Choosing a Career Path in Allergy & Immunology Private Practice WAO December 7, 2011 Stanley Fineman, MD, MBA President ACAAI Atlanta Allergy & Asthma.

Choosing a Career Path Choosing a Career Path in Allergy & in Allergy & ImmunologyImmunology

Private PracticePrivate PracticeWAOWAO

December 7, 2011December 7, 2011Stanley Fineman, MD, MBA

President ACAAIAtlanta Allergy & Asthma

Clinic

Learning ObjectivesLearning ObjectivesUpon completion of this workshop participants Upon completion of this workshop participants

should be able to:should be able to: Improve their ability to search, locate, & Improve their ability to search, locate, &

evaluate various medical practices evaluate various medical practices opportunities.opportunities.

Evaluate employment agreements with Evaluate employment agreements with future employersfuture employers

Discuss the process of joining a medical Discuss the process of joining a medical practice, achieving partnership or ownership practice, achieving partnership or ownership and providing for improved patient careand providing for improved patient care

Outline

What kind of practice do I want? What makes a good practice? Evaluating Practice Opportunities. Now that I’m in practice what should

I expect?

What kind of practice do I What kind of practice do I want?want?

Administrative/non-clinicalAdministrative/non-clinical AcademicAcademic Hospital PHOHospital PHO Multi-Specialty groupMulti-Specialty group Single-Specialty practiceSingle-Specialty practice

GroupGroup SoloSolo

Part-time or Full-timePart-time or Full-time

What kind of practice do I What kind of practice do I want? (cont’d)want? (cont’d)

How do I find the right opportunity?How do I find the right opportunity? Ask a lot of questions:Ask a lot of questions: Lifestyle issues?Lifestyle issues? How do you want to practice?How do you want to practice? Would you prefer to be solo or have Would you prefer to be solo or have

colleagues?colleagues? Clinical reputation/sophisticationClinical reputation/sophistication Business/political environmentBusiness/political environment Market forcesMarket forces

Positive Market ForcesPositive Market Forces

Decreasing Allergist Supply

+Aging Allergist Supply

+Increasing Population

IncreasingIncreasingIncomeIncome

PossibilitiesPossibilities==

Negative Market ForcesNegative Market ForcesOther Specialties Competing

+Managed Care

+Weak Regional Economies

+Increasing Overhead

+Possible Insurance Pmts

DecliningDecliningIncomeIncome ==

National 50National 50thth Percentile Percentile Allergist IncomeAllergist Income

From the Medical Group Management Association, 104 Inverness Terrace East, Englewood, Colorado 80112-5306; 303.799.1111. www.mgma.com. Copyright 2005.

Single SpecialtySingle Specialty $291,000$291,000 Multi-SpecialtyMulti-Specialty $244,000$244,000 EasternEastern

$266,000$266,000 WesternWestern $224,000$224,000 OverallOverall

$247,000$247,000 No CapitationNo Capitation 33%-52% of 33%-52% of

chargescharges >10% Capitation>10% Capitation 29%-45% of 29%-45% of

chargescharges

Best Options FinanciallyBest Options Financially

Replace a retiring provider Replace a retiring provider with strong market positioning, with strong market positioning, in a solo or single-specialty small group in a solo or single-specialty small group

Start a solo practice in an underserved areaStart a solo practice in an underserved area

Earnings are higher, and cost of living is Earnings are higher, and cost of living is generally lower, in the Eastern & Southern USgenerally lower, in the Eastern & Southern US

Benefits of Solo Benefits of Solo PracticePractice

Control incomeControl income

Control hours & lifestyleControl hours & lifestyle

Select support staffSelect support staff

Income often better than in multi-specialtyIncome often better than in multi-specialty

Less internal politics/personality disputesLess internal politics/personality disputes

Benefits of Group MembershipBenefits of Group Membership

Higher earnings (Higher earnings (maybemaybe)) Clinical peer supportClinical peer support Delegated administrative tasksDelegated administrative tasks Better managementBetter management Afford/amortize better equipment & Afford/amortize better equipment &

facilitiesfacilities More power in local medical politicsMore power in local medical politics

What makes a good What makes a good practice?practice?

PatientsPatients StaffStaff PeersPeers Opportunities for research or Opportunities for research or

teachingteaching Lifestyle issuesLifestyle issues IncomeIncome

Evaluating Practice Evaluating Practice OpportunitiesOpportunities

Starting SoloStarting Solo Research areaResearch area FinancingFinancing Professional helpProfessional help Systems/OperationsSystems/Operations MarketingMarketing

Joining a groupJoining a group

Evaluating Practice Evaluating Practice OpportunitiesOpportunities

Joining a groupJoining a group RecruitmentRecruitment EvaluationEvaluation Compensation and incentivesCompensation and incentives Ownership opportunitiesOwnership opportunities

Spend a lot of timeSpend a lot of time and ask a lot of questions! and ask a lot of questions!

Evaluating Practice Evaluating Practice OpportunitiesOpportunities

Joining a group (questions)Joining a group (questions) What are the group’s professional and What are the group’s professional and

personal criteria for a candidate?personal criteria for a candidate? Do all partners want a new physician?Do all partners want a new physician? What is the group’s strategic plan?What is the group’s strategic plan? How do the staff and physicians interact?How do the staff and physicians interact? Is there a policy & procedure manual?Is there a policy & procedure manual? Who is responsible for specific activities Who is responsible for specific activities

within the organization?within the organization?

Evaluating Practice Evaluating Practice OpportunitiesOpportunities

Joining a group (questions)Joining a group (questions) What is the payer mix for the practice?What is the payer mix for the practice? What is the market climate?What is the market climate? What has the financial performance of the What has the financial performance of the

practice been?practice been? How do tasks rotate for physician How do tasks rotate for physician

leadership?leadership? What are the competitive forces in the What are the competitive forces in the

community and how has the organization community and how has the organization prepared?prepared?

Evaluating Practice Evaluating Practice OpportunitiesOpportunities

Joining a group (questions)Joining a group (questions) What is the group’s reputation in the What is the group’s reputation in the

medical community?medical community? Visit the practice during office hours and Visit the practice during office hours and

observe organization, professionalism, etc.observe organization, professionalism, etc. How do the current partners envision your How do the current partners envision your

role as a new physician?role as a new physician? Have any physicians left the practice?Have any physicians left the practice? Get professional help reviewing the Get professional help reviewing the

contract.contract.

AAAAI Financial Data Survey AAAAI Financial Data Survey ResultsResults

Survey data collected for 2005 financial Survey data collected for 2005 financial results from April 1 until August 1, 2006results from April 1 until August 1, 2006

74 practices representing 196 physicians74 practices representing 196 physicians

Not all shared charge/collection/expense Not all shared charge/collection/expense datadata

AAAAI Practice Management AAAAI Practice Management Financial Survey DataFinancial Survey Data

54 practices of 146 physicians54 practices of 146 physicians

MedianMedian RangesRanges

ChargesCharges 962,756962,756 75,000 to75,000 to

2,448,4592,448,459

CollectionCollectionss

692,551692,551 45,000 to45,000 to

1,615,0111,615,011

ExpensesExpenses 387,500387,500 42,000 to42,000 to

1,615,0111,615,011

ProfitProfit 270,000270,000 3,000 to3,000 to

940,000940,000

Collection Ratio & Expense Collection Ratio & Expense RatioRatio

Collection ratio (collections/charges):Collection ratio (collections/charges):

Median:Median: 0.69622300.6962230

Mean:Mean: 0.6969810.696981

Range:Range: 0.4167- 0.4167- 0.89560.8956

Collection Ratio & Expense Collection Ratio & Expense RatioRatio

Expense ratio (Expense ratio (expenses/ collectionsexpenses/ collections))

Median:Median: 0.5741550.574155Mean:Mean: 0.5765710.576571Range:Range: 0.1000 to 0.1000 to

0.9333 0.9333

Manpower Needs: FTE Manpower Needs: FTE UtilizationUtilization

Clearly variesClearly varies

Mean result 5.2671 FTE/physician with S.D. Mean result 5.2671 FTE/physician with S.D. of 2.1528 ( Median: 4.850 FTE/phys)of 2.1528 ( Median: 4.850 FTE/phys)

Compared to American College of Allergy Compared to American College of Allergy data from 2002 finding - 7.5 per physician.data from 2002 finding - 7.5 per physician.

26 of 74 practices report using physician 26 of 74 practices report using physician extender (only 8 of 38 solo practices!)extender (only 8 of 38 solo practices!)

Group Versus Solo BreakdownGroup Versus Solo Breakdown

Solo Solo (n=38)(n=38)

Group Group >> 2 2 (36 for (36 for 58)58)

Group Group >> 4 4 (17 for (17 for 15)15)

FTE/ physFTE/ phys 5.1146 5.1146 ++ 2.76872.7687

5.3993 5.3993 ++ 1.52971.5297

5.3514 5.3514 + + 1.47301.4730

ChargesCharges 848,644848,644 1,012,5351,012,535 1,158,7801,158,780

CollectionCollectionss

674,195674,195 692,550692,550 832,000832,000

ExpensesExpenses 350,000350,000 420,000420,000 467,713467,713

ProfitProfit 270,000270,000 263,750263,750 353,892353,892

Physician Extender effectPhysician Extender effectPractices with Practices with (25 of 95phys)(25 of 95phys)

Practices Practices without (48 of without (48 of 52 phys)52 phys)

FTE/FTE/physicianphysician

6.563 6.563 ++ 2.105 2.105 4.547 4.547 ++ 1.868 1.868

ChargesCharges 1,124,5941,124,594 828,322828,322

CollectionsCollections 774,000774,000 620,000620,000

ExpensesExpenses 464,000464,000 350,000350,000

Physician Extender Effect on Physician Extender Effect on Profit / physProfit / phys

Practices withPractices with Practices Practices withoutwithout

MedianMedian 309,029309,029 250,000250,000

MeanMean 312,268312,268 304,175304,175

Immunotherapy % in billingImmunotherapy % in billing

Mean Mean ++ Standard Standard devdev

MedianMedian

TotalTotal 0.27624 0.27624 ++ 0.14890 0.14890 0.242250.24225

SoloSolo 0.26788 + 0.159090.26788 + 0.15909 0.236690.23669

GroupsGroups 0.28400 0.28400 ++ 0.14130 0.14130 0.254800.25480

With PEWith PE 0.27339 0.27339 ++ 0.09991 0.09991 0.241560.24156

WithoutWithout 0.27783 0.27783 ++ 0.17106 0.17106 0.260000.26000

Dividing Income in Medical Dividing Income in Medical GroupsGroups

Equal distribution of income — Equal distribution of income —

15%15%

Straight productivity — 20%Straight productivity — 20%

Productivity and salary — 65%Productivity and salary — 65%

Productivity TypesProductivity Types

R.B.R.V.S.R.B.R.V.S. Patients Seen – Hours WorkedPatients Seen – Hours Worked Non-Patient Care ResponsibilitiesNon-Patient Care Responsibilities

A – TeachingA – TeachingB – Peer Review B – Peer Review C – Quality AssuranceC – Quality AssuranceD – Utilization ReviewD – Utilization Review

SenioritySeniority

The Employment Contract:The Employment Contract:What to ConsiderWhat to Consider

Income: Salary and productivityIncome: Salary and productivity Duties: Patient care and non-patient Duties: Patient care and non-patient

carecare Fringe benefits: What are they and Fringe benefits: What are they and

how long are they provided?how long are they provided? Liability (malpractice) insuranceLiability (malpractice) insurance

What type: Claims made/occurrenceWhat type: Claims made/occurrence Which limits?Which limits? Who pays for tail coverage?Who pays for tail coverage? Rating the insurerRating the insurer Practice philosophy on malpractice Practice philosophy on malpractice

suitssuits

The Buy inThe Buy in

What is the buyout?What is the buyout? Tangible assetsTangible assets Receivables as a factorReceivables as a factor Defining goodwillDefining goodwill Role of superior income Role of superior income

potentialpotential The practice valuationThe practice valuation When valuation is in the futureWhen valuation is in the future

Buying a Medical PracticeBuying a Medical Practice Fixed assetsFixed assets

GoodwillGoodwill Gross and net incomeGross and net income 4-year history4-year history Collectible ratioCollectible ratio The patients base The patients base What percentage is managed care?What percentage is managed care? Study the area for impending changesStudy the area for impending changes

Important Events of Important Events of Your Transition Into PracticeYour Transition Into Practice

1.1. Inform state licensing board of addressInform state licensing board of address(6-9 months)(6-9 months)

2.2. Apply for hospital staff privileges Apply for hospital staff privileges(6-9 months)(6-9 months)

3.3. Obtain a city and/or county occupational Obtain a city and/or county occupational license from county/city clerk’s office license from county/city clerk’s office

4.4. Review personal liability (malpractice) Review personal liability (malpractice) insurance insurance (3-6 months)(3-6 months)

Important Events of Important Events of Your Transition Into PracticeYour Transition Into Practice

5.5. Contact managed care organizations for Contact managed care organizations for inclusion as a provider (3 – 6 months)inclusion as a provider (3 – 6 months)

6.6. Contact State Department of labor for Contact State Department of labor for state employment regulations (if starting state employment regulations (if starting a practice)a practice)

7.7. Obtain a federal Employer Identification Obtain a federal Employer Identification Number (EIN) from the IRS (SS-4 Form) Number (EIN) from the IRS (SS-4 Form) and a State Employer Identification and a State Employer Identification NumberNumber

Now that I’m in practice what Now that I’m in practice what should I expect?should I expect?

The business of practiceThe business of practice Marketing yourself and your practiceMarketing yourself and your practice