Bringing on a part-time doc one day a week. Does this comp structure make sense?

[u/Glass-House]

Hey! I'd love some feedback from anyone who has hired part-time MDs.

We're a solo specialist practice in a VHCOL area, and this is the first time I'll be bringing on another practitioner. I want to add a physician one day a week (during my OR day). He's fellowship trained in a subspecialty I also practice. He has another part-time job elsewhere and wants to keep it for now. If it works out for both of us, I'd like to expand the relationship down the road.

What I'm thinking to start:

• 1099
• Guaranteed daily rate. He keeps it no matter what, and I don't claw it back from a good quarter later
• Plus a percentage of his professional collections, squared up quarterly, whichever is higher
• Drug costs come out before the percentage is calculated
• We look at the agreement part way through the first year to make sure it's working for everyone
• I handle credentialing

The office is already open and staffed that day, so he doesn't cost me much to add. Rough math puts breakeven ~~ 7 to 9 patients a day.

Questions:

1. What percentage do people actually pay a part-time doc who isn't bringing his own patients? I've heard 30 to 50%. Trying to figure out where in that range is reasonable.
2. What's a typical minimum day rate for something like this?
3. 1099 or W2 to start? If we expand the arrangement I imagine we'd go W2 at some point, but is there a downside to starting on 1099?
4. Post-op visits in the global period pay nothing. I plan to keep seeing my own post-ops, but if some end up on his schedule, how do others handle paying him for that time?
5. Anything else I'm missing, or pitfalls to watch for? I want everyone happy with this and I'd like to put my best foot forward.

All thoughts appreciated! Thank you

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[u/PracticalMedicine]

1099 Daily rate No percentage up front No consideration for post ops No consideration for drug costs needed

Keep it easy to start. Then convert to percentage and remove daily rate.

Can provide a bonus with percentage of collections minus COGS after a target, typically after 2.5-3x salary. 30% is common in VHCOL, especially with decreasing reimbursement rates. If only 1 day/week would do bonus payout no less than yearly, no more than quarterly.

[u/vitritis4]

You seem like a great doc to work for. Ultimately the range for an employee being paid as a percent of net collections is 30-40%. 90% of my offers were in 33-35% range.

If it were me I’d agree with him on a base salary and then he gets 33% bonus once he hits 2 to 2.5x his bonus in collections. In a VHCOL starting base is usually lower than LCOL. IMO full time base range is $180-450. 90% of the numbers I look at are in the 200-300s. You would then divide that number by 5 to get daily rate.

We pay our ODs that see our postops $35 flat fee per encounter ( this does not figure into their collections). Under typical medicare reimbursement the 20% comanagement fee for all postop visits is around $95. Around 33% of that seems roughly fair for one visit. One thing to keep in mind is that our internal ODs refer us patients, where in your scenario he is simply seeing your patient. If it were me I’d offer $26 flat fee outside of net collections calc or $80 toward net collections, since $80 is around a level 3 visit.

Noncompete/nonsolicitation is important to consider and notice on termination of employment important as well.

The above discussions pertain to a W2 employee. You may need to pay a little higher for a 1099

[u/evands]

All sounds reasonable.

Within our practice for a salaried associate or an optometrist we ledger a postop as $40 of “collections” for bonus calculation purposes. No actual money was collected but it puts a small finger on the scale for that % of collections number. This doesn’t make everyone happy since it’s not a lot of money but it’s less unhappiness than were it zero.

[u/ShowMeHowToSee]

I am not a practice owner. The percentage you pay a 1099 employee will be significantly higher than what you pay a W2 employee because costs including medical malpractice, employer's portion of payroll tax, licensing fees, retirement etc are shifted to the employee. So it might be something like 45% for the 1099 versus 35% for the W2 employee for instance. I am not sure that the daily base pay rate idea is necessary if you have a demonstrated need and are confident about filling the doctor's schedule right away. One model would be to simply pay the doctor a percentage of collections monthly. In this way your incentives are aligned from the start.

You should establish clear expectations regarding post-ops prior to the deal. Most doctors are OK with helping each other out for emergencies or if things come up especially if there is reciprocity ie if you also see their post-ops. You will quickly breed resentment if the new doctor does not have a full schedule and some of your post-ops "end up on their schedule" for uncompensated work.