Build my Empire vs. employed vs. IPA vs. ?

[15hrsaday]

Hi all, I'm a longtime WCI reader & forum member from Day 1 but essentially a lurker. Thanks to all the regular posters for all of your sharing; you have taught me a lot and I hope to get some feedback about some impending practice choices.

After military residency and 4 yrs of active duty practice payback I've been an obgyn in a rural community for the past 15 yrs, solo for 10 then was very fortunate to have a new attending come 5yrs ago. She and I have separate businesses while sharing staff & office space and call. We have one NP, one PA and ancillaries including urodynamics, office hysteroscopy, a certified ultrasound program, pelvic muscle rehab and the usual gyn stuff. All the business we want is available- I've delivered over 200 babies already this year, she has a one year old so limits her deliveries to 8-10/month- but it's 85% state insurance. We get along great but the pace is tough with QOD call.

The local hospital seemed to shift to a much more supportive view of Women's Health this year. They already supplemented us with call pay & I get a stipend as medical director but they called us in to ask how they could help us further. We told them that 4 partners is a great number for an obgyn group and that the 600/yr deliveries required to support 4 FTEs are out there, especially if we can swipe the 2 employed obgyns in the town 20 miles away. The hospital is on board with the idea. The four of us mds have met and have a shared interest in leaving work and turning off our phones 3 out of every 4 days. We have already discussed pooling all the Ob patients and eating what we kill in gyn. I think the group is going to happen, we already have the office space arranged.

So my question is what would the new practice look like. I think the choices are:

1. Employed with wRVU compensation and all the usual benefits. We would lose our other revenue streams but in the contract negotiations could maybe claw back call pay or mid-level supervision fees. WCI forum has many threads about contract negotiation to help us.

2. Form or join an Independent Practice Association. IPAs have been a growing trend in obygn. An IPA would provide group benefits, negotiate contracts, usually handle billing and staffing issues while we each get paid what we collect, less a percentage. I'm not sure the current W-2 guys are even willing to go this route, they have no interest in the hassles of running even this kind of business- been there, done that.

3. Create a democratic group and negotiate a practice service agreement with total RVU compensation from the hospital. Actually got the idea from this forum so there would have to be some selling to the partners and the hospital.

4. Employ the other three myself with the hospital still providing support in legal ways, like call pay and even overhead support for a period of time. I think this would be as "simple" as negotiating contracts with them, getting good group health insurance and creating a new retirement plan (probably 401K PSP).  This is a really appealing choice for a Dahl-ite who is used to the benefits of above the line deductions. I just don't know if I have the energy or political talent to make it work.

Any other models you guys can think of? Any advice on how to proceed? Is there a consultant or advisor that could help me make number 2,3 or 4 happen? What would you do? If it helps I'm at least 5 yrs from FI with no debts besides my home mortgage. AGI is 450-500K after all the business owner deductions.

Thanks in advance.

 

 

[15hrsaday]

tl;dr version - Is it worth it for a 50yr old to build a big practice?

[Hatton]

OK. I did read.  I am OB/GYN.  I was initially in a large non-democratic group that I hated.  I moved back to my home town and opened a solo practice.  I found several other small groups and solos to share call with.  Several of us met multiple times trying to find a way to come together as a group.  It never happened.  I am in a moderate sized city with lots of competition.  So the hospital was not willing to help.  I like your IPA idea if you can sell it.  If you employ the other 3 it might turn out great or they each get paid and you pay the payroll.  You know that if you do more deliveries and the pay is the same you will end up bitter.  8-10/mo is not very busy.  Will she work harder as the child grows up?  How many do the others do?  You want people who will work as hard as you do and not dump on you.

[15hrsaday]

Thanks hatton1, great to get input from a forum mainstay!

The other three deliver 120-150/year and besides absorbing some of my overflow are not going to aggressively try to expand. My thought was that the benefits of being the business owner in control of the ancillaries would make up for the loss of ob income. You know, all that stuff happens during business hours not at 3am!

We are meeting with a guy who forms Independent Practice Associations next week. After that I wasn't sure how else to get information to help make a decision- hence a WCI forum post!

Sure would like more advice, even just behavioral things like how to think through the process. Or pointed toward the right kind of consultant because that person could be the "referee" so I don't look greedy or petty.

[VagabondMD]

This is out of my area of experience and or expertise. It would seem to me that if you can’t be financially viable (and lucrative)  as a private practice group, that would be more desirable option.  There are certainly pros and cons of democratic groups versus one person owning the group and employing the others versus the IPA.

From the brief sketch provided, out the four intended partners in this arrangement, it sounds like one is expecting to work less than the others, and this needs to be confirmed and accounted for.  I agree that this would be an excellent place for a consultant to help guide the discussion, assess what model is the most suitable for the four of you, and implement. I do not know who that person would be.

[q-school]

Vagabond MD wrote:

This is out of my area of experience and or expertise. It would seem to me that if you can’t be financially viable (and lucrative)  as a private practice group, that would be more desirable option.  There are certainly pros and cons of democratic groups versus one person owning the group and employing the others versus the IPA.

From the brief sketch provided, out the four intended partners in this arrangement, it sounds like one is expecting to work less than the others, and this needs to be confirmed and accounted for.  I agree that this would be an excellent place for a consultant to help guide the discussion, assess what model is the most suitable for the four of you, and implement. I do not know who that person would be.

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it is almost impossible to have long term happiness as a four person group if one person is consistently doing less and has expectations that they can continue to do this and draw the same income.  however, there are always exceptions.  i would think this would dramatically limit any new hires unless they got the same deal.

also it totally depends on the person doing less.  sometimes they want to make it up and do stuff no one wants to do.  other times they are narcissistic and everyone has to pick up around them all the time.  i hate to mention it but i'm sure ob has thought about it more than other groups.  future maternity leaves?  sick days?  it is good you are having someone external draw the paperwork up so you can focus on negotiation of the important aspects.  if you own your own practice, overhead decisions are pain in the ******************.  retirement funds can be challenge.  distributions can be pain.  as you mentioned, health insurance for small group can be pain.  don't forget you would be insuring and retirement funding for all your employees, not just your pa,np and docs.  watch out for theft.  amazing percent of physician practices have petty cash stolen.  prescriptions are falsified by staff.  you need to be your own HR department.

ps-running the business frequently just adds to the stress of the day, it is very uncommon (particularly for newly formed group where decisions have to be made all the time) that it reduces busyness, even if clinical work is reduced.  i doubt that however.  leopards can't change their spots.  if you are the busiest clinically now, you will likely be the busiest clinically after implementation.  you will just be taking meetings in the daytime with cpa, insurance, etc.  however, if you are q2 call currently, who knows if lifestyle would improve.  q2 is amazing.  i don't know how you manage your personal life, especially with all the interrupted sleep you get.

good luck!

[15hrsaday]

Thanks Vagabond & q-shool, that helps.

Gotta admit that backing off the grind is really attractive to me. Right now I'm signing something or taking a call between every 2nd or 3rd patient. But then my ego says I could manage a bigger practice and really kill it...

Financially things are fine but I wish we had made some different decisions over the years and already had walk away resources. Kind of a poster child for WCI intervention because there was no plan 5yrs ago and now, thanks to this site/blog, work will be on a want-to basis in the near future. Jim's right when he says most any physician is 10 yrs away from FI.

[jfoxcpacfp]

This is a business decision and you need a business advisor to help you think through all of the choices and make sure they are not only fair to you, but to everybody. A smooth start, with minor tweaks along the way, is far more likely to succeed than a shoot for the moon start and finding out one person is disgruntled and decides to leave after a year. I guess you already realize all that. So, that said to suggest that you probably need to hire a CPA with physician practice background who is also pragmatic, brutally honest when needed, and can help you ask the right questions in order to design an agreement most likely to stick. You need someone who will think of the "what if" worst case scenarios and resolve those predicaments before you even begin.

[Hatton]

The IPA sounds best to me.  It also preserves the doctor with the 1 year olds ability to work less hard.  If she the same amount of call but she goes home earlier etc she will make less but be happy with the life style choices.  If you do all the practice management you should be compensated.  We all know that in OB the call schedule fairness leads to happiness.  I shared call with a total of 6 for weekends and holidays. I shared weekday call with one other.  We checked out laboring patients on Fridays etc.  No money changed hands.  It is hard to meld practices equally after you have patients etc.  I could never work out who is going to fire all their employees and which space do we use.  The pre-existing employee thing to me was the hardest stumbling block to merging practices.

[CM]

15hrsaday wrote:

But then my ego says I could manage a bigger practice and really kill it…

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[15hrsaday]

jfoxcpacfp wrote:

This is a business decision and you need a business advisor to help you think through all of the choices and make sure they are not only fair to you, but to everybody. A smooth start, with minor tweaks along the way, is far more likely to succeed than a shoot for the moon start and finding out one person is disgruntled and decides to leave after a year. I guess you already realize all that. So, that said to suggest that you probably need to hire a CPA with physician practice background who is also pragmatic, brutally honest when needed, and can help you ask the right questions in order to design an agreement most likely to stick. You need someone who will think of the “what if” worst case scenarios and resolve those predicaments before you even begin.

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Thanks Joanna. Where can I find such a person? I'm two hours north of Atlanta- just Google search for one?

[15hrsaday]

CM wrote:

15hrsaday wrote:

But then my ego says I could manage a bigger practice and really kill it… 

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I had this approach early in my career, and I did “kill it,” but then the practice killed me; I burned out and left medicine for an extended period.

Because you already make a very good living and you are very close to FI, I can’t imagine that it would be worth it to kill yourself to make even more. Your priorities may differ, but in your position I would try to ease off the accelerator rather than stomp on it.

In retrospect, I would have been better off earning a little less, but with more sleep and exercise. That would have extended my career while improving both my quality of life and my bank account.

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I hear ya, there has definitely been a price my family has paid. Employed and end the fulltime gig at 60 isn't a bad deal.

[jfoxcpacfp]

15hrsaday wrote:

jfoxcpacfp wrote:

This is a business decision and you need a business advisor to help you think through all of the choices and make sure they are not only fair to you, but to everybody. A smooth start, with minor tweaks along the way, is far more likely to succeed than a shoot for the moon start and finding out one person is disgruntled and decides to leave after a year. I guess you already realize all that. So, that said to suggest that you probably need to hire a CPA with physician practice background who is also pragmatic, brutally honest when needed, and can help you ask the right questions in order to design an agreement most likely to stick. You need someone who will think of the “what if” worst case scenarios and resolve those predicaments before you even begin.

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Thanks Joanna. Where can I find such a person? I’m two hours north of Atlanta- just Google search for one?

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If you want to have a f2f advisor, you need to ask around and google. I’m sorry, but it’s kind of hit and miss to find a good pro. You might ask your attorney for referrals.

[15hrsaday]

hatton1 wrote:

The IPA sounds best to me.  It also preserves the doctor with the 1 year olds ability to work less hard.  If she the same amount of call but she goes home earlier etc she will make less but be happy with the life style choices.  If you do all the practice management you should be compensated.  We all know that in OB the call schedule fairness leads to happiness.  I shared call with a total of 6 for weekends and holidays. I shared weekday call with one other.  We checked out laboring patients on Fridays etc.  No money changed hands.  It is hard to meld practices equally after you have patients etc.  I could never work out who is going to fire all their employees and which space do we use.  The pre-existing employee thing to me was the hardest stumbling block to merging practices.

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"No money changed hands"- so the group just figured it would even out in the end? And it worked okay? I just want to avoid the end of shift C-sections and 39wk indxns with rock hard cervices (cervixes?). We figured pooling the obs would avoid hard feelings and be best for the patients no matter how the business is structured.

[Hatton]

15hrsaday wrote:

hatton1 wrote:

The IPA sounds best to me.  It also preserves the doctor with the 1 year olds ability to work less hard.  If she the same amount of call but she goes home earlier etc she will make less but be happy with the life style choices.  If you do all the practice management you should be compensated.  We all know that in OB the call schedule fairness leads to happiness.  I shared call with a total of 6 for weekends and holidays. I shared weekday call with one other.  We checked out laboring patients on Fridays etc.  No money changed hands.  It is hard to meld practices equally after you have patients etc.  I could never work out who is going to fire all their employees and which space do we use.  The pre-existing employee thing to me was the hardest stumbling block to merging practices.

Click to expand…

“No money changed hands”- so the group just figured it would even out in the end? And it worked okay? I just want to avoid the end of shift C-sections and 39wk indxns with rock hard cervices (cervixes?). We figured pooling the obs would avoid hard feelings and be best for the patients no matter how the business is structured.

Click to expand...

The general rule was if you started an induction you finished it.  If a patient was going to deliver soon you finished it unless there was truly some planned event you could not miss.  ROM at 4PM the call person took over.  I think OB practices are unstable if someone starts feeling dumped on even if money is not effected.  I think if you know you have to deliver the patient you will not induce a rock hard cervix at 39 weeks when you are not on call.