I'm curious about the typical wording for bonus structures in ophthalmology contracts. Is it normal for the bonus to be calculated at the end of the calendar year? If you start in the middle of the year, it doesn't seem possible to earn a bonus until 1.5 years after starting. I dont think there is any way that people get over 3x base salary by 6 months in, right? Ouff..wishing we were taught a bit more about business of ophthalmology in residency!
Bonus Structure question
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Bonuses are normally based on yearly numbers with distribution on a pro-rated basis with distribution on a quarterly or biannually, depending upon the agreement.
In your example....if your breakeven threshold is at 3x your base, at six months you would need to collect just 1.5x your base in order to generate a bonus.
First year of practice, many times your bonus will not be what you will achieve long term in the future. Those first couple months that you begin working, you will not have any collections coming in. Whereas Day 1 of Year 2, you will have collections coming in. You should make a bonus if all goes according to plan, but certainly will not be an accurate picture of your long term income potential. Make sense?
In your example....if your breakeven threshold is at 3x your base, at six months you would need to collect just 1.5x your base in order to generate a bonus.
First year of practice, many times your bonus will not be what you will achieve long term in the future. Those first couple months that you begin working, you will not have any collections coming in. Whereas Day 1 of Year 2, you will have collections coming in. You should make a bonus if all goes according to plan, but certainly will not be an accurate picture of your long term income potential. Make sense?
You could probably just tell them to add in those stipulations. e.g. "Paid on a pro-rated basis if the time of measurement is less than 1 year"... and "paid out on a semi-annual basis". You want to stay motivated, and being paid out multiple times per year is much better than just annually.
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Have it spelled out....just in case something goes wrong.
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Before you think that the owner is actually going to pay you what is yours read this thread:
medical practice reimbursement issues - Bogleheads.org
Granted, there are many (if not most, I’d like to say) owners that are honest, want their junior associate to succeed, and will play fair with you. But unfortunately there are some that aren’t. Yes I personally know of multiple people who had games played with them regarding their bonus or compensation. If you’re in that situation, start your own gig, go solo.
Here’s my post in the above thread:
to answer the original poster's question, there are SO many ways a practice owner can screw over an associate on bonus based on percent of collections;
1. Accidentally by poor collections practice- not collecting patient responsibilites at time of service, inappropriate or missed coding/ accidental downcoding, forgetting to put in certain CPT codes for procedures.
2. Using a billing company that doesn't follow through with collections.
3. Maliciously- cooking the books. Shifting accounts they collected for patients you saw to their patients and claiming that they didn't collect anything for patients you saw.
4. Dumping patients with lower paying insurances to you, and keeping patients with higher reimbursement for themselves.
Possible solutions:
1. If you like the practice and/or think it's 1 or 2, speak with the owner. perhaps ask to get paid by work RVUs as suggested.
2. If it's 3 or 4 lawyer up and do an audit, start looking for a new job, or both- consider going solo. My collections is typically 99.5% of allowed amounts- because I control the process.
medical practice reimbursement issues - Bogleheads.org
Granted, there are many (if not most, I’d like to say) owners that are honest, want their junior associate to succeed, and will play fair with you. But unfortunately there are some that aren’t. Yes I personally know of multiple people who had games played with them regarding their bonus or compensation. If you’re in that situation, start your own gig, go solo.
Here’s my post in the above thread:
to answer the original poster's question, there are SO many ways a practice owner can screw over an associate on bonus based on percent of collections;
1. Accidentally by poor collections practice- not collecting patient responsibilites at time of service, inappropriate or missed coding/ accidental downcoding, forgetting to put in certain CPT codes for procedures.
2. Using a billing company that doesn't follow through with collections.
3. Maliciously- cooking the books. Shifting accounts they collected for patients you saw to their patients and claiming that they didn't collect anything for patients you saw.
4. Dumping patients with lower paying insurances to you, and keeping patients with higher reimbursement for themselves.
Possible solutions:
1. If you like the practice and/or think it's 1 or 2, speak with the owner. perhaps ask to get paid by work RVUs as suggested.
2. If it's 3 or 4 lawyer up and do an audit, start looking for a new job, or both- consider going solo. My collections is typically 99.5% of allowed amounts- because I control the process.
Thank you @schistosomiasis, that was a really interesting read. Can I ask you how you learned what you needed to know re: collections / billing? Was it from real world experience, a book, an online course, or a combo? Thanks so much!
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When I first opened my practice I had absolutely no clue about coding or billing. Even if you hire a biller, do you think a high school grad biller is gonna properly code your oculoplastics or retinal surgeries? Nope, you gotta learn it yourself to maximize your revenue. I learned coding myself by reading books, asking questions of others (in addition to our blog we have a google group for solo ophthalmologists), and simply trial and error.
Same goes for billing. None of this is rocket science but it is time consuming at first- but quickly becomes second nature. Here's my post about the billing cycle and how I learned about it:
Revenue cycle and billing; why and how to keep billing in house
A bit off topic, but here's my post about why you should do your own bookkeeping. The points I am trying to make are that billing, accounting, credentialing etc are the low hanging fruit where the "experts" try to make it seem like an impossible task- but with a little bit of effort, you can save a TON of money and operate your practice much, much more efficiently than the big groups who hire knuckleheads who barely complete these tasks properly.
Should a solo doctor hire an accountant to do bookkeeping for the medical practice?
And before you laugh at me as a outlier, there are many, probably the majority, of our google group who keep billing, bookkeeping, etc in house. This doesn't mean you personally do it- you oversee it to make sure no one is screwing up, or screwing you over.
Same goes for billing. None of this is rocket science but it is time consuming at first- but quickly becomes second nature. Here's my post about the billing cycle and how I learned about it:
Revenue cycle and billing; why and how to keep billing in house
A bit off topic, but here's my post about why you should do your own bookkeeping. The points I am trying to make are that billing, accounting, credentialing etc are the low hanging fruit where the "experts" try to make it seem like an impossible task- but with a little bit of effort, you can save a TON of money and operate your practice much, much more efficiently than the big groups who hire knuckleheads who barely complete these tasks properly.
Should a solo doctor hire an accountant to do bookkeeping for the medical practice?
And before you laugh at me as a outlier, there are many, probably the majority, of our google group who keep billing, bookkeeping, etc in house. This doesn't mean you personally do it- you oversee it to make sure no one is screwing up, or screwing you over.
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I wrote a post about this here’s a excerpt:
If your base salary is $180,000 and your contract calls for a bonus of 30% of 2.75 times your base salary, then you need to generate about $500,000 in collections to get your bonus. The “typical” comprehensive ophthalmologist generates $800,000 to $850,000 in revenue. High end is $1.2 to $1.5 million in revenue.
Continued at: Bonus structures on physician associate employment contracts: pearls and pitfalls
By the way someone posted above it takes months for revenue to come in. This simply isn’t true at all; well over 90% of my payments come within one month. Medicare usually pays within two weeks.
And as a reference point when I worked for my big group bonuses were paid quarterly.
If your base salary is $180,000 and your contract calls for a bonus of 30% of 2.75 times your base salary, then you need to generate about $500,000 in collections to get your bonus. The “typical” comprehensive ophthalmologist generates $800,000 to $850,000 in revenue. High end is $1.2 to $1.5 million in revenue.
Continued at: Bonus structures on physician associate employment contracts: pearls and pitfalls
By the way someone posted above it takes months for revenue to come in. This simply isn’t true at all; well over 90% of my payments come within one month. Medicare usually pays within two weeks.
And as a reference point when I worked for my big group bonuses were paid quarterly.