MGMA Compensation/Collections Ratio Qs (data included)

[paintrain]

I am middle career, partner (=minimal profit sharing, bought some equity) at medium-sized private practice in MCOL/HCOL. I am on eat-what-you-kill model. Based on this chart, I am >90%-tile in both compensation and collections, although maybe more like >90%-tile comp, >99%-tile coll. When I look at this 2016 MGMA data, my compensation/collections ratio seems low. I am historically taking home ~40% of gross collections. This dataset says comp/coll ratios for 25%-tile/median/75%-tile for All Practice Types is 0.664/0.832/0.950. Seems very high, way higher than my 40%.

I have anecdotally heard 50% of collections is a decent takehome. But why are these MGMA ratios skewed so high? I can imagine scenarios where owners write off a lot of expenses so maybe their adjusted “collections” becomes very close to what they end up taking home. But they are high even in Hospital Owned practices, where I assume docs don’t have ability to write off much as W2. Also the Hospital Owned 75%-tile has a ratio of 1.135, which doesn’t make sense either. I only have this one picture I grabbed from a meeting years ago so no further explanations on the data. Maybe it means NET collections but then that doesn’t quite make sense for them to present data on NET collections since expenses vary so widely between practices, thus I would suspect anywhere they say “collections,” they are referring to GROSS. I have not seen any newer MGMA data that presents these ratios; if anyone has, please send. I have seen some that include wRVU collections but I’ve never worked on an RVU basis so don’t completely know how to interpret the data to get comp/coll ratios like this.

I am considering renegotiating and asking for 50-60% of gross collections based on this data but need to understand more. Are any employed (non-owners) really getting >60% of gross collections? If I go ask for 50-60% because I saw data that said median is taking home 70-90% of collections, I think I will get laughed out of the room. What would be the best way to negotiate this change pragmatically from a data standpoint (I have additional leverage tools to use but would like to present hard data that cannot be argued with).

(Mods: Please delete if not allowed and I will post in phys forum. But thought it would be useful for all).

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[cowboydoc]

MGMA is skewed strongly toward hospital-based practices, though there is representation from most practice types. Compensation > collections doesn’t work in the real world (in the long run, at least). Understand the hospital is also collecting a lot more facility fees and ancillaries off the physician effort but only “crediting” the physician with “physician fees” collections in that ratio. The small piece of the facility/ancillary that is credited to the physician pushes the compensation to a number greater than the “physician fee” collections.

 

[paintrain]

MGMA is skewed strongly toward hospital-based practices, though there is representation from most practice types. Compensation > collections doesn’t work in the real world (in the long run, at least). Understand the hospital is also collecting a lot more facility fees and ancillaries off the physician effort but only “crediting” the physician with “physician fees” collections in that ratio. The small piece of the facility/ancillary that is credited to the physician pushes the compensation to a number greater than the “physician fee” collections.

I see. Makes sense in the hospital model. Still curious how all the other practice types are reporting compensation that is 70/80/90% of collections in the PP setting.

 

[cowboydoc]

I see. Makes sense in the hospital model. Still curious how all the other practice types are reporting compensation that is 70/80/90% of collections in the PP setting.

In the data you posted, there are only 22 private groups reporting with 54 physicians.

If 1 or 2 docs run a lean practice and comp is 60% of collections, a new hire skews the data heavily. e.g. If a solo doc hires a new doc, the compensation will be a lot closer to collections (or even upside down) early on. If the practice model is to turn and burn new grads, the business always looks like it’s paying far more than a stable 40% of collections to those physicians.

 

[DOctorJay]

MGMA is skewed strongly toward hospital-based practices, though there is representation from most practice types. Compensation > collections doesn’t work in the real world (in the long run, at least). Understand the hospital is also collecting a lot more facility fees and ancillaries off the physician effort but only “crediting” the physician with “physician fees” collections in that ratio. The small piece of the facility/ancillary that is credited to the physician pushes the compensation to a number greater than the “physician fee” collections.

we had a discussion yesterday with our chair and admin and they actually told us the exact opposite, that MGMA accounts for "distribution of profits" in the private practice world and thus, "MGMA numbers are usually higher than what they should be". I couldn't tell if they actually believed that because some higher level admin told them that or what.

 

[Ducttape]

they are gaslighting you.


yes, apparently, technically MGMA is for smaller corporations than Sullivan Cotter.

you can ask them to report on 3 measures - MGMA, Sullivan Cotter, AMGA, and get a combined $/wRVU.


and to get to why i think they are gaslighting you - MGMA does not say they are accounting for "distribution of profits" any where on their web site. they are not focused on the private practice world, which does not use rvu model.



they may have a point that the MGMA numbers are a little higher, but not "higher than what they should be". that is an assumption that they made on their own.

the market is what should be determining $$$.

Physician Compensation Surveys | Which One Should You Use?

Before you buy an expensive survey, you would do well first to determine which surveys are best for your particular situation. To help you with this process.

www.phg.com

The compensation data shown below indicates that among the five surveys of 20 specialties highlighted, MGMA lists the highest overall compensation followed by the AMGA and PHG. In contrast, SCA and the Hay Group show the lowest overall compensations.

 

[DOctorJay]

they are gaslighting you.


yes, apparently, technically MGMA is for smaller corporations than Sullivan Cotter.

you can ask them to report on 3 measures - MGMA, Sullivan Cotter, AMGA, and get a combined $/wRVU.


and to get to why i think they are gaslighting you - MGMA does not say they are accounting for "distribution of profits" any where on their web site. they are not focused on the private practice world, which does not use rvu model.



they may have a point that the MGMA numbers are a little higher, but not "higher than what they should be". that is an assumption that they made on their own.

the market is what should be determining $$$.

Physician Compensation Surveys | Which One Should You Use?

Before you buy an expensive survey, you would do well first to determine which surveys are best for your particular situation. To help you with this process.

www.phg.com

Expenses

www.mgma.com

if you search this site they actually do have "distribution of profits" listed. I was surprised to find that.

our network uses a weighted "blend" of MGMA, AMGA, and Sullivan Cotter to determine our benchmarks. those benchmarks just increased dramatically for us and in an almost exponential fashion. for instance 75th percentile increased 628 wRVUs from last year. we're trying to work through this currently as this obviously amounts to a big pay cut or a ton more work to maintain similar pay.

 

[paintrain]

In the data you posted, there are only 22 private groups reporting with 54 physicians.

If 1 or 2 docs run a lean practice and comp is 60% of collections, a new hire skews the data heavily. e.g. If a solo doc hires a new doc, the compensation will be a lot closer to collections (or even upside down) early on. If the practice model is to turn and burn new grads, the business always looks like it’s paying far more than a stable 40% of collections to those physicians.

I guess this is why the N number counts as the sample size is pretty small. But all things considered, across the board it seems like median comp/collections ratio is much higher than I've ever heard anecdotally from a single individual's account. Ie. I have never heard anyone here saying they are getting 60% of their gross collections (or the equivalent after bonuses, distributions, etc.).

 

[Ducttape]

Expenses

www.mgma.com

if you search this site they actually do have "distribution of profits" listed. I was surprised to find that.

our network uses a weighted "blend" of MGMA, AMGA, and Sullivan Cotter to determine our benchmarks. those benchmarks just increased dramatically for us and in an almost exponential fashion. for instance 75th percentile increased 628 wRVUs from last year. we're trying to work through this currently as this obviously amounts to a big pay cut or a ton more work to maintain similar pay.

what does your contract say?


for the most part, it seems that the contracts are renewed roughly every 2 years, with set $ per wRVU and minimum expectations of wRVU total.

so things are kind of locked in place - except once every 2+ years when admin wants to try to renegotiate...

 

[cowboydoc]

the market is what should be determining $$$.

Who are you and what in the name of Ayn Rand did you do with duct??

 

[DOctorJay]

we're evergreen. there is no set time to renegotiate. that only happens when we all get upset enough to try to make something happen.

contract states they use this blend to determine our wRVU benchmarks which are tied to percentiles. we have a base salary and then metric bonus as well as productivity bonus ($X for each percentile). This leads to a decreasing $/wRVU value.

 

[sdnuser001]

I am middle career, partner (=minimal profit sharing, bought some equity) at medium-sized private practice in MCOL/HCOL. I am on eat-what-you-kill model. Based on this chart, I am >90%-tile in both compensation and collections, although maybe more like >90%-tile comp, >99%-tile coll. When I look at this 2016 MGMA data, my compensation/collections ratio seems low. I am historically taking home ~40% of gross collections. This dataset says comp/coll ratios for 25%-tile/median/75%-tile for All Practice Types is 0.664/0.832/0.950. Seems very high, way higher than my 40%.

I have anecdotally heard 50% of collections is a decent takehome. But why are these MGMA ratios skewed so high? I can imagine scenarios where owners write off a lot of expenses so maybe their adjusted “collections” becomes very close to what they end up taking home. But they are high even in Hospital Owned practices, where I assume docs don’t have ability to write off much as W2. Also the Hospital Owned 75%-tile has a ratio of 1.135, which doesn’t make sense either. I only have this one picture I grabbed from a meeting years ago so no further explanations on the data. Maybe it means NET collections but then that doesn’t quite make sense for them to present data on NET collections since expenses vary so widely between practices, thus I would suspect anywhere they say “collections,” they are referring to GROSS. I have not seen any newer MGMA data that presents these ratios; if anyone has, please send. I have seen some that include wRVU collections but I’ve never worked on an RVU basis so don’t completely know how to interpret the data to get comp/coll ratios like this.

I am considering renegotiating and asking for 50-60% of gross collections based on this data but need to understand more. Are any employed (non-owners) really getting >60% of gross collections? If I go ask for 50-60% because I saw data that said median is taking home 70-90% of collections, I think I will get laughed out of the room. What would be the best way to negotiate this change pragmatically from a data standpoint (I have additional leverage tools to use but would like to present hard data that cannot be argued with).

(Mods: Please delete if not allowed and I will post in phys forum. But thought it would be useful for all).

Wow so according to that chart the median collections for multispecialty group is almost 50% more than single specialty?!

 

[DoYouEvenLiftBro]

I think times are different now, staff requires more salary unfortunately due to inflation and job market, this has raised overhead in most groups past 60% and some to 70%
If you Take home 50% that’s great
Some models are skewed overhead so big earners in theory could take home more than that

 

[bedrock]

I think times are different now, staff requires more salary unfortunately due to inflation and job market, this has raised overhead in most groups past 60% and some to 70%
If you Take home 50% that’s great
Some models are skewed overhead so big earners in theory could take home more than that

Agree that staff now require more salary than in the past.

However, I can’t imagine 70% overhead. I would seriously reevaluate the entire practice if I was near that level of cost.