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I've noticed quite a few soon-to-be fellows interviewing for jobs already. I wanted to see what some common pitfalls were with regards to contract negotiations.
Common Pitfalls in Contract Negotiations
- Thread starter Epidural
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Different specialty, same concepts:
- it's like buying real-estate. Don't show emotion or desperation.
- have an idea about how much you can expect in the particular market. If you are asked: 'So, what would it take for you to come here', give them a number 25-30k over the market price. That way, you will get market price, and not 25-30k under market price.
- don't look at the initial number only, look at the 5 year picture. A lower initial number in a group that offers partner after a shorter time and a higher 'take' might be a better deal.
- don't expect to make bonus in the first year. You are building a referral practice, it takes between 9months and 2 years to ramp up to the same volume as the other partners.
- understand the concept of 'restrictive covenant'. Also understand whether there is a state law prohibiting restrictive covenants for physician contracts. If the state has such a law, don't bother fighting about it, it's void anyway.
- understand the meaning of legalese terms such as 'liquidated damages'.
- if somebody offers you a contract, go through it with a contract attorney familiar with physician service contracts (it will be the best invested 1.5k in your life). If the group starts to wince if you mention the fact that you are having an attorney look at the contract, move on to a different group.
- a 3 page contract or even a 'handshake deal' with someone you can trust is worth more than a 30page contract with a crook.
- find out whether there are people who left the group before/after they made partner. Insist to talk to anybody who left the group in the last 3 years. Talk to the nursing staff or other docs in town to get the 'dirt' on a group you are thinking about joining.
- look at the provisions regarding 'termination without cause' and 'reporting endorsement'.
- it's like buying real-estate. Don't show emotion or desperation.
- have an idea about how much you can expect in the particular market. If you are asked: 'So, what would it take for you to come here', give them a number 25-30k over the market price. That way, you will get market price, and not 25-30k under market price.
- don't look at the initial number only, look at the 5 year picture. A lower initial number in a group that offers partner after a shorter time and a higher 'take' might be a better deal.
- don't expect to make bonus in the first year. You are building a referral practice, it takes between 9months and 2 years to ramp up to the same volume as the other partners.
- understand the concept of 'restrictive covenant'. Also understand whether there is a state law prohibiting restrictive covenants for physician contracts. If the state has such a law, don't bother fighting about it, it's void anyway.
- understand the meaning of legalese terms such as 'liquidated damages'.
- if somebody offers you a contract, go through it with a contract attorney familiar with physician service contracts (it will be the best invested 1.5k in your life). If the group starts to wince if you mention the fact that you are having an attorney look at the contract, move on to a different group.
- a 3 page contract or even a 'handshake deal' with someone you can trust is worth more than a 30page contract with a crook.
- find out whether there are people who left the group before/after they made partner. Insist to talk to anybody who left the group in the last 3 years. Talk to the nursing staff or other docs in town to get the 'dirt' on a group you are thinking about joining.
- look at the provisions regarding 'termination without cause' and 'reporting endorsement'.
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There are so many places to get this information.... I've had drug rep sponsored dinner meetings with certified finincial planners, medical contract lawyers, and medical employment consultants. I've been given a week long course in life after residency by the Dept of GME where I did my residency.
My personal experience is that the starting salary is the least important factor in choosing the right opportunity. Salaries can range from ZERO to $400,000 to start and productivity can range from ZERO to 100% collections after 2x overhead.
Consider who you will be working with. Turnover rates in the office including physicians, nurses, billing, front office staff, and support staff above the healthcare industry avg of 20% (published information) indicate a less happy work environment.
What is the job description- is it needle jockey where you work for Ortho and NS and shouldn't ask the patients too many questions because the referring doc wants RX: "ESIx3 and make sure the relief is inadeqaute so I can operate", or is it opioid mgmt in a drug seeking population, or is it MTW see 99213, 99214, 99244, then Thurs/Fri spend the day in the OR or mix OR/EMG.
It is really important to know what you'll be doing M-F and what call if any you'll have.
Where are the procedures performed- if you do everything in an ASC or hospital that only gives you your PRO-fees- you may want to consider looking elsewhere as $72 for an epidural won't pay your student loans.
There is so much more that needs to be said.... first and foremost is would you want to live there? I did an interview an a town with a population of 10,000 and when I drove in to the hotel and later to the hospital- my name was on a billboard welcoming me. The money was 2x my current starting salary and the benefits were extravagant. My wife was with me and asked if I could fly home for weekends as she and the kids were not moving to the sticks.
Steve
My personal experience is that the starting salary is the least important factor in choosing the right opportunity. Salaries can range from ZERO to $400,000 to start and productivity can range from ZERO to 100% collections after 2x overhead.
Consider who you will be working with. Turnover rates in the office including physicians, nurses, billing, front office staff, and support staff above the healthcare industry avg of 20% (published information) indicate a less happy work environment.
What is the job description- is it needle jockey where you work for Ortho and NS and shouldn't ask the patients too many questions because the referring doc wants RX: "ESIx3 and make sure the relief is inadeqaute so I can operate", or is it opioid mgmt in a drug seeking population, or is it MTW see 99213, 99214, 99244, then Thurs/Fri spend the day in the OR or mix OR/EMG.
It is really important to know what you'll be doing M-F and what call if any you'll have.
Where are the procedures performed- if you do everything in an ASC or hospital that only gives you your PRO-fees- you may want to consider looking elsewhere as $72 for an epidural won't pay your student loans.
There is so much more that needs to be said.... first and foremost is would you want to live there? I did an interview an a town with a population of 10,000 and when I drove in to the hotel and later to the hospital- my name was on a billboard welcoming me. The money was 2x my current starting salary and the benefits were extravagant. My wife was with me and asked if I could fly home for weekends as she and the kids were not moving to the sticks.
Steve
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There is something call the "goodwill' as part of a buy-in. This is in addition to the cost of the office equipment, tables, flouroscopy machine, computers, owned offices, etc. "Goodwill" from my understanding may consist of the "other worth of the practice", such as the reputation of the practice, percentage of market share, etc. I am a little confused on this matter. This seems like such a black box or a potential area that you can get "screwed". Is there any way to look at this objectively? What is the disadvantage of joining a new practice, in which "goodwill" is not part of the contract?
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> I am a little confused on this matter. This seems like such a black
> box or a potential area that you can get "screwed". Is there any
> way to look at this objectively?
Yes, you can get screwed, No, there is no way to look at it objectively. The 'goodwill' is a direct measure of the degree of desperation of the other suckers trying to get the same job. For a job in Nassau County, NY, there will never be a shortage of suckers to take even the lousiest deal. For a job in Rugby, ND you will never hear the term 'goodwill'.
> What is the disadvantage of joining a new practice, in which
> "goodwill" is not part of the contract?
Let's put it this way: The only advantage of 'goodwill' is the fact that it CAN be a good investment. Typically, it is calculated as a proportion of the annual partners income or as a proportion of net practice income. If you retire 25 years from now, the amount of 'goodwill' you get back should be calculated the same way as at the time of your buy-in. In the past, practice incomes have typically increased, so people who bought in for lets say 30k in the 70s now walk away with 150k. BUT this is in no way guaranteed. If the practice income takes a nosedive just before you retire, or if the practice goes bankrupt, you have nothing.
> box or a potential area that you can get "screwed". Is there any
> way to look at this objectively?
Yes, you can get screwed, No, there is no way to look at it objectively. The 'goodwill' is a direct measure of the degree of desperation of the other suckers trying to get the same job. For a job in Nassau County, NY, there will never be a shortage of suckers to take even the lousiest deal. For a job in Rugby, ND you will never hear the term 'goodwill'.
> What is the disadvantage of joining a new practice, in which
> "goodwill" is not part of the contract?
Let's put it this way: The only advantage of 'goodwill' is the fact that it CAN be a good investment. Typically, it is calculated as a proportion of the annual partners income or as a proportion of net practice income. If you retire 25 years from now, the amount of 'goodwill' you get back should be calculated the same way as at the time of your buy-in. In the past, practice incomes have typically increased, so people who bought in for lets say 30k in the 70s now walk away with 150k. BUT this is in no way guaranteed. If the practice income takes a nosedive just before you retire, or if the practice goes bankrupt, you have nothing.
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Oh one more thing on the buy-in. Typically, the 'goodwill' part of the buy-in goes directly into the pockets of the existing partners. If the practice is organized as a P.C. this makes tax sense bc otherwise it would get taxed in a pretty stiff manner. Many practices actually have a separate 'real estate corporation'. Typically an LLC or S-corp that holds all of the practices tangible assets (buildings, equipment). A 'stiff' buy-in into the real estate and equipment corp can be a good investment if it is used to invest in new equipment or to reduce debt. And if everybody is heavily invested in the practice, it reduces the likelihood of your partners jumping ship as well.
Most of the time, a 'goodwill' buy-in is a scam to enrich the seniors to the disadvantage of the joining partners. However, if it is structured in a reasonable way and if ALL partners (regardless of the job situation at the time of their hiring) are invested, it CAN be a good idea.
Most of the time, a 'goodwill' buy-in is a scam to enrich the seniors to the disadvantage of the joining partners. However, if it is structured in a reasonable way and if ALL partners (regardless of the job situation at the time of their hiring) are invested, it CAN be a good idea.
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As someone who is hiring, this is what you need to look for when looking at a job.
1) Economic base...look at the city or area that you will be moving to. Is it mostly retired folks, or up and coming professionals with a good economic base....company headquarters, solid manufacturing industries, etc. I think this is probably the most important...whether the city is economically sound or not.
2) How does the group treat you.....equality from day one or are you the butt boy for a few years before they decide whether to let in into the club or not. Some sought after locales have groups that have a revolving junior staff......
3) How is the relationship of the group with the hospital (for hospital based practices)....are you in a long term relationship or is the hospital always shopping for cheaper services.
1) Economic base...look at the city or area that you will be moving to. Is it mostly retired folks, or up and coming professionals with a good economic base....company headquarters, solid manufacturing industries, etc. I think this is probably the most important...whether the city is economically sound or not.
2) How does the group treat you.....equality from day one or are you the butt boy for a few years before they decide whether to let in into the club or not. Some sought after locales have groups that have a revolving junior staff......
3) How is the relationship of the group with the hospital (for hospital based practices)....are you in a long term relationship or is the hospital always shopping for cheaper services.
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Has anyone heard of not signing the Non-compete clause? Why would anyone in his right mind sign a non-compete clause? What is the usual distance and length of time? How do you negotiate not to have this clause in your contract?
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Almost all contracts have some form of a non-compete clause. Otherwise, a doc could join a practice, build up his patient population while effectively receiving loans from the practice to pay for his salary and expenses, then leave the practice taking his patients with him. Or the referring docs continuing referrals with him...
It is a common practice not only in pain medicine but in most areas of medicine. Typically the timeframe lasts 1-2 years and has a distance of 25-60 miles radius associated. Another form of the non-compete is the non-solicitation clause. These are much more legally watertight and involve the lack of taking patients from one practice to another or advertising in certain markets.
It is a common practice not only in pain medicine but in most areas of medicine. Typically the timeframe lasts 1-2 years and has a distance of 25-60 miles radius associated. Another form of the non-compete is the non-solicitation clause. These are much more legally watertight and involve the lack of taking patients from one practice to another or advertising in certain markets.
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Have an attorney IN THE STATE you are intending to practice look at any contract for you. In some states, non-competes effectively void by state law(or by precedence in the respective state supreme court). The group might write it into the contract, but they would have a very hard time enforcing it (it is usually worded in the 'continuity of care' and 'corporate practice of medicine' language. In these states a 'company' cannot tell you to dump 'your' patients).
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It depends on the prevailing state law, the reasonableness of the geographic restriction, and the timeframe. Unfortunately these are not "your patients" but are patients of the corporation. The non-compete clauses are generally invalidated if they have excessive restrictions (eg. 100 mile radius, 5 year limitation, etc) but in many jurisdictions they are legal if there is a smaller radius of say 25 miles and 1 year limitation. But much depends on the language used so a local atty would be a good idea.
The non-solicitation clauses are almost universally enforceable in every state since they do not prevent the physician from continuing practicing in the area. They are designed to restrict the physician from engaging in predatory market practices based on "trade secrets", ie. the corporate patient list. The physician cannot in anyway solicit prior patients via any advertising media. They can advertise openly but cannot say for instance "prior patients welcome" or cannot send cards or letters specifically to prior patients telling them of the new practice. The physician can send out blanket postcards to the entire community announcing the new practice as long as it is not a selected mailing to the prior patients.
The non-solicitation clauses are almost universally enforceable in every state since they do not prevent the physician from continuing practicing in the area. They are designed to restrict the physician from engaging in predatory market practices based on "trade secrets", ie. the corporate patient list. The physician cannot in anyway solicit prior patients via any advertising media. They can advertise openly but cannot say for instance "prior patients welcome" or cannot send cards or letters specifically to prior patients telling them of the new practice. The physician can send out blanket postcards to the entire community announcing the new practice as long as it is not a selected mailing to the prior patients.
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algosdoc said:
algos,
re: non-solicitation clauses
any thoughts on
1.sending letters to referring physicians
2. an announcement in a news paper announcing the equivalent of ..'nice knowing you, thanks for the memories...but its time to move on...and BTW here is my cell number, phone, fax, email, website, office address...just in case you wanted to say hi.'
3. we will be hosting an open house on day 1 for physicians and day 2 for patients
re: non compete...
what about?
this is in line with your pet peeve....a group of 'blind epidural + blind SIJ + blind facet' pain specialists would like to recruit an MR/CT/fluoro/ultrasound/scope wielding injectionist who is comfortable wearing lead aprons/thyroid shields and can do everything that the group doesn't....
now they sever their ties after a year-long marriage... and the injectionist was careful...to perform his procedures in the wee hours of the night with an OR suite completely cloaked...so none of his partners learned how to do the injections
can the group claim no compete if they don't do the procedures that the injectionist does?
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Based on my conversations with attys, number 1 and 3 would be very acceptable. No 2 would be problematic since it would appear to target former patients and offer them effectively a contact number
The latter situation is much thornier with respect to non-compete. If the group can quickly recruit a person to do these procedures (eg. agency pain doc), then they effectively would still have a valid claim that their group is providing such service. If not, then their only claim would be that the technical methods of performing blocks are not relevant, that they themselves are fully capable of performing such injections to a satisfactory degree. In that case, it would be up to a judge to decide. An astute judge would recognize the difference....
Thanks for noticing one of my pet peeves!
The latter situation is much thornier with respect to non-compete. If the group can quickly recruit a person to do these procedures (eg. agency pain doc), then they effectively would still have a valid claim that their group is providing such service. If not, then their only claim would be that the technical methods of performing blocks are not relevant, that they themselves are fully capable of performing such injections to a satisfactory degree. In that case, it would be up to a judge to decide. An astute judge would recognize the difference....
Thanks for noticing one of my pet peeves!
