Private Practice Structure

[RheumMD]

Hi all,

I am currently exploring private practice clinics and am close to getting an offer at one clinic. I am rheum and finishing fellowship in June. Clinic is structured as partnership starting day 1 with splitting profits from infusion center, X-ray, DEXA, and lab. There is no salary, income comes from patient billing and these split profits. There is a multi-month waiting list, and patient volume is not at all a concern. Buy in depends on annual evaluation, but generally 20-30k range and can be done over time in a flexible manner. This will obviously present a bit of a challenge the first few months building a solid patient panel without a guaranteed salary (but will have income coming in still). Is this a smart approach fresh out of fellowship? I am very efficient and willing to gamble on myself for being highly successful long term. What are other downsides to this model? Things I should ask?

[childay]

What do you mean "splitting profits"? Even split? How are patients assigned? How is overhead allocated? Have you seen the partnership agreement? Is everyone doing the same work amount / type? First few months? You may not have any collections for a long time. Otherwise nice they're offering immediate partnership..

[RheumMD]

What do you mean "splitting profits"? Even split? How are patients assigned? How is overhead allocated? Have you seen the partnership agreement? Is everyone doing the same work amount / type? First few months? You may not have any collections for a long time. Otherwise nice they're offering immediate partnership..

Sorry, should have been more clear on that. Even split on profits from the ancillary services after subtraction of staff and overhead for the practice. Patients are assigned as able to open slots evenly, right now all of the partners have nearly completely full panels and aren't taking new patients with a 9 month waiting list. So basically all new patients would be directed to me until my panel is more established. No need to market and recruit patients. Everyone is doing similar amount of work, and there is variability in number of patients seen from 12-18 per day for each provider (average is 14). First few months in terms of building a panel, collections will take longer which is a concern. They do offer an interest free stipend for the first few months to help to be paid back once up and running smoother. I haven't seen the agreement yet, getting close to that point and obviously will need to scrutinized closely. I do wonder if negotiating a 6 month or first year salary may be an interesting route to get my footing.

[jacoavlu]

how much money do they take home per year and how does that compare to other job offers?

[Tim]

Narrative is nice, but the numbers behind need to real.
The new patient backlog and nearly point out a potential. Maybe the existing partners find a way squeeze in the great insurance coverages and you are expected to deal with the poor payors, Medicaid, Medicare etc. How much do they make and will you make the same for equal work? Can you build an equal panel?

Comp, job, location. How do you like the job? How do fit with the group? You will need financials and numbers to to convince you of the earnings being probable.

[RheumMD]

Narrative is nice, but the numbers behind need to real.
The new patient backlog and nearly point out a potential. Maybe the existing partners find a way squeeze in the great insurance coverages and you are expected to deal with the poor payors, Medicaid, Medicare etc. How much do they make and will you make the same for equal work? Can you build an equal panel?

Comp, job, location. How do you like the job? How do fit with the group? You will need financials and numbers to to convince you of the earnings being probable.

That's a good point, I'll need to look more into that. My guess is it is just a slowly building backlog as they are the only show in town and all have full panels, but need to clarify. I need to get specifics on how much they make. Group seems great and collegial with a good environment. These are the things we don't learn in fellowship as far as the numbers go, so definitely appreciate the advice from everyone. Other jobs that are salaried employed that I'm looking at are 220k or so starting with a bonus structure, or 130-150k academic.

[jacoavlu]

those numbers sound really low for rheum, especially PP w infusion clinic. Note I’m not rheum.

[RheumMD]

those numbers sound really low for rheum, especially PP w infusion clinic. Note I’m not rheum.

Ha yep. Those are employed positions in a major metro city working for a big healthcare system, not as a partner. A lot of private practice places aren't hiring right now (ones that would be higher with infusion centers) due to the pandemic.

[EntrepreneurMD]

Just so you know, splitting ancillary DHS (Designated Health Services) profits equally among partners is a STARK requirement (or at least an easy solution to STARK regulations), not a gift to new physicians by the established ones. However, profit sharing is not mandatory.

It's unusual not to have a guaranteed base income the first year, but after that it's commonplace. You could ask for a guaranteed income first year with bonus thresholds if you research local rheumatology salaries, but you could theoretically wind up making less if the practice remains as busy as you say. I would ask about how they distribute new patients and insurance plan. If you get dumped a whole bunch of Medicaid or the suboptimal insurance contracts it's different than getting an equal distribution of new patients and equitable insurance panel distribution.

Sure you want to be in a big city with high overhead? Rheumatology is like gold in the burbs. Of course you may have great reasons to be in a specific location. Sounds like you may have a good gig but I don't think there is any problem with you asking what income you might expect the first year.

[RheumMD]

Just so you know, splitting ancillary DHS (Designated Health Services) profits equally among partners is a STARK requirement (or at least an easy solution to STARK regulations), not a gift to new physicians by the established ones. However, profit sharing is not mandatory.

It's unusual not to have a guaranteed base income the first year, but after that it's commonplace. You could ask for a guaranteed income first year with bonus thresholds if you research local rheumatology salaries, but you could theoretically wind up making less if the practice remains as busy as you say. I would ask about how they distribute new patients and insurance plan. If you get dumped a whole bunch of Medicaid or the suboptimal insurance contracts it's different than getting an equal distribution of new patients and equitable insurance panel distribution.

Sure you want to be in a big city with high overhead? Rheumatology is like gold in the burbs. Of course you may have great reasons to be in a specific location. Sounds like you may have a good gig but I don't think there is any problem with you asking what income you might expect the first year.

Thanks for the feedback. This is looking outside the big city, the other numbers I mentioned above were for the urban area and this particular practice is a bit away (but drivable). I will certainly ask about how patients are distributed and make sure it is fair, but it sounds like (at least how they made phrased it) that there are just a bunch of patients sitting there because nobody has capacity to see them. Will ask about some kind of guaranteed salary the first year and getting better numbers on what the rest of the partners are making, both patient billing and split income. It's a bit daunting to start from scratch making zero for the foreseeable future, so that may need to be adjusted.

[ENT Doc]

That's a good point, I'll need to look more into that. My guess is it is just a slowly building backlog as they are the only show in town and all have full panels, but need to clarify. I need to get specifics on how much they make. Group seems great and collegial with a good environment. These are the things we don't learn in fellowship as far as the numbers go, so definitely appreciate the advice from everyone. Other jobs that are salaried employed that I'm looking at are 220k or so starting with a bonus structure, or 130-150k academic.

130-150k is full blown insanity. Please raise your hand if you signed up for this job.

[RheumMD]

130-150k is full blown insanity. Please raise your hand if you signed up for this job.

My faculty offer was actually for 100k, and took A LOT of negotiating to get it increased. Good times.

[Tim]

Just suppose you misunderstand how the business runs:
75% of profit from the infusion center.
25% of profit from physicians panel.
Your “share” of clinic could generate 100% of the new “business”. Ran as fast as you can to share the bump you created? I am not a physician, so don’t think this applies to your situation. You need to understand the financial flows to avoid potentially getting taken advantage. Might consider actually getting a CPA familiar with medical practices. Facilities could be privately owned and leased to the infusion center. You need to also consider getting the last valuation. What are you buying and how the price is determined. Any physician turnover? Understand the financial flows.
If it turns out they really want a partner, they will be open and cooperative.
The risk of not understanding is they make money off of your sweat equity, and it’s not really split equally. Medscape showed $262 (so what), but if you get to a contract offer, definitely have the contract reviewed.
A second offer would so you have a choice would be helpful as well. Don’t stop at the first opportunity.

[RheumMD]

Just suppose you misunderstand how the business runs:
75% of profit from the infusion center.
25% of profit from physicians panel.
Your “share” of clinic could generate 100% of the new “business”. Ran as fast as you can to share the bump you created? I am not a physician, so don’t think this applies to your situation. You need to understand the financial flows to avoid potentially getting taken advantage. Might consider actually getting a CPA familiar with medical practices. Facilities could be privately owned and leased to the infusion center. You need to also consider getting the last valuation. What are you buying and how the price is determined. Any physician turnover? Understand the financial flows.
If it turns out they really want a partner, they will be open and cooperative.
The risk of not understanding is they make money off of your sweat equity, and it’s not really split equally. Medscape showed $262 (so what), but if you get to a contract offer, definitely have the contract reviewed.
A second offer would so you have a choice would be helpful as well. Don’t stop at the first opportunity.

Thanks for the feedback. I may have phrased it poorly, patient billing is individual for each provider. If I see 16 patients in a day, I get 100% of the collections from that billing and none of it goes to the other providers. The only thing that is split is the shared income from the infusion center, lab, and imaging.

[Tim]

You missed my hypothetical point.
There is no such thing as 100% of billings. I assume there is an office, and a light bill.