By Dennis Hursh
In my 30+ years of representing physicians, I have seen too many physicians that have started their professional careers behind the eight ball and never really recovered. There are a few key questions that absolutely must be answered in an employment agreement for physicians. Among them are the following:
- Is there a guaranteed salary for the first few years?
- How many patient contact hours are expected of me each week?
- Is there an opportunity for me to earn a bonus?
- Besides my pay, what other benefits are available?
- Does the agreement have a restrictive covenant in it?
Many physicians are bamboozled by employers who want to pay them strictly on productivity. These physicians know that they are willing to work hard, so they have no problem accepting little or no guaranteed salary with a lucrative upside if they work hard. These physicians sometimes fail to realize that you can only work hard if the patient load supports it.
Sometimes a practice or a hospital really only needs a halftime physician, but is having difficulty filling that position. The employer can protect itself by simply hiring a physician full-time and paying him or her on productivity. Even if there is a strong patient load now, a competitor can come in and take those patients away. The bottom line is that a new employer should not hire a physician if the employer is not willing to take the risk that the physician may not be busy.
At the other extreme, I have seen physician employment agreements that are open-ended on expected patient contact hours. I’ve even seen agreements that require 45 patient contact hours per week, and specifically exclude hospital and nursing home rounding from these hours. A physician that agreed to that arrangement could easily end up working 70 hours a week in commuting between locations, rounding, and general administrative duties such as charting. I always try to get the employer to commit to a requirement of 32 patient contact hours per week. That generally gives a physician adequate time for charting, rounding, etc.
Many physicians are presented offers that contain no possibility of a bonus. I think that is shortsighted on the part of employers, since it would be in their best interest to have the physician vested in increasing collections, or WRVUs, or some other metric that will inure to the benefit of the employer.
Moreover, as vital as the compensation formula may be, other benefits are also important. Most employers now offer sign-on bonuses, which can approach $50,000 for some specialties. Relocation expenses are frequently offered, which greatly reduce the out-of-pocket expense incurred in moving to a new location. Payments during a disability, health insurance, vacation and CME time (and reimbursement) should be included in any physician’s package.
Beyond that, many employers also offer payment of medical staff dues, DEA and state equivalent registration fees, cell phones and usage plans, dues for national, state, local, and specialty societies, and even medical school debt relief. Although the physician should not expect to get all of these benefits, he or she should at least ask. I always tell my clients that the meek may inherit the earth, but they won’t have the best contracts until that day.
I’ve also seen physicians that are shockingly accepting of a restrictive covenant in their employment agreements. These provisions, as their name implies, restrict where the physician can practice after leaving this employer. Many physicians feel that the folks that recruited them seem like nice people, and if they like the area, why would they ever leave?
However, the modern healthcare landscape is constantly changing. The kindly hospital CEO today can easily be replaced by a corporate Jack the Ripper tomorrow. Even in a private practice, senior physicians retire and new physicians take their place. The collegial practice of today can become cutthroat tomorrow as reimbursement tightens and expenses increase.
When looking at a new employment agreement, physicians should be focused on an exit strategy. Specifically, they need to ensure that they can stay in their current residence, even if they are no longer working for the same employer. In an urban or suburban area, a restrictive area of no more than five miles should be sought.
In addition, the restriction should relate to the location of the physician’s new office. Too many agreements prohibit the practice of medicine within the restricted area. This means that the physician will not be able to treat patients in a hospital or nursing home within the restricted area.
Tips to Remember
- Remember to ask the 5 questions.
- Don’t be bamboozled by employers who want to pay them strictly on productivity.
- Be wary of physician employment agreements that are open-ended on expected patient contact hours.
- Question offers that contain no possibility of a bonus.
- Look at the entire compensation package, such as sign-on bonuses, relocation expenses, disability, health insurance, vacation and CME time (and reimbursement).
- Don’t be so accepting of restrictive covenants in their employment agreements.
- Focus on an exit strategy.
-Dennis Hursh is with Hursh & Hursh P.C. in Middletown, Pennsylvania.
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