Are you an associate ophthalmologist?
Click Here to Manage Email Alerts
“It might be said that it is the ideal of the employer to have production without employees and the ideal of the employee is to have income without work.”
– E. F. Schumacher
Aspiring to and then becoming an equal partner in a private practice has been the preponderant norm until recently. But a trend for the latest generation of ophthalmologists is for more of them to remain an associate rather than moving on to ownership or to be only a small, fractional owner in a corporate practice.
There are numerous drivers for this:
- The business of ophthalmology has become much more challenging in the last 20 years, with lower profit margins, greater regulatory oversight and higher costs to start and maintain a contemporary practice.
- In part because of these challenges, more recent graduates (with high debt and a desire for a better work-life balance) are keen clinicians but less interested in the rigors of medical commerce.
- Private practices in attractive urban centers with an abundance of doctors (Los Angeles, New York, Miami, etc) no longer need to offer a partnership track to attract new talent.
- More doctors are working in health systems and private equity entities, offering little or no MD equity.
Unlike partners who have it all — a vote in the boardroom, access to practice financial reports and a cut of practice profits — employee doctors have limited control. And they are paid wages that are often indexed to personal performance reports that they must basically take on faith.
In line with the rise of durably associate-class eye surgeons, we are increasingly being approached by employee doctors who feel they are being underpaid or otherwise ill-used by their employer. If you work as an associate or employ associate physicians, here are a few guidelines to help assure your terms and conditions are reasonable and stay reasonable.
It all starts in the beginning. For the benefit of employer and employee alike, the employment contract should be complete, clear and reviewed by counsel on both sides. The most common gaps we see are:
- Contracts that do not automatically renew, obliging rushed renegotiations as the deadline approaches.
- Contracts imposing harsher obligations on the worker than on the employer (for example, allowing the employee to be terminated with just 30 days’ notice but obliging the employee to give 180 days’ notice).
- Compensation terms that are hazy or underdefine “net production,” exclusions or charges against income.
- A failure to disclose what office locations the associate will be working at.
- Undisclosed excess call responsibilities without supplemental payment.
- After-hours uncompensated administrative duties.
- A lack of examples explicitly showing how the compensation model will work.
- The omission of contemporary benefits (educational stipends, moving allowances, family health insurance and the like).
- Noncompete terms that do not align with state-based case law.
Beyond the words on a page, it is then incumbent on the employed physician to understand the contract, audit to assure it is being followed by employee and employer alike, and self-advocate whenever the employer is straying from what has been agreed.
This is more important with respect to associate provider compensation than in any other area.
While there are hundreds of compensation models for employee ophthalmologists, the most common approaches are: 1. A base salary plus a bonus indexed to “net collections” (ie, collections net of refunds and higher-cost overhead such as injectable drugs or laser center). A common arrangement for a general ophthalmologist might be an annual base of $275,000 plus 35% of collections in excess of 2.5 times the base salary. 2. A fixed or sliding percentage of net collections, typically in the range of 30% to 35% in general ophthalmology and a bit higher in selected subspecialties.
Under either approach, the typical associate physician is often in the dark about how their gross charges are turned into net collections. Even if they receive monthly statements, they do not have the skill to interpret their accuracy or completeness. Here is a simple audit you can undertake with the help of your practice’s administrator or billing staff.
1. Over the course of a couple of weeks, make a copy of the fee ticket (or similar routing sheet or screen shot) for 25 or more random patient encounters. Then have billing staff show you on the practice management (PM) system screen how each historic encounter was accurately posted (typically within 24 hours) and submitted (typically within 48 hours). If enough time has passed, ask to be shown evidence of how the payment has been credited to your account. What should you observe with this exercise?
- All of the CPT codes you nominated on the routing slip or patient chart were accurately submitted.
- All claims were submitted in a timely fashion.
- All payments were credited to you and not another provider in the practice.
2. Review the last page of your personal “accounts receivable aging report.” This report can usually be pulled up any time on your practice’s PM system and will show the various aging “buckets” (current, 30 days, 60 days, 90 days, etc). Calculate the percent of open accounts that are in the 90-day and older buckets. The 90-day and over accounts should, in most settings, not exceed 12% of the total accounts receivable. In the tightest-run billing departments, this figure is often kept at 8% or lower. A higher percentage indicates either that your open accounts are not well managed (resulting in lower collections credited toward your bonus) or that old/uncollectable accounts are not being written off.
3. Review your overall aging report. This will have a line for each open account. Look for older/higher balances, and then ask the billing staffer questions such as: “I notice that Ms. Jones or her insurance company owes us $850, and that balance is now 90 days old. What’s that account status?” The biller, with a few clicks, should be able to report something such as, “The original claim was submitted but kicked back due to a transposed Social Security number. Her primary payer paid, and we’re now about to send out a second notice for the patient to pay her portion.” (You do not want the biller to say, “I have no idea why we haven’t been paid yet.”)
4. Ask your billing staff or administrator to calculate your “net collection ratio.” This is the percent of allowable charges the practice has historically collected. Here is a simplified example looking at just one charge. Let’s say you charged out $150 for a service with an allowable fee of $100. And then the patient’s insurer paid the practice their obliged $80, and you billed the patient for the $20 balance. But the patient only paid $15, so your total funds recovered were $95, or 95% of the allowable fee. Looking at a cross-section of such payments, in the typical Medicare-biased practice, you want the net collection ratio to be 95% or higher.
Obviously, in order to perform this auditing work, your employment agreement has to grant you the right to the underlying data and the support of practice staff to help you pull and interpret the figures.
- For more information:
- John B. Pinto is the author of several books on ophthalmic practice management, including John Pinto’s Little Green Book of Ophthalmology: Strategies, Tips, and Pearls to Help You Grow and Manage a Practice of Distinction, UP: Taking Ophthalmic Administrators and Their Management Teams to the Next Level of Skill, Performance, and Career Satisfaction (with Corinne Wohl), Simple: The Inner Game of Ophthalmic Practice Success, and Ophthalmic Leadership: A Practical Guide for Physicians, Administrators, and Teams. Available now for purchase at slackbooks.com. Receive 20% off with promo code PINTO20. He can be reached at 619-223-2233; email: pintoinc@aol.com; website: www.pintoinc.com.
Collapse
Read more about
Click Here to Manage Email Alerts