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

2. Learning Objectives Upon completion of this workshop participants should be able to: Improve their ability to search, locate, & evaluate various medical practices opportunities. Improve their ability to search, locate, & evaluate various medical practices opportunities. Evaluate employment agreements with future employers Evaluate employment agreements with future employers Discuss the process of joining a medical practice, achieving partnership or ownership and providing for improved patient care Discuss the process of joining a medical practice, achieving partnership or ownership and providing for improved patient care

3. 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?

4. What kind of practice do I want? Administrative/non-clinical Administrative/non-clinical Academic Academic Hospital PHO Hospital PHO Multi-Specialty group Multi-Specialty group Single-Specialty practice Single-Specialty practice Group Group Solo Solo Part-time or Full-time Part-time or Full-time

5. What kind of practice do I 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 colleagues? Would you prefer to be solo or have colleagues? Clinical reputation/sophistication Clinical reputation/sophistication Business/political environment Business/political environment Market forces Market forces

6. Positive Market Forces Decreasing Allergist Supply + Aging Allergist Supply + Increasing Population IncreasingIncomePossibilities =

7. Negative Market Forces Other Specialties Competing + Managed Care + Weak Regional Economies + Increasing Overhead + Possible  Insurance Pmts DecliningIncome =

8. National 50 th Percentile Allergist Income From the Medical Group Management Association, 104 Inverness Terrace East, Englewood, Colorado 80112-5306; 303.799.1111. www.mgma.com. Copyright 2005. Single Specialty Single Specialty$291,000 Multi-Specialty Multi-Specialty$244,000 Eastern Eastern$266,000 Western Western$224,000 Overall Overall$247,000 No Capitation No Capitation 33%-52% of charges >10% Capitation >10% Capitation 29%-45% of charges

9. Best Options Financially Replace a retiring provider with strong market positioning, in a solo or single-specialty small group Replace a retiring provider with strong market positioning, in a solo or single-specialty small group Start a solo practice in an underserved area Start a solo practice in an underserved area Earnings are higher, and cost of living is generally lower, in the Eastern & Southern US Earnings are higher, and cost of living is generally lower, in the Eastern & Southern US

10. Benefits of Solo Practice Control income Control income Control hours & lifestyle Control hours & lifestyle Select support staff Select support staff Income often better than in multi-specialty Income often better than in multi-specialty Less internal politics/personality disputes Less internal politics/personality disputes

11. Benefits of Group Membership Higher earnings (maybe) Higher earnings (maybe) Clinical peer support Clinical peer support Delegated administrative tasks Delegated administrative tasks Better management Better management Afford/amortize better equipment & facilities Afford/amortize better equipment & facilities More power in local medical politics More power in local medical politics

12. What makes a good practice? Patients Patients Staff Staff Peers Peers Opportunities for research or teaching Opportunities for research or teaching Lifestyle issues Lifestyle issues Income Income

13. Evaluating Practice Opportunities Starting Solo Starting Solo Research area Research area Financing Financing Professional help Professional help Systems/Operations Systems/Operations Marketing Marketing Joining a group Joining a group

14. Evaluating Practice Opportunities Joining a group Joining a group Recruitment Recruitment Evaluation Evaluation Compensation and incentives Compensation and incentives Ownership opportunities Ownership opportunities Spend a lot of time and ask a lot of questions! Spend a lot of time and ask a lot of questions!

15. Evaluating Practice Opportunities Joining a group (questions) Joining a group (questions) What are the group’s professional and personal criteria for a candidate? What are the group’s professional and 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 within the organization? Who is responsible for specific activities within the organization?

16. Evaluating Practice Opportunities 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 practice been? What has the financial performance of the practice been? How do tasks rotate for physician leadership? How do tasks rotate for physician leadership? What are the competitive forces in the community and how has the organization prepared? What are the competitive forces in the community and how has the organization prepared?

17. Evaluating Practice Opportunities Joining a group (questions) Joining a group (questions) What is the group’s reputation in the medical community? What is the group’s reputation in the medical community? Visit the practice during office hours and observe organization, professionalism, etc. Visit the practice during office hours and observe organization, professionalism, etc. How do the current partners envision your role as a new physician? How do the current partners envision your role as a new physician? Have any physicians left the practice? Have any physicians left the practice? Get professional help reviewing the contract. Get professional help reviewing the contract.

18. AAAAI Financial Data Survey Results Survey data collected for 2005 financial results from April 1 until August 1, 2006 Survey data collected for 2005 financial results from April 1 until August 1, 2006 74 practices representing 196 physicians 74 practices representing 196 physicians Not all shared charge/collection/expense data Not all shared charge/collection/expense data

19. AAAAI Practice Management Financial Survey Data 54 practices of 146 physicians 54 practices of 146 physicians MedianRanges Charges962,756 75,000 to 2,448,459 Collections692,551 45,000 to 1,615,011 Expenses387,500 42,000 to 1,615,011 Profit270,000 3,000 to 940,000

20. Collection Ratio & Expense Ratio Collection ratio (collections/charges): Collection ratio (collections/charges): Median:0.6962230 Mean:0.696981 Range: 0.4167- 0.8956

21. Collection Ratio & Expense Ratio Expense ratio ( expenses/ collections ) Expense ratio ( expenses/ collections ) Median:0.574155 Mean:0.576571 Range: 0.1000 to 0.9333

22. Manpower Needs: FTE Utilization Clearly varies Clearly varies Mean result 5.2671 FTE/physician with S.D. of 2.1528 ( Median: 4.850 FTE/phys) Mean result 5.2671 FTE/physician with S.D. of 2.1528 ( Median: 4.850 FTE/phys) Compared to American College of Allergy data from 2002 finding - 7.5 per physician. Compared to American College of Allergy data from 2002 finding - 7.5 per physician. 26 of 74 practices report using physician extender (only 8 of 38 solo practices!) 26 of 74 practices report using physician extender (only 8 of 38 solo practices!)

23. Group Versus Solo Breakdown Solo (n=38) Group > 2 (36 for 58) Group > 4 (17 for 15) FTE/ phys 5.1146 + 2.7687 5.3993 + 1.5297 5.3514 + 1.4730 Charges848,6441,012,5351,158,780 Collections674,195692,550832,000 Expenses350,000420,000467,713 Profit270,000263,750353,892

24. Physician Extender effect Practices with (25 of 95phys) Practices without (48 of 52 phys) FTE/physician 6.563 + 2.105 4.547 + 1.868 Charges1,124,594828,322 Collections774,000620,000 Expenses464,000350,000

25. Physician Extender Effect on Profit / phys Practices with Practices without Median309,029250,000 Mean312,268304,175

26. Immunotherapy % in billing Mean + Standard dev Median Total 0.27624 + 0.14890 0.24225 Solo 0.26788 + 0.15909 0.23669 Groups 0.28400 + 0.14130 0.25480 With PE 0.27339 + 0.09991 0.24156 Without 0.27783 + 0.17106 0.26000

27. Dividing Income in Medical Groups Equal distribution of income — 15% Equal distribution of income — 15% Straight productivity — 20% Straight productivity — 20% Productivity and salary — 65% Productivity and salary — 65%

28. Productivity Types R.B.R.V.S. R.B.R.V.S. Patients Seen – Hours Worked Patients Seen – Hours Worked Non-Patient Care Responsibilities Non-Patient Care Responsibilities A – Teaching B – Peer Review C – Quality Assurance D – Utilization Review Seniority Seniority

29. The Employment Contract: What to Consider Income: Salary and productivity Income: Salary and productivity Duties: Patient care and non-patient care Duties: Patient care and non-patient care Fringe benefits: What are they and how long are they provided? Fringe benefits: What are they and how long are they provided? Liability (malpractice) insurance Liability (malpractice) insurance What type: Claims made/occurrence What type: Claims made/occurrence Which limits? Which limits? Who pays for tail coverage? Who pays for tail coverage? Rating the insurer Rating the insurer Practice philosophy on malpractice suits Practice philosophy on malpractice suits

30. The Buy in What is the buyout? What is the buyout? Tangible assets Tangible assets Receivables as a factor Receivables as a factor Defining goodwill Defining goodwill Role of superior income potential Role of superior income potential The practice valuation The practice valuation When valuation is in the future When valuation is in the future

31. Buying a Medical Practice Fixed assets Fixed assets Goodwill Goodwill Gross and net income Gross and net income 4-year history 4-year history Collectible ratio Collectible ratio The patients base The patients base What percentage is managed care? What percentage is managed care? Study the area for impending changes Study the area for impending changes

32. Important Events of Your Transition Into Practice 1. Inform state licensing board of address (6-9 months) 2. Apply for hospital staff privileges (6-9 months) 3. Obtain a city and/or county occupational license from county/city clerk’s office 4. Review personal liability (malpractice) insurance (3-6 months)

33. Important Events of Your Transition Into Practice 5. Contact managed care organizations for inclusion as a provider (3 – 6 months) 6. Contact State Department of labor for state employment regulations (if starting a practice) 7. Obtain a federal Employer Identification Number (EIN) from the IRS (SS-4 Form) and a State Employer Identification Number

34. Now that I’m in practice what should I expect? The business of practice The business of practice Marketing yourself and your practice Marketing yourself and your practice