I am not someone who thrives on praise or recognition. Good results and good pay, now that motivates me. People like myself tend to not thrive as well in an employment setting.
It’s 11 days into December and I hadn’t gotten paid for my consulting work in November. I inquired about it and my consulting client told to turn in my hours. Come again!?
The last conversation we had about my consulting fees for this client involved a minimum of 20 hours per week at $75/hour. It seems that I misunderstood. And it seems that I was supposed to keep a log of my hours.
This is what happens when you don’t ink your agreements. I heard one thing, they said another. So it looks like I won’t get paid my $6,000 for November from this client. It’s definitely my fault so let’s dissect this big L for me.
The retainer model
I know the value that I bring to the team. I’m neither humble about it, nor cocky. At $75/hour I’m a steal.
I agreed to this low dollar amount because of a retainer model for consulting – which means that I get some guaranteed hours.
Without guaranteed hours I would charge $150-200. After all, I’m no spring chicken. I’m about to start my 3rd year of healthcare consulting work.
On a retainer model, the client agrees to pay the consultant a lower hourly fee but provides them a minimum workload. This can be beneficial for both parties and it’s open to routine renegotiations.
Consultants have to constantly fight for their income. They have to pick up some work ahead of time and often end up doing too much in a single week in order to fare well during dry spells.
Billing per hour
$75/hour isn’t all that bad. It might seem low for a physician but I don’t treat patients, I don’t prescribe medications, I don’t commute to a job site, and I don’t need malpractice insurance.
The great thing about getting billed per hour without a retainer is the freedom you enjoy. When your consulting client contacts you about work that they need done, you have the option of saying no or doing however much is in your capacity.
Billing per hour gives you the most amount of freedom. And it allows you to mark up your hours. If I’m doing a lot of thinking and planning for a project or doing research, all that stuff gets factored into my billing time.
The downside for the client is that they get nickel and dimed for everything you do. And the onboarding they must do to get the consulting physician up to speed has to be paid for as well.
Physicians consulting for healthcare startups
The past handful of years have been very lucrative for physicians who wanted to get into the consulting game. A lot of money was being thrown at healthcare startups by venture funds.
With so much data generated through the EMR’s, there has been the potential for 3rd party software designers to come in and help healthcare organizations make money off this data.
2019’s economic changes will likely weed out quite a few of these healthcare startups and dry up consulting opportunities for physicians.
Physicians enter healthcare startups at two distincts points: 1) they are in the fledgeling stages of product development, or 2) they are brought on during product deployment.
1. Product development
Product development is the toughest. There are unrefined ideas and most of the members of the team haven’t had a chance to work together. Nobody knows if the product will work, much less sell.
During product development it’s critical for the engineers and startup founders to get a solid sense of the medical and clinical field they will be competing on.
There is no way to build a product which relies on gathering data from patients without consulting physicians who are masters at squeezing relevant information from patients.
To give you an example, one of my clients started their business with one idea in mind until they decided to sit down with me over a 10-day stretch and pick my clinical brain. After that, they completely redesigned the business and decided to bail on their first product and begin product development on our current chronic disease prediction model.
This isn’t me bragging – that same conversation with any physician would have instigated the same pivot.
2. Product deployment
Let’s say my client had a healthy, viable product and they wanted to implement it – going live, so to speak. Let’s say that they sold their first product to a client and now needed to oversee product deployment. How would they do it without a physician?
It’s hard to. With enough resources and time, they could eventually figure out where the product deployment was failing. But with a clinician overseeing every step, they would get to the bottom of problems 10x faster.
Saving money on high-cost physicians
Doctors aren’t cheap. And they aren’t easy to work with.
They are hard to wrangle and it takes a long time to onboard a physician and teach them everything needed in order for them to be effective consultants.
These guys might pay a lawyer $300/hour to draw up contracts but they probably will use a lawyer 20 hours for the whole year.
Healthcare startups who need clinicians would have to pay doctors ~$100/hour and include them in damn near every conversation between CEO and engineer, between UI/UX designer and sales lead. This would likely add up to at least an annual consulting budget of $100k .
You don’t want men designing tampons and you don’t want software engineers designing clinician tools.
To fix the problem, you end up hiring a bunch of physicians on the backend who have to go in and advise engineers to make 1,001 changes in order to make the damn thing usable.
Settling payment arugments
To be honest, I was frustrated when the CEO asked me for my timesheet. This was the first sign that I had done a poor job of communicating with these guys – my fault.
I didn’t insist on a contract and they didn’t make their terms clear. I thought one thing, they another.
November wasn’t a very busy month and I definitely didn’t do 20 hours of work per week for this client. But I anticipated lots of work in December. I relied on the retainer model to balance my time commitment to these guys.
I could have stood my ground and fought for the payment but I don’t think that would have been fair. Instead, I asked for a 10 hour pay for November @ $75/hour = $750, and left it at that. They got a huge discount and I got some crack money.
A healthcare startup is always short on capital. My client has to recognize the value of a clinician on their team. Thank dog I don’t need the money desperately and don’t have to try to sell myself to them.
It’s a fortunate position to be in – the alternative would feel very suffocating.
We had a conversation today as to how we would structure our financial dealings moving forward. I don’t want to be placed in this position again, to depend on an income which suddenly evaporates.
Had I known that I wasn’t going to get paid, I would have secured some other income source in order to maintain my financial buffer for November.
I’m reminded that relying on one source of income is financially detrimental. Relying on one employer, one retirement investment, one medical license, etc. – these limit the degree of freedom I have to earn money.
My new consulting model
I have 2 main consulting clients currently. I still enjoy working with both and despite some of these differences, the team members are solid and the work is fascinating.
I won’t give up consulting for it has made for awesome dinner conversations when asked what I do for a living. Instead, I will cut back on my hours and increase my rates.
From the advice of my consulting coach, H. who has done compliance consulting for several years and charges $150-200/hour, I have decided to raise my rates to $150/hour and forgo a retainer.
I will guarantee my clients a maximum 10 hours a week @ $150/hour and will do more work if I have the bandwidth or at $200/hour if I am limited on time.
Do I have the skills to demand this kind of income? Dunno, we’ll soon find out.
Will I make enough money doing this to pay for the hookers and blow? Doesn’t matter, I enjoy the work and I’m learning a lot, which is the main reason I am doing healthcare startup consulting.
How will I continue earning an income moving forward?
- I have my investment income
- I am working on my own health coaching business
- I have some income from telemedicine work
- I have income from product sales
Don’t be afraid to experiment. Don’t get butthurt either if something doesn’t go your way. Take some notes, try something else, move forward with a model which works and tweak along the way.
A coach is helpful. H. happens to be a friend and a coach. Finding someone who has some experience can save you lots of headaches. She’s learning things from me as well – it goes both ways.