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Coming off Guarantee Early --> Productivity

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  • Coming off Guarantee Early --> Productivity

    Contract structure is a 2 year guarantee but get paid whatever wRVUs I generate in excess of my guarantee during that period of time. I've been fortunate enough to be comfortably busy and am reliably exceeding my wRVU guarantee by a factor of 1.3-1.5 depending on the month. I'm going to be "made whole" a couple of months after the year is up. However, I'm looking ahead to my second year of my contract and wondering whether I should ask to be taken off of guarantee and go to full productivity a year early, which would allow me to have more regular higher paychecks rather than one large lump sum deferred until a full year in the future.

    This may be a completely stupid question but I just want to make sure there are no other angles to this decision that I should be considering that I'm not thinking of beyond the $. One factor I can think of would be vacation time, as with my guarantee I have 5 weeks of time to take off, and once onto full productivity model, if I don't work, I don't get paid. However, I'm exceeding my wRVU threshold by such a degree that it doesn't seem like that would be a big deal (ie I could still take a full 5 weeks off and be exceeding my wRVU guarantee).

    Any other thoughts?

  • #2
    In PP, we true up every quarter, so I'm used to quarterly large checks. Unless you are taking a $100k salary and could use a more consistent 200k,then I could see why it matters.

    Otherwise, I'd just let it ride.

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    • #3
      Unless you need the cash flow then having the guarantee will provide some protection (remember COVID and what it did to visits and many surgeries). At minimum, it’ll be a good exercise in living below your means to set up a solid financial foundation.

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      • #4
        Originally posted by CordMcNally View Post
        Unless you need the cash flow then having the guarantee will provide some protection (remember COVID and what it did to visits and many surgeries). At minimum, it’ll be a good exercise in living below your means to set up a solid financial foundation.
        This is a behavioral question more than anything else. Consider the risk before the return. In this case, you seem to have been blessed with a nice referral setup.
        Congrats on getting your efficiency up to speed. What could go wrong?
        One car accident for just one thing. That guarantee is valuable.

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        • #5
          I went off guarantee early and never looked back.

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          • #6
            Typically after your 2 year guarantee you will be forced on production anyway or your ‘guarantee’ will suddenly drop if you’re not producing your salary

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            • #7
              Thanks all for the input, to respond to a few posters:

              1) yes, my contract goes to productivity after two years, so this would basically just be accelerating the timeline by 1 year. On productivity it sounds like they reevaluate the monthly draw each quarter, but while I'm on guarantee it's unfortunately each year (which on some level makes sense)

              2) i don't need the cash flow by any means and am currently saving aggressively anyway, it would honestly be more to get $ in market more aggressively. Likely kids +/- mortgage in the next 1-3 years so trying to sock away as much as I can for now. But we're talking like ~120k of gross income being deferred >1 year rather than paid out.

              Sounds like basically the decision, as I imagined, comes down to the benefits of having my money sooner (basically just for earlier investing) versus the slim chance of a disaster where I can't work, whether due to physical or societal reasons, and would enjoy having the security blanket of the guarantee. I'll chew on it a bit. Thanks folks

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              • #8
                I’d rather have the money now…if it’s that much the practice is keeping it’s like giving them a 120k interest free loan for however long it takes for you to get it. I’m not ok w that. If your such a high producer then the practice should have no problem amending your contract to keep the guarantee and also give you quarterly bonuses now instead of giving it out in a lump sum. Ask and see, you can even let them keep 50%of the quarterly bonus in a pot that gets balanced out at year

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                • #9
                  When I was working for big corp I came off my 2 year guarantee after 7 months, it sounds like you should too. Here's why I did:
                  1. You're giving your company an interest free loan for 6+ months. That's your money you have already earned it.
                  2. Time in the market = more gains in the long-term.

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                  • #10
                    Many places once you switch you cant go back so make sure there is no seasonal volume variability

                    Since taking vacation on pure productivity hits your income more, if you have any 2 week vacation ideas I would do that before switching.

                    Make sure you have your $/WRVU accepted/negotiated

                    Otherwise switching sounds like you will get your money sooner.

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                    • #11
                      Yeah I’d come off early too. Giving them your money for a year interest free is terrible. Get that money in the market sooner.

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                      • #12
                        “But we're talking like ~120k of gross income being deferred >1 year rather than paid out. ”

                        This is not lost on the practice. Some practices make an effort to funnel referrals to assist new attendings achieve volume. A small professional courtesy and advantageous. Some take advantage. Just try to avoid the “I did this”syndrome. No clue , but just make sure your volumes are the result of your efforts and branding.

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