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  • Partner contract negotiation

    Posted by happypersontotally_399 on May 14, 2023 at 5:38 am

    Our group has a small problem. We have a partner track associate who is up for partner in 2 weeks and is now negotiating hard with us on the partner contract. His initial employee contract does not have a renewal clause and expires after it’s term which we assume means he can leave us right when it ends without giving us our standard 90 day written notice (let me know if this is true because we’ve never had anyone leave without notice). Our group is a little short staffed and the subspecialty division he is in really needs the help over at least the next 1.5 years. The guy is asking for us to waive our standard 120k buy in which all the prior partners have paid. He says he’s ready to leave and has another tele job lined up. We can’t decided if he is bluffing and really willing to leave.
     
    Would you guys negotiate with him and give in a little or tell him to take it or leave it? We are a little surprised he is doing this, as when we try to think of it from his view, he has already committed 2 years of being underpaid on his partnership track, and if we tell him no and he leaves, he will surely have to work somewhere else for less. It just doesn’t make too much sense from his standpoint to risk giving up the partner income for the 120k buy in. For us, we really need the help, but not sure we should be caving in to such demands.
     

    ctinfo replied 11 months, 3 weeks ago 37 Members · 72 Replies
  • 72 Replies
  • ruszja

    Member
    May 14, 2023 at 6:31 am

    ‘Thank you for your work with the Dumbletown Radiology, PC. We wish you well in your future endeavours. Please leave your hospital ID and dose badge at the radiology front desk at the end of your last shift.’

    • DanielQuilli

      Member
      May 14, 2023 at 6:40 am

      What is the 120k buy in for? Are there significant assets?

      • ruszja

        Member
        May 14, 2023 at 7:03 am

        Quote from tigershark06

        What is the 120k buy in for? Are there significant assets?

        – existing AR
        – the value of buying an existing business rather than setting one up from scratch

        • g.giancaspro_108

          Member
          May 14, 2023 at 8:17 am

          That’s an interesting dilemma and short-sighted on the candidate’s part.  A partner he trusts could sit down with him and go over how a buy in works (and reiterate that he gets that money back when he leaves, likely a larger amount), what he receives for his buy in to the partnership, as well as explaining to him what partnership means.  If he does not have a buy in, then none of the partners should have a buy in, which means his income will decrease because every partner will have their buy-in paid back by the group.  Explain what AR means and why it is to his advantage to have an ownership share in it.  Explain any other financial, professional and personal benefits he gains from the buy-in.

          He may have just spent too much time reading Auntminnie and he believes some of the misguided information here.  Alternately, maybe this is not a traditional private practice and is something like RP and he would be wise to avoid buy-in. If your group has no AR and nothing of value then perhaps it would be unwise to buy in to the group.  If he really does not want to he can continue on as an associate without the benefits of being a partner/owner.  Try to have everyone look at it dispassionately and find a solution that will work for the associate and the partners.  My personal opinion is do not let him make partner without the buy-in, and your group should evaluate if he is a good long-term fit for a partner.

          • tureckibalet_476

            Member
            May 14, 2023 at 8:43 am

            What is your BATNA? Is it going to cost your group more than 120k to replace him?

        • radiologistkahraman_799

          Member
          May 14, 2023 at 9:43 am

          Quote from fw

          Quote from tigershark06

          What is the 120k buy in for? Are there significant assets?

          – existing AR
          – the value of buying an existing business rather than setting one up from scratch

           
          Isn’t that what the 2 years or so associate work up was for.  So the associate is paying in both time AND $$?  If it was equity in a free standing center, maybe, but this sounds…

          • g.giancaspro_108

            Member
            May 14, 2023 at 9:54 am

            One of two things appears to be happening.
            Either this candidate was taken off guard by a surprise “Hey, there is a buy-in to your partnership in two weeks that we didn’t mention before!”
            Or he is trying to change the deal after two years of having agreed to the deal.
             
            Anything can be negotiated, but if the situation is the latter then tread carefully.
             
            We had a candidate make a similar demand years ago when he made partner, after some negotiation he agreed to stick to the original deal, made partner and paid his buy in.  Unfortunately we did not heed the preview of his personality and we came to regret making him partner.  He was selfish and money-driven, acted only in his self-interest to the detriment of other partners and the group as a whole.  In retrospect we should have seen this was coming when he tried to change the original deal he had already made.  I hope you will not experience the same thing, being temporarily short-staffed could be much better than having a bad partner.  A partnership is a team effort.
             
            Another example for you is that we have a candidate that was offered partnership and he declined because he did not want to pay the buy-in, didn’t trust private practices, some other reasons, but he was happy to stay on as an employee (knowing he could become partner anytime he chose).  He has been with us, as an employee, for many years now and although he has missed out on 7 figures of income by his choice, he has also missed out on some of the headaches of running a practice and appears happy with his decision.  Perhaps your candidate would prefer to continue on as an employee.

            • ruszja

              Member
              May 14, 2023 at 10:02 am

              Was the buy-in something disclosed when he signed the associate contract ?
              If yes: eff him. You don’t want him as a business partner.
              If no: your group is run by idiots. Good for him if he gets out before he gets in.

            • Unknown Member

              Deleted User
              May 14, 2023 at 10:10 am

              I hope the individual is reading this thread

              They are acting irrationally.

              Partnership is a long haul situation and thats part of the partner track

              Comparing this to an employee or contractor tele gig is not even a legitimate comparison.

              The buy in is effectively a final goodwill move to the group they are joining, which will be paid back out at career end.

              Maybe this partnership isnt really a good deal? Thats the only way this can be making sense. If thats the case then the whole thing may be about to implode of a tele gig is competitive to the deal of being a partner.

              • happypersontotally_399

                Member
                May 14, 2023 at 10:42 am

                We are a traditional private practice. 30 partners plus employees. We structure the buy in so that you just pay the amount but when you leave the group, there is no buy out. It’s one of those things where it’s just the way it has always been done. So once the new partners keep on agreeing to the practice to make partner, they don’t want the next person that makes partner not have to pay it for fairness sake. I haven’t been here long enough, but it may have been some thing made up during the time when job applicants were much easier to come by as a way for the older partners to extract a little more value for themselves from the people on partnership track.
                 
                Anyways, our pre partner contract is vague and does not state how much the buy in is. It’s something that can’t be negotiated since it’s not in writing. We just verbally mention it briefly when the initial contract is being offered/negotiated. 

                • maxifranca

                  Member
                  May 14, 2023 at 10:51 am

                  Quote from Tufer

                  We are a traditional private practice. 30 partners plus employees. We structure the buy in so that you just pay the amount but when you leave the group, there is no buy out. It’s one of those things where it’s just the way it has always been done. So once the new partners keep on agreeing to the practice to make partner, they don’t want the next person that makes partner not have to pay it for fairness sake. I haven’t been here long enough, but it may have been some thing made up during the time when job applicants were much easier to come by as a way for the older partners to extract a little more value for themselves from the people on partnership track.

                  [b]Anyways, our pre partner contract is vague and does not state how much the buy in is. It’s something that can’t be negotiated since it’s not in writing. We just verbally mention it briefly when the initial contract is being offered/negotiated. [/b]

                   
                  What an enormous red flag. 

                  • g.giancaspro_108

                    Member
                    May 14, 2023 at 10:53 am

                    Does the contract specify how the buy in is calculated (such as “AR/# of partners”)?
                     
                     

                    Quote from MidwestIR

                    Quote from Tufer

                    We are a traditional private practice. 30 partners plus employees. We structure the buy in so that you just pay the amount but when you leave the group, there is no buy out. It’s one of those things where it’s just the way it has always been done. So once the new partners keep on agreeing to the practice to make partner, they don’t want the next person that makes partner not have to pay it for fairness sake. I haven’t been here long enough, but it may have been some thing made up during the time when job applicants were much easier to come by as a way for the older partners to extract a little more value for themselves from the people on partnership track.

                    [b]Anyways, our pre partner contract is vague and does not state how much the buy in is. It’s something that can’t be negotiated since it’s not in writing. We just verbally mention it briefly when the initial contract is being offered/negotiated. [/b]

                    What an enormous red flag. 

                    • happypersontotally_399

                      Member
                      May 14, 2023 at 10:59 am

                      No. It’s just a set number. We don’t refer to it as a buy in. It’s more of a you just earn a little less each paycheck your first year of partner. So if partners make a little over 700k for the year, you will make 600k the first year as partner. Similar to how we pay associates less on their partner track. That could also be consider a buy in, if you’re making 300k less per year for those years.

                    • radiologistkahraman_799

                      Member
                      May 14, 2023 at 11:36 am

                      Quote from Tufer

                      No. It’s just a set number. We don’t refer to it as a buy in. It’s more of a you just earn a little less each paycheck your first year of partner. So if partners make a little over 700k for the year, you will make 600k the first year as partner. Similar to how we pay associates less on their partner track. That could also be consider a buy in, if you’re making 300k less per year for those years.

                      What a scam.  Sounds like “tiered” partnership.  How much more are the guys who have been there 25 years making?  

                    • g.giancaspro_108

                      Member
                      May 14, 2023 at 11:45 am

                      It is not a buy-in if there is no buy-out.
                       
                      If it is a fixed-amount then it should have been specified in the contract.
                       

                    • Pasant

                      Member
                      May 14, 2023 at 11:43 am

                      Quote from Tufer

                      No. It’s just a set number. We don’t refer to it as a buy in. It’s more of a you just earn a little less each paycheck your first year of partner. So if partners make a little over 700k for the year, you will make 600k the first year as partner. Similar to how we pay associates less on their partner track. That could also be consider a buy in, if you’re making 300k less per year for those years.

                      What happens to this money? How was the amount decided? This all seems pretty arbitrary if not based on asset valuation. 

                    • consuldreugenio

                      Member
                      May 14, 2023 at 11:44 am

                      So its 3 years to partner, not 2. 1st partner year is partner
                      lite as you are paying a fee you arent ever getting back. A little misleading. In this market, 2 years to partner should be the norm. Im guessing the candidates wrvu numbers are in line or higher than partners.

                • ruszja

                  Member
                  May 14, 2023 at 2:35 pm

                  Quote from Tufer

                  We are a traditional private practice. 30 partners plus employees. We structure the buy in so that you just pay the amount but when you leave the group, there is no buy out. It’s one of those things where it’s just the way it has always been done. So once the new partners keep on agreeing to the practice to make partner, they don’t want the next person that makes partner not have to pay it for fairness sake. I haven’t been here long enough, but it may have been some thing made up during the time when job applicants were much easier to come by as a way for the older partners to extract a little more value for themselves from the people on partnership track.

                  Anyways, our pre partner contract is vague and does not state how much the buy in is. It’s something that can’t be negotiated since it’s not in writing. We just verbally mention it briefly when the initial contract is being offered/negotiated. 

                   
                  Ok. Verdict is in:
                   
                  He is reasonable. Your practice is not.

                  • Unknown Member

                    Deleted User
                    May 14, 2023 at 3:11 pm

                    Pendulum swings, it’s now on the employees / partnership track guy’s side. Just like when old partners had non existent buy ins. If a group doesn’t get with the times, they’ll suffer more than the avg. 120k in the grand scope of things for a “good group” to retain a “good rad” ….is peanuts.

                    • smfst7_929

                      Member
                      May 14, 2023 at 3:41 pm

                      Lets be realistic though. Many in the group will harbor resentment against this rad, warranted or not. I cant speak for everyone else, but I value a good work environment for potentially the rest of my career over a one time payment of 120k which is more like 60k after taxes. At this point however I think this rad has to stick with his ask. If he backs down and says ok Ill pay the 120k, then he will still be resented for even asking. So he might as well go through with his ultimatum at this point.

                      My guess is also that there is more to the story. Maybe he is top 10% of production. Maybe some of the other partners are outlier on the low end and its getting under his skin after two years. Maybe he wants better work life balance and figures if they call his bluff hell just move to a job with better work life balance.

                      Also for all we know, the OP is actually the rad in question and wants to present the story to either be reassured he made the right decision to negotiate or be talked down from his perch.

                      I say keep your demand of waived 120k buyin. Youve made your bed, so sleep in it or leave.

                    • alex.nieto_484

                      Member
                      May 14, 2023 at 4:27 pm

                      This whole fake buy in is scammy and scummy and should be dropped. At some point in the past the partners decided they could squeeze the associates for one last drop of productivity/value at the very end by springing this bullshit right before partner and so far everyone has taken it lying down.
                       
                      Someone has finally stood up and called out the BS. I hope you let them go and they go on to substantially improve their work-life balance by taking the tele job. 
                       
                      I hope there is a name and shame one day

                    • happypersontotally_399

                      Member
                      May 14, 2023 at 7:17 pm

                      Well, you may not like how my group operates, but everyone else in our group thought it was ok and has followed suit. This guy is going it alone. Good luck to him when we don’t agree on a contract and both of us lose out, he more than us.

                    • satyanar

                      Member
                      May 14, 2023 at 8:02 pm

                      As I said. A lose/lose situation. But I guess it makes your group feel better that you can share the results of his worse loss than yours on AM.

                      Your partnership doesnt sound like a real partnership. A true partner would be owed their share of the AR on retirement.

                    • alex.nieto_484

                      Member
                      May 15, 2023 at 4:52 am

                      Quote from Tufer

                      Well, you may not like how my group operates, but everyone else in our group thought it was ok and has followed suit. This guy is going it alone. Good luck to him when we don’t agree on a contract and both of us lose out, he more than us.

                       
                      Not a single person on this forum agrees with you and this is your take lol. Glad the associate stood up for themselves. 

                    • btomba_77

                      Member
                      May 15, 2023 at 5:01 am

                      Quote from RadCog

                      This whole fake buy in is scammy and scummy and should be dropped. At some point in the past the partners decided they could squeeze the associates for one last drop of productivity/value at the very end by springing this **** right before partner and so far everyone has taken it lying down.

                       

                      Quote from tigershark06

                      Sounds like this guy understands yall are trying to scam him. If there is no buy-out then what is he “buying-in” to?

                      I think I come down on this side of it.
                       
                      Seems bogus.  It’s not a real buy-in … it’s a money grab in the final days as an associate.

                    • JohnnyFever

                      Member
                      May 15, 2023 at 6:28 am

                      Wish you would have included that there is no buy-out in the original post. Needs to go away. Recent partners who paid that nonsense are going to get screwed

                    • m.bertugozen_584

                      Member
                      May 14, 2023 at 8:29 pm

                      Something seems fishy about this associate. I would personally run a background check on him before agreeing to play ball and negotiate. Find out what you are getting into before minting him partner

                    • DanielQuilli

                      Member
                      May 15, 2023 at 2:13 am

                      Sounds like this guy understands yall are trying to scam him. If there is no buy-out then what is he “buying-in” to?

                    • Drthekra

                      Member
                      May 15, 2023 at 2:50 am

                      Camaraderie and self esteem.

                    • ruszja

                      Member
                      May 15, 2023 at 4:43 am

                      I would expect that any partner contract that specifies a buy-in also specifies a buy-out (and how it is valued).

                      Waiving a buy-in becomes tricky if you decided to sell the group. If someone didn’t buy in, they should not receive a share of the sales proceeds.

                    • ds_428_213

                      Member
                      May 15, 2023 at 4:45 am

                      Agree with many others that this buy-in is ridiculous and just because that is the way its always been done does not mean that is the way it should be done moving forward.

                      I think the partners should use this opportunity to decide if this associate is someone they truly want to be partners with. If he cherry picks cases to get high RVUs and weasels out of tumor boards and marketing events, maybe this is your opportunity to dump this guy. If he is an upstanding associate that will more than pull his weight as a partner and he was the first person to realize that the buy-in doesnt make any sense, you probably do want him as a partner.

                      Going forward, the practice should seriously reconsider restructuring this agreement. As others have said, you essentially have 3 years to partner and a buy-in with no buyout. Most savvy associates will say that doesnt make a lot of sense. You could get rid of the buy-in moving forward. Or you could make it one year to partner and keep the $120k or whatever amount you want to make up to be paid out as $30k per quarter pretax paid out over year 2. Because there is no buyout, you can do whatever you want as a group.

                      $4k pretax money for each partner is nothing. $120k to an associate who has $300k in student debt and has to buy an expensive house and pay for childcare etc seems like a huge amount of money.

                    • pranav.devata

                      Member
                      May 15, 2023 at 7:23 am

                      I’ll be honest, as a long time PP partner at a few sites, I immediately thought “screw this dude, you should cut him loose because he thinks he is entitled”. BUT, after reading the buy-in of 120k with NO buy-out part, and the 3 years to partner, I am totally on his/her side now. If there is a buy-in there should always be a buy-out. Otherwise it isn’t about buying into the AR, it’s about giving up your salary to pay the real partners extra. As is the third year prior to partner. Sounds to me like “the way it has always been” is all about the senior partners screwing over the new guys. I have had a buy-in at the three PP I have been a part of. Always a buy-out when people leave. Varied from 1-2 years to partner. 2nd group did a graded pay prior to partnership that was instead of straight buy-in. More complicated, but it worked.

                    • gmail.com

                      Member
                      May 16, 2023 at 6:19 pm

                      Did the partners who joined say 20 yrs ago buy-in for 120K?   
                      The negotiation has likely poisoned the well.   
                      If he is a top 10% productive rad he is probably irritated that the other partners who are less productive, dare we say lazy, appear to be benefiting off his hard work.  Even though the principle of everyone went through this seems reasonable to some, it’s clearly not for him.
                      Or maybe he has researched telerad work and figured he can make more money or some groups are throwing insane signing bonuses at his feet.
                       
                      Probably best to move on to preserve the harmony in the group.  Huddle and figure out if you need to modernize your job offer/contract for partnership track rads.   On top of earning less for 2 years and then handing over 120K without having it spelled out clearly from the beginning would leave many rads with a very bad taste in their mouth.
                       
                      My old group had a buy-in but it was for equipment owned in imaging centers and real estate (imaging center, etc.)  so the valuation of it done annually made sense when calculating the buy-in.   We did not have the new partner buy-in to AR, but when they retired or left, they got a % of the AR based on a vesting schedule spelled out in the contract.  To me this seemed fair.  No one tried to negotiate it right before becoming partner. 
                       

                      Quote from RadCog

                      This whole fake buy in is scammy and scummy and should be dropped. At some point in the past the partners decided they could squeeze the associates for one last drop of productivity/value at the very end by springing this **** right before partner and so far everyone has taken it lying down.

                      Someone has finally stood up and called out the BS. I hope you let them go and they go on to substantially improve their work-life balance by taking the tele job. 

                      I hope there is a name and shame one day

                    • mwakamiya

                      Member
                      May 17, 2023 at 5:33 am

                      Some have mentioned that the “buy-in” should have been clearly stated in terms of a specific amount from the very beginning. For anyone who runs any radiology business, that prediction two or three years ahead of time is impossible to do as the AR fluctuates, especially if contracts are added or taken away, not to mention the AR is presumably divided by the partners who are in the group at that specific time. With a big group, that number percentage wise can be relatively stable but with a smaller group of say 8-12 rads or even 20 rads that percent can change dramatically.
                      I have not reviewed all the posts, but there is something to be said about precedent. Now if this guy is a once in a lifetime talent and the group will literally dissolve into thin air if he goes away, then as a group you guys have to make a decision. Otherwise let him go and be done. Grow some cojones man. 

                    • ds_428_213

                      Member
                      May 17, 2023 at 8:18 am

                      The amount is not an equal share of accounts receivable. It is not directly tied into buying land or equipment. It is not in any way tied to practice valuation. It is just a made up number to line the current partners pockets and there is no buy out at the end. This is why people think it is ridiculous.

                  • Unknown Member

                    Deleted User
                    May 15, 2023 at 8:47 am

                    Quote from fw

                    Quote from Tufer

                    We are a traditional private practice. 30 partners plus employees. We structure the buy in so that you just pay the amount but when you leave the group, there is no buy out. It’s one of those things where it’s just the way it has always been done. So once the new partners keep on agreeing to the practice to make partner, they don’t want the next person that makes partner not have to pay it for fairness sake. I haven’t been here long enough, but it may have been some thing made up during the time when job applicants were much easier to come by as a way for the older partners to extract a little more value for themselves from the people on partnership track.

                    Anyways, our pre partner contract is vague and does not state how much the buy in is. It’s something that can’t be negotiated since it’s not in writing. We just verbally mention it briefly when the initial contract is being offered/negotiated. 

                    Ok. Verdict is in:

                    He is reasonable. Your practice is not.

                    I agree the practice sounds like a problem. Glad I don’t work there.

                    • Unknown Member

                      Deleted User
                      May 15, 2023 at 10:38 am

                      Is this an A/R buy-in or is it a “goodwill” buy-in?  If it is an A/R buy-in no big deal. You can make him a partner without the buy-in but he does not get bought out whenever he leaves. That’s what A/R buy-ins mean, you are buying into a percentage of the A/R.  It does not mean he can’t be a partner with a vote and share the revenue, he just does not own any of the A/R.  If it is a goodwill buy-in, mean it is a way for the new guy to put some bucks in the partners pocket then it’ stupid and you all shouldn’t have done it.  If it is tied to an asset like an imaging center than that is legit and he is asking for the group to buy him in.  My guess is he understands the buy-in is an A/R buy-in and he doesn’t give a crap about it which is fine.  IMHO a productive radiologist in this market is worth much more than forcing him to buy a percentage of A/R which means nothing.

                    • cody.a.keller_68

                      Member
                      May 15, 2023 at 10:51 am

                      Consider yourselves lucky. Heard of a group in Virginia with no real assets and a 600k buy in. 

                    • jtvanaus

                      Member
                      May 15, 2023 at 11:22 pm

                      Sounds like it’s time to re write the partnership agreement and eliminate this “buy in” 

                    • tom.claikens_334

                      Member
                      May 16, 2023 at 12:55 pm

                      .

                    • ds_428_213

                      Member
                      May 16, 2023 at 1:10 pm

                      He can throw a dart at a map and find his next job if he hasnt already. He doesnt have all that much risk in this market unless he is really geographically tied to the area. Even if he is, he can find a tele job easily.

                    • afazio.uk_887

                      Member
                      May 16, 2023 at 1:27 pm

                       
                      Buy-in without buy-out is just theft, plain and simple.  Your group sounds bad imo. 

                    • smfst7_929

                      Member
                      May 16, 2023 at 5:21 pm

                      This group should have been more tranparent from the beginning. They should have called it a 3 year partnership track. Taking 120k from his salary on year 3 means he coukd potentialy make less than as an associate if the group hits hard times for whatever reason- loss of a contract, MRI scanner goes down for six months, all oncologists leave etc. All the risk of partner minus 120k for the privilege. On top of that this associate was probably busting his hump for the first two years. If the guy wasnt a hard worker with high production, I doubt the OP would have even made this thread- he would have just told him ok thanks for the sweat equity and dont let the door hit you on the way out.

                      I actually agree with Nate that most rads wouldnt have the balls to actually make demands like this. Thats why people dont leave private equity, why they let private equity run roughshod over them and part of why our speciality has become a commodity. Nobody is willing to risk a confrontation or a potentially uncomfortable situation to get what they want.

                      This guy could fall into any job though. And if he is experienced some groups would hire him on at financial parity with voting rights at 6-12 months. Now is the time to make moves. Maybe this guy decided he would be bitter if he didnt make this ask.

                • sriramjsrini_593

                  Member
                  May 15, 2023 at 8:22 am

                  since when is something non negotiable if it is not in writing? lol some radiologists need to figure out a better way to make money from actual investments and business ventures (real estate, ect) 

                  • btomba_77

                    Member
                    May 15, 2023 at 8:46 am

                    Quote from raddapp92

                    since when is something non negotiable if it is not in writing? lol some radiologists need to figure out a better way to make money from actual investments and business ventures (real estate, ect) 

                    I think in this case “non negotiable” means “we’re not going to negotiate”

                • jerard.maradona_152

                  Member
                  May 17, 2023 at 1:26 pm

                  There is a buy-in but no buy out? Your practice sucks and that is a scam.

                  YES he has another job lined up and in the current market there is a good chance it pays near or better than your group. He isn’t being short sighted because there is no guarantee to ever see that money again.

                  “Hello you’re hired, now pay US.”

                  The lack of buyout and obscure contract language is so scummy. Change your practice or get ready to never hire/retain another millennial again.

                  • benoit.elens

                    Member
                    May 17, 2023 at 1:36 pm

                    Lot of great points have already been made.  Time for this practice to look inwards and realize they are doing things wrong, and make changes.  It sucks for the guys who already paid in, but just because an unjust policy affected others negatively in the past, doesn’t mean it should continue,
                     
                    Buy in should come with buy out, always.  And IMO, sweat equity is already a buy in for AR (that’s just such a relic that some still hang onto).  Buy ins should be reserved for hard assets.

                    • Sassafras

                      Member
                      May 17, 2023 at 3:06 pm

                      A few more thoughts:
                       
                      –The “buy in” is structured so technically the harder an associate works, the higher the buy in is. If this associate is picking up slack, that is going to sting.
                      –Is the associate taxed on the full of the buy in? If so, you are really hitting them with another 30-40% of that amount their first year. People don’t always catch this. 
                      –If it isn’t clearly disclosed up front, it will forever upset people. Bet there are more upset partners in your group than you realized. This is just the first to take advantage of the market and tell you to pound sand. Of course, the other partners are also continuing in the grand medical tradition of “screw them because I got screwed”

                    • ctinfo

                      Member
                      June 3, 2023 at 8:53 am

                      Good for that associate!  He recognized a scam and is calling your practice out on it.  Unfortunately, most doctors never learn anything about business practices and what to look for in a predatory practice.  They just take it up the rear without even realizing how badly they’re getting screwed by the underperforming senior partners.  

          • ruszja

            Member
            May 14, 2023 at 9:58 am

            Quote from TurboEcho

            Quote from fw

            – existing AR
            – the value of buying an existing business rather than setting one up from scratch

            Isn’t that what the 2 years or so associate work up was for.  So the associate is paying in both time AND $$?  If it was equity in a free standing center, maybe, but this sounds…

            The services you provided as an associate were paid through your associate salary.

            With buy-in comes buy-out. Some groups will give you the buy-in for free and still give you a buy-out when you retire. That’s nice but outside of the argument ‘its a seller’s market’s there is no reason they should.

    • ljohnson_509

      Member
      May 14, 2023 at 6:40 am

      Short sighted thinking for 120k. Its no longer 2010 and a job market depression.

      • JohnnyFever

        Member
        May 14, 2023 at 6:48 am

        I wouldn’t pay 120k unless there are assets to guarantee it. You’re both the a***********.

  • mwakamiya

    Member
    May 14, 2023 at 8:40 am

    Tufus, 
    Don’t fall for it. Guy sounds like a spoiled brat negotiating above his pay grade. 
    You do not want that guy as a partner for potentially the rest of  your life and the lives of your other partners. 
    Things seem “tight” in your group now, however without him I would assume the group would not completely fall apart and disintegrate the next week in thin air (a la Avengers Enggame). 
    He is changing the rules of the game as they game goes along. Yes the market is hot now, but no reason for him to be abusing this, especially last minute.
    I like it when people asksabout “hard assets” in radiology — 95% plus of groups in the USA have not “hard assets” at all. The asset that the group has are AR (this can be substantial — typically in the millions for a mid sized group), a functional/running/successful/profitable business, contracts with hospital/imaging centers, contracts with radiologists/ancillary staff (yes believe or not these have a value within the context of the business) and goodwill/reputation.  All of these are true and tried fundamentals of any business valuation.  

  • elikot

    Member
    May 14, 2023 at 8:55 am

    Assuming that it takes several years to full vest in retirement plan, he will lose that. Perhaps offer to spread out his buy in say over 5 years, and have it come out of his pretax paycheck. 

  • satyanar

    Member
    May 14, 2023 at 9:09 am

    Quote from Tufer

    he has already committed 2 years of being underpaid on his partnership track, 

     
    Which is what should have covered the cost of his AR buy in. Sounds like the partner track was designed for the days when everyone would be happy to have a job, especially a good one in a solid PP. This may end up causing a lose/lose over $120K, which is a paltry sum in the scheme of things.

    • alex.nieto_484

      Member
      May 14, 2023 at 9:43 am

      you could always just meet in the middle. that way no one is happy and a sign of a good and fair agreement

  • smfst7_929

    Member
    May 14, 2023 at 11:57 am

    I say let him do no buyin. But he doesn’t get buyout either.  Problem solved. And this guy will have a target on his back if shortage ever abates… I think bad move on his part longterm, but it is what it is.

  • smfst7_929

    Member
    May 14, 2023 at 12:01 pm

    Quote from Tufer

    Our group has a small problem. We have a partner track associate who is up for partner in 2 weeks and is now negotiating hard with us on the partner contract. His initial employee contract does not have a renewal clause and expires after it’s term which we assume means he can leave us right when it ends without giving us our standard 90 day written notice (let me know if this is true because we’ve never had anyone leave without notice). Our group is a little short staffed and the subspecialty division he is in really needs the help over at least the next 1.5 years. The guy is asking for us to waive our standard 120k buy in which all the prior partners have paid. He says he’s ready to leave and has another tele job lined up. We can’t decided if he is bluffing and really willing to leave.

    Would you guys negotiate with him and give in a little or tell him to take it or leave it? We are a little surprised he is doing this, as when we try to think of it from his view, he has already committed 2 years of being underpaid on his partnership track, and if we tell him no and he leaves, he will surely have to work somewhere else for less. It just doesn’t make too much sense from his standpoint to risk giving up the partner income for the 120k buy in. For us, we really need the help, but not sure we should be caving in to such demands.

    Another consideration is to let him do no buyin… then six months into his partnership track, you give buyouts to all those currently working… making your practice no longer a buyin/buyout practice.  Of course the 120k “buyouts” only go to those who have actually paid into the system… subsequently his paycheck will be a little light that quarter lol.
     
    I think buyin/buyouts are stupid unless you own an imaging center or own equipment.  I understand the concept is that you’re “buying into” the last quarter’s receivables… but I think it’s stupid.  Just do away with it.  
     
    You could also consider making him a non-voting partner for the first year or two if you cave to his demands.  Full financial parity but no voting rights for a certain period of time.  
     
     

    • g.giancaspro_108

      Member
      May 14, 2023 at 12:06 pm

      The OP specified they have no buy out.
       
      No reason they couldn’t do the ‘buyout’ sartoriusBIG suggested and cleanly eliminate this odd partner fee going forward.
       

      • smfst7_929

        Member
        May 14, 2023 at 12:15 pm

        Quote from sandeep panga

        The OP specified they have no buy out.

        No reason they couldn’t do the ‘buyout’ sartoriusBIG suggested and cleanly eliminate this odd partner fee going forward.

        Ah my bad, didn’t see they have no buyout. Well then they would have to institute a new one time “buyout fee” that new partner wouldn’t get. If you make the guy a non-voting partner his first year, then you can easily get that passed. Or wouldn’t even have to do that if your bylaws allow for that with just a simple majority vote. But then you run the risk of ticking the guy off and ending up back in the same place. 
         
        It sounds like what they have is just an extended partnership track and financial parity isn’t reached until year 3.  Kind of dumb. I agree that they should just do away with that 120k entirely.  It wouldn’t be entirely unreasonable to pay 120k to all partners as a one time buyout fee though. But I wonder if we have all the details.  Did the boomers pay a 120k fee?  I don’t think those that never paid 120k should get a one time 120k payment.  But then it becomes harder to pass that through a vote, especially if a majority never paid the 120k or paid a lower amount.

        • consuldreugenio

          Member
          May 14, 2023 at 12:34 pm

          $120k is like $4k extra to the 30 partners for that one year. Is $4k that big of a deal in this market? Thats $2.5k post tax. Pretty short sighted to see this as a reason to lose a needed rad.

          Its truly comical what I see partners complain about when it comes to new recruit deals. While simultaneously complaining about high volumes and difficultly hiring or retaining needed new rads!

          Eat the 4k and stop the nonsense 120k fee/extra partner track year.

          • abd.fawzi_217

            Member
            May 14, 2023 at 12:55 pm

            I’m confused how the idea of “buying out” the partners works. The money doesn’t just magically appear, presumably it would come from the money that they were paying themselves anyway?
             
            Seems like the red flag is on the practice side

            • smfst7_929

              Member
              May 14, 2023 at 1:14 pm

              Comes from accounts receivable bonus money. Typically the way a PP is structured, they pay partners a base salary. At the end of each quarter any money leftover after base salaries are paid ends up being disbursed as a quarterly bonus. Any buyout would come out of that bonus money. Lets say the bonus is 120k per radiologist per quarter. If you do a 120k buyout that quarter for everyone then your bonus is basically zero that month.

              • Unknown Member

                Deleted User
                May 14, 2023 at 2:15 pm

                Theres no reason to give this new potential partner some break the other partners didnt get

                Are they so valuable that they cannot be replaced?

                How are they going to be seen as an equal partner if they got some sweetheart deal to get in? If I were a partner in your practice I would forever resent this person.

            • ruszja

              Member
              May 14, 2023 at 2:32 pm

              Quote from boggles

              I’m confused how the idea of “buying out” the partners works. The money doesn’t just magically appear, presumably it would come from the money that they were paying themselves anyway?

              Seems like the red flag is on the practice side

               
              It means that once a partner leaves or retires, they receive their share of the value of the business. Either as a lump sum, or more commonly parceled out over a few years to reduce the tax effect on the retiring partner and the cash flow effect on the remaining business.
              How you value the business is just limited by how you define it. In a 100% hospital practice that doesn’t own any physical plant, one of the main assets is the existing accounts receivable at the time of the separation. So you have 15 partners and a 90 day AR of 1.5mil, the leaving partner gets 100k. That’s pretty straightforward.
              It gets more complicated if you put a value on the business itself. It’s a recognized value, typically calculated in multiples of earnings (EBITDA). So if you sold the practice, the partner would get his share, this way he gets his share when he retires.
               

    • smfst7_929

      Member
      May 14, 2023 at 12:07 pm

      Final option is to tell him to take a hike, then hire someone on a one year partnership track.  If your group is a good one, you shouldn’t have trouble finding someone on short notice.  Sure, you may be short on vacation for a quarter or two, but you’ll get it back once you bring on someone else.  Don’t try to go back to two year partnership track tho, or you may go 1-2 years without finding a proper replacement.

  • mario.mtz30_447

    Member
    May 14, 2023 at 3:39 pm

    Quote from Tufer

    He says he’s ready to leave

     
    This part is bothersome to me.  Sounds like hes looking for a reason to stay and that something extra is the 120k buy in.  But even if he gets the 120k buy in waived, sounds like there are more important things he doesnt like about your group.  
     
    Maybe he isnt just trying to get an extra 120k, which would be shortsighted.  Maybe thats just what he can think of to tip the scales, but what he really wants is maybe something nothing to do with money.
     

  • aldoctc

    Member
    May 15, 2023 at 6:44 am

    So the reddit “AITA” threads come to Aunt Minnie. LOL
     
    Put me down as another vote for the radiology group being the “A” in this scenario.  To be fair, obviously IDK the associate and he could be an “A” or not.  I’m surprised this is the first time it’s become an issue and that the group is able to recruit anyone.  Prime location perhaps? 
     
    The original post described this as a “small problem.”  If I were looking for a job, I’d look at this ‘buy-in’ as a BIG problem.  
     
    Further info from OP:  “Anyways, our pre partner contract is vague and does not state how much the buy in is. It’s something that can’t be negotiated since it’s not in writing. We just verbally mention it briefly when the initial contract is being offered/negotiated.”  Again, as a potential hire, I’d look at this as a BIG problem.  
     
    So when did you spring it on the newbie that he’d have to cough up $120K to be a partner?  Last week?  Or during that “Oh-by-the-way” verbal mention when he signed? 
     
    Apparently every partner has paid something but has every other partner in your practice paid $120K before becoming partner?  I’m guessing not since ‘buy-in’ amount stated as arbitrary.  My experience is that arbitrary is never ‘fair.’
     
    Why is something that’s not in writing non-negotiable?  
     
    Years ago when I was looking for my first job (early 1990s), I came across practices like this.  I remember one where you were an “associate” for 2 years then on “partnership track” for 5 years or so where your income got dinged but you weren’t actually buying in to anything–not AR, not buildings/RE, not equipment, nothing.  Even in the dismal job market of the 1990s, I wasn’t interested in it.  
     
    Lots of posts on here bashing PE.  With scenarios like the OP, no one should be surprised that PE can easily entice PP radiology groups to sell out.  
     
     

    • smfst7_929

      Member
      May 15, 2023 at 7:18 am

      Human beings are greedy. Radiologists are not immune from this. They have done it in the past because they could get away with it.

      But the times they are a changin

  • Sassafras

    Member
    May 17, 2023 at 8:18 am

    You blindsided him with an undisclosed amount. He probably isn’t bluffing. Might be time to take a hard look at what else he was dealing with in the past two years–dumped on? Always taking the less desirable shifts? Expectation to do insane volume? A lot of resentment can build up in two years of being abused.
     
    The job market has changed. Wildly. In just the past year. Undisclosed buy ins and vague promises aren’t going to cut it anymore. Just because the last people paid it doesn’t mean future people will. It’s time to re-evaluate your partner track NOW and get ahead of it before you end up like a lot of other groups–up a creek, short staffed, and unable to hire anyone. And do it before you get a reputation. 
     
    Few places can easily get an on-site rad anymore. Your best bet after this will be a remote person. 
     
    Sounds like you are at a pivotal point in your practice. Decide now if you want to keep it going or watch it start withering.
     
     

    • smfst7_929

      Member
      May 17, 2023 at 8:27 am

      This is like the reddit AITA forum haha. Consensus seems to be that yes OP and his partner brethren are indeed the A.

      • mircea.cg_544

        Member
        May 17, 2023 at 9:07 am

        So you offered him a joband then said that he had to pay you to start the job. Genius!