The contract provisions couldn’t look any better:
- $ 300,000 annual salary guarantee
- sustained by hospital/practice
- forgiven over 5 years
- phased out beyond 15 months to full productivity remuneration
- $10,000 sign on bonus
- $20,000 relocation expenses
- 3.5 weeks annual vacation
- 2 weeks annual sick time
- 10 days paid CME
- 401K investment
- Profit sharing/open partnership in 12 months.
But before signing the dotted line, take the contract home, read it carefully and understand it. Equally importantly, get to know the people behind it.
For many doctors soon to complete their residencies, one final round of interviewing is underway. This time, unlike prior interviews, it is an audition for your job post-residency, in your chosen profession. Finally!
However, there are some important basics you should capture in your psyche as you venture in this uncharted territory: know thy prospective employer, and know thy contract. For purposes of illustration, we shall regard the prospective employer synonymous with a prospective partnership.
Knowing thy prospective employers is a must. The interview trail is the time you get to check them out initially. This process is like courting. Naturally, you are anxious to see and get to know them beyond the print of their brochure; as much as they are anxious to get to know you beyond the print in your CV. Have your feelers out just as they have theirs out for you.
First things first, before you head out—you must be content with where you might end up living together (if the chemistry is right, that is) . . . for a while, at least. In this regard, location is key. Are you willing to go practice anywhere geographically as long as the terms are right, as in Alaska, half a world away from your parents in Florida? Here are some questions you must ask yourself first: Do you see yourself practicing in a large city, a small rural town, or on board a cruise-liner? What does your spouse or significant other think? What are the job prospects for him/her? The school system for the kids? Crime in the locality, quality of life benchmarks . . . museums, zoos, parks, housing?
For your job searches, you could either do them yourself or use a recruiter to perform the role of the match-maker. A do-it-yourself approach is handy since you are in control. There are many ways you could start: use on-line searches, journals, medical magazines, periodicals, etc.
If you elect to use recruiters, you could use an outside recruiter or deal directly with internal hospital recruiters. Remember, though, recruiters might occasionally embellish the facts to “set you up” with who they think is best for you. If you are dealing with multiple recruiters, have a dedicated telephone number you can use to deal with them . . . otherwise, you may find yourslef fielding incessant calls throughout the day.
Next, in order to get an idea of who thy prospective employer really is, you should strive to understand the vision the employer embraces. Is the firm “for profit” or a “non-profit”? This is important to know. A vision is the song to which an employer will want to dance with you. For instance, a practice with a vision to generate money will screen you as a potential profit center in its quest to improve its bottom line. Similarly, a non-profit entity serving the unprivileged will screen you as a potential agent in their quest to build their community services. Are you ready to dance to those tunes?
Another aspect involved with knowing thy prospective employer is the culture in which the employer is embedded. Is the culture diverse, brotherly or sisterly? Do people even like each other? Or, is the culture paternalistic and authoritative? Is it what Dr. Grudge says is what goes? Or, is it democratic?
The structural make up of thy prospective employer is equally important. Group practices are usually split into single-specialty groups, multi-specialty groups (that could be individual corporations or hospital-owned), and private hospital-owned practices. Then, of course, there are the Federal government based practices, such as the Veterans Affairs and Medical Corps in the military.
A single-specialty practice provides one specific type of care, e.g. a group of just surgeons providing only surgery to their patient base. A single specialty practice will generate you secure compensation, a consolidated patient base, shared call, camaraderie, and a contained life-style (enabling you to go away on vacations and not worry whether your patients will be seen or not).
On the other hand, a multi-specialty practice is usually much larger and provides a more diverse spectrum of care, e.g. a group consisting of internists, neurologists, physiatrists, and orthopedic surgeons. Naturally, you will find that the compensation is greater and more secure although larger operating and overhead expenses will cut into your earnings. Be aware that when you sign that contract, you agree to pay, in essence, for that fancy MRI suite that your group bought before you even joined it. Nonetheless, a multi-specialty group will also afford you a much broader patient base but with less autonomy in administrative decision making.
A hospital-owned practice is a group affiliated with a hospital and jointly owned by that hospital and a group of providers. Obviously, in this type of opportunity, you will benefit from aligning yourself with a known established entity, access to hospital facilities, resources and services, a large referral patient base, numerous pre-negotiated contracts, and smaller financial risk and liquidity (assuming, of course, that the hospital is financially sound).
Gaining some measure of popularity today is locum tenens—a temporary but generally extended assignment to work in a practice or location for higher pay albeit with lesser fringe benefits. This type of practice varies in character from working in any of the types of groups discussed above. One defining characteristic, however, is the ability for you to remain somewhat detached from the “ins and outs” of the group you may find yourself in.
Federal based practices, such as those in the Veterans Administration Hospitals are part of the United States government. They are heavily regulated, but present with workable hours (typically 8-5 with generous holidays off). The bottom line is irrelevant. And though the pay is lower than that in private practice, you don’t have to worry about overhead expenses. In the same vein, military practices are run and regulated by the US government; however, they are tied to a specific service commitment. You become a commissioned officer, open to climb up the ranks while you serve your country in uniform, don’t have to worry about malpractice, billing, and overhead expenses. However. you might be deployed overseas, or “get to travel” quite a bit.
Regardless, you should examine the financial strength on which the practice opportunity is based. As a lot of experienced practitioners will tell you, courting a financially insecure entity will almost always cause you eventual heartache. Therefore, it would not be inappropriate for you to ask during the interview process about the financial strength of your prospective employer. And before signing the employment contract, you ought to ask for and examine the balance sheet of the firm that is courting you.
The other fundamental imperative is to know thy contract. Much like we are told in medicine, if it is not written down, it was not done; anything not in print within the pages of your contract will NOT be done. If you are verbally promised something, get it in writing: signed, sealed, and delivered. If you want to negotiate a provision, don’t sell yourself short . . . ask for it. If you win approval for the provision, then have it included into the written contract.
The contract has 3 important provisions in it: compensation, termination, and restrictive covenants—in that order of importance most people prioritize them. There are, of course, other provisions in it, such as: working conditions, physician conduct, expectations, and some even have a buy-in option (depending on the nature of practice you are looking at).
Compensation can be determined using various models or formulas. You could get paid via a straight salary based on a regional benchmark, e.g. physiatrists in the geographical Northeast get paid (on average) X amount per annum. Then, there is the salary guarantee paid by the firm associated with the hospital, or paid by the hospital itself with an associated service obligation that you incur if you want the monies paid to you forgiven. For example, General Hospital wants to attract more quality physicians (like you) to its fold. General Hospital then concurs with a multi-specialty group, ABC Inc., which is affiliated with the hospital, to pay you a fixed salary of $300,000 per year for 2 years while you build your practice from the ground, under the auspices of ABC Inc. After 2 years, General Hospital will stop paying you $300,000. By then, it is hoped that you will be making equal to, or even more than, what you made from your affiliated practice (you built in 2 years) with ABC Inc. If you stay for 1 year past your 2 year anniversary, the $300,000/yr you earned for 2 years will be forgiven. But if you leave prematurely, you are obligated to pay the hospital a pro-rated amount of the total sum remitted to you.
Straight salaries are generally reviewed annually with a perspective for possible increments in salary. Cash or non-cash bonuses could be also given if your productivity increases within the time period you are being reviewed.
The initial salary guarantee, paid by the practice or the hospital (or even by both) generally relapses when the specified time period ends. Then, your remuneration is determined by factors based on productivity.
Other aspects to know relative to compensation are: the population mix your practice will have, who the main payers are—self pay, private insurance, commercial insurance, Worker’s Compensation, Medicare/Medicaid. Also relative to your compensation is the following: bonuses, moving expenses, and the availability of pension/profit sharing plans, equal partnership opportunity, 401K/403b matching funds, fringe benefits, and mal-practice coverage. Know these well before you sign that contract!
Last but not least, you should inquire about loan forgiveness packages. This is a great provision that almost all physicians out of residency will appreciate. You might be offered anywhere from $50,000 to $150,000 (or even more) paid to you in either installments or in a lump sum. Negotiate the terms to your benefit; some employers pay the funds to the school loan creditors directly or give you the money directly. And, if you wish, you may apply the proceeds to pay off other debt. Remember, though, a loan forgiveness package is usually tied to a commitment, e.g. General Hospital gives you $150,000; for every year you work for General Hospital, $30,000 will be forgiven. If you leave General Hospital in 3 years, you will have to pay them $60,000.
In regards to termination, you should know the required time length required for you to submit your written notice. Different employers require different time intervals: at least 30 days, 60 days, or even 90 days. Also, inquire how much time is required to remedy a breach of contract towards the nonbreaching party.
For restrictive covenants, prime consideration is focused on the clause of noncompetition. This specific clause tells you two important things: the “Period of Noncompetition,” and the “Area of Noncompetition.” The Period of Noncompetition tells you how long, from the time you are terminated, you will NOT provide services as a physician, whereas the Area of Noncompetition tells you the radius, in terms of distance, you will NOT be allowed to practice from the nearest facility/clinic run by your employer.
As you endeavor to find the perfect post-residency match—please take the time to get to know your employer in terms of location, vision, culture, structure, and financial strength. Also, learn your contract well in terms of compensation, termination, and restrictive covenants. Above all, remember that a contract can be negotiated to your benefit. Congratulations on graduation and good luck!