Contract Negotiations

[ShanFan]

How critical is it to have tail coverage in a job contract?

I'm a senior resident, and I've accepted a job offer that I'm really excited about it. The location is perfect for my family, the pay is above average, they see 1.8-2.2 pph, and the people in the group (democratic) seem great.

However, there is no tail insurance. With everything else being so ideal, I don't know how I should handle this. I asked about contract negotiations, and they said that there isn't room for much. Basically everyone who signs in this group sign the same contract without negotiating, apparently.

Also, on another note, how important is it to have details about pay differential (for nights and holidays) included in the contract?

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[GeneralVeers]

Tail coverage is mandatory. If the job won't provide it, then you should consider looking elsewhere. If you really want that job due to location or some other factor, then you should look into getting your own tail coverage.

 

[EctopicFetus]

That tail might cost you 50k. Its a great way to prevent you from leaving. Do you think you will have 50k in the bank after 1 year?

On another note some democratic groups have good reason for this. I would inquire. I can say I have never heard of tail not being covered. If you know someone in that group ask why? If you dont know someone in that group an you have a job offer tell them you are worried about this and wonder why when it seems to be the industry standard.

 

[two guys]

This would be a deal breaker for me...

But, I guess it depends on how "above average" the pay is. Enough for you to have 50-75k sitting around after the first year in case you:
- hate the place
- have an absolute family disaster and have to move
- find a better job

How much this matters depends on how likely you think some of those things are to happen. I was in a similar situation and had to turn the job down. It was a town my wife and I both had roots in and loved and a good democratic group. This place paid 20% of tail each year, so after 5 years your tail was guaranteed. But, the idea of having something bad happen (hate the job, brother dies or something) and having to come up with that amount of cash precisely when I'd also need a bunch of cash to move and be unemployed just didn't make sense.

I'll bet you that they do it this way because it's been that way since 20 yrs ago when this wasn't as big of a deal breaker. They probably like that it ensures some group stability but mostly, the guys who didn't get it before you don't want to pay out of their pocket for you to have it.

Unfortunately, there is likely no negotiation here. They will change it when enough people turn down the job and tell them why. If they're able to keep finding willing people to accept those terms then they'll never change it. If they have to pick up extra shifts for a few years because they can't recruit then they might consider forking over some of their hard earned money to take on the costs of someone who hasn't worked a shift yet.

 

[Titrate2Life]

Without a question a deal breaker. You NEED tail coverage.

 

[ShanFan]

This would be a deal breaker for me...

But, I guess it depends on how "above average" the pay is. Enough for you to have 50-75k sitting around after the first year in case you:
- hate the place
- have an absolute family disaster and have to move
- find a better job

How much this matters depends on how likely you think some of those things are to happen. .

Chances are low that I will hate living in the city. Very low. It is one of the most sought-after and desirable places to live in the US (which is why they can probably get away with not providing tail coverage.) But I suppose I have no idea how likely it is that I will hate working there. From what I know now I don't think that's there a big chance of that, but you never know.

I can't think of any family disaster that would force me to move from this location. It is close to family.

I have been on 6 interviews and received 6 job offers. I was picky about the places I interviewed, and they were basically in the hand-full of cities I saw as the best places for myself and my family... in the entire country (with MANY factors considered.) This job was by far my favorite of the 6. This tail coverage issue is the first thing that's given me any reservations whatsoever.

A little more info about the pay: The average pre-partner makes $280k per year (it is mostly RVU). It takes 2 years to make full partner, at which point that number goes up obviously.

 

[The White Coat Investor]

Our group just switched this last year from claims made (where you need a tail) to occurrence (where you don't.) So when I signed on, there was no promised tail. The contract read that if they fire me, they pay it. If I quit, I pay it. But yes, a fully mature tail is around $50K for emergency docs. A bit of golden handcuffs if you will. Just realize the risk you're taking (that you might have to come up with $40-50K if you quit.) I would also try to negotiate that if they fire you instead of make you partner, they pay. I'd focus my negotiation there and if I couldn't get that, I'd probably take a pass on the job. Maybe I'd go for a 50/50 deal, dunno. Everything is negotiable. Doesn't mean you'll get what you ask for, but nothing is set in stone. Ever. For example, what if you agreed to work for $50 an hour, would they pay the tail? Of course they would. Now go back to what they were offering and work your way down until they'll cover the tail if that's more important to you than your salary.

These guys suggesting you should never take a job without a tail need a little more imagination. I'd take a job for $1000 an hour without a tail and I bet they would too.

 

[two guys]

You'll have a better idea of the pay if you break it down to hourly. 280 isn't a ton depending on your hours and benefit. For example, most people could make that working 100 hrs a month. Take that 280k, add the benefits (401k, health insurance, cme, etc) and divide by the hours. That's your hourly not considering the cost of the tail. For example, 280k without any benefits and 140hrs/month is 167/hr. If you get 52k in 401k money and insurance and CME worth 10k then that's 342,000/1680=204/hr. For 130/month that's 220/hr.

So that's your pre-partner pay. It'd also be fair to ask for the average parter pay and hours and do the same calculation.

Now, try to figure out the cost of that tail money that you'll need to have stashed around asap. I've heard all kinds of numbers so I don't think I could give you a fair estimate. Just know that it grows every year. Probably keeping 50-75k initially and adding 5k/year might be a safe strategy. Go ahead and take that out of the hourly you calculated.

I imagine you know that the average resident changes jobs in the first few years. It sounds like you're telling yourself the same thing we all tell ourselves (I've been really selective about where I interview, I love this town, and I know what I want). Somehow, despite all of us thinking this when we were in your shoes, MOST of us were wrong and did move.

So, all your family lives there and you can't imagine a scenario where you'd leave - that's great bc you will have to pay tens of thousands of dollars when and if you leave. Just playing devils advocate, but what happens if your group loses the contract? What happens if you get in a car accident and can no longer work? What happens if your spouse gets (God forbid) a terminal illness and you need a year to care for her. What happens if you somehow piss off the administrator and your group asks you to leave?

I'm not trying to scare you. I'm just trying to make the point that you are taking a risk. This can be entirely and completely self insured if you're disciplined enough to put the tail money away yourself before you pay loans, buy a house, or give yourself a raise. If you can live with that, then you should definitely consider the job as it sounds like it's great in all other aspects. If you don't see yourself putting that tail money away first, then you are taking on a ton of risk.

 

[Lysinee]

How often do you win negotiations about details in the contract? Is there more compromising than agreeing to all of your terms?

 

[The White Coat Investor]

How often do you win negotiations about details in the contract? Is there more compromising than agreeing to all of your terms?

To the prospective employer, it's all about cash. If one form of cash means more to you than another, it's easy for them to swap it around. For example, if you want a sign-on bonus, you can swap it for lower pay. If you want a tail, you can swap it for moving expenses and CME money. Also, keep in mind that some people care more about different stuff. For example, my group had a no-compete when I signed on. I cared that if I hated the group I wouldn't have to leave town. They cared that I didn't steal the contract from them. So we rewrote that paragraph to protect both of our interests. Win-win.

 

[gman33]

Anyone else want to name some other "deal breakers" in contract negotiations?

A non-compete seems like one to me.

 

[The White Coat Investor]

A deal breaker for me with one group was that they wanted me to work 5 straight years of all nights. "We all did it." Great. I don't need this job that bad. Otherwise great group and job.

 

[GeneralVeers]

$280K isn't that much, which means he must be in the Los Angeles, San Francisco, San Diego or Manhattan areas.

Seriously for $280K they should be paying your tail, offer an amazing 401K, and Cadillac health insurance.

 

[The White Coat Investor]

$280K is a great pre-partner wage IMHO. But when evaluating a partnership job, it's all about the partnership for me, not so much the prepartnership wage.

 

[gman33]

A deal breaker for me with one group was that they wanted me to work 5 straight years of all nights. "We all did it." Great. I don't need this job that bad. Otherwise great group and job.

I spoke to a group with this same deal.
That was the end of the discussion.

 

[DJEMDOC]

$280K isn't that much, which means he must be in the Los Angeles, San Francisco, San Diego or Manhattan areas.

Seriously for $280K they should be paying your tail, offer an amazing 401K, and Cadillac health insurance.

Agreed. There should be some wiggle room.

 

[two guys]

280k might be awesome or horrible - need an hourly accounting for hours worked and benefits - it is a worthless number otherwise

 

[Old_Mil]

Anyone else want to name some other "deal breakers" in contract negotiations?

A non-compete seems like one to me.

Long physician initiated termination of contract clauses. Remember, they will tell you pretty much anything to.get you in the door. When you see things like a six month termination clause or no tail think "they are having trouble getting people so they want to handcuff you to the job." As far as 280k, you need a better breakdown of what that entails (hours worked, hourly rate).

Compare jobs using hourly rate and patients per hour so you are comparing apples to apples and then factor in benefits.

 

[GeneralVeers]

Long physician initiated termination of contract clauses. Remember, they will tell you pretty much anything to.get you in the door. When you see things like a six month termination clause or no tail think "they are having trouble getting people so they want to handcuff you to the job." As far as 280k, you need a better breakdown of what that entails (hours worked, hourly rate).

Compare jobs using hourly rate and patients per hour so you are comparing apples to apples and then factor in benefits.

Agree with above. In general you shouldn't have any job that requires more than 120 hours/month, or more than 2.5 pts/hour. Being forced to work harder than this will get you burnout really quickly.

 

[ShanFan]

I really appreciate all of the insights that have been shared. You definitely got me thinking.

I want to be clear about how much this job has going for it, though.

The "pros" of this job:
-The pay (which I think is great, based on my other 5 interviews and considering the location of this job)
-2.0 pph
-democratic group
-2 years until full partner
-CME allowance (including phone)
-No non-compete clause
-9 hour shifts
-Flexible hours/scheduling
-Health insurance provided
-Ideal location (not just for my family, but for many many people. It's not in CA or NY.... it's in a better state than those. IMO.)
-Public schools that get ratings of 9 and 10

The "con" of this job:
-No tail coverage

 

[deleted109597]

Tail is usually 3x most recent yearly premium. My tail will cost ~20k.
That being said, some states are worse for this.
As above, ask to see the policy. It may be occurence based.

 

[two guys]

Those are all good things.

What are the hours? What is the hourly?

If you want the job and are willing to take on the extra cost then go for it. But, you'd be silly to not take the time to figure out the pre-partner and partner hourly.

 

[ShanFan]

Those are all good things.

What are the hours? What is the hourly?

If you want the job and are willing to take on the extra cost then go for it. But, you'd be silly to not take the time to figure out the pre-partner and partner hourly.

I took your advice.

Hours are flexible, depending on how much you want to work. Average is 140/month.
Hourly (including benefits) pre-partner is $200. After making partner it is $270.

 

[two guys]

That's reasonably competitive for pre-partner SDG and average-ish for partner SDG (Assuming the salary you were quoted is for 1680 hours per year). If everything else is great I'd go for it. You clearly like this job better than all the others - there's probably some good reasons for that. Just know that you will have to pay the tail at some point. I'd probably save for that first. You'll be taking home about 14k/month after taxes. Put 4k/month away for this and you'll be in reasonable shape in 12-18 months. Or pick a different number...but pick a number.

 

[Call Me Dr.]

WhiteCoatInvestor has got it right. Tail coverage is an absolute necessity but HOW you get the tail coverage is negotiable. I've heard people negotiate for a variety of tail coverage situations, such as a proportion paid for by the employer that escalates over time. I've also heard that practices can often get cheaper tail coverage rates than individual physicians and that having the practice purchase the tail (with you paying them back for part of it) can also save money.

Don't believe employers when they say that something is not negotiable. Employers expect you to negotiate. Sometimes, all they need are some creative suggestions to reframe the discussion. Also, if you're not comfortable negotiating, I recommend studying negotiating tactics. Slate has a fun mini-course on negotiating.

 

[gman33]

The schedule seems to be a big part of satisfaction.

What is common language about how the schedule is made?
Not sure hours, but the actual shifts.

I'd hate to sign on being told the shifts are equal (or whatever I'm told), then the reality hits me that I'm working all overnights or any other type of suckage.

 

[emergentmd]

I took your advice.

Hours are flexible, depending on how much you want to work. Average is 140/month.
Hourly (including benefits) pre-partner is $200. After making partner it is $270.

I really appreciate all of the insights that have been shared. You definitely got me thinking.

I want to be clear about how much this job has going for it, though.

The "pros" of this job:
-The pay (which I think is great, based on my other 5 interviews and considering the location of this job)
-2.0 pph
-democratic group
-2 years until full partner
-CME allowance (including phone)
-No non-compete clause
-9 hour shifts
-Flexible hours/scheduling
-Health insurance provided
-Ideal location (not just for my family, but for many many people. It's not in CA or NY.... it's in a better state than those. IMO.)
-Public schools that get ratings of 9 and 10

The "con" of this job:
-No tail coverage

I am not trying to be a debbie downer but if your only "con" with this job is tail, then you are just kidding yourself. Once you start working, you will see more "cons" that you never even thought of. Everything might sound great but there are other issues that you will encounter with EM. That 9 hr shift could be 11 hrs with crappy charting. You may have some say in scheduling but I doubt it will be truly flexible (remember there are partners that will have MORE flexible schedules than you).

I would not say that you Pay is great. Prepartner with benefits at $200/hr is nothing great. Post Partner at $270/hr isn't great. I live in a very nice city (subjective) and our prepartners make close to what are making as a partner. With all the changes in medicine, I believe EM pay will go down especially if bundling takes hold.

I would take a pause with any SDG that will not go to an occurrence policy or buy the tail. If I were a partner, I would demand my group convert to occurrence or buy out a tail for partners.

You have some control over your future. But you also have little control when it comes to EM. What if a CMG takes over? I doubt the CMG will pay for your tail and the group surly will not pay for your tail.

SDG is becoming rarer and I believe eventually they will be dinosaurs.

 

[Birdstrike]

I've never had claims made insurance or had to ever pay a tail (I'm in a decent tort reform state, always had occurrence) so I'm not going to claim to be an expert. Here's something I'd ponder, though.

Ask about turnover. If a group knows the average doc they hire stays 10-15 years, it's less of a big deal to offer to pay tail insurance. If they're grinding docs in and out every year or two, it would be cost prohibitive. Consider digging a little bit deeper about employee turnover.

Also, if you're going to a state where med-mal insurance is so expensive they can't afford occurrence policies, then ask yourself if it might be better to look for a job somewhere with better tort reform. If you can avoid getting tied up in frivolous lawsuits, you won't regret it.

 

[Dre8]

Tail insurance us usually 1.5-2x your premium. And your first year premium is usually rather low. Ask them who their insurance carrier is (99% chance it is the go-to mutual insurance company for the state). Ask them what their premiums cost and what the tail cost would be after 1 or 2 years. They will have no problem answering your questions. I just left a job for family reasons (great democratic group). They said they would either pay my rail or let me keep future my collections- my choice (I knew this when I signed the contract 4 years ago). I chose my collections. Does your potential group allow you to keep your collections?

By the way, after 1 year, I suspect your tail will be about $20-$30,000. If you'd be making $20,000 more per year with this group, it would seem worth the risk if this is the group you like.

 

[LabMonster]

Many good points made here, avoid just thinking "deal-breaker" especially if there is good cause to live in a particular area (family, children etc.) What we don't understand as graduating residents is how valuable we are - we are not a dime a dozen, unless your particular market is saturated. I have only worked for groups with tail coverage and I consider it very important; however, I think you need to balance all the contract options in front of you including the points made about other benefits, turnover, scheduling etc. Based on your pro/con list, and your obvious desire for that particular area, no tail may be a reasonable risk. Again, we really have no idea about how we are valued coming out of residency - WE JUST WANT THE DAMN JOB AND A PAYCHECK! You can always ask for the moon and they can always decline. I'd suggest the negotiations already mentioned by Dr White Coat and go from there.

 

[gman33]

The schedule seems to be a big part of satisfaction.

What is common language about how the schedule is made?
Not sure hours, but the actual shifts.

I'd hate to sign on being told the shifts are equal (or whatever I'm told), then the reality hits me that I'm working all overnights or any other type of suckage.

Anyone want to comment on this question?
thanks.

 

[Birdstrike]

Anyone want to comment on this question?
thanks.

Ask if you can take a look at the last few months of schedules for the group, and look for trends. Ask various members in the group how the shifts are assigned. Try to talk to anyone that seems to trend towards disproportionately bad shifts.

 

[Venko]

I really appreciate all of the insights that have been shared. You definitely got me thinking.

I want to be clear about how much this job has going for it, though.

The "pros" of this job:
-The pay (which I think is great, based on my other 5 interviews and considering the location of this job)
-2.0 pph
-democratic group
-2 years until full partner
-CME allowance (including phone)
-No non-compete clause
-9 hour shifts
-Flexible hours/scheduling
-Health insurance provided
-Ideal location (not just for my family, but for many many people. It's not in CA or NY.... it's in a better state than those. IMO.)
-Public schools that get ratings of 9 and 10

The "con" of this job:
-No tail coverage

What about retirement? Night differential? A few places provide short and long term disability, financial planners, tax completion assistance...lots of potential other things out there.

CME budget provided can be quite variable so it's mere presence is not a huge feather

number of weekends per month, numb er of nights per month, etc. Are important.

Who makes call backs for misreads etc? If patients complain do you have to reply or is there someone else doing that? What if any impact to patient satisfaction surveys have upon your life?

Btw, scribes? Research or administrative requirements?

Maternity / paternity leave? How is coverage viewed and obtained for illnesses etx? How is sign out managed?

 

[ShanFan]

I am not trying to be a debbie downer but if your only "con" with this job is tail, then you are just kidding yourself. Once you start working, you will see more "cons" that you never even thought of. Everything might sound great but there are other issues that you will encounter with EM. That 9 hr shift could be 11 hrs with crappy charting. You may have some say in scheduling but I doubt it will be truly flexible (remember there are partners that will have MORE flexible schedules than you).

I would not say that you Pay is great. Prepartner with benefits at $200/hr is nothing great. Post Partner at $270/hr isn't great. I live in a very nice city (subjective) and our prepartners make close to what are making as a partner. With all the changes in medicine, I believe EM pay will go down especially if bundling takes hold.

I would take a pause with any SDG that will not go to an occurrence policy or buy the tail. If I were a partner, I would demand my group convert to occurrence or buy out a tail for partners.

You have some control over your future. But you also have little control when it comes to EM. What if a CMG takes over? I doubt the CMG will pay for your tail and the group surly will not pay for your tail.

SDG is becoming rarer and I believe eventually they will be dinosaurs.

I appreciate your perspective. You are right that there are so many factors that I will not know about the job until I actually start. No job is perfect, and I know there will be many flaws. I guess I have just decided that the "pros" of this job/area/situation are worth it to me to take the risk. And to save up for tail coverage.

For anyone wondering, this job is located in a very popular mountain state. The pay averages about $50 more per hour than the other jobs that I interviewed at in the mountain states. So I still say it's pretty good. For some people the factors of living by the mountains, having no humidity, great weather, and very few bugs, is worth a little sacrifice in pay.

I just left a job for family reasons (great democratic group). They said they would either pay my rail or let me keep future my collections- my choice (I knew this when I signed the contract 4 years ago). I chose my collections. Does your potential group allow you to keep your collections?
.

Yes.

What about retirement? Night differential? A few places provide short and long term disability, financial planners, tax completion assistance...lots of potential other things out there.

CME budget provided can be quite variable so it's mere presence is not a huge feather

number of weekends per month, numb er of nights per month, etc. Are important.

Who makes call backs for misreads etc? If patients complain do you have to reply or is there someone else doing that? What if any impact to patient satisfaction surveys have upon your life?

Btw, scribes? Research or administrative requirements?

Maternity / paternity leave? How is coverage viewed and obtained for illnesses etx? How is sign out managed?

Retirement package is fine and included in overall pay per hour that I mentioned. CME is also included in the overall pay, it's not additional. There is a night differential that I am more than comfortable with. The group has several dedicated night guys, so number of nights isn't bad. Scribes yes. No research. No admin duties as a newbie.

You gave me (and others who are interviewing now and in the future) a lot of great things to consider and to ask. There is such an incredible number of things to think about in this process. Thank you for your reply.

 

[Dre8]

If you get to keep your collections after you leave, then it's basically a wash (unless you leave really early, like within 6 months, in which case you won't have enough collections to offset your year of tail). So the tail issue is a non-issue.