All right, so we're doing Financial Fundamentals RVUs for Retirement. I'm not going to speak a lot about retirement because you heard a great talk. My two cents on retirement is if you have interests or loans, don't let it compound. Save money as early as possible. Maximize your retirement accounts and be nice to your spouse. Every older partner I meet says, hey, the biggest thing is don't get a divorce and be nice to your spouse. I know I'll be dead and I won't have to worry about money, so just be nice. So we're going to start off with real basics here. You are a physician. Just because you're smart and a physician does not mean you have any idea that you know what you're doing with your money. I hear the doctor's lounge, there's always the financial channels on and everyone's talking about all these high-risk investments they made that really went well and then for every one of those, there's four that went really poorly. So what is your risk tolerance and how smart are you? Please understand your limitations. I know that I'm a moron and I have somebody at home who knows better than me, so please remember that you're only as smart as your training level. You're not an MBA, for most of you, some of you might be, but understand that you can take care of sick patients but not necessarily know how to time the market. Ask questions from the right people. If you need a financial planner or you know somebody that's their line of work, then they're more than happy to meet with you and not charge you anything to do some conference calls and whatnot. They're hoping that eventually you think that they're smart and that you will invest with them, but just make sure that you're not trying to feel like you need to do all this on your own. So now we're going to start getting to the really exciting things. If you've ever gone to any national conference, you'll invariably see a coding seminar. These are things you can put on at night and always go to bed to. So we're going to try to make it not as boring as that, but we're going to just start off with real basics that are going to be applying to you at the stage of your career. So you're going to hear a lot of stuff when you're getting contracts about salaries, is it guaranteed, is there a bonus, or is it just productivity? And when we're talking about productivity, it's always going to be based on what the RVUs are. We'll go into that, or whether or not you're just doing it based on receipts or your collections based on what you build for and you receive from an insurance company. And some just basic questions that you should be thinking of, and we'll talk about more of this during the presentation, is you need to ask questions for transparency. And so if you go someplace and they say you're going to be making money based on your RVUs, then just ask, what's the average RVUs that physicians are doing? How does it vary by the site of service? How does it vary by the location of service? Are you going to be all of a sudden thrust into the hospital and now be paid based on your RVUs when you can't be as productive in an unproductive environment as say an outpatient endocenter? What is the dollar per RVU conversion? This is not uniform at any hospital system or any group. And so you'll hear horror stories of people saying, oh, they decreased my RVUs, dollar per RVU conversion every six months, and now I'm getting paid the same as an internal medicine doctor. So you have to really be mindful of these things. Payer mix is another thing. You might find out you're in the poorest part of town with everyone who's Medicare compared to the senior physicians who are all in the locations where all the Microsoft and Amazon employees work. So that will be something that you have to think about in terms of what your compensation would look like. Now for the excitement, RVUs, the relative value unit, how many people do their own billing now that they're in fellowship? No one? Let's see. Yeah. So when I went to third year, we had somebody in our department who had been in private practice their whole career and then retired to academics. And their first thing to us as soon as we became third years, they said, it's time to do the billing. And so you have to start learning about relative value units, CPT codes, ICD-10s, all really exciting things. But this is what's going to determine if you bill and get paid for what you actually did. Because insurance companies are not going to give you money and say that, you know, you didn't really bill completely for all the work that you did. We're going to make it up to you. They're going to say, you know, you didn't write down that you actually did that biopsy or you didn't code for the biopsy. So you have to make sure that you're getting compensated for the work that you do. So we just threw on some basic stuff from a Boston Scientific little handout that they always throw at you. I know ASG has one, too. I'm sorry I didn't use the brand recognition. But you just go through and you look. You have to bill for your CPT code for each procedure. And then you come over to the side and say, what's that work RV unit? And you see that there. And then the other things you can look at is, OK, now what's the site of service difference in terms of what you get paid? You can get paid two to three times more for the same thing if you're working in a hospital setting versus if you're working in an outpatient ASC. Are you getting paid two to three times more to work in a hospital-employed model? No. So that money is not necessarily flowing to you. When we look at the CPT codes, you have to understand what CPT codes pay more money and what your worth is. You know, I did ERCP. I thought I was really great that I was going to make more money for the group. And people laughed at me as soon as I showed up. And they said, I don't want you to be doing a lot of ERCPs. I'd rather you do two colonoscopies in the same time as you do that ERCP and you'll make more money. So we don't value you as an ERCP person in a business model necessarily. So you have to think about that. Just because you have a higher level of training and you do some advanced things, that necessarily isn't valued by everybody. The work is obviously very important, but you have to know your audience when you're coming into some of these locations. So practice settings, you know, we're trying to look at how coding and billing and RVUs work in different practice settings. We've talked about this before. I am not academic, so I'm not going to talk about that at all. I don't know what I'm talking about. And I say, please ask the people who actually know what they're talking about. I'm not hospital employed, but I've worked in a hospital-employed hospitalist model for internal medicine before I started. I'm married to someone who is an employed physician and hear all the horror stories. And luckily, she's on the compensation committee, so she knows what's going on. Traditional private practice, I was in before, so I know the ins and outs of that and now in a private equity model. So there's obviously variations throughout on where you get your money, how you get your money, how the billing works. So hospital-owned, we're just going to go a little bit into it. It's an employed model. It's always thought of as the high floor, low ceiling. You come in at a market salary. You're not paying your dues. You get paid a salary. So sometimes you can get, in a traditional contract, you can have either a salary guarantee forever and get paid that same salary moving forward. Obviously it's negotiable on every so many years, but most places are going to do a salary guarantee for a certain amount of time and then you're going to go on productivity. Be very careful of this because you have to know what that productivity model looks like and how you're going to get paid. Some people come to us and say, yeah, I took this job in rural Wyoming and it was really great because they said they'd pay me $750 and it was easy. And then I had my salary guarantee stop and I got paid in RVUs and now I'm making $250,000. And now I have to find a new place to live and I have to start all over again. So you have to be really mindful of all these specifics. How are you getting compensated once you go off a salary guarantee? What the productivity structure looks like? What the RVU averages are and how that would equate to a salary moving forward? And then what that dollar per RVU conversion factor is. Another thing that's important is who's doing your billing. This varies very much throughout different practice settings. I know places that they have note cards that they write down what they did and they give it to their office manager and their office manager does the billing. The office manager is not clinical, no idea what they're doing from a billing perspective and if they're capturing all that revenue. Some places have their own billing departments and they actually call you up and say, hey, you missed writing that you did a polypectomy or you'd missed that you did the biopsy over there. Can you please go back to your note and indentament so you get paid adequately? And so there's everything in between from that. At hospital settings, we've had a contract at hospital ask us to take EUSs out of the hospital because they were losing money. We started looking at why they were losing money and they were just doing the billing wrong and everything was getting downcoded. And so from that standpoint, you have to make sure, once again, you have to ensure that you're getting paid for the work that you're doing. Employee models, obviously there's no buy-in so you're not looking to having to save money as you go and say, okay, how do I work this into my budget? So like we talked about, there's pros and cons in each setting in the employment model from a salary perspective. A lot of people come out and say, hey, I just want a guarantee. I want the salary that I know I can budget, I can start my life, and that's great. It works for a lot of people. There's not as much upfront financial risk. Please know that there is more money going into the system that you're not seeing with HOPD rates and while HOPD rates are great, the question is, from a cons perspective, are those HOPD rates going to stay for things like colonoscopy that can be done in an ASC? There's a lot of push from a Washington, D.C., advocacy perspective that they're going to try to do site-neutral payments and is that HOPD rate going to be taken away and how is your hospital system then going to be able to compensate you moving forward? Are they going to still say your salary is guaranteed moving forward or is it going to be ratcheted down by the RVU conversion factor? Cons, we'll go for some more here. I have to read it because I don't remember my slides. Like we talked about before, that dollar per RVU can be adjusted every six to 12 months. You might hear people saying, oh, God, I'm waiting for the dollar to RVU to come out so I have to figure out if I need to work extra days to maintain my salary. For the most part, it stays pretty balanced, but you do have to watch out for certain systems that might try to be a little tricky, especially post-COVID when some places are trying to maximize all the income that they can. Traditional private practice, when I came out 15 years ago, there were a lot of groups that said, hey, we got this great job. It's going to be great for you long-term, but when you come out, we won't pay you that much because you got to pay your dues. You got to take more calls than everybody and you start off, but you're going to get that opportunity to buy in and then you'll really kill it in the future once you're a senior partner. That's why I call it the fair versus the pay your dues structure. There's a lot of change to really make sure that traditional private practice are giving salaries to associates that are meeting what the market rate is to be able to recruit better, but you're still going to get some places that are going to do that tiered structure. You have to decide what's right for you, especially if you're worried in this market is, is there any chance that I'm going to come in and pay my dues and then at year one and a half, this traditional private practice is going to sell to a hospital or they're going to sell to a PE-backed company. Am I going to feel like I've gotten left out from a financial standpoint on that? Every time you talk to somebody from a contractor, an associate, ask about bonus structure. Sometimes there is one, sometimes there's not. Sometimes they'll be willing to negotiate a bonus structure. The bonus structures can vary very much, but usually they're based on collections. They'll say, here's your salary, anything that you bill above that salary, you might be able to keep say 25% of it. If the going rate for a doc in your market is 400,000 and they say, we're only going to pay you three, but then it's based on bonuses, you have to make sure that one, can you actually achieve that bonus? Then two, is there going to be something in there that might prevent you from getting the bonus? If someone gets sick, are they going to pull you in to cover the hospital? Are they going to put you in a clinic that is in the worst payer mix? Ask these questions as you go, just so you know what you're getting yourself into. Bonus clawbacks is just one thing we'll talk about real briefly. There are some groups that will offer you bonuses to sign. They'll offer you relocation expenses. They'll offer you productivity expenses, but some of them have in the contract language that if you do leave for whatever reason, they have the option and the right to claw that money back. It's something obviously they're doing to protect themselves, so you don't say, I just moved here and got $25,000 and now I'm leaving two months into my contract, but still you have to understand that if you have a risk of doing something where you might have to move, you have a family obligation, that those bonus clawbacks might be there. Obviously time to partnership and buy-in structure is important. It's something to think about as soon as you're getting there as an associate if you're considering this a long-term fit because you don't want to come someplace, live there for two years, you get up for partnership, and then you start asking questions about the buy-in structure and you realize it's a $2 million buy-in and you don't have that kind of money. The more you know up front, the better. Usually it's two years to full partnership. Some groups don't have, when you buy-in, there's very much a tiered structure. You might be a partner, but you're a junior partner. You might not have voting rights. You might not be able to buy-in to all the ancillaries all at once. You might have to take 10 years to do it. That can really limit the amount of money you make if you don't have that ability to be able to buy-in to the ancillaries right off the bat. We talk about the ancillaries, what you need to know, obviously the ASC is the endocenter. Just because somebody has an endocenter does not mean it's the same thing. Obviously it can be physician-owned 100 percent, it can be physician-owned 51 percent, it can be a JV with a hospital, it can be a 49-51 split with a strategic, something like AmSurg, and so that really can change your earning potential from that endocenter and how you buy into it. Anesthesia services, pathology infusion, other things like research, they're all ancillary income streams that groups will have. How you buy into that, is it just all part of the group or do you have to buy-in to each individual component over time, really changes how you're going to look at what your income potential is for that first five to 10 years. So when we talk about partner income, most places are eat what you kill, and so it's just whatever you do, you get paid for the value of whatever that is. So is it RVU-based, which a lot of groups are, or is it based on the receipts? Some places will say, hey, we're trying to make sure that we have two different locations, like where I live, there's Pierce County and King County, King County and Pierce County have different payer mixes, and so we say, hey, to make it a little bit fair, do we go ahead and blend it, where we do 50 percent is based on your RVUs and 50 percent is on the income, so it makes it a little bit more equitable that you're not getting paid a lot more but doing less work just because you live in a better payer mix. Some groups will do it based on equal ownership, so you own five percent of the group, so whatever the money comes in, you see I'll get paid 5% of whatever that is. And then others will do it as a blend. So when I was originally in private practice, we all had ownership in the ancillaries. That came out to about 80% of what we made. And then the 20% was based on your productivity after that. So the bell curve was very narrow. And so if you wanted to, essentially, whatever you made more than your partner was just how much less vacation you were taking when it came down to it. So it just depends on what model works for you. Because some people say, hey, I want to make it based on RVUs, and I want to kill it. I'm going to work every day and never take vacation. They might not like the equal based on ownership model because they're working hard and they're not getting compensated extra for the time that they're putting in. So other things to think of, it's just kind of not just traditional of what you're taking home, but just what's the sophistication of the group. When we talk about who's doing your billing, what's your revenue cycle management team, how much are you actually collecting of those bills, your C-suite really does help in those type of things. You have to pay for that C-suite. But the question is, if you're very sophisticated in what you do, your days in AR go down a lot and your income streams go up. And so you have to manner that the whole idea of sophistication versus mom and pop really can make a difference on how much you make. We have some groups that we talk to. They're a six-stock group, and their billing department is the doctors, or their clinic manager, or some random woman that we don't even know where she came from. And you start looking at their financials, and it's very scary. And you say, OK, we can help you get better, but you've been leaving a lot of money on the table for a long time and not being compensated adequately. So some things that can change this, obviously, RCM, billing, really help. The other things that you might have to think about, what you're paying for and what your overall budget is, that might take away from some of your income are some of these other components that go into managing a practice. So it's just something to think about. Sometimes bigger is better, but it costs more. And the question is, are you taking home more because of the financial sophistication than another group that might be not as well? So once again, we'll just do pros, cons real quick. You might have a lower floor, higher ceiling long term and have ability to have ownership in a group. And be involved in the financials, which might be good for you if you're an entrepreneurial spirit and want to be involved in growing a practice. But from a cons perspective, there's some people who say, I don't like the fact that my income's not guaranteed. It was really bad in COVID when I had to show up to work as the hospital doc and knowing that I'm working for $0. And my clinic partners are at home, and they're not getting paid either, but they're not working. And so when your income's not guaranteed sometimes and you just don't know how things are going to go in the market, it's a little bit scary when you're out in your own business than when you have some of that support structure from a hospital. Once again, you're not HOPD rates, so you're getting paid half to a third of the same rate for the work you're doing as other locations. And things to think about. If you're going to own a practice, your costs are going up. The cost of labor is going up. Your reimbursements continue to go down. CMS is not throwing money at you and valuing what you're doing right now. We're advocating to try to get the doctor's fee schedules back up to where they need to be, but you're making, when you adjusted for inflation, our docs are making 25% less than they did 20 years ago when adjusted for inflation for the same level of service. Other things to be concerned about. You haven't even joined a practice yet. How is consolidation going to affect me? Do I have, is there a large group, something evil like us, lurking in the distance? Or is there a hospital system there? And am I going to be running the risk of consolidation and losing out if I come in as an associate and then all of a sudden feel like, you know, I didn't get what I deserved or what I needed? You know, I've had friends who've called me up who said I was up for partnership at a year and a half and they said, we're pushing it back six months. What does that mean? And I said, it means you're getting screwed and they're selling your practice. So ask somebody who you trust to tell you what's going on and then decide if you want to stay, if they're willing to make it whole or it's a good situation or get out now and start shopping around. So you have to be mindful of these things because, you know, before we joined the GI Alliance, every single fellow that came in said, I don't know what you guys are going to do and you're not going to tell me, so I'm just worried about joining. And I understand that. But, you know, like I said, you guys got to make sure you're in the right practice, you're looking at your financials and you got to make sure it's the right opportunity for you and you know where the money's going. So private equity, we talked about, a PE firm invests in a medical group. And what does that mean? It means they're buying a portion of the medical group. It means they're going to be taking a portion of whatever that is and put it in their pockets to invest in the long-term interest of the group. So sometimes people say, well, I don't understand it. We talked about it, the MSO, they form this medical service organization and so they're trying to increase their access to capital to grow the practice. What does that mean for you as a doc? Well, it means a lot of different things depending on the practice setting that you're in. A lot of you guys, I got to give you compliments, you've asked better questions than any other conference or group of people that I've been to about specifics about this model. So kudos for you, keep asking questions. But like I said before, there's a classic starting point when you look at the financials of a private equity group. The classic one is that the PE firm owns 51%, the medical doctors own 49%. You say, okay, that's similar to some JVs that groups do with hospital systems. It's similar to what some groups do in their endocenters with strategic partners like Physicians Endoscopy and AmSurg. And so that doesn't seem like a weird concept or anything in terms of a business model. However, it's what happens next is what you have to see how that's going to affect your salaries moving forward. So after the classic starting point, the question is, where does the equity get diluted? If you're a physician and you own 49%, that's great. But if every time a new practice joins or you hire a new partner, they're just buying some of the equity from you and the investment firm stays at 51%. Yes, the docs stay at 49, but the individual docs, equity might go down and down and down. Or in some situations, the equity firms start having their, the PE firms have their equity going up as yours goes down, depending on how the structure is. So you have to really ask questions about equity dilution because it can mean that when the next time that there's an equity event, if the docs only own 12% of the group, you might get a Starbucks gift card when they sell the group and the equity firm gets a lot of money. So from an associate standpoint, the good thing is from our standpoint, we said, hey, I live in Bellevue, Washington. It's the home of Amazon headquarters two, it's Microsoft. I'm the poor doctor couple in the neighborhood that they use as an example of like, when their kids say, how can you take us out on the boat, daddy? And they say, well, about everyone has boats. And they say, all my friends do. And they say, the Catholics don't have a boat. And so, you know, it's, so we realize it's hard to, it's hard to recruit necessarily into some of these areas and have lower salaries that aren't market. So we said, hey, this is an opportunity to restructure how we're looking at taking care of our new people coming in and saying, hey, we need to have a higher floor. We need to guarantee that salary. It needs to be market rate. We need to make sure that we are upfront about bonuses and the time to partnership is a reasonable amount. And it's something that's defined and structured. But from a buy-in structure, the partnership track, things can change and vary based on the MSO and whether or not the ASCs, the endocenters are owned by the company, by the MSO, or if they're owned by the individual groups. So sometimes you're gonna come into a situation where with my practice, we don't have a buy-in to the endocenter. You would get receipts from the endocenter as a partner, but you don't have to have an extra buy-in. Some groups decided they wanted to keep their ownership in their endocenter and they might still say, hey, you still need to pay a $1 million buy-in to get into our endocenter and you still have a buy-in for the MSO. It just varies. And so that's some questions that you're gonna have to ask. The productivity, like we talked about before, as a partner, is all gonna be variable, just like we talked about. Is it RVU base? Is it a blended rate? Is it gonna be receipts? And then you have to know something about the remittance and the management fee. And this is really big because some places can have a remittance of 20%. Some can have a remittance of 40%. Most are gonna be around 30% of the income you take home is gonna go to the corporation with the goal of taking that money to invest in your local structure. So do you wanna build a new endocenter someplace? It doesn't come out of your salary. It's part of that money that went to corporate. Do you wanna bring in a new service line? Do you need to put infusion into a location that doesn't have infusion currently? That's where the money comes from. They don't say, okay, you were making 600,000, but we had to build that new endocenter and take a $5 million loan, so now you're making 300,000. So it's kind of the kitty that is used for growth and innovation. One thing about talking about management fees, if your group is not growing and you're a 100-doc private equity group and you two years later are 110-doc private equity group, your management fee is probably going up a lot. There are some that are paying management fees of $250,000 a doc. And so we talk about not all private equity groups are the same and the devil's in the details. And you do have to ask these questions. If you take out a partner to a restaurant or get a drink at a bar, two drinks in, they're probably gonna tell you what's really going on. And so you know that you are, what you're getting into. And so it's amazing the number of people that call me up and say, hey, I'm in this other group and I don't wanna be in it anymore. How do I get into your group or how do I get a job in a different market? So I've been, unfortunately I've become a broker for people to get into other things and I don't get a finder fee, so. So more about partnership. Like I said, the equity for the most part is provided to you at the time of partnership. In our group, we have, you get paid $350,000. We can't give you a gift of equity, but we can say, hey, we're gonna pay you $350,000 of extra salary, which the goal is to then for have you to pay taxes and then the government takes its cut and then you put that $250,000 into equity and that is yours at the time that you become a partner. We also give the opportunity for you to buy additional equity, but you don't have to. And so some people say, I like this blended formula because now I might wanna buy a house. I don't really think I have $250,000 floating around and I like the fact that I might have a year or two that I can buy this or in the future, I can buy more equity as we go. It's a lot better than some groups who say, I don't know why I can't recruit anybody and I say, what's your buy-in? They say, oh, it's $2 million. And so a lot of people these days say, why am I paying $2 million to you for fixed assets that isn't gonna grow in value when I can put $2 million in the S&P and make 5% to 8% depending on the climate and get more money out of it. So we took a page out of Amazon and we listen to all their employees who say, I make $160,000 and then everything is stock options and we're all trying to make the company more valuable so our stock options are worth more so we can intermittently decide if we wanna buy and sell every quarter. And so we think of that same kind of model where we're all trying to say, how do we invest in ourselves and grow the practice and try to make your equity more valuable rather than just have fixed assets that are kind of held and ransomed for the life of your employment and partnership in the group. Equity evaluation is important because if you don't know what the value of it is, then what is it worth? Some places will say, oh, we're just gonna value it every four to five years whenever we sell and other places like our group says we're gonna value it every year so you know what you're doing. Last year, it went up 18%. That creates some good sentiment that we're doing the right thing and you should keep doing the right thing to grow the value of the equity and that it's actually worth something. When you sell equity, like we said before, if you become a partner, you get $250,000. Yes, that's yours, but we're not just gonna give it to you so you can say one day later, well, I decided I wanted to move, but thank you for the $250,000. I'm gonna take that home with me. There's always usually a vesting structure that within a five-year period, that money will be yours just like in a retirement account. It's not yours from day one. You have to prove that you're willing to stay and invest usually over a period of time. So equity, private equity pros, like we said, the higher floor now, the higher ceiling, which is based on whether or not the equity grows and like I said before, cons, does the equity get diluted? In our group, the physicians have said, hey, we wanna maintain the equity so we went from originally 49% physician-owned when GI Alliance first started and now it's up to 90% physician-owned where the private equity group is only a 10% minority partner. But other groups have anywhere from 12% physician-owned to 49% physician-owned. So it's different and you gotta ask those questions about where's my money going? Equity growth, like I said, if your group is not growing, then your equity is probably not growing either. You're usually in those situations, your debt's growing and at the time that there is an equity event, someone's gotta pay off the debt, usually it's the doctors. So you make sure you're, like I said, asking the right questions. Government regulation is huge. If you live in the state of Oregon or Michigan or Washington or California or any blue state for that matter, you'll see that there's a lot of people out there and a lot of AGs who think that any type of consolidation, any type of private equity is this evil thing that's restricting our access to care. It's restricting, it's causing increased costs, it's making quality worse. They're not basing it on any real world things, it's just a hot button topic that keeps people in office. So you have to realize that depending on what state you're going to, there might be some increased government regulations that you need to be aware of. Ask those questions. I'm the chair of health policy for the Digestive Health Physicians Association, our national GI advocacy group for independent practices. I didn't go to school to learn this, but unfortunately you have to learn it as someone in business. But the more you ask and the more you start understanding what's going on in the financial climate of government, the better. Retirement, like I said, I'm not gonna talk too much about, just the more you can just ask if your company has the following retirement plans. Make sure you put the money in and max it out as early as possible. We already talked about some of those things. 401k, profit sharing, cash balance plans are all things that groups can have. They don't necessarily have all of them, but usually any private practice or other group would have a 401k and a profit sharing that should be available to you. All right. And if you have any questions about CPT codes, we do have some handouts if you want to see kind of some of the complexities up at the booth. So you can always come by and stop by and talk about really exciting CPT and RVU structures.

financial planning

retirement accounts

RVUs

physician compensation

contract negotiation

CPT codes

practice settings