Tag: employee

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The Real Reasons Partnership Track Salary Offers Are Lower (And The Risks You Take!)

salary offers

Now that you are beginning to search for employment opportunities or have plans to start in a few years, you may hear a bit about the employee and partnership track salary for radiologists. Also, you probably have learned that new radiologists on the partnership track earn significantly less. Since you were hoping to become a partner in a practice, are you getting sticker shock about the lower partnership track salary offers? And, why do stark salary differences exist between a partnership track position and an employee anyway? Moreover, what are the pros and cons of taking on this lower starting salary? To answer these questions, we will examine the most critical reasons why starting salary offers differ dramatically. Then we will discuss the risks you take when starting with this lower partnership track salary.

Why The Differences In Salary Offers?

Increased Partnership Income

After all these years, you’ve probably heard the adage: you never get something for nothing. In this case, this aphorism holds. Those who take on a lower starting salary get more significant rewards in the end. When you start on a partnership track, you sacrifice your current income for future increased income. So, that makes a bit of sense.

Buy-ins And Buy-outs

When you start as a partner in private practice, it’s only fair to put some of your money toward buying a share of the practice’s assets. These assets may be accounts receivable, buildings, equipment, and more. No one is going to give that away. So, here is where the buy-in comes to play. Usually, practices will deduct some of this amount from your initial salary during your partnership track to pay for it. We know this amount as “sweat equity,” or the work/money you must put into the imaging business to share in ownership.

Bigger Benefits

Hey buddy, it’s not just about the salary. The fringe benefits of partnership often make a more considerable difference in your lifestyle. In the case of many partnerships, partners get larger pensions, increased malpractice insurance, more extensive life and disability insurance policies, tax-free car write-offs, cell phone and internet usage deductions, and more. These perks can add up over time. So, practices tend to compensate for these more considerable benefits by issuing a lower salary on a partnership track.

Increased Control

Nowadays, it is next to impossible to control almost anything fully in healthcare. However, entering into a partnership allows you to manage your destiny more than working as an employee for a practice. No doubt, the increased control you will eventually obtain from completing a partnership track factors into those first few years of partnership.

What Are You Risking For All Of This?

The Chance You Will Never Make Partner

You take a leap of faith when you begin on a partnership track. Rightfully so, you assume that you will be able to meet the requirements of the practice and eventually become an equal shareholder. But what happens if this is not the case? Well, that can be undoubtedly devastating. You will lose out on years of potentially higher income that you would have made elsewhere. So, you are looking at potentially significant risk when starting a partnership track.

Company Buyout

More commonly than ever, large corporate conglomerates and massive practices buy out smaller “Mom and Pop” firms or even mid-size practices. Let’s say you happen to be on a partnership track at the time of one of these buyouts. In this case, you will have no guarantee that the new owners will add you to the partnership track, issue you any significant benefits, or even compensate you appropriately when the buyout ensues. All your hard work and lower initial starting salary proverbially can be down the drain.

Partnership Will Not Be The Same

You go onto different forums (check out Aunt Minnie!), and you will find many threads on this topic. Let’s say everything goes great, and you eventually become a partner in a practice. Who is to say that the results will pan out? Sometimes, but not often, private partnership salaries can be lower than the salaries that their employees enjoy. Especially for practices that are not well run. Or, maybe, reimbursements for procedures will take a nosedive when you are working on a partnership track. Who knows if the benefits will remain 5 or 10 years down the road?

My Bottom Line

You probably understand why practices issue lower salary offers to employees on the partnership track than their employed colleagues at this point. You are receiving the potential for real future benefits. 

At the same time, however, working on a partnership track involves taking significant risks. What you choose in the end will probably pan out. But, it certainly does not always work out. Therefore, before starting any job, you must do your due diligence and determine if a partnership track or employed position works well for you. Good luck with your search!

 

 

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Should I Be An Independent Gun For Hire?

independent gun

Nowadays, new radiologists may face a new choice, not as prevalent years ago. As such, you may work for one or more than one firm that allows the option of independent contracts or employed work. Most commonly, this decision exists for those who choose teleradiology. But other arrangements are also possible. So, what do you do? Do you operate as an independent contractor getting yearly 1099 forms? Or do you take employment wages and receive a W-2 at the end of the year? Although this decision may seem innocuous, significant consequences await those who don’t think about how to proceed. So, today we will discuss the advantages and disadvantages of contracted work. In addition, we will talk about a significant pitfall you must avoid when you begin your first independent contractor job. Let’s start!

Reasons To Become A Gun For Hire

Independence allows radiologists to contract out with multiple groups. Many employed positions muzzle the worker by outlining in the contract that they may not work with other groups or outside work. On the other hand, theoretically, as an independent contractor, you can work with five or more different groups and facilities. Similarly, the more the independent contractor works, the more you can get paid. This workflow differs dramatically from an employed worker that often has a fixed salary with, perhaps, a small production bonus.

In addition to the ability to work with multiple facilities, the independent contractor can also deduct expenses from their income taxes. As a typically employed radiologist, you cannot write off items like fax machines, paper, health insurance, 401k plans, and more. When you work for yourself, all these deductions can significantly reduce your taxable income. Therefore, making more take-home income with the same salary is possible.

Then, of course, depending on how you structure your business, you may be able to take advantage of the new tax laws that favor corporations. For instance, you may depreciate capital equipment more rapidly over time. And, if your income dives below a lower threshold, you can deduct additional earnings as a pass-through corporation. Additionally, you may be able to put more retirement account funds away in a SEP-IRA versus an employed 401k plan. Whatever the case, I highly recommend discussing the consequences of different corporate structures and tax ramifications with your accountant.

Becoming A Gun Is Not All Peaches And Cream!

What issues do independent contractors need to contend with? Maintaining contracts with different entities becomes your responsibility if you independently contract with multiple facilities. And the loss of one or more contracts can devastate your finances if you rely on this income to sustain your household. No longer can you rely on your employer for your paycheck.

Working for yourself as an independent contractor can also become a lonely business. Instead of working in an extensive practice with many other radiologists, some independent work can isolate you from your colleagues. For some, this can be a potential deal breaker.

Other issues arise, such as traveling from facility to facility to work. (if you work at multiple locales) If you have a more capital-intensive business and, for instance, you run remote computer software, you may need to fix the equipment if it goes down. Or, if you work from home and have a power outage, how do you run your business? These questions do not have to cross the mind of the employed radiologist.

Finally, if you employ other workers/services, you also rely on their work. If they don’t show up, you don’t get paid!

A Major Independent Contractor Pitfall

For those of you who go down the road of an independent contractor, you must remember what you take home; you do not entirely keep. Naturally, you always have to save additional money for the taxman. More than that, you will also likely need to pay quarterly estimated taxes to prevent IRS penalties. Again, I would talk to your accountant about the details of your situation.

To Be Or Not To Be An Independent Contractor

Becoming an independent contractor as a radiologist certainly can have significant benefits. But, no job comes without its pitfalls as well. Suppose you like the independence of working for multiple groups, getting paid as much as you work and being able to deduct certain work expenses. In that case, independent contracting has a certain allure. At the same time, it also involves different risks you must take. Additional rewards never come without some sacrifice!