What would you consider pay and benefits 1-3 years out of school?

[NCiDOC]

In another thread, the topic of salaries paid by private ODs versus commercial settings came up.

I am curious, what do you feel is a fair/good starting salary and benefits package if you are one to three years out of school?

Be as honest as you can about what you would accept personally, not what you would throw out as your first shot at a negotiation.

Thanks

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[KHE]

In another thread, the topic of salaries paid by private ODs versus commercial settings came up.

I am curious, what do you feel is a fair/good starting salary and benefits package if you are one to three years out of school?

Be as honest as you can about what you would accept personally, not what you would throw out as your first shot at a negotiation.

Thanks

There are simply far too many variables in that question...

Location, number of patients seen, expected to be seen, composition of patients (ie: young and healthy or mostly old and disease ridden) potential future partnership or not are just a few of the things to consider.

From the employEE perspective, you have to look at it in terms of how much money you think you can make for the owner. That will give you a frame of reference on which to ask for salary.

 

[NCiDOC]

Okay, good point. Let's cut down on the variables.

Let's say, a mix of patients, young and old 50/50.

In the first year, you are expected to produce $500,000 in collected revenues (not what is charged out, but what is actually collected by the practice after insurance write-offs, bad debt, etc.)

Assume no ownership possibility but an "equity" pay out if you stay with the practice, for 10 or more years, that is equal to your last year's pay.

And, to throw in another point to ponder, would you rather:

a)Be paid a higher guaranteed salary that never changes other than for cost of living increases or

b)Be paid a percentage of what you generate for the practice, so that as your patient base grows, you continue to increase your pay. Let's assume that percentage is 17%.

Assume the location is desirable in a good community.

 

[aarlan]

Are you including materials sales, CTL, lenses etc in your $500K estimate?

How much in PURELY professional fees?

 

[NCiDOC]

Yes, good question. I am including sales of all materials - glasses, contacts, etc as well as medical services, ancillary testing, professional fees - including any surgical co-management and treatment services.

 

[KHE]

Yes, good question. I am including sales of all materials - glasses, contacts, etc as well as medical services, ancillary testing, professional fees - including any surgical co-management and treatment services.

Again, there are far too many variables.

At it's base though, what you are paid in private practice is going to be based largely on how much money you can generate for said practice. That's true in commercial as well but a bit less so. Mostly you are paid a set rate and as long as they're happy with your production you'll get to keep working.

For example, let's say you generate $500,000 in optical sales. That's worth less than $500,000 in professional fees because optical has significant costs of goods associated with it that professional fees do not.

So there really is no answer to your question.

Let's turn it around for a bit....

As a practice owner, how much revenue should I be expecting a doctor 1-3 years out of school to be generating? Anyone want to through out a guess?

 

[stonegoat]

The reason that so many new ODs go the commercial route is that senior ODs tend to canibalize their own. I think that a OD with 3 years experience should be able to generate between $500k-$700K/year, mixed dispensing and professional fees. The wage, in my opinion should be $120-$160k/year. But that's just me.

 

[KHE]

The reason that so many new ODs go the commercial route is that senior ODs tend to canibalize their own. I think that a OD with 3 years experience should be able to generate between $500k-$700K/year, mixed dispensing and professional fees. The wage, in my opinion should be $120-$160k/year. But that's just me.

You must have some incredible associates. I have NEVER had one even come close to generating that.

Now, I'm talking about an associate who isn't walking into a completely packed schedule from day one. If that's something that you can provide, then yes, they should be able to generate that.

 

[stonegoat]

You must have some incredible associates. I have NEVER had one even come close to generating that.

Now, I'm talking about an associate who isn't walking into a completely packed schedule from day one. If that's something that you can provide, then yes, they should be able to generate that.

My "new" associate started about 2 months ago, and except for the odd day, had been fully-booked, and should easily generate $500k this year. I realize not all practices are as busy as mine.

 

[KHE]

My "new" associate started about 2 months ago, and except for the odd day, had been fully-booked, and should easily generate $500k this year. I realize not all practices are as busy as mine.

If an associate can enter a situation where they are fully booked from the word go, then yes, they should be able to generate large amounts of revenue.

I think however it's safe to say that the vast majority of practices are not in a position where they simply need to add capacity to just be doing a lot more of the same thing that they are already doing.

As such, this leaves the new associate to either have to bring some other niche into the practice, or to grow their portion of the practice to the point where they CAN be viable doing more of the same thing the practice is already doing on a full time basis.

And that's the kind of thing that students and new grads need to think about. What an I do to bring money into this place? Or...how much money do I need to bring in in order to justify the salary and/or benefit package that I want.

 

[IndianaOD]

In another thread, the topic of salaries paid by private ODs versus commercial settings came up.

I am curious, what do you feel is a fair/good starting salary and benefits package if you are one to three years out of school?

Be as honest as you can about what you would accept personally, not what you would throw out as your first shot at a negotiation.

Thanks

In summary. Overall probably disappointingly little for the level of education.

 

[odieoh]

The reason that so many new ODs go the commercial route is that senior ODs tend to canibalize their own. I think that a OD with 3 years experience should be able to generate between $500k-$700K/year, mixed dispensing and professional fees. The wage, in my opinion should be $120-$160k/year. But that's just me.

Is that 500-700k collected or billed?

 

[NCiDOC]

Is that 500-700k collected or billed?

See my second post above when asked for specifics. Collected.

Your thoughts?

 

[stonegoat]

Is that 500-700k collected or billed?

Collected...I only have about 30k in accounts receivable at year end.

 

[odieoh]

My "new" associate started about 2 months ago, and except for the odd day, had been fully-booked, and should easily generate $500k this year. I realize not all practices are as busy as mine.

How many patients a day do you consider to be "fully booked?"

Collected...I only have about 30k in accounts receivable at year end.

Wow thats pretty good, who do you have doing your collections, Dog the Bounty Hunter?

 

[socal2014]

Stonegoat, this might be a silly question, but do you consider taxes when determining income of the associate?

What about other docs? Has an associate every discussed the issue of taxes on their income with you?

Seems to me, the docs who own their practices can just write off stuff like rent, transportation etc etc. so they are not damaged by taxes, unlike the associate who has to pay "regular" taxes.

I am pretty sure in both the USA/Canada, an associate would need to earn $150K to reach TRUE six figure income, which is crappy since the ~$50k amount in taxes is around the same amount as the national HOUSEHOLD income!

 

[stonegoat]

How many patients a day do you consider to be "fully booked?"



Wow thats pretty good, who do you have doing your collections, Dog the Bounty Hunter?

For my associate, fully-booked is usually about 18-20 patients/day

...as far as collections, we rarely use it. We do require a 50% deposit on glasses before we make them, so maybe that helps. People here just seem to pay their bills...

 

[stonegoat]

Stonegoat, this might be a silly question, but do you consider taxes when determining income of the associate?

What about other docs? Has an associate every discussed the issue of taxes on their income with you?

Seems to me, the docs who own their practices can just write off stuff like rent, transportation etc etc. so they are not damaged by taxes, unlike the associate who has to pay "regular" taxes.

I am pretty sure in both the USA/Canada, an associate would need to earn $150K to reach TRUE six figure income, which is crappy since the ~$50k amount in taxes is around the same amount as the national HOUSEHOLD income!

I do not consider my associates taxes....I'll let him/her worry about that. If I had an associate who bitched about making $150k/year, because of the tax burden, and wanted more $$ from me, the solution would be simple...GET THE HELL OUT!

 

[odieoh]

Stonegoat, this might be a silly question, but do you consider taxes when determining income of the associate?

What about other docs? Has an associate every discussed the issue of taxes on their income with you?

Seems to me, the docs who own their practices can just write off stuff like rent, transportation etc etc. so they are not damaged by taxes, unlike the associate who has to pay "regular" taxes.

I am pretty sure in both the USA/Canada, an associate would need to earn $150K to reach TRUE six figure income, which is crappy since the ~$50k amount in taxes is around the same amount as the national HOUSEHOLD income!

I would think not, taxes apply to everyone, the owners of practices included. For the practice itself sure the doc can do some creative things such as purchasing new equipment at the end of the year to offset profits and avoid more taxes. But any money that he pays himself and takes home is still subject to "regular" taxes just like anyone else. The practice and the doc are usually separate taxable entities.

I don't think too many people take your approach to defining a six figure income. Since everyone is subject to taxes, its just understood that if your salary is $100k, yes you make six figures but no you don't take six figures home.

 

[odieoh]

Stonegoat, how much overhead would you estimate that an associate costs you, in addition to their salary? This thread interests me because I am a newish associate (I've been here pretty much one year exactly), and the doc who hired me really keeps pushing for me to find more ways to get in more patients. He also keeps making comments about how I am "almost" paying for myself in terms of productivity.

However, I really have to wonder how in the world it can be "almost" when I think I am making him a decent profit. In July we looked over the numbers for the first half of 2010, and I had brought in just shy of 500k collections. About 120k of that was from optical sales which as mentioned is different from other income. I see pretty much exactly what you describe for numbers of patients, average 18-20, sometimes more. I'm an ophthalmologist so I have a moderate amount of surgical volume as well.

I understand that my total cost to the practice is much more than just my salary, if you figure in benefits, malpractice insurance, and the cost of additional staff etc. However, if you extrapolate my numbers to the second half of the year I'm heading toward bringing in ~ 1 million for the year. Really it should be much more considering that Jan. and Feb. were really pretty slow, and that just in the last 3-4 months my volume has picked up pretty significantly.

My salary is right in the range you quoted. So I'm having a hard time seeing how I am "almost" paying for myself, and I hate the constant pressure to bring in more patients, mainly because I really dislike having to go out and schmooze doctors' offices. I know its important to add volume but I think it will come, and HAS come with time.

I don't want to be a whiner, and I actually really like the guy I work for, he has been very straightforward about everything (except this I guess?) and he has gone out of his way to accommodate me in joining his practice. I just want to get some perspective from the other side of the deal, is there something I'm missing here?

 

[stonegoat]

Stonegoat, how much overhead would you estimate that an associate costs you, in addition to their salary? This thread interests me because I am a newish associate (I've been here pretty much one year exactly), and the doc who hired me really keeps pushing for me to find more ways to get in more patients. He also keeps making comments about how I am "almost" paying for myself in terms of productivity.

However, I really have to wonder how in the world it can be "almost" when I think I am making him a decent profit. In July we looked over the numbers for the first half of 2010, and I had brought in just shy of 500k collections. About 120k of that was from optical sales which as mentioned is different from other income. I see pretty much exactly what you describe for numbers of patients, average 18-20, sometimes more. I'm an ophthalmologist so I have a moderate amount of surgical volume as well.

I understand that my total cost to the practice is much more than just my salary, if you figure in benefits, malpractice insurance, and the cost of additional staff etc. However, if you extrapolate my numbers to the second half of the year I'm heading toward bringing in ~ 1 million for the year. Really it should be much more considering that Jan. and Feb. were really pretty slow, and that just in the last 3-4 months my volume has picked up pretty significantly.

My salary is right in the range you quoted. So I'm having a hard time seeing how I am "almost" paying for myself, and I hate the constant pressure to bring in more patients, mainly because I really dislike having to go out and schmooze doctors' offices. I know its important to add volume but I think it will come, and HAS come with time.

I don't want to be a whiner, and I actually really like the guy I work for, he has been very straightforward about everything (except this I guess?) and he has gone out of his way to accommodate me in joining his practice. I just want to get some perspective from the other side of the deal, is there something I'm missing here?

I have naver really calculated what an associate costs me. I pay a percentage of gross, so I don't really have to worry about losing money on an associate. My staff costs are only marginally higher with an associate, and I already have enough equipment for the both of us.

In your situation, I really can't see how you're not paying for yourself.

Just curious, do you make a flat rate or a %??

 

[odieoh]

I have naver really calculated what an associate costs me. I pay a percentage of gross, so I don't really have to worry about losing money on an associate. My staff costs are only marginally higher with an associate, and I already have enough equipment for the both of us.

In your situation, I really can't see how you're not paying for yourself.

Just curious, do you make a flat rate or a %??

I make a flat rate with a bonus incentive of a small percentage of collections above and beyond a certain number (above $600k as I recall, I need to look at my contract.) Thanks for the input.

 

[socal2014]

Just wondering, if an associate generates 500K and is paid a modest 100K for service, where does the other 400K go?

If the owner of the doc works full time as well and generates 500K, the owner is actually making 900K. That is a huge difference between the owner of the practice and the associate. I realize the owner of the practice has overhead, but I am not too sure it is quite large- somewhere around 35% of gross I believe, which includes staff pay.

I don't think the pay is fair for an associate who is bringing in nearly half of the total revenue of the practice- maybe there might be more overhead than I calculated?

 

[odieoh]

Just wondering, if an associate generates 500K and is paid a modest 100K for service, where does the other 400K go?

If the owner of the doc works full time as well and generates 500K, the owner is actually making 900K. That is a huge difference between the owner of the practice and the associate. I realize the owner of the practice has overhead, but I am not too sure it is quite large- somewhere around 35% of gross I believe, which includes staff pay.

I don't think the pay is fair for an associate who is bringing in nearly half of the total revenue of the practice- maybe there might be more overhead than I calculated?

Overhead is pretty significant. In ophthalmology it usually runs in the 50-60% range, and some practices even up to 70%.

Also, its important to separate out the optical sales, which have a MUCH lower profit margin, on the order of 10-20%. In my own case as I mentioned, I brought in ~500k but 120k were from optical, which is really only 20k or so in actual profit to the practice.

 

[KHE]

Just wondering, if an associate generates 500K and is paid a modest 100K for service, where does the other 400K go?

If the owner of the doc works full time as well and generates 500K, the owner is actually making 900K. That is a huge difference between the owner of the practice and the associate. I realize the owner of the practice has overhead, but I am not too sure it is quite large- somewhere around 35% of gross I believe, which includes staff pay.

I don't think the pay is fair for an associate who is bringing in nearly half of the total revenue of the practice- maybe there might be more overhead than I calculated?

Overhead is much higher than 35%. Usually COGS is around one third but then there's rent, staff, utilities, equipment, office supplies etc. etc.

Just thinking about your example, you can see the folly. If an associate brings in 500k and is paid 100k and an employer brings in 500k, that does not mean that the owner "makes" 900k because in that scenario you haven't paid for ANY overhead.

Most mature private practices net their owners around 30%. Well run efficient practices can push 40.

 

[socal2014]

Sometimes I wonder how other non-optometric businesses survive, when they have about the same amount of overhead minus cost of equipment and other things pertaining to optometry only.

Would tax be considered overhead?

To those doctors who have opened up a practice of their own, would you recommend it? IMO, there is just too much overhead, and for one to make more money by owning a practice, that practice needs to gross upwards of 500K+, which I don't see happening for new grads due in part to the economy, people not really valuing eye care, and the competition from senior docs who have an established patient base.

 

[KHE]

Sometimes I wonder how other non-optometric businesses survive, when they have about the same amount of overhead minus cost of equipment and other things pertaining to optometry only.

Would tax be considered overhead?

To those doctors who have opened up a practice of their own, would you recommend it? IMO, there is just too much overhead, and for one to make more money by owning a practice, that practice needs to gross upwards of 500K+, which I don't see happening for new grads due in part to the economy, people not really valuing eye care, and the competition from senior docs who have an established patient base.

Tax would generally be considered overhead.

I have not started a practice cold so I can't comment specifically on that but I would say that $500,000k is generally a reasonably mature practice for a single doctor operation.

So if you start cold, it's not that likely that you're going to pull in $500k the first year, but with proper planning you can do it a lot sooner than you think.

That's one of the advantages of practice ownership. While there are certainly risks involved, the potential income is nearly limitless. That's not the case in commercial unless you're the leaseholder and even then there's limitations.

In employed commercial practice, you will start out at a certain salarly but you will almost certainly max out at a salary not much higher than that. A doctor with 10 years experience is rarely more valuable than one with say two years experience. So why would I want to pay a seasoned doc $500 a day when I could pay a guy 18 months out of school $325?

Plus I never have to worry about coverage for my office. If I want Tuesday mornings off, I take them off. If I want to go golfing this Saturday, I go. I don't have to worry that I'm going to get a phone call from the "district manager" about not being available on Saturdays.

 

[JMU07]

Plus I never have to worry about coverage for my office. If I want Tuesday mornings off, I take them off. If I want to go golfing this Saturday, I go. I don't have to worry that I'm going to get a phone call from the "district manager" about not being available on Saturdays.

Is this only an issue in certain states, where the doctor's office isn't considered independent of the retail side (I don't even know if there are any states where they aren't separate)? Or moreso in a Wal-Mart/Target/etc. location? I'm asking because I worked at a franchise location where the doc set his own hours, fees, etc. Or is that only typical of a franchise?

 

[KHE]

Is this only an issue in certain states, where the doctor's office isn't considered independent of the retail side (I don't even know if there are any states where they aren't separate)? Or moreso in a Wal-Mart/Target/etc. location? I'm asking because I worked at a franchise location where the doc set his own hours, fees, etc. Or is that only typical of a franchise?

Just about any commercial lease agreement will ask you to specify which days/hours you are going to work. If what you wish is not agreeable to the corporation, you won't be offered the lease.

Once you do sign up for something, if you don't provide the stated coverage you can be fined, sometimes heavily depending on the arrangement.

 

[socal2014]

The only downfall of opening a PP cold is that the receptionist might be making as much or more than the OD after overhead.

Given the economy, and the opening of new schools, a buy in would seem like the only logical choice, if one chooses to be his or her own boss. But even then, I am sure an investment of 100K+ is required, which would be pretty hard to attain from a lender considering the unpaid optometry tuition debt.

As scary as it seems, corporate optometry is the way to go for new grads and maybe some seasoned vets.

 

[KHE]

The only downfall of opening a PP cold is that the receptionist might be making as much or more than the OD after overhead.

Given the economy, and the opening of new schools, a buy in would seem like the only logical choice, if one chooses to be his or her own boss. But even then, I am sure an investment of 100K+ is required, which would be pretty hard to attain from a lender considering the unpaid optometry tuition debt.

As scary as it seems, corporate optometry is the way to go for new grads and maybe some seasoned vets.

When I bought my practice, the seller financed 100% of it.

You can buy in over time with sweat equity as part of the transaction if that works for you and the seller.

There are also lenders out there who will lend you 100% of the financing needed to start/buy a practice with no collateral other than the practice itself.

Don't go into it with a negative attitude. If private practice is your goal, work on attaining that goal right from the start, whether it's a cold start or a purchase.

 

[NCiDOC]

The only downfall of opening a PP cold is that the receptionist might be making as much or more than the OD after overhead.

Given the economy, and the opening of new schools, a buy in would seem like the only logical choice, if one chooses to be his or her own boss. But even then, I am sure an investment of 100K+ is required, which would be pretty hard to attain from a lender considering the unpaid optometry tuition debt.

As scary as it seems, corporate optometry is the way to go for new grads and maybe some seasoned vets.

SoCal, I will respectfully disagree with you on this one. I can understand why you would think that way for sure but there are some great private practices around the country that have positions for associates that will pay as good or better than what they can get at a corporate position, with better hours and as good or better benefits packages.

That is not my stamp of approval of private practice or disapproval of corporate optometry. I think both have their place.

I know plenty of doctors across the country that are not owners, just associates, working 40 or less hours a week, pulling in $120-190K depending on their volumes. They have no headaches of ownership and no risk in the practice. However, they are great at what they do. They fit the latest products; they are good educators to their patients about medical advice and they know how to bill and code to get paid properly for their services; they are knowledgeable about the retail aspect of the practice and can recommend the proper lens options, treatments, contact lenses, sunglasses etc; and finally, they are not afraid to ask patients for their referrals of friends, co-workers and family.

Adding to that, these doctors are typically appreciative of the staff that work with them, they are cordial to patients and good at relationship-building and they are good associates/employees that care about the practice as a whole. Even though they are not owners, they understand that their livelihood is dependent on the health and welfare of the practice.

I hope that at least opens your eyes to a different side of optometry that you might not have considered.