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Help evaluating 2 job offers

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  • Avatar CzarKing 
    Participant
    Status: Other Professional
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    Joined: 09/06/2019

    I was recommended by a colleague to register/post this question here so I hope I am not breaking any rules by asking for such advice.

    Briefly–I am a graduating surgical subspecialty fellow and am looking at 2 private practice employment offers which I will summarize below. I am asking if there are any major red flags or concerns that are raised based on my description–specifically regarding concern about buyout or future business planning.

    #1-I like this location of this job significantly more than #2. Larger multispecialty group (~100 physicians). Cost of living is approximately 40% higher. 5-10% more hours expected for (tax-adjusted) 80-85% pay of #2. Call coverage is better (less nights on call). Start as an employee for 3 years with partnership offered afterwards (I couldnt get anyone to lock down a number of how much more partners make but I would expect it would be 20-40% more based on my knowledge of the payors and the formula I was given for partner pay). Buy-in of unspecified amount (paid off over 2-3 years). Group does not own any hard assets (eg no land/equipment/ASC). Potential concerns I had was rumors of a larger group potentially looking to buy this group but no firm offer yet and unclear if group was interested in selling. Their business apparatus appears more mature than #2 actively looking to increase income through novel methods but due to the location’s relative remoteness (~3h drive to nearest metro area) does not seem to have much ability to expand. Turnover has been very low over the past 10 years. Ownership of business is separate from partnership and takes longer to achieve (about half of partners are also owners).

    #2-Like the location less but still could see myself living there. Cost of living is much lower than #1. Less overall hours. Smaller single specialty practice with ~10 physicians. Start as employee for 2 years, then made partner. No assets so buy-in is for accounts receivable only. Employee salary is almost identical to partner salary since it is based on productivity plus a set call rate per day worked that makes it ~20% higher than #1. Business model is less evolved and group is smaller than #1, would not expect them to be bought out before I would benefit from purchase. Multiple nearby expansion opportunities (eg hospitals looking for their service line) that are limited by lack of personnel. Multiple people (3-4) have left over the past 10y due to work/call load. Has more overnight call required but appears this was related to shortage of people which has been fixed and I doubt the amount of work I would be expected to do would increase based on my current information.

     

    I feel like pay from #2 is higher and will likely stay high with a growing practice in an area I dont like as much. #1 will probably pay more than #2 at partner level but they have been quite successful and could be bought out before I get to the partner level and I would be permanently stuck at the lower pay rate in a higher COL area. Any opinions welcome and thank you for any advice (my local mentors are not very savvy in this regard).

    #244284 Reply
    Avatar nephron 
    Participant
    Status: Physician
    Posts: 227
    Joined: 05/09/2019

    real salary numbers would be helpful to compare.   I like the bigger more established group #1 because it is bigger and more established and presumably knows that they are doing.  The down side of a big group is that there are more people on top/administrators that are taking a piece of your salary.   It’s the same as being employed by a large hospital group or academic center, your pay is less but the system is established and you know what you are getting.  I see the turnover in group 2 as a red flag.  Even if you decide that you like it there and want to stay, you may not like it when one or more of your partners decide to leave.   People say that they leave due to call/work load all the time, but it is oftentimes an indicator of some dysfunction in the group.   Even when you ask people straight out why they left, they usually hedge, particularly if they don’t know you, and don’t give a real honest assessment.

    #244309 Reply
    CordMcNally CordMcNally 
    Participant
    Status: Physician
    Posts: 2851
    Joined: 01/03/2017

    There’s things in both jobs that I don’t like.

    Job #1: No specified buy-in amount and you don’t have a great idea what partners make. You achieve partner but then you’re still not an owner? What’s the difference between partner and owner. The rumor of a large group looking to buy would concern me. Usually with these things, where there’s smoke there’s fire. All it takes is for a majority of partners (or owners, I guess in this case) to be close to retirement to take a buyout. Considering it takes a long time to be owner, and I assume owners have more say than partners, it may not take much for owners to take a buyout and leave other people empty handed. I don’t like models where there is different tiers of partners, owners, etc. in medicine because it doesn’t take much for people to get screwed.

     

    Job #2: The amount of turnover is incredibly concerning but everything else seems to be very fair. If they’re having problems with working too much, they need to evaluate their staffing model.

    “But investing isn’t about beating others at their game. It’s about controlling yourself at your own game.”
    ― Benjamin Graham, The Intelligent Investor

    #244310 Reply
    Avatar CzarKing 
    Participant
    Status: Other Professional
    Posts: 3
    Joined: 09/06/2019

    real salary numbers would be helpful to compare.   I like the bigger more established group #1 because it is bigger and more established and presumably knows that they are doing.  The down side of a big group is that there are more people on top/administrators that are taking a piece of your salary.   It’s the same as being employed by a large hospital group or academic center, your pay is less but the system is established and you know what you are getting.  I see the turnover in group 2 as a red flag.  Even if you decide that you like it there and want to stay, you may not like it when one or more of your partners decide to leave.   People say that they leave due to call/work load all the time, but it is oftentimes an indicator of some dysfunction in the group.   Even when you ask people straight out why they left, they usually hedge, particularly if they don’t know you, and don’t give a real honest assessment.

    Click to expand…

    There’s things in both jobs that I don’t like.

    Job #1: No specified buy-in amount and you don’t have a great idea what partners make. You achieve partner but then you’re still not an owner? What’s the difference between partner and owner. The rumor of a large group looking to buy would concern me. Usually with these things, where there’s smoke there’s fire. All it takes is for a majority of partners (or owners, I guess in this case) to be close to retirement to take a buyout. Considering it takes a long time to be owner, and I assume owners have more say than partners, it may not take much for owners to take a buyout and leave other people empty handed. I don’t like models where there is different tiers of partners, owners, etc. in medicine because it doesn’t take much for people to get screwed.

     

    Job #2: The amount of turnover is incredibly concerning but everything else seems to be very fair. If they’re having problems with working too much, they need to evaluate their staffing model.

    Click to expand…

    Thank you for your responses. #1 is 75th MGMA, #2 is 90th+ MGMA so both have more than fair compensation, especially for a freshly minted practitioner.

    #1 only has a few non-clinical employees and is run quite lean. I think the overhead of both practices is on the order of 15-20%. I do share the concern that there might be multiple layers of partnership that lock away true earning potential for many years instead of 3 years up front and, if they do sell, I would probably never see income close to what #2 is offering up front. I think the income potential from #1 is higher because their payor mix is much more favorable than #2. About half of its current physicians are partners and about 2/3 of those also have ownership stake.

    #2 practice has been around 20+ years and has seen larger turnover just recently but seems to be stabilizing. A large portion of their income comes from significant hospital subsidization with call contracts that are 3x what #1 gets (or at least what they offer to pass on to me) which is great but potentially not sustainable over a career with all of the expected cuts coming to healthcare.

    #244326 Reply
    Avatar HandFellow 
    Participant
    Status: Physician
    Posts: 201
    Joined: 01/18/2016

    Overhead of 15-20%?  Sign me up!

    #244382 Reply
    Liked by Zaphod, ENT Doc
    Avatar Brains428 
    Participant
    Status: Physician
    Posts: 399
    Joined: 11/09/2017

    I don’t know. Still too vague with the information. I think you’re going to go with #1 solely based on location. #1 sounds shady because of the potential buy out and no clear partnership buy in. A buy in of 25k is a lot different than 250k (I would guess the higher number is less likely given lack of hard assets). The turnover for #2 is due to call burden. So what is the call burden and is it the same forever, or does it get less over time. Can you get paid for taking more call (like your partners selling you said call)?

    I’m assuming you’re single… so I think it’s okay to roll the dice with the higher pay. You never know if you’ll like the community until you get there.

    … I still think we need more information. Good luck.

    #244389 Reply
    ENT Doc ENT Doc 
    Participant
    Status: Physician
    Posts: 3518
    Joined: 01/14/2017

    Concerns about #1:

    -You are a surgical subspecialist in a MSG. You will be subsidizing other specialties and will see money disappear into the admin space. Beware of how your expenses are calculated.
    -More hours, less pay, higher living expenses. Not a good formula for success. And this place is more remote?? All those facts should be reversed except for the hours.
    -No knowledge of buy-in. No knowledge of partner income. Partner doesn’t equal owner. 3 years until partner. All that combined are big red flags imo.
    -Rumors of buy-out. Bye bye (undisclosed amount of) added income.
    -No hard assets. What are you paying for with buy-in? What is buy-out? Sounds like missed opportunity to be honest.

    Concerns about #2:
    -Turnover is concerning. Agreed that people aren’t going to give you the real scoop on that. You’d need to talk to other groups in that town to get the real gouge.
    -Same salary as employee as partner? Why buy in?
    -Salary bump is tied to something very idiosyncratic.

    I think your overhead numbers are wrong, and is dive into the financials if you’re serious. Also, look for other opportunities.

    #244405 Reply
    Liked by childay, CzarKing
    Avatar Tim 
    Participant
    Status: Accountant
    Posts: 3079
    Joined: 09/18/2018

    “Cost of living is approximately 40% higher. 5-10% more hours expected for (tax-adjusted) 80-85% pay of #2. Call coverage is better (less nights on call). ”

    Comp, job, location
    •# The riddle is more hours for less pay with a substantial higher COLA but less call .
    •You like #1 and “hope” the income goes up with the uncertain path to “ownership/partnership”.
    •If both options were successful, you like #1 better regardless of the COLA.
    • #2 has a much higher probability of financial success due to the COLA. You “hope” the location and call burden work out.
    • Exit plan on both is “move” if for any reason the partnership deal doesn’t workout.

    I suggest you think more about your life style and personal life more than the money. Where would you fit in personally and professionally in 10 years. The red flags are there, both can fail and you are going to start over. #2 you will have more cash, #1 you will have more experience in scouting the next opportunity.
    Go back to the basics: comp, job, location. You want #1 but #2 is tempting, 90% is a strong incentive.

    Just a reminder, there is a life outside of your job. It can get “miserable” really fast if it’s a bad fit. That probably will be the deciding factor.

    #244414 Reply
    Liked by CzarKing
    Avatar CzarKing 
    Participant
    Status: Other Professional
    Posts: 3
    Joined: 09/06/2019

    Concerns about #1:

    -You are a surgical subspecialist in a MSG. You will be subsidizing other specialties and will see money disappear into the admin space. Beware of how your expenses are calculated.
    -More hours, less pay, higher living expenses. Not a good formula for success. And this place is more remote?? All those facts should be reversed except for the hours.
    -No knowledge of buy-in. No knowledge of partner income. Partner doesn’t equal owner. 3 years until partner. All that combined are big red flags imo.
    -Rumors of buy-out. Bye bye (undisclosed amount of) added income.
    -No hard assets. What are you paying for with buy-in? What is buy-out? Sounds like missed opportunity to be honest.

    Concerns about #2:
    -Turnover is concerning. Agreed that people aren’t going to give you the real scoop on that. You’d need to talk to other groups in that town to get the real gouge.
    -Same salary as employee as partner? Why buy in?
    -Salary bump is tied to something very idiosyncratic.

    I think your overhead numbers are wrong, and is dive into the financials if you’re serious. Also, look for other opportunities.

    Click to expand…

    “Cost of living is approximately 40% higher. 5-10% more hours expected for (tax-adjusted) 80-85% pay of #2. Call coverage is better (less nights on call). ”

    Comp, job, location
    •# The riddle is more hours for less pay with a substantial higher COLA but less call .
    •You like #1 and “hope” the income goes up with the uncertain path to “ownership/partnership”.
    •If both options were successful, you like #1 better regardless of the COLA.
    • #2 has a much higher probability of financial success due to the COLA. You “hope” the location and call burden work out.
    • Exit plan on both is “move” if for any reason the partnership deal doesn’t workout.

    I suggest you think more about your life style and personal life more than the money. Where would you fit in personally and professionally in 10 years. The red flags are there, both can fail and you are going to start over. #2 you will have more cash, #1 you will have more experience in scouting the next opportunity.
    Go back to the basics: comp, job, location. You want #1 but #2 is tempting, 90% is a strong incentive.

    Just a reminder, there is a life outside of your job. It can get “miserable” really fast if it’s a bad fit. That probably will be the deciding factor.

    Click to expand…

    Thank you for your input. I have been on several interviews and have yet to find the ‘perfect’ job. I do have a family and we will be able to tolerate another move if we need to since my kids are young enough that it wont be a huge hit but obviously would prefer not to.

    I am increasingly convinced I am going to have to take some kind of risk/uncertainty on if I choose to go in to a private practice because in the 5 I have visited not a single one has been able to fully disclose all of the details (buy-in amount, partner salary, likely accurate reasons for previous docs leaving, buyout potential etc). I assume these details will become more solid the longer I spend there and if it seems inequitable then I will need to move on. It would be great if all private practices were completely open about their finances and how much they make but I have found that there is a spectrum of openness and nobody seems to want to be fully open with a stranger.

    It is reassuring to see that my concerns about #1 were not paranoia/unfounded. I also appreciate the advice to focus on fit/lifestyle and will need to consider that as well.

    #244432 Reply
    Liked by Tim
    ENT Doc ENT Doc 
    Participant
    Status: Physician
    Posts: 3518
    Joined: 01/14/2017

    I would never sign up to have years of my life potentially wasted on faith. You need hard numbers or move on. Sign a non disclosure. Another red flag is unwillingness to cooperate in this regard.

    #244455 Reply
    Zaphod Zaphod 
    Participant
    Status: Physician, Small Business Owner
    Posts: 6186
    Joined: 01/12/2016

    Overhead of 15-20%?  Sign me up!

    Click to expand…

    Yeah, this is likely a gross underestimation of the actual overhead. It’d be decent if it was double that frankly.

    #244467 Reply
    CordMcNally CordMcNally 
    Participant
    Status: Physician
    Posts: 2851
    Joined: 01/03/2017
    I am increasingly convinced I am going to have to take some kind of risk/uncertainty on if I choose to go in to a private practice because in the 5 I have visited not a single one has been able to fully disclose all of the details (buy-in amount, partner salary, likely accurate reasons for previous docs leaving, buyout potential etc).

    Click to expand…

    I understand that private groups aren’t just clamoring to show their books to everybody but this is important information that potentials new hires need to know in order to make an accurate decision.

    “But investing isn’t about beating others at their game. It’s about controlling yourself at your own game.”
    ― Benjamin Graham, The Intelligent Investor

    #244484 Reply
    Liked by ENT Doc, Zaphod
    Avatar wcinewbie 
    Participant
    Status: Physician
    Posts: 89
    Joined: 09/30/2017

    At the very least you need to be able to talk to past doctors. Big red flag if they’re unwilling to provide you with their contact info. Regardless, if you call around, it should be pretty easy to find out who they are.

    #244537 Reply
    childay childay 
    Participant
    Status: Physician
    Posts: 1013
    Joined: 01/09/2016
    I am increasingly convinced I am going to have to take some kind of risk/uncertainty on if I choose to go in to a private practice because in the 5 I have visited not a single one has been able to fully disclose all of the details (buy-in amount, partner salary, likely accurate reasons for previous docs leaving, buyout potential etc). 

    Click to expand…

    I understand that private groups aren’t just clamoring to show their books to everybody but this is important information that potentials new hires need to know in order to make an accurate decision.

    Click to expand…

    Agreed.  Showing the actual books to someone is questionable.  However they should be able to give you partner incomes, roughly, along with buy-in details.  Frankly if they don’t then I would be rather suspicious as to the democratic nature of the “partnership.”

    #244545 Reply
    Liked by Zaphod, ENT Doc
    Avatar Tim 
    Participant
    Status: Accountant
    Posts: 3079
    Joined: 09/18/2018

    Sounds like a lot of geo arbitrage.
    More money in LCOL or less money in HCOL.

    At least you have the family situation sorted out. That greatly eliminates another unknown.

    #244548 Reply

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