Adding Fluoro Suite in Office - pay structure question

[TheGreatestTrochanter]

Hi All,
I'm a PM&R Sports Medicine physician who did a fair amount of spine training in residency and fellowship. I work in an small (~8 doctor) ortho/sports group, mostly primary care sports, 2 surgeons. I predominantly do sports med, but am about 50% spine, doing ESIs and RFA (axial and joint). Up to this point I have been doing this in a hospital or ASC setting, as I added this to our practice and no spine care was established and we had no C-arm. Two years in we are looking to develop and add a fluoro procedure suite to the office. The question has come up about who should pay for this development and how it should impact my pay.

Currently I take home a monthly % collections. I am not a partner. The owners are proposing that with the additional money I will make from the higher in-office reimbursement, my pay structure should change. They are wanting to treat it almost like an ASC that myself or other docs in the group could contribute to paying for and then keep a certain percentage of the addition money I will bring in from these procedures. None of them do spine procedures. This seems odd. My thought is either I pay for the c-arm and collect a higher percentage than I normally do as I own part of the machine, or the practice pays for it, and I keep the same payment model since I am still paying a percentage of overhead on the additional money. Correct me if I am thinking about this incorrectly. Not sure why they should personally make money from my procedures.

Have any of you been part of a small group when they added a c arm, and how did you handle that financially?

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[RoloTomassi]

Practice should pay for it, your %collections stays the same per your contract. They reserve the right to not want to pay for it if the ROI doesn't make sense to them, if your volume is not enough. And you can leave if you don't like that.

 

[callmeanesthesia]

I guess that depends on how the group usually shares overhead. The group shares the cost of the c-arm and procedure suite, but I also pay a share of things like cast techs and casting supplies.

If you’re moving most of your procedures from a group-owned ASC, they will actually make less money off of your injections. However, that’s not your problem if you’re not a partner. Since you’re paid percent collections, it makes far and away more sense to do in office procedures.

 

[runfastnow]

Extremely similar situation to you - went through the process ~18 months ago as I was to busy for my block time at ASC.

We converted some unused clinic space into a fluoro suite. Cost ~$100k for construction and equipment. Practice looked at it as an opportunity for growth and offering more options for our patients to do procedures sooner, cheaper (since there is not a facility fee), and faster (no hour of paperwork and shuffling around waiting areas like the ASC). Two lead partners did not specifically put the cost of set up on me to pay for alone. However, I am responsible for ongoing costs - C-arm lease to own, supplies, rent lost from prior tenant of the space, etc.. It took 3-6 months to work out the kinks and convince patients to let go of the excessive hand holding done at the ASC but now is making a solid profit (and I collect a lot more on the pro fee side). My overhead for salary/bonus did not change.

The largest expense I have to cover is the rent for the space. If you do not have that to worry about you will pay off any construction/equipment costs very quickly and will become profitable assuming you're doing at least 12 injections a week in office.

Caveats - we do not do any IV sedation or cervical injections in office (never will due to staff issues). We also did not buy an RF machine as so many of my patients demand IV sedation for RFs. Trying to change this but without much success. My split now is 20% ASC / 80% in office for fluoro injections.

Also echo the ASC ownership concern - if your ortho group owns the ASC they will likely lose money moving majority of injections in office.

 

[jsaul]

The direct costs of equipment will fall on you
It won't and should not be a shared overhead expense. Pay for the equipment and the space and then you can continue with your same revenue model of percentage of collections

 

[callmeanesthesia]

The direct costs of equipment will fall on you
It won't and should not be a shared overhead expense. Pay for the equipment and the space and then you can continue with your same revenue model of percentage of collections

Why should all the direct costs of equipment fall on an employee who will not receive the full profit of the change?

My group shares most overhead even when used by only some doctors, with a “you win some, you lose some” attitude. We looked at splitting a bunch of it out by usage a couple years ago and it came down to +/- a few thousand a month net change, with a bunch of extra admin work, and potential for gaming the system by changing utilization and patterns of services.

 

[jsaul]

Because buying a c arm and pain table and getting a procedure room is not the same as sharing supplies. None of the other docs will use it. It will only benefit the pain doctor so why would the others front that cost.

 

[Asclepius186]

Some of these items and the facility improvements will belong to the group even if the interventional physician leaves or dies. They could theoretically bring in another doctor to take his place. Thus it’s reasonable for group to share some of the startup costs on the capital improvements.

Direct recurring costs should be allocated directly. That is why the facility fee is essentially bundled on the payment for clinic based injections

 

[drusso]

How a group allocates overhead is discretionary. You can all agree to do it any way you want.

Why don't you propose this: You will start your own LLC and finance and buy all the equipment. You'll take all the risk. You will lease the equipment back to the practice for an agreed amount. When the equipment is paid off, the group can purchase the depreciated equipment at "book value."

Because YOU'RE taking all the risk, you need a little premium...you got to get some vig on the deal, some spit on the ball, a little juice on the action until the equipment is paid off. So, give them a choice--completely up to them--you can keep your full pro fees from the work you do with your own hands in the procedure room, or you can charge them a little extra rent on the equipment.

People love choices. Let them choose.

 

[TheGreatestTrochanter]

Lots of great input, thanks for all of your perspectives. Looks like there are plenty of ways to frame this. drusso I love your idea, and think I may propose this to them. Thanks!

 

[nvrsumr]

Keeping ur entire fee is gonna pencil out as more $ for u than having them rent the equipment back.

U could buy all equipment pay group a nominal rent for space and still be ahead

@drusso is right that giving the illusion of options greases the wheels but u want the entire pro fee.

I have had several unsolicited offers to rent my procedure room over the years and the $ was never worth the hassle