Beginning Medical
Practice
A Primer for Family Medicine Trainees
John S. Butler, MD, B.Comm, M.Sc., CCFP
Key Considerations
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Practice Scope
Practice Location
Practice & Payment Structure
Practice Size and Intensity
Incorporation
Practice Scope
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Choice of medical practice impacts:
 Professional
satisfaction
 Income
 Lifestyle
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Early career choices propagate later into career
 Difficult
to “shrink” a practice if too ambitious
Practice Scope - Continued
Locums
 Family Medicine, office practice only
 Emergency Medicine/Urgent Care only
 Office Practice + value added services
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Emergency or Urgent Care
 Nursing Homes & Home Visits
 Hospital inpatients, chronic care, OR assist, OB-Gyne
 Palliative Care
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Locum
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Advantages:
No commitment, flexibility in life
 Try out different practice styles and communities
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Disadvantages
Unpredictable and unstable income
 Unfamiliar Patients, Variable charting/EMR***
 Changing Charting procedures & Local consultants
 Less income than other options
 No vested income potential
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Office Practice Only
Advantages
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Simplifies life, less obligations, more flexible
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Vested value of practice (esp with PEMs)
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Set your hours, more time for self
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Relatively easy work
Office Practice Only
Disadvantages
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Professionally less rewarding (boring?)
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Lower income relative to comprehensive
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Income stream narrow
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complete dependency on one payment model
More easily capped
Value Added Services
(Nursing Homes, Hospital, ER, etc)
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Increase Revenue Streams
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Highest income earners in this group
Reduce probability of being capped
Maintain skills and interesting work
Increase doctors’ value to the community
Improve visibility with specialists
Emergency & Urgent Care
Advantages
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Few responsibilities after shift, more free time
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Income tends to be reasonable
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Fun work, managing acute cases
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Working in the hospital can enhance physicianphysician relationships and access to CME
ER - disadvantages
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Shift work & high stress can take its toll
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Depend 100% on hospital system
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Hospital politics
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Income Stream extremely narrow
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Time-off negotiated with group,
ER Disadvantages - Continued
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May have too little or too much work, little control
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ERs can close or change practice requirements
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No vested income for long term
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Opportunities can be limited, choice of
communities narrows
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True for ER and for Urgent Care
Location
Choice of Location Depends On…
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Practice that meets preferred work scope
Rural or urban medicine?
 ER/Hospital/Nursing home work available?
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Spouse and family issues
Personal needs..
Do you “need” to have sushi in the neighborhood?
 Community educational institutions
 Is it safe? Is it remote? Near Fishing? Near golf?
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Other Location Considerations
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Availability of nice homes, cost
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Distance to hospital of office and home
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Accessibility to shopping/cultural activities
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General economic climate
So your ready…
Key Remaining Considerations are:
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Practice Structure & Infrastructure
Payment Structure
Practice Size and Intensity
Practice Structure
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Virtually everyone will join group
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Most are cost-sharing associations
Some professionally managed
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Can reduce overhead, especially if you are a low
earning doctor
Overhead Flat Rates
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Most costs are either:
Fixed – eg RENT
 Fixed Variable – Labour, Software Support, phones
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There is very little variation in cost with changes
in patient volume
Fixed rates favor lower earning doctors
 As income goes up non-flat rate preferred
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Overhead Example
Practice-Specific Costs
2002 – 2 docs, no EMR, RN 4days
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$63,000/yr - 27% of office revenue, 16% of total revenue
2005 – 2 docs, no EMR, RN 5 days
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$5250 per month
$6050 per month
$72,600/yr, 23% of office revenue, 15% of total revenue
2009 – 4 docs, new building, EMR lease & support fees,
2 RN’s, 5 support staff, $18,000 copier/scanner,
new integrated phone system $8300 per month
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$99,600/yr, 20% of office revenue, ~15% total
Fixed Overhead is not all overhead
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You still have other overhead items:
CME
 Car Expenses
 CMPA fees
 Accounting costs
 Personal computers at home, PDAs
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These do not change regardless of practice type,
volume, income, etc
Practice Structure
Incorporation
Incorporation
Key Benefits:
 Tax reduction (16.5% >> 15.5% July 2010)
 Income Splitting
 Tax deferral (and investment growth)
 Sets up “two offices” – improves write-offs
 Flexibility in income stream
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Eg. Maternity, time off
Incorporation Advantage
Example – kid’s Education
Assume $24,000 per year cost/child in university
Non-incorporated - $44,444 in earnings to fund the cost
of education.
Incorporated - $28,743 in earnings to fund education by
paying dividends.
Savings: $15,701 per year per child!
Incorporation
Potential Drawbacks:
 More Complicated
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Bank accounts, legal documents, “minute book”
Annual renewal requirements, letterhead, etc
Separate personal and corporate tax returns
Higher legal and accounting fees
BUT…
 Increased net income far outweighs cost
 If incorporate UP FRONT, less hassle
Recommendations
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Incorporate your medical practice
Start process before finishing residency
Avoids:
switching accounts
 accounting for transfer of assets, revenues and
expenses (very time-consuming)
 multitude of legal and business notifications
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Payment Structure
How will you be paid?
Payment Structure
Acronym Primer:
FFS = Fee for Service
PEM = Patient Enrolment Model
CCM = Comprehensive Care Model
FHG = Family Health Group
FHN = Family Health Network
FHT = Family Health Team
FHO = Family Health Organization
FFS vs PEM
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FFS – straight pay per service rendered
No capitation fees, bonuses, EMR funding
 Works best in walk-in/urgent care
 Main Codes: A003, A007, A001, K005, etc
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PEM - general
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Steady income less fluctuation
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Focus more on patient issues than volume
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Reward comprehensive, quality care
PEM - general
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Support for IT
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Encourages group formation
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Compensates for cost and complexity of having
a medical practice
PEM – Key Issues
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Rostering – paid per patient rostered
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Becomes lucrative over 1400 patients
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IT funding
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Bonuses for Comprehensive Care
PEM’s - Subtypes
CCM – Comprehensive Care model
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solo with similar pay scheme
Roster patients
FFS + 10% + $2.16 per month/per patient
Impact of New Models
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Payments to Family Docs in Ontario almost doubled
from 1992 to 2009 ($1.5 billion+ to $3 billion+)
Average pmts to primary care physicians increased
from$200,000 to almost $400,000
FHO physicians highest, closely followed by the other
primary care model physicians
Solo practice physicians make less than half of the
primary care model group
FHG
Family Health Group
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Roster Patients
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FFS + 10% premium + Capitation ($2.16)
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Bonuses for preventative care
FHG
Family Health Group
For 1400 patients:
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Adds $36,000 capitation income
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plus 10% of FFS billings plus bonuses
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About 25% increase in income over FFS alone
Ontario FHG Providers 3170; Enrolled – 3.8 million pts
Family Health Network
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Pay is mostly roster-based
Covers 57 core services
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Other Services – extra billing
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Eg. A007, A003, K005, G420
Eg. Skin cancer, biopsies, Joint Injection
About 356 doctors with about 357,000 pts are in
this model
FHN and FHO
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Any ER/APP Funding is in addition
FHO is fastest growing group 119 fee codes
FHN and FHGs are shrinking – more FHO
Over 4.5 million patients now in FHO
FHN/FHO Payment
Base Rate – varies depending on age/gender
Average is $112/pt/yr FHN; $124/pt/yr FHO
+ Access Bonus (less claw-back)
+ Capitation
+ Bonuses
+ Preventative Bonuses
+ up to $48,000 for codes for non-enrolled
Bonuses > $24,000/yr
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Hospital
$12,500 ($2000 in C-codes)
Palliative $2000 (4 x K023/yr)
Mental Hlth $2000 (10 pts schizo/bipolar)
Home Visits $2000 (100 visits per year)
Pre-natal
$2000 (5 pts/yr to 28 wks)
Procedures $2000 ($1200/yr of work)
CME $100 per hour up to 24 hours/yr
Other Bonuses & Premiums
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Diabetic Management Fee
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$75 per patient (about 8 – 10k most practices)
Prevention Bonuses
Paps, Mammos, Colorectal, Immunization
 Up to $11,000 in bonuses
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FHN Income Stabilization
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Provides bridge funding until roster grows
$155,000, paid monthly; $170,000 North/Rural
Maximum of one year
No OHIP billing at all
YOU CAN make extra money in AFA/ER
Comparison of Billings
FFS vs PEM/Roster
2004, FFS, excluding ER
$295,000
2007-2008, Roster Model
$505,000 ( up 71% )
Plus ER billings
Plus on-call bonuses
Plus ER billings
Plus on-call bonuses
Seeing less patients
Taking more time off
FAMILY HEALTH TEAMS
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Collaborative Practice
NOT a payment model
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Physicians in FHT are paid via FHN or FHO
Professional manager, office administration
along with help from NPs, RNs, social workers,
etc, to improve office workflow and quality of
patient care
Maximizing Value
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Maximize codes not in basket
Joint injections, biopsies, warts
 Nursing Home visits
 Home Visits
 Hospital Visits
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Disadvantages of PEM
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Patients not always served as well
Less motivated to add-in
 Less motivated to see higher volume
 Wait times are higher
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Less ability to go after variable income unless in
APP such as an ER.
Critical Considerations
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Apply for your OHIP before exams!!
Apply for your CPSO before exams!!
Bulge of Applicants
 Hospital privileges depend on your CPSO
 Need OHIP number to contract with FHN/FHT
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Take Home Messages
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Choose a practice that suits your lifestyle
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Incorporate at the very beginning
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Go with FHN/FHO if possible
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Be organized, arrange OHIP, CPSO, CMPA