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Drs. Allen, Bones and Coff recently broke away from their medical group and formed a new group, ABC Physicians, LLC. The new group intends to provide imaging services to patients of the group. ABC Physicians purchased a used MRI and CT scanner from the hospital at which they have medical staff privileges. Because the equipment was older and used, ABC Physicians got a good price for it. The 3 physicians are owners of the group and practice full time through the group. They hire a retired radiologist, Dr. Ray, to work 50% time. He wants to get out of his house and they need him to provide professional "reads" of the images. Dr. Allen tells Drs. Bones and Coff that he likely will generate more of the imaging revenue because he is an orthopedic surgeon and orders x-rays frequently for his patients and so he wants a greater share of the imaging revenues. The physicians agree to pay Dr. Ray a fixed dollar amount of $50,000 per year and to pay themselves $150,000 of fixed salary per year. Any amounts collected in excess of these amounts are paid as profit-sharing, to be divided among the 3 owners based on the.
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