How does ownership / partnership track work?

[deleted725838]

I'm hearing about job opportunities, and starting to dip my toe in the recruiting process. I don't understand what it means when I hear "two years at XXX, and then opportunity to become partner."

My understanding is I get a share of the profit generated each year. Is this like stocks, where I would have to buy shares? Does the amount I work affect the dividend at the end of the year? i.e can I go 0.8 and still get it, what happens if I leave the position?

I was hoping to get some of the nitty gritty details at the places you work. Is this an extra 10k on your salary, or a 100k. What questions should I ask, and what things should I be wary of?

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[Groove]

If it's a reputable SDG, and you both have mutual interest in partnership, they should be willing to be transparent with the books to give you the information about average profit distribution upon making partner. Average annual salary for partners, etc..

It's not that partnership tracks are unfair, but you really just have to be careful as there are a lot of predatory groups out there. How many docs have started partnership track and not made partner in the past 5 years? Stability of the contract? (Have they been there 3-5 years or 20?) How much sweat equity in the partnership track? Are you sacrificing 15-20% of your salary or 50%? If it's the latter, and you do the math, it can sometimes take you many years to break even after your initial investment (up to 6-8 years sometimes) at which point the real risk is having the assurances that the contract will remain stable for almost a decade before you can recoup your initial losses and in today's era of private equity run groups and hostile takeovers, it's difficult to guarantee 6-10 years of contract stability...but not impossible.

Make sure it's ownership of the group as in true equity and not a contractor for an LLC/PA where the business entity is owned by a singular individual who simply pays the docs based on revenue and the profit sharing is taken from the docs on the partnership track and/or calculated from production incentives. It's not that the latter is always a terrible business structure (depending on whether the owner is skimming off the top and being transparent with the books) but just keep in mind that you won't "own" anything after making "partner". You'll probably just have some voting rights in the group along with access to full pay with profit sharing, etc.. I considered a job one time from a guy selling the gig as "partnership track" with "equity" and it was a Ponzi scheme like my latter example. He was very shady and wouldn't answer all my questions and I had to be very direct which revealed it was nothing more than a sweat equity track for the "opportunity" to work for him with some trivial voting rights and owning nothing. I ran away from that one as fast as I could.

I would only consider a partnership track for an SDG if you are dead set on the area and confident you will be happy in the hospital system. That's a long term commitment.

I'll let some others chime in. We've had a few threads on this topic but I can't remember where they are located.

I'm naturally a little bit leery of SDG partnership tracks but that's probably because I've never really found a good one. I found one...with an almost barely tolerable 2 year track in CO only to find out they sold out to USACS about a month away from when I would have made partner...had I taken the job.

 

[Dr Mantis Toboggan]

I'm hearing about job opportunities, and starting to dip my toe in the recruiting process. I don't understand what it means when I hear "two years at XXX, and then opportunity to become partner."

My understanding is I get a share of the profit generated each year. Is this like stocks, where I would have to buy shares? Does the amount I work affect the dividend at the end of the year? i.e can I go 0.8 and still get it, what happens if I leave the position?

I was hoping to get some of the nitty gritty details at the places you work. Is this an extra 10k on your salary, or a 100k. What questions should I ask, and what things should I be wary of?

It just depends on how the group is structured. Basically you are guaranteed a wage for the first 2 years, likely just per hour without benefits. Assuming you are voted in a as a partner/owner you then get to partake in whatever is left after paying the contractors and expenses. Different groups split it differently (RVU based, eat what you kill, profits divided based on hours worked etc).

It’s fine to ask what the profit sharing model is and you should get a ballpark idea of what to expect.

For me I ended up with on average $75-100 hour more after I moved from contractor to owner depending on the year (became partner in 2016). This year that delta will be less most likely given the nursing shortage and resultant inability to move much volume these days.

 

[RustedFox]

Buyer beware. But here is my n=1.

The only SDG in my area was straight dishonest about their predatory practices.
I knew an uncomfortable number of docs who "used to work at *Nonspecific Medical Center Hospital*" and didn't make partner; and they told me of the nonsense.

One day, I interviewed with them. How this interview happened is a different story. Lets just say I'm a sociable person.
I said, right there, in the interview - "Hey, what happened to Doctor Stacie? - I know she was here for a bit. Is she still here?"

"Uhhnhh, uhm *stammer* Doctor... Stacie.... sheee..... wanted to "go sow her wild oats and work locums" before... umm.... errr.... settling down to have a family... Yeah, that was it."

The look that I shot them was telling. I didn't have to say it.

"So, you didn't make Doctor Stacie work eleventeen nightshifts in a row, and on her first night off, which she had requested, your "partner" called off and you called Doctor Stacie to tell her that she had to come in, or else?"

Yeah, no way was I doing that nonsense for 150 an hour for 2 years, only to be told that I didn't make partner.

 

[sloh]

Buyer beware. But here is my n=1.

The only SDG in my area was straight dishonest about their predatory practices.
I knew an uncomfortable number of docs who "used to work at *Nonspecific Medical Center Hospital*" and didn't make partner; and they told me of the nonsense.

One day, I interviewed with them. How this interview happened is a different story. Lets just say I'm a sociable person.
I said, right there, in the interview - "Hey, what happened to Doctor Stacie? - I know she was here for a bit. Is she still here?"

"Uhhnhh, uhm *stammer* Doctor... Stacie.... sheee..... wanted to "go sow her wild oats and work locums" before... umm.... errr.... settling down to have a family... Yeah, that was it."

The look that I shot them was telling. I didn't have to say it.

"So, you didn't make Doctor Stacie work eleventeen nightshifts in a row, and on her first night off, which she had requested, your "partner" called off and you called Doctor Stacie to tell her that she had to come in, or else?"

Yeah, no way was I doing that nonsense for 150 an hour for 2 years, only to be told that I didn't make partner.

Should always ask for contact information of physicians who left the job

 

[emergentmd]

If you can ever find a group where owners are docs, give you immediate stock options, then u need to jump immediately!!!!!

 

[maxxor]

Should always ask for contact information of physicians who left the job

People straight up lie in my experience. I had a radiology practice say “we have really low turnover. Only 1 person has left”. In reality, at least 8 people had churned through the place.

If they have a practice website, check out archived versions of it on archive.org and see who’s no longer there compared to the present day.

 

[Dred Pirate]

at my place - you have two shifts a month as sweat equity. You get paid a salary for 14 shifts, 2 are your donations to make partner after two years. We have such a low turnover rate that in my 15 years (I am not a doc, I just am good friends with our docs) I have seen exactly 4 docs leave that weren't retirements. one was asked to leave (he was a partner) and 2 were at the tail end of their careers and wanted a glide path to an easy cake non patient care job.

I think every doc they hired made partner, obviously I am guessing this is not the norm. During COVID/2020 the salary docs made more than the partners, but that is the exception. I don't know the actual salary, but I have heard virtually every doc tell me they couldn't imagine being at a better place.

 

[maxxor]

at my place - you have two shifts a month as sweat equity. You get paid a salary for 14 shifts, 2 are your donations to make partner after two years. We have such a low turnover rate that in my 15 years (I am not a doc, I just am good friends with our docs) I ahve seen exactly 4 docs leave that weren't retirements. one was asked to leave (he was a partner) and 2 were at the tail end of their careers and wanted a glide path to an easy cake non patient care job.

I think every doc they hired made partner, obviously I am guessing this is not the norm. During COVID/2020 the salary docs made more than the partners, but that is the exception. I don't know the actual salary, but I have heard virtually every doc tell me they couldn't imagine being at a better place.

This is so unbelievably wholesome I can’t believe it’s real.

 

[Dred Pirate]

This is so unbelievably wholesome I can’t believe it’s real.

haha - I have no ulterior motive, doesn't affect me one bit. Exact quote from two docs "This is literally the best ED job in the country".

Like everywhere, we are far from perfect and dealing with our messes, but our payer mix I think keeps things reasonable. I have been told they docs could make more money elsewhere, but it is not worth it.

 

[EctopicFetus]

To the OP if it is USACS run.

 

[EctopicFetus]

If it's a reputable SDG, and you both have mutual interest in partnership, they should be willing to be transparent with the books to give you the information about average profit distribution upon making partner. Average annual salary for partners, etc..

It's not that partnership tracks are unfair, but you really just have to be careful as there are a lot of predatory groups out there. How many docs have started partnership track and not made partner in the past 5 years? Stability of the contract? (Have they been there 3-5 years or 20?) How much sweat equity in the partnership track? Are you sacrificing 15-20% of your salary or 50%? If it's the latter, and you do the math, it can sometimes take you many years to break even after your initial investment (up to 6-8 years sometimes) at which point the real risk is having the assurances that the contract will remain stable for almost a decade before you can recoup your initial losses and in today's era of private equity run groups and hostile takeovers, it's difficult to guarantee 6-10 years of contract stability...but not impossible.

Make sure it's ownership of the group as in true equity and not a contractor for an LLC/PA where the business entity is owned by a singular individual who simply pays the docs based on revenue and the profit sharing is taken from the docs on the partnership track and/or calculated from production incentives. It's not that the latter is always a terrible business structure (depending on whether the owner is skimming off the top and being transparent with the books) but just keep in mind that you won't "own" anything after making "partner". You'll probably just have some voting rights in the group along with access to full pay with profit sharing, etc.. I considered a job one time from a guy selling the gig as "partnership track" with "equity" and it was a Ponzi scheme like my latter example. He was very shady and wouldn't answer all my questions and I had to be very direct which revealed it was nothing more than a sweat equity track for the "opportunity" to work for him with some trivial voting rights and owning nothing. I ran away from that one as fast as I could.

I would only consider a partnership track for an SDG if you are dead set on the area and confident you will be happy in the hospital system. That's a long term commitment.

I'll let some others chime in. We've had a few threads on this topic but I can't remember where they are located.

I'm naturally a little bit leery of SDG partnership tracks but that's probably because I've never really found a good one. I found one...with an almost barely tolerable 2 year track in CO only to find out they sold out to USACS about a month away from when I would have made partner...had I taken the job.

I’ll give some slight amendments. As a partner everything including everyone’s salary and sources as it relates to the practice should be transparent to all. If that’s not true then there is a problem. My group has always paid more to the associates on the partnership track than anyone could make elsewhere in town. The rest of the buyer beware stuff is right. I’ll also say if they want u to write a check for 10k or more they are business idiots.
i think most of the m&a in EM is cooling fast since these guys are drowning in debt. That being said that’s a real major risk. Ask what guarantees there are if the group sells before u make partner.

 

[turkeyjerky]

A partnership tract is essentially a predefined period of time in which you work as an employee of a group, before being given the opportunity in which to become an owner of said group.

The exact structure and nature of each group's tract vary tremendously. Some require an actual monetary buy-in at the end, some do not. All are exploitative to some degree.

(As above, there are many dirty players out there who advertise some variety of pseudo-partnership in order to entice people. Be aware of those, but know that these shady small groups are not what we are referring to as SDGs. Be wary of any job posting that reads "physician led independant group" or something along those lines. That's not a small democratic group, that's a dude who owns one or more hospital contracts and makes money off the other docs).

It's difficult to get into the nitty-gritty details on actual $comp, since you're not comparing apples to apples, even though you think you would be. Are you paid W2 w/ benefits vs 1099 w/o, and some small groups will pay a low hourly in order to make up for tax avoidance strategies (401k, DBP, paid medical, etc).

For instance here are a few "hypotheticals":
group A pays 215/hr as a 1099 w/ a 2 year partnership tract
group B pays 200/hr + RVU bonus as a W2 w/ a 2 year partnership tract, followed by a graduated 2 year monetary buy in (20k every six months) to become a full shareholder. RVU bonus and retirement contributions kick in after 1 year.
group C pays 150/hr W2 w/ a 30k sign on bonus. 1 year partnership tract. 100k monetary buy-in (can be paid over 5 years). Heavy tax avoidance mechanisms employed.

Who the hell knows which one of those pays the best, or what the actual buy-in is?

There are a few basic generalities:
--Partners generally make substantially more than pre-partners. Doubt there are any where it's less than 100k/yr and most much more.
--most groups pay out profit sharing or bonus w/ some regard to productivity (or, the base hourly is productivity based and the profit is equally split) prorated onto an hourly basis.
--most groups have a certain minimum hours/mo (ours is 108 averaged over a year, plus the option to take a sabbatical month each year). If you go below that, you might lose your profit sharing or go back down to prepartner hourly pay, or something else. We have a few partners who went down to part-time and became nocturnists in exchange.

 

[turkeyjerky]

FWIW, I'm currently in a partner-tract position. I took a pay cut of 250k over 2 years compared to what I was making immediately prior.

 

[EctopicFetus]

FWIW, I'm currently in a partner-tract position. I took a pay cut of 250k over 2 years compared to what I was making immediately prior.

Fwiw my old group which went to 💩 (aka is now envision) my buy in was about $2m. (No typo). All sweat no actual dough. I also think it’s important to define the buy in. My number above is what I would have gotten paid if I was paid as a partner. I think a better measure is opportunity cost. In other words your pay at the partnership track vs another job you could have taken (ideally same city/region).

 

[EctopicFetus]

Fwiw my old group which went to 💩 (aka is now envision) my buy in was about $2m. (No typo). All sweat no actual dough. I also think it’s important to define the buy in. My number above is what I would have gotten paid if I was paid as a partner. I think a better measure is opportunity cost. In other words your pay at the partnership track vs another job you could have taken (ideally same city/region).

Just cause I like examples. Let’s say the SDG avg is $500/hr and they pay you 200/hr. If the CMG jobs are also $200/hr then you have no risk. If you have to work 1500 hours a year you of course could say your buy in is 450k per year.

 

[turkeyjerky]

Fwiw my old group which went to 💩 (aka is now envision) my buy in was about $2m. (No typo). All sweat no actual dough. I also think it’s important to define the buy in. My number above is what I would have gotten paid if I was paid as a partner. I think a better measure is opportunity cost. In other words your pay at the partnership track vs another job you could have taken (ideally same city/region).

5 year tract w/ partners making 250/hr more than prepartners?

 

[EctopicFetus]

5 year tract w/ partners making 250/hr more than prepartners?

Was more graded year 1 was like $350/hr more and slowly worked its way down. I also worked a lot.

 

[deleted725838]

Fwiw ...... my buy in was about $2m.

I need to ask a follow up here. How does that work?

This idea of a sweat equity buy in. If:
Dr. Jane gets $500/ hr as a partner, and Dr. Joe gets $200/ hr as a pre-partner. Is that difference essentially his 'buy in'. But to get to 2M it takes a LOT of hours.

 

[deleted725838]

Thank you for the responses, it just gives me some things to think about moving forward.

 

[maxxor]

I need to ask a follow up here. How does that work?

This idea of a sweat equity buy in. If:
Dr. Jane gets $500/ hr as a partner, and Dr. Joe gets $200/ hr as a pre-partner. Is that difference essentially his 'buy in'. But to get to 2M it takes a LOT of hours.

I mean, or you can look at it as yearly comp associate track vs partners for those years right?

(Rads but same idea)

Practice I was in paid X for 4 years for the associate years
Partners got 3-3.5X.

Over 4 years, they are making 8-10X more than you did (4X vs 12 - 14X). That's your sweat equity, not even including having less vacation, working worse shifts, etc.

 

[EctopicFetus]

I need to ask a follow up here. How does that work?

This idea of a sweat equity buy in. If:
Dr. Jane gets $500/ hr as a partner, and Dr. Joe gets $200/ hr as a pre-partner. Is that difference essentially his 'buy in'. But to get to 2M it takes a LOT of hours.

Yep and yep. Lots of hours. Insanely low pay for a few years.

 

[emergentmd]

I think the 2M "lost" is all relative. If Dr. Partner makes $500 and Dr Ecotpic makes $200 then yes, he is not make the extra $300/hr. But if the market rate for the other places in town are $225/hr, then in reality Dr. Ectopic is only losing out on $25/hr assuming this is hwere he wants to stay. Now if he could have taken another Job at $300/hr but thought partnership was a good risk, then he did lose out on $100/hr but that is the risk he was willing to take. Roll the dice, knew what could happen, and just went snake eyes.

 

[EctopicFetus]

I think the 2M "lost" is all relative. If Dr. Partner makes $500 and Dr Ecotpic makes $200 then yes, he is not make the extra $300/hr. But if the market rate for the other places in town are $225/hr, then in reality Dr. Ectopic is only losing out on $25/hr assuming this is hwere he wants to stay. Now if he could have taken another Job at $300/hr but thought partnership was a good risk, then he did lose out on $100/hr but that is the risk he was willing to take. Roll the dice, knew what could happen, and just went snake eyes.

Exactly as I mentioned above. my $2m was what I earned vs what the partners were making. my buy in was probably closer to 750k. Never have I calculated that to be fair.

 

[lp430]

At the risk of making this another Colorado bashing thread, recently talked with a recruiter for an SDG in Denver and they wanted me to do $100/hr for 3 years before I would get back to what I make now by working out of state. Glad I learned that before I wasted my time interviewing, but really disheartening about the landscape. I know these are hard to find, but damn.....

 

[Torsion]

What I'm interested to know is how people are able to pay for partnership buy-ins. Many groups factor accounts receivable into buy -ins, which in a profitable group is a significant sum. I assume newer attendings a few years out of training don't have several 100k lying around to buy into a practice. What kind of loan rates have people been able to get?

 

[Calizboosted76]

haha - I have no ulterior motive, doesn't affect me one bit. Exact quote from two docs "This is literally the best ED job in the country".

Like everywhere, we are far from perfect and dealing with our messes, but our payer mix I think keeps things reasonable. I have been told they docs could make more money elsewhere, but it is not worth it.

Sounds like we worked at the same or very similar ED'S haha

 

[EctopicFetus]

Many buy ins are sweat equity. My current group no one puts forth any money. Same with my last SDG. The ones where u actually pay money into a group in EM are idiotic And that’s me being nice with my words.

 

[Arch Guillotti]

What I'm interested to know is how people are able to pay for partnership buy-ins. Many groups factor accounts receivable into buy -ins, which in a profitable group is a significant sum. I assume newer attendings a few years out of training don't have several 100k lying around to buy into a practice. What kind of loan rates have people been able to get?

You are a drone and get a salary for a while while the fat cats profit from your slave labor. Then you become a fat cat and do it to the next guy.

 

[EctopicFetus]

You are a drone and get a salary for a while while the fat cats profit from your slave labor. Then you become a fat cat and do it to the next guy.

Depends on the setup. Also, ill point out if you work for a CMG you are a drone forever, never profiting.