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Interesting article on being a “partner” in RadPartners
Good analysis…
[link=https://www.benwhite.com/radiology/radpartners-partners-are-not-partners/]https://www.benwhite.com/…ners-are-not-partners/[/link] -
18 Replies
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Quote from PirateRad
Partnership Designation:
During the Term, the relationship between Physician and Practice shall be that of employee and employer and shall not modify or affect the physician/patient privilege or relationship. Unless otherwise directed in writing by the Chief Executive Officer of Practice, the Physician may refer to himself/herself as a Partner, allow others to refer to him/her as a Partner and refer to such other employees of Practice who have executed this Form of Employment Agreement with Practice as his/her Partner, provided, however, that the designation of Partner shall be in name only and the Physician shall not be an owner/partner of Practice under the law. Further, Physician shall not have any power or authority to bind Practice in any way, to pledge its credit or to render it financially liable for any purpose unless formally appointed an officer of Practice with such authority pursuant to Practices governing procedures and law or authorized in writing by the Chief Executive Officer of Practice.An acquaintance of mine showed me his RadPartners contract, and this paragraph was word-for-word in his contract. Incredibly deceptive and unethical use of the word “partner” by RP, while they lie in all of their job ads claiming “partnership” track. Everyone should be aware of this standard paragraph in presumably all RP contracts.
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My guess would be the “partner” system we in use in many PP radiology groups today makes no sense to the business types. This about it, your get hired and if you show up everyday to work and function at an average level you are essentially guaranteed real co-owner status. If you don’t F up badly you get partnership. I doubt it is easy like that on Wall Street etc. I am guessing “partner” in the true sense of the world is much more difficult to obtain in law firms or banks / finance companies that in Rad practices.
Bottom line is if you work for a company you are a W2 employee no matter what you are called. That can be just fine also if the W2 income is pretty high.
Partnerships you will be getting a K1.
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I saw this this morning. This is reportedly from someone working for USACS – an anesthesia PE company. However, I have seen it occurring in Radiology, with a slightly different flavor, different particulars, but the same theme. The marks (i mean employees) are promised one thing and when time comes around to pay up, the company unilaterally changes the rules because they can. The “promises” are not legally binding
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Wow paying income tax on funny money has to hurt. If they go to zero then youre really screwed twice.
Ill say it again- this continues until physicians are willing to make sacrifices to avoid working at these places. Until that happens, private equity will keep chugging along. Physician shortage only matters if physicians are willing to make sacrifices and move their feet to a non PE job. High interest rates wont stop them unless we hit them at their bottom line. At the very least squeeze PE overlords for as much money as you can if you have any leverage. But best option is to just not work for them at all.
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Partnership in a private medical practice is a misnomer. P.C. or L.L.C. or even Corps are set up for the owners to be shareholders. A shareholder is what it is…you OWN shares of the company and based on the structure you hold equity, get distributions and have fiduciary responsibilities for the company. This means you have real skin in the game and this is the real value of joining a private practice. The whole RP partnership thing is nothing but a shell game to give the radiologists some sense of ownership and potential longer term value. We all know this is completely false and you are nothing but an employee who has no control over your future other than leaving and RP has been known to make that really difficult.
As the shortage of radiologists deepens, more and more radiologists will understand the long term security and financial value of private practice. In the coming chaos of the corporate model collapse there will be much opportunity for solid, democratic and well managed practices to grow and dominate.-
“Today, the PE sector loves a rollup, which is when they buy several related businesses and merge them into one firm. The nominal business-case for a rollup is that the new, bigger firm is more efficient. In reality, a rollups strength is in eliminating competition. When all the pet groomers, or funeral homes, or urgent care clinics for ten miles share the same owner, they can raise prices, lower wages, and f@$k over suppliers.”
Cory Doctorow-
Quote from drad123
“Today, the PE sector loves a rollup, which is when they buy several related businesses and merge them into one firm. The nominal business-case for a rollup is that the new, bigger firm is more efficient. In reality, a rollups strength is in eliminating competition. When all the pet groomers, or funeral homes, or urgent care clinics for ten miles share the same owner, they can [u][b]raise prices, lower wages, and f@$k over suppliers[/b][/u].”
[emphasis added]
Succinct and accurate description of PE tactics.
The problem for PE re: radiology seems to be that of the three highlighted tactics above, the only one they’re able to pull off currently is effing the suppliers (rads) with stuff like 401(k) shortfalls, delayed “bonuses”, etc. Raising prices has resulted in insurors taking them to court and lowering wages leads to inability to recruit and/or attrition of existing workers, much more painfully than BS’ing their way through obviously misleading e-mails about how they’re so sorry but they just won’t be able to do the quarterly funding of your 401(k) as stipulated in your employment contract.
Not defending any of this but shenanigans like this have been par for the course in law, finance and business seemingly forever. And there have been plenty of examples of threads on AM about PPs that <expletive deleted> over new hires (most recent one that comes to my mind is the guy posting about how his group has a “buy-in” for associates that’s nothing more than a squeeze for more income for partners) so it’s not like medicine is immune.
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Quote from Dr. Joseph Mama
Quote from drad123
“Today, the PE sector loves a rollup, which is when they buy several related businesses and merge them into one firm. The nominal business-case for a rollup is that the new, bigger firm is more efficient. In reality, a rollups strength is in eliminating competition. When all the pet groomers, or funeral homes, or urgent care clinics for ten miles share the same owner, they can [u][b]raise prices, lower wages, and f@$k over suppliers[/b][/u].”
[emphasis added]
Succinct and accurate description of PE tactics.
The problem for PE re: radiology seems to be that of the three highlighted tactics above, the only one they’re able to pull off currently is effing the suppliers (rads) with stuff like 401(k) shortfalls, delayed “bonuses”, etc. Raising prices has resulted in insurors taking them to court and lowering wages leads to inability to recruit and/or attrition of existing workers, much more painfully than BS’ing their way through obviously misleading e-mails about how they’re so sorry but they just won’t be able to do the quarterly funding of your 401(k) as stipulated in your employment contract.
Not defending any of this but shenanigans like this have been par for the course in law, finance and business seemingly forever. And there have been plenty of examples of threads on AM about PPs that <expletive deleted> over new hires (most recent one that comes to my mind is the guy posting about how his group has a “buy-in” for associates that’s nothing more than a squeeze for more income for partners) so it’s not like medicine is immune.
Scale is the difference. PE orders of magnitude more dangerous than pp simply due to size.
Humans are humans- partners not much better than finance bros- greed will rule the day.-
The tax advantages of being a true partner not receiving a W2 cannot be overstated. So much more freedom and real income options in even a bad PP. aside from all the RP crap. That is the one I feel the worst for RP rads.
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Can you elaborate on these tax advantages? Just wondering how does K1 allow you to receive distributions with limited tax burden. I am also wondering in regards to 1099 income I am getting from a side job. I would definitely consider leaving W2 employment for a PP K1 position if the post tax income is much higher on K1
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The efficiency gains that rolled up firms enjoy often come at the expense of workers these companies shed jobs and depress wages, and the savings aren’t passed on to customers, but rather returned to the business, which reinvests it in gobbling up more companies, firing more workers, and slashing survivors’ wages. Anything left over is passed on to the investors.
RP drones are destroying their own jobs. -
Many radiology residents are more focused on the actual learning of radiology and medicine than the business aspect. Many are unsuspecting and dont understand how they may be treated like a commodity and taken advantage of.
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Quote from drad123
“Today, the PE sector loves a rollup, which is when they buy several related businesses and merge them into one firm. The nominal business-case for a rollup is that the new, bigger firm is more efficient. In reality, a rollups strength is in eliminating competition. When all the pet groomers, or funeral homes, or urgent care clinics for ten miles share the same owner, they can raise prices, lower wages, and f@$k over suppliers.”
And when it doesn’t work out, they can dump the company in bankruptcy court and get rid of the liabilities (i.e physician wages and malpractice insurance and the funny money shares that are below every other share class and at the bottom of the cap table.
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An aspect of this problem that doesn’t get mentioned enough (at all?) is the role of high student loan debt.
Too many (all?) fresh residency grads are buried in unavoidable student loan debt from med school (at the very least; many/most with undergrad debt piled on). Even the worst P.E. backed radiology contract has a far greater earning potential then the best deal at, say, Target or Walmart.
The loan debt pit allows the P.E. groups a steady stream of poor fresh meat.
My 0.02.-
Wow their SVP of finance quit. Writing is on the wall. The rats in the know appear to be abandoning the ship. Only a matter of time before even the stupid rads realize they are on a sinking ship and it’s best to leave before everyone else is trying to find a job in the same location.
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Quote from sartoriusBIG
Wow their SVP of finance quit. Writing is on the wall. The rats in the know appear to be abandoning the ship. Only a matter of time before even the stupid rads realize they are on a sinking ship and it’s best to leave before everyone else is trying to find a job in the same location.
Important notes. The bankruptcy of RP doesn’t likely mean the end of RP. And that even the end of RP doesn’t mean the end of the need for rads in those jobs.
The net number of rads in any geographic area pre-RP bankruptcy and post is likely unchanged or close to it.
It’s just going to be a deck shuffling of who now is employing those rads.
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Quote from dergon
Quote from sartoriusBIG
Wow their SVP of finance quit. Writing is on the wall. The rats in the know appear to be abandoning the ship. Only a matter of time before even the stupid rads realize they are on a sinking ship and it’s best to leave before everyone else is trying to find a job in the same location.
Important notes. The bankruptcy of RP doesn’t likely mean the end of RP. And that even the end of RP doesn’t mean the end of the need for rads in those jobs.
The net number of rads in any geographic area pre-RP bankruptcy and post is likely unchanged or close to it.
It’s just going to be a deck shuffling of who now is employing those rads.
My guess is rads will join with hospitals as employees- no way for a physician group to negotiate with insurance companies. RP is learning this now.
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Insurance company negotiation is overhyped. Our small group doesnt have a problem. And dont think its 100% eat what you kill as hospital employed. Sure some may do that out of sheer desperation but hospital admin will also skim professional fees where they can, perhaps not directly but via higher than market rate billing charges etc. And if ever a surplus of rads, that pot of money will be too tempting for hospital admin. Of course still better than private equity skimming 30-40%. Even if they negotiates better rate, odds are 100% of that isnt lining rad pockets
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