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How do you negotiate RVUs when looking at offers?

Home Practice Management How do you negotiate RVUs when looking at offers?

  • RJ RJ 
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    Thank you for starting wRVU discussion. I work for a hospital system where all shareholders (which I am) are production based. Its wRVUs and a conversion factor. No base salary.

     

    Here is my problem: I am an ophthalmologist. It is extremely rare for us to work in a wRVU model. Because of that I feel our CF is skewed to lower side. It’s currently $43.42 per wRVU. Adim tells us that that what MGMA is for our specialty. How do we get it through to them that MGMA is not representative of FMV because ophthalmologists do not usually work for wRVUs? Any ideas?

    Thanks.

     

    RJ

    #15203 Reply
    childay childay 
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    So you are saying there is no practice setup and no patient base and no reference for what she will be making.  In that case I would negotiate for a guaranteed higher fixed salary for say 2 years.  Then go to a mixed salary / RVU model after that.  It could take a while for her to build up a clinic etc and she may not make any RVU bonus.

    At my hospital I had a guaranteed salary for two years with RVU on top of that, once I met the RVU threshold which was my salary.  After 2 years then the guaranteed salary changes to 70% of the previous year RVU total every year.  I don’t work in an academic hospital so that will make things more complicated.

    #15205 Reply
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    Avatar Raj 
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    Childplay- quick question-You say after 2 years, your guarantee is 70% of the previous year RVUs- Does that mean, in your third year of work if you were to make <70% (lets say you made only 50% of second years RVUs) RVUs of year 2, you would still end up making dollars equal to 70% of RVUs?

    #15221 Reply
    Avatar travismoola 
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    They’ve got her incentive comp w rvu’s included at 30k , 80k , and 110k at the 50%, 75%, and 90% of the rvu range for her specialty. From what I’m seeing here the rvu payout is too low. If you were negotiating for a guaranteed salary, how do you value rvus? Do you pick the 75% range and say OK I want 50 cents on the dollar if I made that rvu figure since this is a startup practice for the hospital. Or do you ask for a full rvu guarantee at that 75th percentile? Agree we need to ask for higher base pay. My question is what would be your strategy for how you would start.

    #15227 Reply
    childay childay 
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    @ RJ  Sorry no idea.  You can try to argue against MGMA but it will be hard.  Administration tends to be rather concrete about such things..  Of course everything is (possibly) negotiable.  Perhaps you can compare the average wRVUs x your CF compared to average private practice salaries?

    @ Raj   Yes that is exactly correct.  Guaranteed salary of 70%.

    @ travis  I am not sure why they would have more than one wRVU value, that doesn’t make sense to me.  The hospital gets paid the same for the procedure regardless of how many RVUs the MD has.  I am not sure what your exact question is perhaps you can rephrase it?  “They’ve got her incentive comp w rvu’s included at 30k , 80k , and 110k at the 50%, 75%, and 90% of the rvu range for her specialty.”  I am not sure what that means exactly.

     

    #15257 Reply
    Avatar Katietsu 
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    She is looking at an academic position.  The structure for this position, like many academic positions, appears to be one iin which a majority of your compensation is base salary and standard benefits.  In our institution, over 90% of total compensation, is fixed.  If your clinical production, ie rWVU’s are within a broad range based on the average for the speciality that would be all the pay you would receive.  If you exceed a certain wRVU level then you receive a bonus based upon your production in a manner similiar to your description. (If you are a true slug, your base pay for the following year can be decreased.)

    I would suspect that the wRVU levels and ranges are set for the department as a whole and would be difficult to negotiate.  I would also suspect that as a beginning attending who has a strong interest in teaching and research, the rWVU incentive may be a very small part of her income, at least initially.  You also need to be careful about comparing one piece of a pay structure with a forum comment concerning a piece of a different type of pay structure. You can not just pull out the $/wRVU figure in isolation.

    If I understand you correctly, you proposed asking for a base salary that would include the 75% wRVU incentive as a guarantee.  This is not making sense to me.  Do you understand that the 50% level, at least as I am used to hearing it used, refers to the average wRVUs for her speciality. As a beginning attending, she would likely come in well under this level. Those with a mature practice and more experience should be able to produce more rWVU’s. It is reasonable to negotiate base salary but I do not understand why the 75% level incentive would have anything to do with your negotiation.

    There are other issues important to her decision that are particular to academic settings.  Some examples include: Has she discussed the amount of time that would be expected for direct patient contact?  Has she discussed funds available as seed money for research?  Are there requirements for community or institutional involvement?  Do you plan to have children and, if yes, how will her salary be affected by her time off.

    Does she have a faculty member at her current institution who could talk with her about the things to think about when going down the academic career path?

     

     

    #15270 Reply
    Avatar travismoola 
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    Childay they are trying to make her comp look more attractive than it is. Ie $35 per wrvu between 4500 and 5500. So if she earned all the wRVUs in that range they list the incentive comp at 30k. Same for the other ranges. 5500 to 6800 is $36 per wRVU. They list is as hypothetical bonus to make your eyes pop.

    #15274 Reply
    Avatar travismoola 
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    All the institutions have asked for at least 60% time as clinical, even the top research universities. I wonder if this is a trend other people are seeing. Lots of focus on mkt share and increasing revenue. Also, some of the spots have had ppl leave BC they were pressured to focus on revenue ie procedures. The places are hiring to replace these folks, so certainly need to be careful . not all academic roles are created equal we are finding . some have teaching and research as an afterthought and some are serious about it. Seems like the comp structures reflect their priorities though.

    #15275 Reply
    Avatar travismoola 
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    Interesting follow up, one of her friends just got an offer about 35% lower in California in a “desirable” area. Maybe the other isn’t as bad as we thought

    #15553 Reply
    Zaphod Zaphod 
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    Couple more relevant points

    -she would be the only surgeon in her specialty for the region if she goes there. Ie no preexisting patient base. I’m assuming she would not come close to meeting her rvus as she struggles to get the private practice obgyns to let go of some of the procedures they have been doing .

    -no income tax state, so I’m assuming you discount the rvu number accordingly for comparison purposes.

    How much would you ask for in extra base pay to take rvu possibility off the table ? Just curious as to what peoples point of indifference here is for rvus vs base salary all things equal.

    We haven’t received the details of other larger academic hospital offers yet. I’m imagining those will be more base salary oriented since they’ll have higher research expectations (70% clinical 20% research 10% teaching)

    Click to expand…

    Everything you’re saying should increase her base pay and her rvu rate, the hospital needs her badly from this perspective.

    #15628 Reply
    Avatar travismoola 
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    Kind of down on this offer now. The hospital just came back and said that the base salary was based on her getting a high RVU number, so they dropped the guaranteed base and lowered the range where RVU payments start. In other words now its 260 plus the RVU incentives that could bring it back to 300. That only benefits them, as if she doesn’t hit the revenue numbers they aren’t out any money. This all despite it being a start up situation in a rural area. I think they aren’t familiar with hiring new specialists or they wouldn’t do this poor business practice. Guess we have to hope the other offers come in better.

    Though with her friend getting a low 200s number w little incentive comp in LA, I’m wondering if this is the future. Doctors getting totally taken advantage of by big hospital systems

    #15705 Reply
    Avatar Joseph 
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    Status: Physician
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    Without alternative offers, I don’t understand why you are so sour and feel “totally taken advantage of”.  Go out and find the more competitive jobs.

    I could guarantee you a more lucrative contract coming from a “big hospital system”.

    Also, remember that sexism exists. Girls get paid 6% less due to poor negotiating skills.

    Have you done any good in the world today?

    #15707 Reply
    Liked by ENT Doc
    Zaphod Zaphod 
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    No. It does sound like they dont have much experience. They need to increase the base pay and lay off the rvu stuff. Dont worry about LA or SF, for some reason the medical field is backwards and the more desireable an area is to live the less money you make. It is much easier to move to bfe for a huge salary than to go duke it out in SF for peanuts where software engineers make more than you.

    LA is full of starving plastic surgeons. They know people want to be there, there is a relatively fixed demand for medical stuff, they simply know that someone will want it enough, or be in an economic position to where their pay matters less than location. Its the opposite in the flyovers. Advantage should be to you.

    Make a reasonable counter offer, nothing ludicrous (though my residency colleague certainly got one), that is mutually beneficial and forward thinking. That is, keeps her around and stable until she builds up a practice that can produce for the hospital. Find another off, play them off each other, that is the best strategy…”ugh, just curious since our other offer is x comp, y benefits, and z production, and is so far out of line with yours”, etc…if they seem to be this shrewd and people prior were leaving, maybe thats a sign.

    #15807 Reply
    Avatar travismoola 
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    Thanks Joseph and Zaphod. We are expecting two more offers to come in this week to go w the one she already has. The two hospital systems have indicated that the offers are coming. The one where folks have been departing seems pretty business savvy and aggressive. They told her its professional to get an answer “very, very soon” when they extend an offer. She has two more interviews left and would like to see what they put on the table before pulling the trigger. Obviously the more aggressive negotiating hospital thats had the 2 ppl leave doesnt want her to have those two offers to compare to theirs and thus is trying to push her to take theirs before she knows all her options. Any experience on how long to hold out until you give a hospital a decision? I suggested she tell them she would decide in 4-6 weeks to allow time for contract reviews, talking with family, etc

    #15830 Reply
    Avatar asmallchild 
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    Thanks Joseph and Zaphod. We are expecting two more offers to come in this week to go w the one she already has. The two hospital systems have indicated that the offers are coming. The one where folks have been departing seems pretty business savvy and aggressive. They told her its professional to get an answer “very, very soon” when they extend an offer. She has two more interviews left and would like to see what they put on the table before pulling the trigger. Obviously the more aggressive negotiating hospital thats had the 2 ppl leave doesnt want her to have those two offers to compare to theirs and thus is trying to push her to take theirs before she knows all her options. Any experience on how long to hold out until you give a hospital a decision? I suggested she tell them she would decide in 4-6 weeks to allow time for contract reviews, talking with family, etc

    Click to expand…

    I had similar pressure when trying to make a decision. My gut feeling is that if they really want you and feel you are the right fit, they’ll give you a reasonable period of time to make a decision (4-6 weeks is probably a bit long unfortunately)

    I would be honest and tell them there are 2 more interviews forthcoming. If they have to move on to their next candidate, that’s fine. If they can sweeten the offer, that could convince you guys to make a decision earlier.

    #15832 Reply

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