Contract advice

[monkey7247]

Hey all,
I'll be going on my first job interview in a couple weeks and was wondering if any who have been through it before could give me advice on what to look for in a potential employment package. For background, it is a large group practice looking for a cornea specialist for long-term/partnership in NE FL.

Based off their location/needs and my skills/desires, it seems like it potentially could be an ideal job. What pitfalls should I watch for and mistakes should I avoid while embarking on this trail? Any info from the more experienced could help. Thanks in advance.

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[guttata]

I'm sure I'm missing something, but this if off the top of my head.

1. Everything in the contract is negotiable. Salary, vacation time, benefits, bonus structure.

2. Benefits can vary widely. Some practices will not cover life insurance, disability insurance, retirement plans (401k).

3. Larger groups tend to have very formal contracts - this is good and bad. Good - usually all of the typical concerns are accounted for in the contract. Bad - they are usually not very amendable.

4. If they are promising to buy equipment, get that in writing.

5. Unless this is a new position, contact previous employees and ask why they left. If the practice is trying to hide them (ie, "we don't know how to contact Dr. So-and-so"), that's a red flag. Drug reps may have some knowledge of previous associates.

6. If you want to stay in the area, check on the length and scope of the non-compete clause.

7. IMO, if they treat you well during the interview (ie, cover all expenses), they will treat you well at the practice. Most practices will pay for all expenses, but beware if they balk at paying for your airfare or hotel.

8. My bias - beware of practices that use a recruiter. Generally, these practices are less desirable - some of the time it is related to location, but other times, there may be a major problem with the practice.

9. You should be able to access the financial books. If they are not willing to show you the finances, run.

10. For a larger group, ask who is responsible for hiring staff (techs). Not a big concern, but if they need to hire new techs, you can be involved in the recruiting process.

11. Speak with new associates (ask for their phone number or email and talk to them after the group interview - they will be more forthcoming).

 

[orbitsurgMD]

I'm sure I'm missing something, but this if off the top of my head.

1. Everything in the contract is negotiable. Salary, vacation time, benefits, bonus structure.

2. Benefits can vary widely. Some practices will not cover life insurance, disability insurance, retirement plans (401k).

3. Larger groups tend to have very formal contracts - this is good and bad. Good - usually all of the typical concerns are accounted for in the contract. Bad - they are usually not very amendable.

4. If they are promising to buy equipment, get that in writing.

5. Unless this is a new position, contact previous employees and ask why they left. If the practice is trying to hide them (ie, "we don't know how to contact Dr. So-and-so"), that's a red flag. Drug reps may have some knowledge of previous associates.

6. If you want to stay in the area, check on the length and scope of the non-compete clause.

7. IMO, if they treat you well during the interview (ie, cover all expenses), they will treat you well at the practice. Most practices will pay for all expenses, but beware if they balk at paying for your airfare or hotel.

8. My bias - beware of practices that use a recruiter. Generally, these practices are less desirable - some of the time it is related to location, but other times, there may be a major problem with the practice.

9. You should be able to access the financial books. If they are not willing to show you the finances, run.

10. For a larger group, ask who is responsible for hiring staff (techs). Not a big concern, but if they need to hire new techs, you can be involved in the recruiting process.

11. Speak with new associates (ask for their phone number or email and talk to them after the group interview - they will be more forthcoming).

I agree about the equipment purchase; if it is important to your being able to develop the kind of practice you want, make them put the agreement to purchase in writing. Be very specific about exactly what you want them to buy and when they must have it available to you. Anything nebulous is not a good sign. I had an employer once renege on both an oral agreement to buy laser equipment I needed to develop a practice area I wanted to build to be competitive in that city and on a promise to build out dedicated practice space (that he already had in shell) to support that part of my practice. It was a significant dissatisfier for me and contributed to my decision to leave his practice. If they make promises they won't put in writing, watch out.

You might do some due diligence and call local optometrists to ask what they think of the practice and the senior doctors. You should consider they may have a bias--possibly a referral/comanagement relationship with someone else in the community--but a positive report is something. A hesitant or obviously flat neutral is also important. if they are hesitant, ask for the name of someone they think might be able to provide useful information to a potential associate. You can find out some very valuable information this way.

Also, if they are touting a practice-associated ASC, ask who owns the center and whether practice physicians are permitted to purchase shares. That is important.

If the owner's spouse is holding a key officership position in the practice corporation, and she/he is not a doctor, that is a red flag (a big one, IMO.)

Have a lawyer look over the contract only after you have had a chance to read it fully yourself. If something is there that is a non-starter on your reading, save yourself the legal fees if the practice is not willing to change the terms to your liking.

Never believe anyone who says that all the contracts for all of the doctors are the same. That is rarely ever true. Practices offer different amounts to different specialists at different times, and if the money terms can be different, so can anything else.

Beware contracts that have terms that say the contract is a negotiated agreement when they are unwilling to negotiate any terms. Best to have those paragraphs completely eliminated, as they are not true (and it really is sort of a fraud to say you must sign that a contract is negotiated when it is not.)

Don't let the practice rush your signature. If you have an issue you want changed, ask if they will change it. Beware an offer that tries to make a change appear contingent on your agreeing not to change anything else.

 

[monkey7247]

Thanks for the advice. I got in touch with this group through the local Alcon rep. Recruiters have not worked out. I will keep my eyes on the non-compete clause, as I hope to stay relatively close to this area regardless of whether the job works out.

Did you all work multiple job opportunities at the same time or focus on one and then move on to another?

 

[orbitsurgMD]

Thanks for the advice. I got in touch with this group through the local Alcon rep. Recruiters have not worked out. I will keep my eyes on the non-compete clause, as I hope to stay relatively close to this area regardless of whether the job works out.

Did you all work multiple job opportunities at the same time or focus on one and then move on to another?

I may have had one or two I was considering at a given time, usually not more than that. Getting a good offer with terms I felt comfortable with was the most important.

 

[monkey7247]

I may have had one or two I was considering at a given time, usually not more than that. Getting a good offer with terms I felt comfortable with was the most important.

That's what I was thinking of going for as well. Thank you both for your help. I'll update after the interview

 

[KHE]

I'm sure I'm missing something, but this if off the top of my head.

1. Everything in the contract is negotiable. Salary, vacation time, benefits, bonus structure.

2. Benefits can vary widely. Some practices will not cover life insurance, disability insurance, retirement plans (401k).

3. Larger groups tend to have very formal contracts - this is good and bad. Good - usually all of the typical concerns are accounted for in the contract. Bad - they are usually not very amendable.

4. If they are promising to buy equipment, get that in writing.

5. Unless this is a new position, contact previous employees and ask why they left. If the practice is trying to hide them (ie, "we don't know how to contact Dr. So-and-so"), that's a red flag. Drug reps may have some knowledge of previous associates.

6. If you want to stay in the area, check on the length and scope of the non-compete clause.

7. IMO, if they treat you well during the interview (ie, cover all expenses), they will treat you well at the practice. Most practices will pay for all expenses, but beware if they balk at paying for your airfare or hotel.

8. My bias - beware of practices that use a recruiter. Generally, these practices are less desirable - some of the time it is related to location, but other times, there may be a major problem with the practice.

9. You should be able to access the financial books. If they are not willing to show you the finances, run.

10. For a larger group, ask who is responsible for hiring staff (techs). Not a big concern, but if they need to hire new techs, you can be involved in the recruiting process.

11. Speak with new associates (ask for their phone number or email and talk to them after the group interview - they will be more forthcoming).

That is largely good advice and should give people things to think about but the one thing that I would strongly disagree with would be point #9.

As a practice owner, any prospective associate who asked to see my financial books would be promptly shown the door.

 

[orbitsurgMD]

That is largely good advice and should give people things to think about but the one thing that I would strongly disagree with would be point #9.

As a practice owner, any prospective associate who asked to see my financial books would be promptly shown the door.

I would insist on seeing my books. I would expect any reasonable employer to let me see my billings, my collections, my writeoffs, my charges by code and payments, and to provide me a statement every month. Without that, the validity of performance-based bonuses cannot be verified. In my view, not being allowed that information, and not having that in writing would be suspicious and be a non-starter. You wouldn't have to show me the door.

 

[monkey7247]

As a practice owner, any prospective associate who asked to see my financial books would be promptly shown the door.

Thanks for your perspective. Since you would be unwilling to share financial info, how would you suggest prospective employees/potential partners verify the financial health of the practice?

 

[KHE]

I would insist on seeing my books. I would expect any reasonable employer to let me see my billings, my collections, my writeoffs, my charges by code and payments, and to provide me a statement every month. Without that, the validity of performance-based bonuses cannot be verified. In my view, not being allowed that information, and not having that in writing would be suspicious and be a non-starter. You wouldn't have to show me the door.

That's a completely different animal. Once you are IN the practice, and if you are being paid in any way based on production then OF COURSE you should have the right to review your own billings. If that's what guttata meant by "accessing financial books", then I would be totally fine with that. I took his suggestion to mean that he wanted to review P&L statements or tax returns. I can't think of any situation I would allow that.

 

[KHE]

Thanks for your perspective. Since you would be unwilling to share financial info, how would you suggest prospective employees/potential partners verify the financial health of the practice?

You probably can't but how do you verify the health of any business in any industry before accepting a job there?

From a medical standpoint, it's not likely that a practice that is struggling is going to look to ADD an associate.

Let me clarify because perhaps I misunderstood....if gutatta meant to be able to review your own financials for production based pay or things like that, that's completely reasonable and should be allowed.

If he's talking about P&L statements or tax returns, that's information for partners people looking to become partners only. Not associates.

 

[orbitsurgMD]

That's a completely different animal. Once you are IN the practice, and if you are being paid in any way based on production then OF COURSE you should have the right to review your own billings. If that's what guttata meant by "accessing financial books", then I would be totally fine with that. I took his suggestion to mean that he wanted to review P&L statements or tax returns. I can't think of any situation I would allow that.

I can. I would make that disclosure required if you were planning on selling me an equity share. I would require you to submit five years of full statements and tax returns before agreeing to buy in.

 

[KHE]

I can. I would make that disclosure required if you were planning on selling me an equity share. I would require you to submit five years of full statements and tax returns before agreeing to buy in.

Again, if you're in discussions about a potential partnership, OF COURSE you would need to see those documents. I'm talking about an associate position.

 

[guttata]

Maybe it's different in the optometric world. In the great majority (I would say 90%+) of cases, you join as an associate with the goal of becoming partner. The practice should be forthcoming with basic financial information - charges, revenue, expenses. I do not need to know the income of every physician in the practice. When discussions got serious, I asked for and received this information from every practice. Larger practices will sometimes reveal current salaries of associates/partners. If they won't divulge this information, you have to ask yourself why (and it's usually not because they are making too much). IMO, you have to know the financial status and potential income when you join - unless you don't mind 'wasting' two years of being an associate.

 

[monkey7247]

Again, if you're in discussions about a potential partnership, OF COURSE you would need to see those documents. I'm talking about an associate position.

Many of the positions I've been offered are geared towards partnership track. Knowing that the company is looking for an eventual partner in me, should I expect to be able to review the info now or only in the future?

 

[monkey7247]

IMO, you have to know the financial status and potential income when you join - unless you don't mind 'wasting' two years of being an associate.

That's what I was looking to say.

 

[KHE]

Maybe it's different in the optometric world. In the great majority (I would say 90%+) of cases, you join as an associate with the goal of becoming partner. The practice should be forthcoming with basic financial information - charges, revenue, expenses. I do not need to know the income of every physician in the practice. When discussions got serious, I asked for and received this information from every practice. Larger practices will sometimes reveal current salaries of associates/partners. If they won't divulge this information, you have to ask yourself why (and it's usually not because they are making too much). IMO, you have to know the financial status and potential income when you join - unless you don't mind 'wasting' two years of being an associate.

In optometry, most associates join practices expecting/hoping one day to become a partner. Like in ophthalmology, the percentage of success stories is relatively low. Many young associates get disillusioned when partnership talks stall or drag on endlessly and move on to the next opportunity where the cycle frequently repeats itself.

I guess we're talking about different things when we're talking about "financial documents."

To me, financial documents are P&L statements and tax returns. I would not divulge that to a prospective associate. I would not divulge that until partnership discussions reached a very serious level far beyond the whole "come and work for a couple of years and we'll see how it goes" thing.

 

[KHE]

Many of the positions I've been offered are geared towards partnership track. Knowing that the company is looking for an eventual partner in me, should I expect to be able to review the info now or only in the future?

In my experience in optometry and helping out 2 ophthalmologists start/buy practices and a third negotiate a contract, I would say that both fields tend to be that way......"sure....come in and join the office and we'll talk about partnership in a few years."

I would say that in those situations, the current financial situation of the practice is not the most pressing thing to be considered.

I know it seems like that should be at the TOP of the list but I think what's much more important is setting up the framework of the conditions under which partnership would be offered. The actual dollar amounts involved can be discussed later but if partnership is your goal and their goal, it doesn't matter if it's the most financially healthy practice in history if it's an unachievable goal. Start with that framework first and worry more about the numbers a bit further down the road.

 

[monkey7247]

Can you think of any books that could help in contract negotiation/pitfalls? I've heard some horror stories about people being taken advantage of in their first contract due to ignorance.

 

[KHE]

Can you think of any books that could help in contract negotiation/pitfalls? I've heard some horror stories about people being taken advantage of in their first contract due to ignorance.

Well, there's always Donald Trump's "The Art of the Deal."

I think the best advice I can give is that in any negotiation, of any type really, you have to be prepared to walk away.

One of the biggest mistakes that I made as I travelled that road is that I spent a lot of time dealing with small time thinkers and trying to make unworkable situations workable.

One thing that I would also suggest....

Obviously at some point you're going to need an attorney. Try to find a trusted mentor whom you can bounce negotiations off and try to draw up as much of the framework yourself before getting attorneys involved.

One of the biggest problems with attorneys is that they tend to be adversarial by nature. Far too many of them are deal breakers, not deal makers.

Obviously if you want a job and someone wants to hire you, you're halfway there. In theory, you would think that if two people want the same thing, it would be easy, right? It never is. When looking for an attorney for this type of negotiation, you don't want some mad dog divorce attorney type.

Basically you need a uniter, not a divider to borrow an old phrase.

When looking for an attorney, mention that to them.

 

[shredhog65]

Great advice from the previous posters.

A few of my thoughts -

Look closely at the noncompete clause. It may be the most important thing in the contract. It could come back to haunt you if you ever leave the practice and want to stay in the area. In some states, a noncompete provision is not enforcable but it will still be put in the contract. Find out if it is enforcable in the state you are going to. If it is, I recommend using a significant amount of negotiating power to either remove it or change it so you have the ablity to practice in the area should you leave the group.

I agree with orbitsurg about "opening the books". Any practice that won't show you their finances could be hiding something. All practices I interviewed at were willing to do this.

Remember that your base salary isn't everything. Make sure your productivity incentives are realistic and fair. You should be out of your base in a year or two anyway. Benefits can also add up, so a slightly lower base with benefits may be better than a higher base without.

Also, remember - it's you first job. It might be your only job and it might not. You need to put yourself in a position where you have the option of staying where you are and building a practice, or moving on in a few years without financial and social reprocussions. An honest, fair practice will understand this and try to put you in the best situation to stay with them and grow your practice.

UTSW and Alcon used to put on a program about contract negotiations. I forget the guy's name that heads it but he's really informative. You should contact alcon about it.

 

[Visionary]

UTSW and Alcon used to put on a program about contract negotiations. I forget the guy's name that heads it but he's really informative. You should contact alcon about it.

I think you're referring to Wesley Millican, the CEO of CareerPhysician. He's a great guy and, yes, very informative. He's also been involved with the annual chief resident leadership forum.

 

[guttata]

Re Lawyers -

I almost used the Healthcaregroup. It should go without saying, but make sure you hire an attorney with healthcare contract experience. My contract was pretty straight forward, so I did not end up hiring them. But, I understand some use lawyers for peace of mind (and it's probably worth it). They have a flat fee for contract review.

If you are close to your colleagues (who have accepted jobs), ask them to review the contract.

I don't think you need a lawyer to negotiate for you. I think practices would prefer to negotiate with you directly (with pointers from your lawyer).

Obviously, you want to do it right the first time; but there is a quoted figure that only 20% of people stay at their first job for life.

 

[monkey7247]

CareerPhysician.com seems to have a lot of the info I was looking for. Thanks for mentioning it.

 

[monkey7247]

Now that I've gotten into the negotiating process, it is true that everything is negotiable. Most of the issues with the contract thus far has been lack of details and clarity rather than the predatorial clauses I was afraid of. Again thank you all for your help.

 

[Visionary]

Now that I've gotten into the negotiating process, it is true that everything is negotiable. Most of the issues with the contract thus far has been lack of details and clarity rather than the predatorial clauses I was afraid of. Again thank you all for your help.

You'll find that a lot of the ambiguity in contracts is by design. Attorneys, who are responsible for most such contracts, never want to paint themselves into a corner.

Regarding the predatorial aspect, one thing you can run into, though uncommonly, is a practice that likes to use associates as supplemental income. They'll keep you on until you're up for partnership, then cut you loose, stating that it's not working out. They'll then pick up another associate to step into your place. There's really no way to insure partnership in an initial contract, so you can't protect yourself from this type of behavior. Just be wary of practices that seem to have a lot of recent turnover.

 

[Bgladney]

As a practice consultant specializing in ophthalmic staffing and recruitment, I can tell you that "most" items are up for discussions. Doesn't mean that they are negotiable....just that they can be discussed.

If you are discussing with a solo practice, many things can be changed. A larger firm is more likely much more stringent due to practice policy regarding certain topics (vacation, retirement, health policies, etc.).

An I agree with Visionary. There is not much you can do to protect yourself from a practice looking to abuse a new associate. However, past track record can provide you a pretty good idea of the nature of the practice. Non-partnership is not always a bad thing if both parties recognize what they are entering into.

 

[Visionary]

A larger firm is more likely much more stringent due to practice policy regarding certain topics (vacation, retirement, health policies, etc.).

This is what I found to be the case with my group. It's one of the largest, most well-established private practice groups in the state. When it came to the contract, there was plenty of discussion, but absolutely no movement. They feel they have the contract skeleton perfected after many years in the business. I wasn't totally happy with the contract when I signed, but a year and a half into my practice, I can see the rationale for most of the details. Relationships with the other docs and staff have been great, and I don't foresee any problems with eventual partnership. Sometimes, it takes a little leap of faith, particularly when you are just starting out.

 

[KHE]

This is what I found to be the case with my group. It's one of the largest, most well-established private practice groups in the state. When it came to the contract, there was plenty of discussion, but absolutely no movement. They feel they have the contract skeleton perfected after many years in the business. I wasn't totally happy with the contract when I signed, but a year and a half into my practice, I can see the rationale for most of the details. Relationships with the other docs and staff have been great, and I don't foresee any problems with eventual partnership. Sometimes, it takes a little leap of faith, particularly when you are just starting out.

Now that you are in the practice, for the benefit of others can you eleaborate on some of those details?

 

[Visionary]

Now that you are in the practice, for the benefit of others can you eleaborate on some of those details?

I'll go over a few of the key issues I had. You'll see they mostly involve money, which is what most grads are thinking about, after accumulating debt for 12+ years! You learn there's a lot more to it than that, though.

1) Starting salary was below average for medical retina--closer to comprehensive. Since I'm their 1st retina doc and I knew the potential patient volume, given a large built-in referral base, I was okay with it.

2) Associate period is 3 years, when most are only 2. While associate pay is definitely better than resident/fellow pay, I wasn't excited about delaying partnership another year.

3) Productivity bonus is below average (~20%), and half of it is placed in an escrow account to be used toward the buy-in. That's an insurance policy for the practice: you only get the escrow if you decide to buy-in.

4) Annual salary increases during the associate period do not scale along with the productivity goal. For instance, after the 1st year, I was given a 10% raise, but am expected to bring in 25% more revenue.

To many, this may sound like a potential screw job, and I had similar concerns. Sounds like they'll be making a lot of money off me over those 3 years, doesn't it? I voiced my concerns and was urged by the managing partner to trust the process they had developed. If this wasn't such an established, well-respected practice, I may have walked away.

Now that I'm here, I understand that some of the policies (e.g., the escrow account) are in place because of problems with former associates. As far as the actual numbers, it is true that a lot of the revenue I bring in as an associate goes back to the practice; however, the buy-in is a fraction of what you will find at other practices this size (8 docs, and looking for a 9th).

They are essentially accumulating "goodwill" money from me during the associate period, so I don't have to pay it at buy-in. Still, even if you total that "goodwill" and the actual buy-in money, it's far below the average for a similar buy-in. For instance, the doc who made partner when I joined totally paid off his buy-in with the escrow money plus a draw off his first quarter partner pay. So, a quarter into his 1st partner year, he was already pulling his full potential!

The practice has also agreed to purchase all the equipment I've ever requested, including a 6-mode Spectralis. Since I arrived, they've really bent over backwards to make me happy. I know I made the right choice coming here.

In retrospect, I could have eased my mind, had I asked more questions during the contract negotiations. Of course, I didn't really understand enough to even ask the right questions! That's a definite shortcoming of residency/fellowship training. Most ophthalmologists will end up as small business owners, but will have to learn how the business works while on-the-job!

That's the main reason I post to this website. I've learned quite a bit from others here over the last several years, and I want to help those that follow. We don't get everything we need to know from school.