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Forming a small EM democratic group: how would you do it?

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  • Forming a small EM democratic group: how would you do it?

    If you were in the process of setting up a democratic EM group to contract with one hospital, what structure would you use? Would have around 8 partners.  Equal pay for partners.  This would be a new group made up an existing group that was not democratic.  Owner is retiring.  We were part of the group and set up as an S-corp where we did our own W2, malpractice, health ins, etc as an individual.  Not sure if the othe physicians were set up using the same structure. Is there a better way? Also, what would be best to protect the group from liability?

  • #2
    Equal pay regarding what? I doubt you'll all be working the exact same number of hours and I'm sure some of you will be more productive than others.

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    • #3
      pay with percentage of individual billing from pot of collections/stipends.  expenses/fees distributed by same percentage.  plan about how to add partners.  plan about how to leave.

      contact and join ACEP democratic group section for guidance.

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      • #4
        regarding structure, specifics matter. If potentially eligible for 199a deduction partnership likely to be better. If income high enough 199a deduction is not possible, S corp probably better. Partnership has more flexibility in compensation, if pay might be unequal. Pluses and minuses to both. You'll need to consult professionals to help (lawyer, CPA)

         

        specifics also matter regarding the transition. If there is an existing entity, is that being dissolved? If this is the case, that may mean all new contracts. Do you want to renegotiate payer contracts?

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        • #5
          The current group is being dissolved.  Yes, there will be a new contracts with group and hospital.  Lots to iron out.  Pay will be close to $400k a year if putting in 13-14 shifts a month.  Will definitly consult with a CPA and lawyer to finalize the contracts.  Just trying to figure out the best business structure to be most tax friendly for everyone, etc.

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          • #6
            If group with partners is set up as LLC, can you legally hire everyone as a sub contractor?  3 partner at 1st with 2 more later. Other docs would be part time contractors.  All hires would have their own business.  They would meet the qualifications of sub contractors except for the part where they are not working long term.  Or does the hospital contract renewal take care of this in the eye's of the IRS?  I don't like the part where the group doesn't have control over the hours worked, etc of the contractors though.  So is it best for the group to hire them as employees and do all the fun taxes, payroll, etc?  At what point does one way make sense over the other?  # of hires between 8-10 with 3 shifts covering 32 hours total a day.

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            • #7
              LLC/partnership is how most do it.
              Helping those who wear the white coat get a fair shake on Wall Street since 2011

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              • #8


                pay with percentage of individual billing from pot of collections/stipends. expenses/fees distributed by same percentage. plan about how to add partners. plan about how to leave. contact and join ACEP democratic group section for guidance.
                Click to expand...




                Would have around 8 partners. Equal pay for partners.
                Click to expand...




                I don’t like the part where the group doesn’t have control over the hours worked, etc of the contractors though.
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                LLC/partnership is how most do it.
                Click to expand...


                I think you have a lot of noodling to do for 8 original partners to reach a consensus. The process of setting up a democratic EM group takes leadership. Ongoing leadership will take time. How and will leadership function and get paid? That is why it is difficult to set up a "democratic" structure. There is a lot of gray areas where decision making authority is delegated to an individual or mgt committee. Not all 8 are willing or capable of running a "partnership". There is an "overhead cost" that will come up, how much will each partner pay and "who determines the amount" and makes the decisions? "Equal pay" is more than math, there is real time and effort.

                 

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                • #9
                  Coming to that realization.  Not everyone wants to deal with numbers.  Group will start with 3 partners and end with 5. Previous group was not democratic which was what caused the problems.  Had lack of transperancy and only one or 2 knew the inner workings of how the pay structure worked or any dealings with administration.  Some personal issues almost resulted in the hospital canceling the contract and going with a big corporate group.  Lets just say the group leaders were not being much of an asset to the hospital.  We want to work with administration and have an open structure so everyone knows what is going on to avoid these issues in the future.  Hospital is on board with keeping most of the current people in place.  Offered to hire as hospital employees or renew a group contract.

                  Still have a question on business structure.  Group should be LLC, but should the people working for the group be employees or independent contractors?  Seems to be a bit of a grey area with the IRS.  With the inner workings of a group, I do not see how hiring physicians as ICs is legal.  I know groups have this structure, but guessing it leaves the group more vulnerable to audits.

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                  • #10
                    employees of company isn't in grey area.  plus, you can structure it almost as favorably as 1099 work.

                    if not everyone can be convinced about the benefit of a democratic group AND deal with the numbers (or not be a PITA for those that DO deal with the numbers), hospital employment is the BATNA.

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