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Employed GI doctor collections/charges and salary

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  • Employed GI doctor collections/charges and salary

    I'm an employed GI doctor on a pretty standard base + bonus compensation model. My salary is $500K annually. This is almost identical to my annual collections. My annual charges however are approximately $2.5 million.

    Assuming I was in an "eat what you kill" private practice, I assume I would take home a certain % of my collections minus overhead, say 50% (this is arbitrary). This means that my salary would be $250K. I understand that for GI other revenue sources such as ASC partnership, pathology, real estate etc. would, after partnership and a buy-in, increase my salary.

    However, if a private practice takes a cut of my collections to pay the bills for running my clinic, hiring MAs, paying for the EMR etc., how is my employer able to make money off me if I am essentially getting paid my collections? The annual charges are not the money that my employer actually receives for my billing, correct? Or is it all in the facility fees for endoscopy and downstream path/radiology/surgery etc. referrals that I end up making during my clinical practice?

    I hope this question makes sense as I'm trying to get a sense of how the financials work in favor of my employer, as I'm sure it does, and what a private practice alternative would look like.

  • #2
    your overhead includes the MA's, share of office staff, etc, doesnt it? So if you got 100% of your collections minus your overhead, the employer will be net zero cost for hiring you (not accounting for any downstream services and facility fees). So just by taking a percentage of your collections, they are making money off you. Which every employer needs to to stay in business.

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    • #3
      It seems unlikely that your collections are only 500k. what are your RVUs? I guess it all depends on how busy you are and how many procedures you are doing.

      Once you are in private practice it usually doesn't come down to % of collections minus overhead. The overhead usually IS the % collections. If you collect 100k per month and have overhead of 50% (mine is 50%, others in the same practice have higher and some have lower overhead. If you want a PA, that comes out of your collections. If you want 3 MAs instead of 2, you pay for it from your collections), you have 50k left over that is yours. In my practice at least, the docs aren't really making money off the collections of the others. We are all just paying for the building, the EMR, the employees, etc together. That's not how it works in all groups.

      You are right about the economics about it in some ways. If you want to go part time, the first money out goes to overhead, so slowing down might be hard if you have a high overhead practice. Starting a practice is also difficult and if you are in a practice that is "eat what you kill" from the beginning, you might not get any collections for 3 months and you might have to borrow money or pay back money from the practice.

      When I go to a hospital as a non-hospital physician, they have to pay for the procedure and then they get the facility fees. When you go, they get your fees as well. So they control all the money.

      In private practice you then get the chance to own imaging centers, surgery centers, and real estate in your field. Someone said it here before. The floor is higher for your salary in an employed practice but the ceiling is likely lower too.

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      • #4
        Is your employer a hospital?

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        • #5
          I may be wrong, but (only in my experience), revenue and collection practices should always be on the radar. Are pt. accounts being followed up? Are procedures being coded correctly? Is there any opportunity for theft? So much opportunity for leakage. Poor management at the employer? Always a possibility, but, again, that will eventually cascade down to you. Collecting only 20% of billing on an ongoing basis sounds a little low to me, but maybe that is standard for GI’s (in hospitals?)

          I presume the hospital/group that you work for makes $$ from related referrals, lab, etc. that are enveloped into your “profit center”. But, again, that doesn’t mean that you are getting everything you could when you are billing $2.5M. Maybe just food for thought - you know your employer better than I, but there has to be a very good reason they pay you 100% of collections.
          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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          • #6
            I agree I'm sure your collections must be more than 500k. As a family practice primary care doctor my collections are over 500k.

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            • #7
              Appreciate the responses. I am hospital employed for a large non profit system. And I make 9000 rvus annually.

              My employer is transparent with these numbers so I suppose they are just bad with collections? I am paid per rvu so have no incentive to assess the collections process but I do know they are coding correctly as that does influence me.

              Is it correct to say that the amount billed is a meaningless number in terms of revenue I bring in as it’s only the collections my employer actually sees from my work?

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              • #8
                Originally posted by vtpaca View Post
                Appreciate the responses. I am hospital employed for a large non profit system. And I make 9000 rvus annually.

                My employer is transparent with these numbers so I suppose they are just bad with collections? I am paid per rvu so have no incentive to assess the collections process but I do know they are coding correctly as that does influence me.

                Is it correct to say that the amount billed is a meaningless number in terms of revenue I bring in as it’s only the collections my employer actually sees from my work?
                Amount billed, or gross charges, is indeed meaningless.

                You are hospital employed. What you’re missing are the facility fees they are being paid. That could double the price of a given visit for the patient/insurer. Look into the OPPS if you want to know more. I would also ask collections on what? Everything? The physician fee schedule component?

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                • #9
                  Billings have 3 components:
                  physician, facilities, and malpractice. You may be only seeing the physician component.

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                  • #10
                    Can you find out what the average GCR (gross collection rate) is for a GI doc nationwide is and what it is for your area? 25% (collections/charges) seems very low. However, I’m not a GI doc so that may be the norm.

                    Medicine docs in our group can get to upper 40s%.

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                    • #11
                      If you’re an employed GI doc hitting 9k rvu my guess is the hospital is making 2-3 million profit on your labor.

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