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  • Contract negotiation

    I was wondering if I could get some opinions on my contract negotiation.  I’m a hand surgeon in a multi-specialty group, currently in my 3rd year with the practice.  I’m still on my starting salary and am working on adding incentives based on total collections.  From what I’ve read, and speaking with friends in the field, it seems like most ortho practices usually have about a 50% overhead and incentives kick in when revenue reaches 2x salary.  Based on the numbers my company has given me, they claim our overhead is closer to 70%, so I’d need to bring in more than three times my base before any incentives would kick in.  One good thing about the practice is that revenue I generate at the company’s ASC goes toward my collections, but the ASC expenses attributed to me go against my overhead.

    I feel that part of the problem is the company doesn’t have an accurate way of calculating the overhead of each doctor and bases it on the revenue generated.  And since I’m not an owner, I don’t have a lot of control over the expenses they are putting under my name.

    Does anyone have thoughts on a reasonable overhead for this type of practice?  Has anyone been able to successfully negotiate down the overhead, citing industry standard?

    Thanks

  • #2
    Hate to tell you this but in a multi specialty group generally you are s.o.l.
    They tend to not want to make exceptions for cited reason of having to then consider every case and offer them to everyone.

    Yes tournoverhead is higher as you are subsidizing primary care and/or other less profitable groups. The trade off is not having to go out and get referrals etc. you don't have to negotiate contracts etc. there are some benefits to being in a multi specialty group.

    All those overhead numbers are essentially made up.
    You have very little bargaining power and either will have to decide whether to live with it or move. Reassigning expenses is not easy. For all you know those expenses were reassigned to you by colleagues ahead of you asking the same question. If hats the case, ito s even worse.

    Good luck.

    Comment


    • #3
      I used to be in a similar situation, except it was a small private single-specialty group, not a multi-specialty one with a gazillion docs across various specialties. Yet, in my mind at least, the same issue arose.  Even though my collections were rising every year, the numbers I was shown always showed a "deficit" after the "overhead" was taken into account.  I argued that as an associate, why should I be looked at the same way as a partner?  i.e. when you buy into a partnership, you are responsible for the overhead.  As an associate, you're just an employee.  Whatever you bring in minus your salary and benefits, plus perhaps a marginal increase in overhead incurred by you, equals pure profit for the partners.  Another way to look at it is:  if you were truly losing the group money every year, why'd they keep you?  What private, for-profit business retains an employee who keeps losing it money every year?

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      • #4
        overhead 'should' typically run 46-53% in a practice like this.  Monthly reports and transparency are key.  If you'd like we can set up a time to discuss - we may be able to provide some additional thoughts and/or questions to ask the group during this time.  We do have a 'free' consulting session for WCI's - you can sign up here:

        https://calendly.com/contractdiagnostics/15min/06-21-2017?back=1

        - Contract Diagnostics

         

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        • #5
          Thanks for all the advice.  I'm not sure if it will accomplish what I hope, but I'm going to try to get an itemized list of all my expenses and look more into my revenue, as the numbers I have run are much higher than what my company has attributed to me.  Whether I'm producing enough to receive a bonus or not, this will be an opportunity to see my numbers, according to my admin.

          Comment


          • #6




            Thanks for all the advice.  I’m not sure if it will accomplish what I hope, but I’m going to try to get an itemized list of all my expenses and look more into my revenue, as the numbers I have run are much higher than what my company has attributed to me.  Whether I’m producing enough to receive a bonus or not, this will be an opportunity to see my numbers, according to my admin.
            Click to expand...


            Do you want to stay at this place? Or Would you be happy starting a new adventure?

            Comment


            • #7




              Thanks for all the advice.  I’m not sure if it will accomplish what I hope, but I’m going to try to get an itemized list of all my expenses and look more into my revenue, as the numbers I have run are much higher than what my company has attributed to me.  Whether I’m producing enough to receive a bonus or not, this will be an opportunity to see my numbers, according to my admin.
              Click to expand...


              Theres a big difference depending on how the contract is worded, ie billing or collections that can be a real stickler and leave you to the mercy of the collections department.

              Comment


              • #8
                I was once a partner in a large OB/GYN group of 13.  When I became a partner the financials were distributed in a meeting and then taken up by the accountant at the end of the meeting.  There was no time to study where the numbers came from.  I left the group for many reasons but this was one of them.  In retrospect I realize the overhead was allocated to maximize the income of the senior partner. I think in multi-specialty groups it is very hard to satisfy both FP/peds wing versus surgical subspecialties.  Transparency and fairness are extremely important.  If they are not there it is time to move on.

                Comment


                • #9
                  adventure, it's sort of up in the air at the moment.  I haven't actively begun looking, but due to various factors, ie. low volume, high overhead, poor management, and my practice not being a priority, I'm having difficulty seeing this as a long-term solution for me.

                  Zaphod, I agree, counting money collected, rather than money billed or wRVUs, definitely puts me at the mercy of our billers.  For that reason, I've gone back and forth whether I should go with wRVU or collections to determine the bonus structure.  My billing dept has been notoriously slow and inconsistent in collecting for the work I've done.  On the other hand, I do a lot of cash business, which makes wRVUs difficult to calculate.  Currently I track all my wRVUs and what they would generate based on a percentage of medicare.  The next step is getting consistent reports on collections from my billers that I can check against my spreadsheet.  I'm also trying to find out our payer mix, so I can adjust the "percentage of medicare" on my spreadsheet to get a better idea of what I should be generating.  This may be moot, but even if I go elsewhere, I want to have a check on the numbers that the company gives me.

                   

                  hatton1, transparency has always been an issue with this company, and I think a lot of the issues I've had stems from that.  If I can't get the info that I need to ensure I'm paid fairly, it will be time to move on.

                  Comment


                  • #10
                    It always amazes me how easy it is for admin to try and beat the drum for physicians to work harder instead of fixing billing, collections, or any number of other areas.

                    Comment


                    • #11
                      I've known a couple people leave due to that wacky mindset. telling people to cut vacation instead of just you know, try to increase collections 1% and get a tad of the nearly 1M due. It's insane to anyone with their head on straight. Go work harder so we can add it to the uncollected previous work we refuse to collect. What's the point?

                      Said person now has no issue with collections and is doing great solo.

                      Comment


                      • #12
                        Wanted to bump this thread as I have a question related to signing bonuses in private practice:

                        Signing Bonus - if they do not offer one (but I will insist in getting one)

                        • Provide them a $$ or %% of the base salary of what I think they should offer

                        • Should I provide examples of my fellow peers and the $$/%% they are receiving

                        • Should I tell them "I would like to be competitively compensated with a signing bonus that reflects current market opportunities that my colleagues are receiving" and not give them a concrete $$


                        In regards to point #1, I know you should never throw out a number first in contract negotiations, however, in the case they do not offer one from the start, should I give them a "higher" number to start off the negotiations (ie. my peers have been receiving 10-20% signing bonuses based on year 1 salary, so I give them the 20%-25% figure?)

                        Comment


                        • #13




                          Wanted to bump this thread as I have a question related to signing bonuses in private practice:

                          Signing Bonus – if they do not offer one (but I will insist in getting one)

                          • Provide them a $$ or %% of the base salary of what I think they should offer

                          • Should I provide examples of my fellow peers and the $$/%% they are receiving

                          • Should I tell them “I would like to be competitively compensated with a signing bonus that reflects current market opportunities that my colleagues are receiving” and not give them a concrete $$


                          In regards to point #1, I know you should never throw out a number first in contract negotiations, however, in the case they do not offer one from the start, should I give them a “higher” number to start off the negotiations (ie. my peers have been receiving 10-20% signing bonuses based on year 1 salary, so I give them the 20%-25% figure?)
                          Click to expand...


                          What kind of private practice are you joining?  How many partners?   How competitive is the job?

                          Generally if it is a well run practice, they have a range in mind.  If you want them to match other practices, you should make sure it is apples to apples.   If you are far apart, be sure that you prioritize this above other wants.   If someone was negotiating with me, and we had to have them, they might get a bigger signing bonus but they would be making it up in other ways.

                          I’ve never really negotiated the signing bonus.   I was more focused on productivity bonus.   Frequently they offered up bigger sogning bonus without my asking. Ymmv.

                          Good luck.

                          Comment


                          • #14
                             







                            ......
                            Click to expand…


                            What kind of private practice are you joining?  How many partners?   How competitive is the job?

                            Generally if it is a well run practice, they have a range in mind.  If you want them to match other practices, you should make sure it is apples to apples.   If you are far apart, be sure that you prioritize this above other wants.   If someone was negotiating with me, and we had to have them, they might get a bigger signing bonus but they would be making it up in other ways.

                            I’ve never really negotiated the signing bonus.   I was more focused on productivity bonus.   Frequently they offered up bigger sogning bonus without my asking. Ymmv.

                            Good luck.
                            Click to expand...


                            Ortho / 10 partners / i'm highly desired

                            My colleagues in the same field who have signed contracts already have all received bonuses.  The practices are all very similar, so def apples to apples.

                            Comment


                            • #15
                              Private practices in my experience are vary rarely apples to apples.  How they control overhead can be very different.    How they disburse income over the year can be very different.  Some groups pay for car leases for example.   Some groups focus on distributions.  Some choose to make everyone essentially independent contractors.   Some practices stuff retirement accounts.  How they allocate overhead.   How outreach is allocated.   Who sees uninsured.

                              In some ways, signing bonus is the smallest of the concerns you should have after professional fit, culture, overall income long term etc.

                              Im sure you know all this already so I will stop rambling.

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