patient load/revenue I would assume) is now using mid-levels to handle their high workloads. Wouldn’t it make more sense to increase the number of physicians by offering more residency spots rather than give NPs easy access to a coveted MD specialty? Am I the only one that finds this ridiculous?

You are definitely not the only one. The data shows that NPs do more biopsies, and from a pathology standpoint I am more likely to get a poor clinical description that doesn't match the histology, or a biopsy that wouldn't have been done if the NP actually knew what s/he was looking at, so they drive up revenue at the expense of patients. I would never see a derm NP. About half of states now have independent practice for NPs, so they are all opening their own med-spas without supervision. I think derm MDs have shot themselves in the foot with this.

[SerrateAndDominate]

I know this is slightly off topic, but when I found out my wife was going to a dermatologist and being seen by a NP/mid-level, I was quite PO’d. She’s switching practices to see a physician. I mean, to me it makes no sense that a subspecialty who has historically kept their own numbers of providers low (in an effort to maintain higher patient load/revenue I would assume) is now using mid-levels to handle their high workloads. Wouldn’t it make more sense to increase the number of physicians by offering more residency spots rather than give NPs easy access to a coveted MD specialty? Am I the only one that finds this ridiculous? To me it seems there is a real risk of hurting the profession by allowing mid-levels to practice with much much less training. Sorry if this is a rant, I’m just trying to wrap my head around this. I get why NPs make sense in an unpopular specialty like Primary Care where there arent enough docs who want to do the work. But to do this in a highly desirable specialty like Derm seems like a slap in the face to docs who would have preferred derm but couldnt get in due to so few residency spots. And for the record, I am not one who wanted to go into derm (personally dont like touching people that much haha)

I completely agree with you on that. I think there are a lot of competent MDs who couldn't make the cut to get into derm. Derm is insanely competitive, and honestly, it's way harder than I think people give it credit for. When I did my dermpath fellowship last year, I really came to appreciate the depth of knowledge needed to be a good dermatologist. I can say that inflammatory derm work-ups are best done by the dermatologist instead of the midlevels. I think full body skin exams and follow-ups can be delegated to them (same for any specialty, especially first time appt), but that's up to OP how to run his practice.

I just hope with the looming PE set up that OP can get a fair number for supervising. I fear that percentage may vanish when some middleman corporation comes into play.

mkintx is spot on.

[Lordosis]

Wait! It is more then just Nystatin and Triamcinolone?

[EntrepreneurMD]

Agree with SerrateAndDominate. PE is not good in this and most cases, except for the seller. It will put a cap on provider income. There are two main reasons practice owners sell. 1- They're approaching retirement age. 2- The practice is not doing that well and needs a cash infusion. PE comes knocking on my door all the time, whether it's the practice or the building - they also know it's good to be the employer/commercial landlord. No thanks!

I would say if the owner wants to sell, better for the employed dermatologists to buy. More skin in the game by the physicians is better for the practice. More important than their supervision of mid-levels, although it's good to have both without a PE middleman taking a hefty chunk out of the collections and the tax benefits of business ownership.

[SerrateAndDominate]

Agree with SerrateAndDominate. PE is not good in this and most cases, except for the seller. It will put a cap on provider income. There are two main reasons practice owners sell. 1- They're approaching retirement age. 2- The practice is not doing that well and needs a cash infusion. PE comes knocking on my door all the time, whether it's the practice or the building - they also know it's good to be the employer/commercial landlord. No thanks!

I would say if the owner wants to sell, better for the employed dermatologists to buy. More skin in the game by the physicians is better for the practice. More important than their supervision of mid-levels, although it's good to have both without a PE middleman taking a hefty chunk out of the collections and the tax benefits of business ownership.

Agree, and I know OP understandably wanted to avoid this thread devolving into that. However, PE is the real elephant in the room, not the midlevel production. This job might be great in the current set up, but I highly doubt that will be the case when/if the MBAs come in and take over. That 7% midlevel cut won't matter much when your job sucks

Best of luck, OP

[JK]

Appreciate all the input even though it did go off track a bit.

Agree that there is too much midlevel entry into the field and it probably makes more sense to open up residency slots. But that's beyond my control. Definite concern over PE acquisition but unfortunately owner didn't offer sale to junior partners (likely our money couldn't compete with his offer) so trying to make the most of the transition with renegotiation of contract on several points. Finding a new job is a challenge at the moment as we're pretty settled in the area, can walk to work, etc... Fingers crossed it works out for the best. Short term I think it will work out well. Long term obviously is a bit of a different story.