Compensation Questions

[Dr Sardonicus]

Hi,

I have some questions about physician compensation (money is not my primary motivation--I am just curious).

While surfing some recruiter websites, I noticed that some ads listed "loan forgiveness" as one of the benefits. Given that the average med student graduates with a debt of $100,000+, I view this as an extremely generous benefit. Does anyone know exactly how this works? Are your loans paid off in one lump sum? Is this standard in certain specialties??

Also, some ads listed "base salary + production." Can anyone explain what "production" is? Is it a bonus for bringing in new patients?

Thanks

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[passngas]

With loan forgiveness, typically what a hospital or group will do is essentially give you a "loan" of a certain agreed upon amount of money in exchange for you working there. For instance, if you agree to work for the group/hospital for four years and you agree to a loan forgiveness amount of say $60,000, they will give you the money typically in a lump sum or any other way that you request it. In return you will agree to to work for them for four years. At the end of those four years they will "forgive" the $60,000 "loan". If for some reason that during those four years you decide to move on, most contracts will include the stipulation that you borrow the pro-rated amount of money you have left on your contract and pay it back to them with interest. That is one of the draw backs. If you find yourself wishing to get out of the agreement, it may end up costing you more money in the long run. Since you can't just walk into a bank and borrow money at 6-7% (or lower now with the new rates)like you can with your student loans, if you decide to move on before the agreement is up it can cost you a few extra dollars. Also, at the end of your commitment period, once the loan is forgiven, you will owe taxes on the full amount, since that money is now considered income. This can bite you in the ass if you don't prepare for it. I am currently in discussion with a group for a deal similar to the one described here and that is what I am basing most of what I am writing on.

 

[Neurogirl]

A production bonus usually means that the physician receives a percentage of the business she/he brings in above their guarantee. For example (this is the deal a neuro friend of mine received last year), salary guarantee of $150,000, plus a 40% production bonus. By the end of the 7th month, he had brought in $150,000 in net earnings (covered his guarantee). From that point on (for the next 5 months) he took home an additional 40% of what he netted for the group (ended up being around $40,000). So, instead of getting $150,000 for the year, he got $190,000. I've been told that (at least for neuro) production bonuses usually range from 25-50% and that most people meet their guarantee by mid-year. Production bonuses are usually only given for the first 1-3 years. At the end of the agreed upon length of time, the physician and group will determine whether or not they want to form a more permanent relationship (partnership).

 

[Firebird]

Here's a quick comment that hasn't been mentioned, but seems somewhat useful.

In some states, like mine (KY), the state will pay your med school tuition if you agree to work four years in a primary care setting somewhere in the state. But as was already mentioned, if you get into the deal and then want out before your four years are up, then you are in a mess.

I think WV, for example, almost DOUBLES your debt if you get out of the deal. So if you pay $60K for med school and you get out of the state's deal, you're going to be owing something like $100K or so. At least that is what I've been told.