During your final year of medical training, you might be daydreaming a bit about life beyond residency and fellowship. You’re looking forward to getting to work, making some money and start living! You have credit card debt, student loan debt, car payments, and perhaps some loans from family members to pay back. And with any luck, in addition to starting a new job that pays well, you hope to line up some moonlighting on the side. Sure, it might mean some long hours, but you’re already accustomed to that from your residency.

But – not so fast! Your new employer expects you to devote essentially all of your professional efforts to growing and promoting your practice. And a close look at your employment agreement indicates that there are several potential barriers to working outside your normal full-time work environment.

The first issue has to do with your restrictive covenant, an issue that I touched on in my previous blog (Restrictive Covenants), which prevents you from competing with your employer. You will also need to see what restrictions have been placed on moonlighting. Do you need your employer’s permission? Are there restrictions as to the type of work you can do? Is there language about the type of work you specifically can’t do? Continue reading

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Restrictive Covenants

A restrictive covenant (RC), as used in most physician employment agreements, is a provision(s) that prevents or restricts an employee from competing with his employer. Such provisions will prevent the new employee, in the event he leaves employment, from:

  • recruiting staff away from the employer to his new location;
  • soliciting customers (patients) of the employer;
  • setting up shop (practice) within a certain distance from the employer for a certain length of time.

electric-fenceSuch provisions implicitly acknowledge that there are costs to the employer of recruiting, hiring and establishing a physician in practice that will not be recouped if the newly recruited physician takes patients away from the employer to a competing entity or his own, newly established independent practice.

The third of these provisions is the most potentially damaging of these restrictions. If the duration is long enough and the distance far enough, the physician will have no choice but to abandon any practice he has created and start from scratch building a new practice at a distant site. These considerations, of course, apply mostly to primary care physicians and medical specialists, less to certain surgeons, and even less to anesthesiologists, emergency medicine specialists, urgent care physicians and hospitalists (who provide episodic care and don’t generally develop a “loyal” practice of repeat patients). Continue reading

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Sweat the “Small” Stuff and Enjoy a Bonus!

Seeking a good position, researching perspective employers, participating in interviews, and negotiating an agreement can be tedious, time-consuming work! And the reality is that most employers are going to offer a standard agreement, with a salary range that will probably be well within industry norms and internally consistent. Why bother with all of the meticulous review, contentious negotiation, and costly legal review? Here are a few examples of problems that can result from less than optimal employment agreements (names have been changed to protect the innocent).

Onerous Restrictive Covenants

Three imaginary physicians, Moe, Larry and Curly, all worked under agreements with a large hospital system, located in a semi-rural area with one major competing system. Each of them were NOT asked to renew their agreements at the end of their terms for various reasons. And each of hem had a slightly different non-compete clause in their agreements.

Curly had a two-year, 20-mile restriction following his termination. So, he had to look outside a 20 mile radius for a new position. Unfortunately, the closest employer outside the 20 mile radius for his specialty was more that a 50 minute drive from his home. Since he was required to be on call he would most likely need to move closer to the new system.

Larry had negotiated a slightly better agreement. His restriction was also for two years, but the radius was only 10 miles. There were several potential practice opportunities just beyond the 10 mile radius that Larry was able to select from, although he would need to build a new practice from scratch. But he would not face the task of uprooting his family, changing schools for his children and selling his home.

Moe probably fared the best. He had negotiated a one year restriction with a 20 mile radius. Because he was able to commute to a temporary job for year without moving and maintain his income at a reasonable level, he was later able to start a new practice near his home and eventually attract a large percentage of his previous patients to his new location. Continue reading

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Liability Insurance – Who Pays for Tail Coverage?

I want to briefly discuss the handling of liability insurance as part of the contract negotiation process. Generally, most employers agree – liability insurance is a bona fide business expense. This should be clearly stipulated in the employment agreement as a covered expense of employment.

Unless you’re working for the federal government or providing charity care without compensation (in some cases), you will be required to carry professional liability insurance in order to care for patients and provide services for your employer.

If your relationship with your employer is as an independent contractor, you might be expected to cover your own malpractice coverage. But barring that, your employer will expect to pay for the coverage.

armourThere are some caveats, however, that you want to keep in mind. You can generally only expect the coverage to apply to work done for the employer. If you plan to moonlight with other entities to boost your income, be sure that evidence of professional liability coverage is provided by the other entity prior to seeing patients.

And expect to have an offer of employment withdrawn if it is determined that you are not insurable for some reason, or if the costs of coverage significantly exceed local average premium rates. Continue reading

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Thoughts on Salary (part 1)

This is typically the topic of most concern when initially considering an employment offer. As you begin to seek new employment opportunities, you may have a pretty good idea what salary to expect (based on discussions with colleagues, published salary surveys, or other sources) or you may enter the process completely open-minded, ready to compare multiple offers as they are presented to you.

This topic is made more complicated because compensation models are evolving and may differ during the term of your contract. It is not uncommon for compensation to start out as a fixed salary (generally paid on a biweekly basis), then transition into one partially or wholly based on productivity and other performance measures.


Employer Perspective

The employer has a need for your expertise or wouldn’t be expending the resources necessary to recruit you. Employers are generally prepared to offer a fair salary based on salary surveys, current local salary ranges and other insights that their human resources departments provide. But they also have to consider other factors. When I was recruiting for our hospital-based multi-specialty practice, I had many concerns:

  • When, if ever, will collections (and even down stream revenues) justify the salary, benefits and other expenses associated with this hire?
  • Will the new recruit be a cultural fit with the organization?
  • Is the new physician truly interested in entering into a long-term relationship, or will we be investing in her only to see her leave in a year or two?
  • Does the new physician understand what it takes to build a new practice and is she prepared to assist in that process?
  • Will the new recruit work well with other team members, including staff, managers, leaders and other medical staff?
  • Does the physician understand the importance of good documentation and is he committed to balancing quality, access and cost?

You should keep these concerns in mind as you negotiate the terms of your employment. Continue reading

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It’s Your Time!

You’re nearing the end of the formal training phase of your career. You’re probably planning your next career move, and possibly interviewing or even considering an offer.

Unfortunately, business, legal and financial issues are neglected areas of physician training. This is expected, given the overwhelming volume of  the clinical knowledge you must master. Near the conclusion of my Family Medicine residency, I remember feeling hesitant and apprehensive. As I began to contemplate my next career move, I thought…

  • What kind of practice did I really want to pursue?
  • Where did I want to work?
  • What factors should I consider?

Continue reading

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