Approaching the end of training and beginning practice as an attending physician is both an exciting and nerve-racking chapter. Unfortunately, structured financial education is not usually a part of the medical curriculum—leaving graduates poorly equipped to understand the nuances of different employment options and navigate the pitfalls of contracts and negotiation. The following discussion is not meant to be comprehensive, but rather highlights important concepts.
Reimbursement. To understand the differences between practice models, you have to understand how healthcare reimbursement works. Every procedure that is performed reimburses both a professional fee (given to the operator) and a facility fee (given to the facility where the procedure was performed). The facility fee is usually several multiples greater than the professional fee. Unfortunately, there have been drastic reimbursement cuts in successive CMS fiscal years that have affected reimbursement for ablations
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—these reductions have disproportionately affected the professional fee component. A portion of professional fees (∼40%–50%) are further withheld for shared overhead expenditures of the practice.American College of Cardiology
Proposed 2023 Medicare Cuts Target Ablation Services; ACC Prepares Responses.
Proposed 2023 Medicare Cuts Target Ablation Services; ACC Prepares Responses.
www.acc.org/latest-in-cardiology/articles/2022/07/14/14/49/proposed-2023-medicare-cuts-target-ablation-services
Date accessed: December 28, 2022
Private practice relies heavily on the collection of professional fees. Progressive private practices have diversified to include investment into assets such as real estate, ambulatory surgical centers, imaging equipment, and more. The revenue from these other assets is usually divided among the partners of a practice.
Different types of practices. Generally, there are 3 different types of practices: academic, hospital-employed, and private practice. Hospital-employed models vary greatly based on administration—culture and leadership play an immense role. Hospital-employed positions usually use a base salary with a defined bonus structure—usually based on RVUs (relative value units). It is important to assess how attainable these benchmarks are by talking to current providers and assessing their productivity. Private practice models are more heterogeneous. Usually, there is a period of time that you are employed by the practice before having the opportunity to become a partner. Most private practices will then require a buy-in, where a large payment is required. After this period, there will usually be profit sharing and other benefits.
There are several factors to consider in this model. The buy-in sum represents a massive opportunity cost. New graduates usually have student loan debt; this decision needs to be weighed heavily.
Private equity (PE) is another variable to consider. PE is a third party that may purchase a practice and add it to its portfolio. Usually, a PE will offer a large lump-sum payment that is distributed to the partners and then offer a salary that is generally lower. Additionally, PE will aggressively reduce costs through various maneuvers to increase margins. A crucial scenario to consider is that if a private practice is sold before a candidate becomes partner, that candidate may be entitled to nothing.
Contracts: Negotiations and pitfalls. Salary is often the most important variable to most candidates. Candidates should use a reputable source such as Medical Group Management Associate (MGMA) data to assess salaries by quartiles by geography and practice type. Additionally, data regarding federal, public hospital, and academic positions are available online. Everything is negotiable, but there are other variables to consider: sign-on bonuses, relocation stipends, vacation, research time, bonus structure, CME funds.
Hospital positions may provide a salaried contract and transition you to an RVU-based model; assess metrics and benchmarks carefully. If considering private practice, define what it means to be a partner and assess opportunity costs. Also, a contract should have protection in place in case the private practice is purchased in the period before the candidate becomes a partner.
Malpractice insurance and restrictive covenants. Malpractice insurance policies are either “claims-made” or “occurrence-made.”
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Most are claims-made, given that they are more affordable. In a claims-made policy, the carrier will only represent you if the company that insured you at the time of the alleged “occurrence” is the same company at the time the claim is filed in court. If you leave a job and change carriers, you will require “tail coverage.” Who pays for this tail coverage is important, given that the expense can be immense. Restrictive covenants are used by employers to protect their business interests in the case that a provider leaves. Pay close attention to the terminology, duration, and the radius of the restrictions.References
- Proposed 2023 Medicare Cuts Target Ablation Services; ACC Prepares Responses.www.acc.org/latest-in-cardiology/articles/2022/07/14/14/49/proposed-2023-medicare-cuts-target-ablation-servicesDate accessed: December 28, 2022
- Malpractice Insurance.
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Disclosures: Dr Rodriguez has no disclosures to report.
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