Contract Negotiation

[HouseofPain]

I have question regarding an employment contract I just received. First off I am an anesthesiologist and am currently completing a fellowship in pain medicine at the same institution I completed my residency. I am familiar with the MGMA data published every year, however I am confused by the different designations given to pain medicine. Should I be looking at the data provided for anesthesiology: pain medicine or just pain medicine? The position offered is strickly 100% pain. The employer has pegged all the compensation numbers to the Pain Medicine category (median salary, wRVU value). I feel you could argue that Pain Medicine catagory probably includes PMR, neurology, Psych, Fam Med, and some that may not do a significant amount interventions. I may be wrong about all of this but it would be nice to get some input from you guys. Thanks!

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[101N]

Anesthesiology: pain medicine.

 

[HouseofPain]

Thanks for the input... Is my reasoning correct (more interventions, higher paying procedures kyphos, scs trials/implants) for requesting we go by the Anes pain med data instead of pain medicine non-Anes data? What would you consider a good wRVU value? Currently offered mid 50s in semi-rural area in the SE with a less than ideal payer mix (70% Medicare/Medicaid)... Will be the only pain doc in a 60 mile radius...Just trying to get my ducks in a row before I meet with them again to discuss the contract and I don't want to come across pompous/greedy

 

[lobelsteve]

Thanks for the input... Is my reasoning correct (more interventions, higher paying procedures kyphos, scs trials/implants) for requesting we go by the Anes pain med data instead of pain medicine non-Anes data? What would you consider a good wRVU value? Currently offered mid 50s in semi-rural area in the SE with a less than ideal payer mix (70% Medicare/Medicaid)... Will be the only pain doc in a 60 mile radius...Just trying to get my ducks in a row before I meet with them again to discuss the contract and I don't want to come across pompous/greedy

You already have.

Go in with open mind and do not ask for anything. See what they offer to start and see what the potential is. Then you can post back. You should be asking for interview tips and what to look for in the practice.

1. New practice?
2. Only doc for 60 miles? Doubt it in the SE.
3. Staffing? EMR? Fluoro in office, ASC, HOPD- this determines how much you make for them and how much you keep.
4. What happened to the last doc?
5. Partnership: options, does it mean anything?

 

[HouseofPain]

You already have.

Go in with open mind and do not ask for anything. See what they offer to start and see what the potential is. Then you can post back. You should be asking for interview tips and what to look for in the practice.

1. New practice?
2. Only doc for 60 miles? Doubt it in the SE.
3. Staffing? EMR? Fluoro in office, ASC, HOPD- this determines how much you make for them and how much you keep.
4. What happened to the last doc?
5. Partnership: options, does it mean anything?

I have already interviewed and ( have a contract in hand) so first 2 years guaranteed salary with productivity bonus based on wRVU ( $/wRVU mid-fifties), third year strictly production. This is an employed position (W-2) by the hospital

1. Yes it a new practice
2. Only pain doc (fellowship trained) in 60 miles...fact
3. Probably would just have a receptionist/LPN at office but all provided by hospital. No c-arm in office, all procedures requiring fluoro would be done in the OR at hospital, yes they utilize an EMR
4. Never employed an interventional physician... There was a independent private practice doc who left approximately a year ago who would do some procedures at the hospital and they are missing the facility fees he generated apparently wife didn't like area and they moved approx 60miles away to a larger community
5. No partnership or ancillary income streams

 

[lobelsteve]

Perfect. Noncompete? Not important for area unless you want to stay if things dont work out? Benefits package? 401k, 403b, insurances, pension? CME money, cell phone allowance?
wRVU ignores site of service so unimportant for you. You need fluoro suite and not an OR at the hospital to speed up turnover and need to find a way to have scheduling done with minimal paperwork. Hospital cases are horrible as the paperwork takes longer than the procedure. You need an MA and an LPN for the office to check in, check out, and assist. As long as base is 250+ you will be above 50% MGMA when it comes time to go straight production. If proper support from hospital for building the practice (and they should want you to succeed wildly) then this is an easy 500k plus job M-F 8-5 no weekends no call. Topping 800k not going to happen on wRVU model unless you get $65+ for wRVU or feel like working 80 hrs per week.

 

[ampaphb]

This is your one shot at getting everything you want financially. From this point forward, they will try and whittle away at you. So get the highest RVU value you can now. Make sure they dont have the sole right to modify that rate in future.

Make sure you get to determine what your staffing needs are to accomplish your desired efficiency and volume, not some bean counter in the administration.

HOPD means they will be making a boatload of money on your procedures. As a result, they should be covering 100% of your overhead, now and in the future.

Steve is right in that you will be limited by the numbers of procedures you can do. Hospitals are notoriously inefficient. Find a way to incentivize them financially to move things along. Maybe add a penalty clause if they cant turn over the room to allow you to do procedures q15-20 min.

If you invest 2 years building up the practice, and then they try and screw you when you go productivity only, your non-compete is vitally important. First, find out if they are enforceable at all in your state. If they are, try to make sure there isn't one, or there is a minimal ($10k) liquidated damages buy out clause. Try to have the covenant waived if you are terminated without-cause, you terminate for-cause, or you are not offered partnership.

http://medicaleconomics.modernmedic...ns-need-know-about-restrictive-cove?page=full

 

[HouseofPain]

Perfect. Noncompete? Not important for area unless you want to stay if things dont work out? Benefits package? 401k, 403b, insurances, pension? CME money, cell phone allowance?
wRVU ignores site of service so unimportant for you. You need fluoro suite and not an OR at the hospital to speed up turnover and need to find a way to have scheduling done with minimal paperwork. Hospital cases are horrible as the paperwork takes longer than the procedure. You need an MA and an LPN for the office to check in, check out, and assist. As long as base is 250+ you will be above 50% MGMA when it comes time to go straight production. If proper support from hospital for building the practice (and they should want you to succeed wildly) then this is an easy 500k plus job M-F 8-5 no weekends no call. Topping 800k not going to happen on wRVU model unless you get $65+ for wRVU or feel like working 80 hrs per week.

Thanks for the info/advice guys.. I really appreciate it... I just want to make sure I walking into a square deal and not getting setup to fail....26 years is a long time to invest in education/training to not do my due diligence before signing a contract

So as far as benefits CME ~3500yr/5 days off, sign on bonus/stipend ~40-50k depending on how soon I sign, ~50k for med school loans, ~1.5k/yr med license etc, paid malpractice with tail, 401k but really no match ~3% what I contribute up to 20k, health/dent/vision for entire family would be ~ 300/m pretax, there is a noncompete clause 30mile radius for 2 years...The base they're offering is close to 400k for the first 2 yrs until I get established and build a practice but come year 3 zero base, straight wRVU and that is what I'm hesitant about... The kicker with all of this is the location is not ideal however I know that's the trade off.. To me it seems like the wRVU aren't ideal for performing procedures unless you negotiate a high value like $60-65/unit... Just as an example, Why do a LESI and get 1.4 wRVU when you could see a 15m follow up and get 1 wRVU - no risk with follow up plus in my situation you could possibly see 2 follow ups in the time it takes to turn over the OR... (I love doing procedures and would go crazy if I had to just see 30+ follow ups a day btw so just using as an example). It seems like the disparity is greater with some of the more advanced procedures (kypho/scs). During the interview I did express concerns with efficiency performing these procedures in the OR and the ceo did say that I could have 2 ORs to flip/flop and access to a cath lab. None of that is in the contract but in reality that's going to be determined by surgeon use wether or not I get multiple rooms.

 

[ampaphb]

400K is huge, and a terrific deal. Location is undoubtedly BFE. Hire a lawyer and look into the non-compete. 30 mi is a lot, but the hospital has way deeper pockets than you if they want to fight it.

This is a discussion about leverage. Right now, they need you (that's why they are willing to pay through the nose). From this point on, they will be nothing but a drag on your practice. They will require you to have 100% patient satisfaction. They will limit your staff, and thus your ability to expand. The cath lab has equipment from the mid 80's if it is anything like ours, and should be avoided at all costs.

DO NOT do this alone, and assume you can negotiate your contract. Hire a health care lawyer to review their proposal.

 

[HouseofPain]

but what about year 3? basically wRVU target is close to 7000/yr to support base....Is that doable? When i put pen to paper it seems like you would have to avarage per day 10-15 procedures, see 4-5 new patients and 10-15 follow ups...Does that sound reasonable/sustainable?

 

[hyperalgesia]

This is a good deal if you plan as far as the contract explicitly states, which is 2 years. So you live in BFE for 2 years, build a hospital practice for the hospital, learn some things, save some money, and then leave with all parties happy. That should be the plan going in because after 2 years, things will deteriorate rapidly, starting with your income, and ending with your dignity.

 

[HouseofPain]

there lies the problem this is a 3 yr contract

 

[ampaphb]

I get you needing to average 30 wRVU/d. I don't work in that setting, so those who do need to answer if it is doable.

BTW, your convertion factor needs to be based on your payer mix, as well as the contracted rates your employer has with those payers. That is data you need, prior to signing your contract.

 

[ampaphb]

If they want a 3yr commitment, they need to provide you with 3 years of support. Assure them that, with sufficient commitment on their part, it won't be necessary, but that, if their projections are inflated, they should bear the risk, not you.

 

[HouseofPain]

I get you needing to average 30 wRVU/d. I don't work in that setting, so those who do need to answer if it is doable.

BTW, your convertion factor needs to be based on your payer mix, as well as the contracted rates your employer has with those payers. That is data you need, prior to signing your contract.

no conversion factor straight CMS wRVU irregardless of payer mix...had a long discussion about this during the interview

 

[IlDestriero]

I think your match is probably 100% up to 3% of your income, and not just 3% of your input. (Up to the federal limit of course)
You have to be able to do routine procedures in your office. You'll go broke trying to do them at the hospital with the limited block time you will get unless your area is really dead and the ORs are empty all the time. Empty promises won't pay the bills in 2 years when you have zero leverage and they say, sorry that's all we can do. And your only option is to move as your non compete is so limiting.

 

[ampaphb]

Your first two year guarantee is very enticing. But if you only make 200 your third year, your average will be 333. That's still reasonable, but you have to do the "is it worth living in BFE" calculus, not with the shiney object they are dangling in front of you.

 

[HouseofPain]

the liquidated damages clause is 200K...they are definitely trying to entice me to sign based on the guaranteed base salary for the first 2 years and then recoup some of their up front money in the 3rd year and beyond in my opinion

 

[ampaphb]

Can I ask what state we are talking about?

 

[hyperalgesia]

the liquidated damages clause is 200K...they are definitely trying to entice me to sign based on the guaranteed base salary for the first 2 years and then recoup some of their up front money in the 3rd year and beyond in my opinion

You need something in the contract that says they will be providing your overhead costs after year 2, including staff, emr, etc, etc. You may want to itemize these because they will be tempted to transfer whatever costs they can to you.

 

[HouseofPain]

It does say that they are responsible for all personnel, supplies, equipment, office space etc "resonably necessary per their sole discretion"... nothing about EMR though

 

[ampaphb]

"reasonably necessary per their sole discretion" is a deal breaker, and ought to be an indicator (i.e. red flag) about how willing they will be to listen to your concerns once the contract is signed.

 

[hyperalgesia]

I wouldn't necessarily take a hard line... Their initial guarantee is quite a gesture. It seems a little unusual for a fully employed position to be fully production based. I guess you will do your own billing after year 2? Is their billing dept gonna send office claims for you and collect no part of it?

 

[HouseofPain]

I wouldn't necessarily take a hard line... Their initial guarantee is quite a gesture. It seems a little unusual for a fully employed position to be fully production based. I guess you will do your own billing after year 2? Is their billing dept gonna send office claims for you and collect no part of it?

Yes they bill everything and take care of collection. I just get reimbursed based solely for my WRVU production which is pegged to a dollar amount (mid fifties per unit)... I need to average ~35 wRVU/day to make ~400k in year 3...like I said before that seems like a lot 10-15 procedures, 10-15 follow ups, 4-5 new patients everyday... I just don't know if that's going to be realistic

 

[hyperalgesia]

Yes they bill everything and take care of collection. I just get reimbursed based solely for my WRVU production which is pegged to a dollar amount (mid fifties per unit)... I need to average ~35 wRVU/day to make ~400k in year 3...like I said before that seems like a lot 10-15 procedures, 10-15 follow ups, 4-5 new patients everyday... I just don't know if that's going to be realistic

Do you mind working late? It's kind of busting your balls to get those numbers. And you will be very dependent on loyal, dependable hospital staff that you may have very little control of. I wouldn't count on that much money in year 3 but you'll probably do fine. I think it seems like a good offer on the face of it. Would love to get an update on how it goes at some point.

 

[HouseofPain]

Thanks everyone for all the advice! It is much appreciated! I will keep you posted on how everything progresses

 

[jettavr6]

Thanks everyone for all the advice! It is much appreciated! I will keep you posted on how everything progresses

Do not sign anything until you run this buy both a health care attorney, and a business attorney. It will cost you some money, but it is well worth it. Approach this negotiation in the same way an executive gets hired for a position at the hospital. They will negotiate everything down to a golden parachute even if they completely mess things up. The situation seems favorable to you, and I would take advantage of it. Ultimately, no wheel turns in the hospital machine without the orders of a physician - leverage that power.

 

[Jcm800]

why not just ask for 75% of your income from year 2 guaranteed, or whatever you feel is as low as you can go, and have the RVUs kick in above that guarantee…

sometimes i have heard, no experience though, you put in a penalty for you, if you don't make like 90% of your salary ,you will take a hit or something or pay a penalty the following year…

don't accept a contract with no guarantee unless you plan to give notice at 1.5 years and start looking for another job.

 

[Ducttape]

mid $55/wRVU is appropriate for a setting that has a high medicaid proportion.

attorney reviewing contract is key.

make sure your benefits do not expire once it hits year 3. the actual salary you are getting, for the first 2 years is a lot higher than $400K, due to the benefits (malpractice, health insurance, student loan, retirement...).

see if they would be able to get you 2 rooms for procedures on OR days - and they should if they are not busy. even if the OR staff can only move patients in 1/2 hour time blocks due to inefficiency, if you have 2 rooms, you can essentially do procedures every 15 minutes.

i would try to get non-compete down or eliminated, even if you dont want to live in the area, so that you have more of a bargaining chip if they do decide to fire you in the future.

one other suggestion - counter back that after year 3, you recieve a base salary, say $250K, then wRVU to kick in at $55 after you reach 4545 wRVU. or it might be sweeter for them if you ask for a base $20k/month, and $55/wRVU kick in after 363 wRVU for any particular month.

 

[drusso]

why not just ask for 75% of your income from year 2 guaranteed, or whatever you feel is as low as you can go, and have the RVUs kick in above that guarantee…

sometimes i have heard, no experience though, you put in a penalty for you, if you don't make like 90% of your salary ,you will take a hit or something or pay a penalty the following year…

don't accept a contract with no guarantee unless you plan to give notice at 1.5 years and start looking for another job.

Even better: Ask to be a vendor to the hospital vis-a-vis an exclusive business services contract and ask them to just 1099 you or your LLC. Talk about simpler for everyone! This is the way I would do it. The hospital can use what ever internal accounting mumbo-jumbo (RVU's, wRVU's, % collections, etc) it wants as long as the check gets to you by first of the month.

http://www.radiologybusiness.com/to...usive-hospital-contracts-five-critical-issues

 

[Ducttape]

i would suspect that the hospital would terminate these contracts much faster (or just let them expire), since the hospital does not have the control they require (as you have oft noted yourself). they also might not be able to provide such an incentive package as he would not be an actual employee of the system.