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A lot of residence a are somewhat afraid that they've been in the
you know the mentor student role for a long time
and now they're getting outta that resident now in going out into the
private world of medicine and they may be a little embarrassed to ask the right
questions and
and may have a little reticence to
and two tasks as right questions I
one others is that about
I'm the wrist the reluctance to ask a lot of sensitive information especially
when it comes down to finances et cetera
sale on a resistance and that and residents shouldn't really feel
embarrassed to
you know you are entering the private practice world
and I'm you are entering a contract negotiation process
and some *** ask questions have your
future employers just as in the residency process you learn a lot about
medicine along the way
you are now entering another world where a lotta terms will be thrown around
I'm a lotta acronyms et cetera which are not gonna be familiar to you
it's very very important not to go you know I'm
glide over those if you don't understand negotiation pointer terminology
I because they may come back to haunt you later another thing
a lot of residents in the negotiation process
in the wine and dine process maybe promise things
your call may be one in three and maybe one in five you may get to be in the new
office et cetera
but then they find out number one it's not in the contract
I'm when they get that final written contract on
only to find down the road when they do sign a contract and start their work
and that those things may not bear fruit or they may been misled
so one of the points being and I had to be skeptical about this but
if it doesn't exist in the contract it doesn't exist
and you can't just take their word for it in terms of financial due diligence
I'm a lot I have presence may ask our wonder how much information
am I entitled to receive the first interview is
to get an idea the fit I'm can I work with these people
when she kinda bridge that you get through that and said hey I can work
with these people
then you're gonna ask the follow-up questions I you know in subsequent
meetings
then you can get to the knot knots and bolts about money again most practices
should be forthright about those dollars and sense
if they don't it so it may signify one of two things
number one that they again or not managing their finances well and so they
don't know those answers on C
or number two they may have something to hide and that's not all so good in some
situations
and group may not be able to give you the right answers in terms that
the finances a practice that may not necessarily be dishonest you're anything
like that
but certainly may smack have well hey this practice may not have the
appropriate
accountant in place the appropriate financial tools in place
so it may be representative a practice that doesn't really handle their own
business too well
another excellent question to ask is what is the group
long term and short term outlook in goals
on personal find out if you take them for a loop when yes and that question
they may not have that
not looker goal on but having said that if they have one that's good that means
that the group
has a bit foresight a
long-term growth plan and as part of that growth plan
will be also interesting to find out what their capital expenditure plans are
you may be joining them in a certain point the practice and lo and behold
there about to open a new practice that's a ten million dollar office
and you're gonna be on the hook for your percentage of that looking at a balance
sheet
have an organization is certainly an interesting question ask
and that kinda depends on your comfort level with the group in negotiating with
certainly understandable if they don't want to share that with you because it
is the harder the finances at the group
I'm however if they can provide you with that information or a general outline
and that
that would be invaluable in that balance sheet you're gonna find out one
important thing which is cash flow
do they have the cash flow in the organization to meet their monthly
obligations to employees as well as the partners in the practice
pay the light bills another partner that is the date sheet
okay and there's good data and there's bad I'm good at is that that is used to
finance
a different things like buildings
and structures and investments in dialysis centers things like that
generate revenue bad that could be that that's used to pay day today
finance day-to-day operations the over had to
revenue ratio most practices your when you are again in the investigating
processor that practice
you want to find out what their overhead percentages most practices are gonna run
in a band of overhead
somewhere between 40 and 60 percent okay
if a practice is running really lean and they're able to be very efficient
not higher too many staff they may be a little bit lower and that's great
and if the practice overhead as little bit higher
I'm greater than 60 percent you may wanna you know find out where there's
expenses are coming from
and why those expenses are so high and see if there's room for improvement
but that could be seeing you know signs in a practice I could be anything better
in terms of efficiency
another thing that you're gonna wanna look at is the pair mix
and is there a lot of medicare in that particular area
is there a lot of private insurance in that area that you gonna practice
what about HMOs what happened contracts are there
negotiating at and the interest income distribution plan
will fall into usually three categories one is that
it is a and even distribution plan
I E and their is
there are five practice partners million dollars a revenue
and and then each person gets two hundred thousand dollars
okay that's an even distribution plan the second one
a is based on productivity alright
so you will be compensated as a percentage
productivity that you bring to the to the practice
third may involve some sort of mix where there's an element of your salary
which is productivity based in part about that is based on a even
distribution to all physicians
an example that is where and say
in a urology practice say
one doctor may be doing cancer surgery
they may be involved in three four five six hour cases all day
they may not generate the revenue as a doctor who's in the office who's seen
thirty forty patients that day
so you need to be able to compensate each one equally for the amount of work
that they're doing
but also allowing for the fact that the different types of work each position is
doing in the practice
now 10 the interesting coral it so that when you look in income distribution
plans rather even or productivity based
I'm is that you need to make sure that most to the physicians are pulling their
own way
the practice on there may be an older
senior doctor somebody that doesn't lessen the pool their way sometimes I
can be a point of contention in a group
especially if they're uneven distribution plans when do you become a
partner in a practice
usually the salaried employees to partnership track
is also a safety a mechanism for the practice
because they can %uh Valerie you as a employees
and subsoil as a partner and
usually this will be offered to you in the one to
or three-year time frame and
if it's earlier certainly that's a good option you do need to be a little
cautious are careful
if the partnership track is made vague to you
or if it's a prolonged partnership track greater than three years
usually in the first year practice you are going to be losing money to the
practice as you kinda
ramp-up your second your practice you're usually starting to build up
and maybe you're making your income third year is usually in typically in
most practices when you're really starting to build up your own reputation
your practice is really going
there should be a bye in Clause which is explained
as well as a buy-out clause a you wanna find out what that by and in tales
okay and I could be as much as just the fixed assets at the practice
I'm how much does it cost to for all the computers your share the computers
your share of the blood pressure machines your share the
and secretary's desk all those things that can be hard assets
what you want ok I never keep an eye on is
if the buy in also potentially includes an element
by goodwill okay that's hard to quantify are qualified
especially in this day in age when insurance contracts can
you know blow up in smoke overnight the goodwill to practice can really also
evaporate overnight
or if it is all for any other reason I'm so
ultimately the best buy ins are a
portion paper fair portion are proportion
the fixed assets a company to Goodwill does have a monetary value
by and has the word goodwill means is they can also be a very
esoteric a vague term a and
it's hard to really put a proper price on that so the important thing to know
about contract negotiations
is that this should be looked at is as a
cooperative process you're not here to buy a car
we're here to get the best deal and then walk away without our ongoing
relationship
here to join a physician or a group of physicians
and hopefully enter a long-term relationship
and it starts at the contract negotiating process
so after you get an idea that you like these people and you like to spend more
time with them
enjoy working with them then you need to start looking at the nuts and bolts on
the contract
just like if you're going to be negotiating any sports contract or
anything like that
your best point have negotiation and your negotiation FrontPoint strength
is gonna be before you sign the second he sign
and you know it's gonna be harder for you negotiate
things that you want not everything of course communique she added
and there's gonna be certain sticking points are fixed points that the group
is not gonna by John
and you get a pretty rapid feel for what that is but it doesn't hurt to ask our
way said doesn't hurt to ask
and and the worst case I'll say no also understand
that has a partnership goes that this involves a fair amount a compromise
you're not gonna get everything that you want
and in fact the prime need to make a list 1 through 10 13 20 whatever it is
what you really really need and what your deal makers are
and what your deal breakers are at some point in the
contract review process and certainly before you sign anything
you do need to have a health care attorney involved in that process
and that health care attorney really needs to be from that geographic area
because the rules and regulations for
I'm contracts will change state by state or area by area
I have become so where than I
am not aware have so many on the right questions to ask
and at this point I wouldn't even consider
signing a contract without a contract attorney who
absolutely knows how to keep my best interest in the position in mind
I've had many people warned me you know be sure you understand coverage chief
sure you understand licensing be sure you understand
not to sign a contract into the really pantry look at it and know that
you know my best interests are protected uses the surprises with
imminent student loan payments you know as soon as you finish
right graduation that and i wanna have something in play
and I want to be able to make good decisions with the contracts because
I've heard too many people come in say
I wish I had known that do not sign anything until you have an attorney look
at it i mean because there's so much legal
wording that we don't even understand on and I know that I've gone over
a contract with an attorney at one point and he picked up on things that
I would never in a million years has have caught
arm and so he just the way he worded things and even sometimes it's like a
little minor points but
they do turn out to be something that can be very important later on and you
can't just even if you end up working for your dad's practice that you've
joined or whatever
you know where this is a friend of the family you still have to treat it like
it's a business
and you cannot take anything personally and you have to you have to do this with
a private party and you just have to have it looked at by an attorney
its have the utmost importance depending on the type
have practice that you join some places may give you a sky-high salaries
specially if they're backed by a hospital or something like that
you have to be careful if they offer you a pie in the sky sell your first year
because that's second year may not be so pretty when she come away from this per
and that that income support from the hospital or the croup
cell you have to look at where your first year salary is from that group but
also have been
a realistic expectation over your 2nd 3rd 4th year salaries are gonna be
that brings up an important point is that there's a difference between your
salary
and your compensation salaries just that number that you're getting there
you know and compensation implies
the entire package and that can be your 401 K
your disability plan malpractice coverage
times all those things so you need to look at not only the salary
but the compensation plan altogether you get through that process that you like
everything that you
seen and heard and looked at then you can't now seriously go into Phase two
which is to say hey let's talk about the nuts and bolts oh this what is a
potential offer to me
and then start going down the financial tracked