Physicians: Find the Right Job & Negotiate a Better Contract

In the 1980s, physicians who owned their practices served on hospitals’ voluntary medical staffs.

Since then, continuing changes in reimbursement have driven hospitals to employ physicians.

Employed physicians perform hospital functions formerly performed by the voluntary medical staff.

Before 1985, local health care markets were fragmented.

Changing reimbursement drives market consolidation.

In many markets today, a few health systems employ most physicians.

Accountable Care Organizations promote higher quality and lower costs; and may drive market consolidation.

Management quality influences organizational culture and physician job satisfaction.

Hospital-employed physicians “lose money” due to system upgrades, staff compensation, and management overhead.

Physicians generate significant revenues for hospitals.

Plan your job search 18 months in advance,
Start looking 12 months in advance,
Start negotiating 6 months in advance.

Practice your elevator pitch.

Make your curriculum vitae an easy-to-read chronology of your experience and qualifications.

Recruiters work for employers.

Recruiters use pressure tactics.

Use word of mouth and networking to find jobs.

Learn about the local health care market

“Tell me about your practice”

Ask followup questions about key issues.

“Tell me about the compensation package.”

“I would like to be fairly paid for my work.”

“I will be happy to consider your offer.”

Plan your visit

Observe organizational culture: Positive? Negative?

Meet everyone

Shadow your prospective colleagues

Compensation, benefits, obligations

Employee vs. Independent Contractor

Look for
- Financial stability
- Highly functional systems
- Current technology
- Early- mid- and late-career physicians
- Low physician turnover
- New physician success

A hospital loan may be offered to start or join a physician-owned practice

Physician’s hospital loan subsidizes Employer’s expenses

Risks
- High loan balance
- Underperforming practice
- Reduced compensation

Reduce risks
- Due diligence
- Transparent financial relationship

Is this job a good fit?

Consider your contract in the context of
- Direct observation
- Experiences of prospective colleagues

Good contracts
- Precise, clear, equitable, concise
- Positive tone

Specialty and scope of practice

Typical office, hospital, and call schedules

Specific office(s), hospital(s), other locations

Anticipated practice development

Shadow your prospective colleagues

Local market conditions strongly influence compensation

Base salary may be reduced/eliminated after 1 - 3 years

Incentive compensation = Work Units above Threshold x Rate

Correlation between work and pay
- strong: wRVUs
- moderate: Collections
- weak: Profits

Each CPT code has 3 Relative Value Units (RVUs)
- Physician’s work effort (wRVU)
- Practice expenses
- Malpractice insurance expenses

wRVU Threshold ~= same percentile as guaranteed compensation

wRVU Rate = Guaranteed compensation/wRVU Threshold 
~= median wRVU rate for specialty

Collections Threshold <= 2.5 x Base Salary

Collections Rate >= 25% amount above Collections Threshold

Profits
- Fair allocation of fixed, variable, and direct expenses

Profits only
- Shareholder agreement protects your rights

Obtain realistic projections of your practice’s
- Starting size
- Growth rate
- Goal size

Develop a plausible practice business plan

Consider other physicians’ experiences

More employers offer modest incentives 
for quality and patient satisfaction.

Some employers offer other bonuses.

Typical recruiting incentives
- Signing/starting bonus
- Relocation expenses
- Student loan repayment
- Immigration expenses

Learn about your employer’s health insurance, retirement plan, and other benefits.

Most employers also offer CME and other professional expense reimbursement.

Compensation + benefits

Ask for more money.

Physicians can often work a flexible schedule 
or part-time to help maintain a healthy work-life balance.

Initial term
- 1-3 years

Termination without cause
- 90-day notice

Malpractice tail insurance premium

Restrictive covenants

Malpractice tail insurance extends the protection of a claims-made policy after employment ends.

The Employer should pay the tail insurance premium because employment creates Physician’s liability 
which continues after employment ends.

Non-compete
-May not practice in restricted area during restricted period

Non-solicitation, non-interference
- Patients, employees, business relationships

Can I live with the restrictions?

Obligations during and after employment

The legal framework describes how and where the Employer and Physician will interpret and enforce their contract.

Legal framework “boilerplate” language typically benign.

Notices to your home address

Entire agreement

Get it in writing!

Path to partnership outlines mutual expectations

Goal: Full and equal shareholder

Estimate buy-in price, return on investment

Fair compensation as an associate

Consider group practice compatibility

Consider practice financial stability

Avoid hospital loans

Consider your key career issues

Let sleeping dogs lie

Negotiate with decision maker

Avoid litigation

Walk away from a bad deal

It’s probably a good idea to have someone advise you on your employment contract before signing.

Here’s what to look for when choosing professional advisors -

Before signing your contract, 
consider how well the job might satisfy 
your key career issues.