Associate Base Pay – How much is enough?

I had a soon-to-be-grad ask me “I am being offered a $3000 base.” What do you think? I think this is ridiculously low! Let me show you why:

$3000 base (let’s assume single, 1 allowance)
less $186 for OASDI (Social Security)
less $ 43.50 for Medicare
less $549.42 for Income Tax Withholding
Net is $2221.08

THEN, this grad has to pay her own malpractice: about $100 a month
AND, don’t forget those student loans, which can be almost $1000 a month.

AND, the doctor wanted her to pay her own way to seminars.

So what do you have left to live on???

Is this supposed to be incentive to make associates work harder? Maybe, but what happens if you get sick one month or you have to take time off for personal reasons?

Some DC’s want to reduce the base if the office has “substantial” increases in costs or lower income. That’s crazy! They don’t pay their front office staff less, why should you settle for less.

Sorry for the rant, but I see this stuff way too often. My solution: Go into practice for yourself. At least if you’re not making money, it’s your own fault and no one else’s. Of course, if you work hard and smart, you can make a great income as a chiropractor.

Remember Henry Ford’s famous quote: If you think you can, or you think you can’t, you’re right.

What Medicare Part B administrator am I under?

It depends on what state you're in.  Here's the list:

 http://www.cms.hhs.gov/MedicareProviderSupEnroll/PSEC/list.asp#TopOfPage

Medicare enrollment – Part II

After you have an NPI number, you will need to enroll as a Medicare provider.

If you are enrolling as a sole proprietor, you'll enroll on the 855i form:

http://www.cms.hhs.gov/cmsforms/downloads/cms855i.pdf

If you're enrolling as anything else, you'll use the 855b form

http://www.cms.hhs.gov/CMSforms/downloads/cms855b.pdf

If you want to be a participating provider, you'll also need to enroll for this:

http://www.cms.hhs.gov/cmsforms/downloads/cms460.pdf

Medicare enrollment – Part I – NPI

Here is the information you need in order to enroll for Medicare:

1. The first thing you need to do is obtain an NPI number. This stands for "National Provider Identifier" and it's a 10-digit number that you will use throughout your career. 

Here's the information on obtaining this form:  http://www.cms.hhs.gov/MedicareProviderSupEnroll/downloads/EnrollmentSheet_WWWWH.pdf

Here are the instructions for applying:   https://nppes.cms.hhs.gov/NPPES/StaticForward.do?forward=static.instructions

Professional Corporations – What are they?

I receive many questions about legal forms of practice, and there is lots of confusion about differences and advantages. For example, the Professional Corporation (PC) is often misunderstood. It is just what it says it is: (1) A corporation, (2) run by professionals. Laws relating to PC's differ by state. Here are some requirements to think about if you're considering setting up as a PC:

1. Some states require a name which reflects the professional nature of the corporation. In other words, a PC named "Wellness Forever" would not be acceptable. The word "Chiropractic" should be part of the name. New York goes even further and requires that the name must not be "false, fraudulent, deceptive or misleading" and that it appropriately describe the profession and the services provided.

2. The name must include "PC" or "Professional Corporation" to clearly distinguish it from other types of corporations.

3. In some states (California, for example), only certain professions are allowed to form PC's. In Texas, MD's, osteopaths, and other "doctors of medicine" (including chiropractors???) are not allowed to incorporate, but must form an LLC (Limited Liability Company) or PLLC (Professional Limited Liability Company).

5. Another restriction on PC's in some states (Iowa, for example), is that all shareholders must be licensed in the profession. So if you were going to form a PC in Iowa, you could not have your non-DC family as shareholders. (The law doesn't mention your Board of Directors, though.)

In short, you must check the laws of the state in which you want to practice. Go to the web site of your state's Secretary of State and find the business section. Or get an attorney who is licensed to practice in that state and who specializes in these matters.

(More information in Planning for Practice Success)

Working with a parent

Q:  I'm graduating and want to work with my DC father.  Should I associate?  Buy into the practice? Become a partner?

A:  Working with a parent or other family member can be a great way to continue a family chiropractic legacy and give you a supportive work environment.  I would suggest an associate (employee) relationship to start out, and then an option to buy into the practice as a partner/member (in an LLC) or shareholder (in a corporation) within a few years.  Be sure to put together a very strong contract, which designates a buy-in price and opportunities for both parties to terminate the relationship.  In other words, put this in writing the same as you would if you were going to work for anyone.  This way you can avoid the mis-communication of assumptions and expectations that might damage your relationship.  In this, as all business situations, "put it in writing."

Check out my article in the July "practice startup" issue of Chiropractic Economics for an article about working with family members, and see my Member site (the FAQ section) for more details on what to include in an associate contract.
Jean 

Signing a lease – before or after financing?

I received a "chicken and egg" question about leasing an office — which comes first, the lease or the bank financing?  Good question – this one's kind of a juggling act.  You will need a specific locaiton before you finalize your financing, since you don't know how much exactly you'll need to pay for rent until you know the location.  On the other hand, you don't want to get locked into a lease  before you have funding. One solution is to sign the lease with a CONTINGENCY (a condition which must be met before everything is final) that you receive ACCEPTABLE financing. That word "acceptable" is important.  You don't want to get into the position of having to take financing at a ridiculously high interest rate, just to get into the lease.  See what I mean by "juggling act"?  

Planning for Practice Success has lots of information about leasing and financing.   

Fiscal year – how to choose?

Q:  How do I figure out what fiscal year to use for my practice?

A:  The fiscal year of a business is its financial year.  At the end of the fiscal year, the books are "closed" and a new year begins.  At this time, profit and loss is determined for tax purposes.  Since your business will most likely be tied to your personal taxes, keep it simple and use a calendar year (Jan 1 to December 31) as the fiscal year for your business.

More information about this and other financial topics is availale in Planning for Practice Success.