Employment Contract Before Residency?

[The Long Way]

Greetings,
I apologize if this is has been addressed elsewhere, but I have not seen the post if it has.

I am a MS3 and will most likely go into radiology. I am from a small state where it is hard to recruit some specialties. In response to this a number of hospitals in the area will offer medical students contracts prior to even beginning residency training. Typically they pay an additional stipend during residency and will pay some amount of student loans, in return, students make a 3-5 year commitment to the hospital.

I am interested in returning to the area and would consider signing such a contract. However, I am wondering if by signing such a contract I am selling myself short in the long run. Since I am committed, would the hospital low-ball my salary or other benefits?

Does anyone have any experience with these types of agreements?

Thanks.

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[hans19]

Greetings,
I apologize if this is has been addressed elsewhere, but I have not seen the post if it has.

I am a MS3 and will most likely go into radiology. I am from a small state where it is hard to recruit some specialties. In response to this a number of hospitals in the area will offer medical students contracts prior to even beginning residency training. Typically they pay an additional stipend during residency and will pay some amount of student loans, in return, students make a 3-5 year commitment to the hospital.

I am interested in returning to the area and would consider signing such a contract. However, I am wondering if by signing such a contract I am selling myself short in the long run. Since I am committed, would the hospital low-ball my salary or other benefits?

Does anyone have any experience with these types of agreements?

Thanks.

Until you have the acceptance letter in hand, I don't think you are in any position to bargain. Secondly, if this town is so short of radiologists, why commit yourself now? Who knows if you want to do a fellowship in the future. You may want to be in a different part of the country.

If you interview at several places before interviewing at the small town, you have more leverage. If they don't offer you what you want, you walk. A stipend over residency is peanuts compared to what the differences in salary can be from practice to practice. If you want to pre-sign, do it further into your residency.

You have nothing to lose by talking to them now, tell them you are interested, but I would be cautious about signing up so soon.

With that said,

I knew a guy who had this kind of arrangement. The value of his stipend was about 70k. Before he could honor the agreement and join the group, the group fell apart and he didnt have to pay any of it back.

-Hans

 

[f_w]

Typically they pay an additional stipend during residency and will pay some amount of student loans, in return, students make a 3-5 year commitment to the hospital.

Also, in return you give the hospital a security interest in all of your billing from professional activities as a physician until the money they loaned you is paid back or your service committment is concluded.

I am wondering if by signing such a contract I am selling myself short in the long run.

Yes !

Since I am committed, would the hospital low-ball my salary or other benefits?

First of all: As a radiologist you should never ever absolutely not ever not ever be and employee of a hospital (contract the hospital to do your billing or a joint-venture agreement to take advantage of provider based billing is a different story, but employee: never)
This is particularly important if the hospital has the big club of a service committment to hold over your head.

Does anyone have any experience with these types of agreements?

Not with this particular scenario. It is however similar to recruitment and retention incentives (same concept, except that you get it after you are done with residency), and I have seen a number of people getting a raw deal with those.

The reason a hospital will front you money is because they have to. If this was an attractive practice, they would have people lining up to take the contract. Once you are done with residency, take a look at the opportunities in the area. If a hospital offers you a reasonable 'R&R' contract, have a good attorney review it and consider taking it.

 

[The Long Way]

First of all: As a radiologist you should never ever absolutely not ever not ever be and employee of a hospital (contract the hospital to do your billing or a joint-venture agreement to take advantage of provider based billing is a different story, but employee: never)

Thanks for the advice.

At the risk of revealing complete ignorance to the business side of medicine, why not be employed by a hospital? What are the advantages and disadvantages of such an arrangement? What are some of the other alternatives?

Thanks in advance for the reply.

 

[f_w]

What are the advantages

None.

and disadvantages of such an arrangement?

- Every month, the hospitals CFO has to sign off on your paycheck which will be larger than his, the CEOs and the chief nursing nazis together. This breeds intense contempt and many opportunities to sabotage your practice and your life.
- Your boss is the hospital CEO. If you are independent, nobody is your boss ( well maybe your wife).
- You allow the hospital to leech of your hard-earned professional fees, why ?

What are some of the other alternatives?

- be an independent radiologist. Have your own corporation or LLC, hire a billing agency to do your billing and a $14/hr pretty face to put the bills in one pile and junkmail in another.
- join a single-specialty radiology group (most common scenario)
- join a multispecialty group (less desireable)

(everything above applies to the small hospital scenario where recruitment incentives and hospital employment are common)

 

[Neuronix]

- join a multispecialty group (less desireable)

I'm going to jump in with my newbieness and ask a somewhat unrelated question about this part. So I'm in a highly academic department doing basic science research in Radiology and all I hear is about how private practice is dying/dead/selfish/etc etc etc badmouth badmouth you get the idea.

One of the many reasons I've heard recently about why private practice is going to die TOMORROW (I've been hearing it will be dead THIS year for over 3 years now) is that there's some bill that forces all Radiology practices to be multispecialty, thus making them take on poorly reimbursing modalities that will sink private practice profits. Is there truth to this?

 

[f_w]

So I'm in a highly academic department doing basic science research in Radiology and all I hear is about how private practice is dying/dead/selfish/etc etc etc badmouth badmouth you get the idea.

Nothing new under the sun. This is the same talk the people who trained me heard in the 40s, 50s.......
It's the envy of the poorly paid academician talking, nothing more to it.

is that there's some bill that forces all Radiology practices to be multispecialty, thus making them take on poorly reimbursing modalities that will sink private practice profits. Is there truth to this?

No such bill.

There is a bill that medicare reimbursement is supposed to be split into different 'pots' such as primary care, surgical and 'ancillary' and that cost in each pot is to be capped at some arbitrary level. If that happens, radiology could indeed take a hit, the last couple of times the socialists tried to write it into the medicare fix bills it got kicked out in committee.

 

[osli]

Great thread... lots of things I've been wondering about but know are things I'll have to figure out in the future, not necessarily now (and for several specialties, not just radiology... though I continue to keep my fingers crossed).

It seems that a lot of the hospitals that are offering the highest compensation and incentive packages are the small town south/southeast ones that have trouble attracting physicians to the area. If you happened to want to live there, that would seem an advantage. But those incentives and compensation packages are for becoming hospital employees, right? And that breaks the never ever not ever never rule.

Also, smaller towns might not have many/any group opportunities, or at least I'd think... am I thinking wrong? So being a hospital employee is bad, but is it so bad that you'd turn down a job for a great salary, great loan repayment, in an area where you really want to live anyway?

I guess I know the answer. A radiologist on temp to a hospital in the area also said never be an employee of the hospital. I'm just wondering how much leverage you have if you go the private practice route. If they're offering 200k loan repayment for 5 years, and the salary is good, are you really shooting yourself in the foot? After the 5 years if you decide the employee thing really does suck, and want to go private practice in that town, have you shut yourself out of doing business with that hospital?

As always, thanks to f_w and hans for giving real world advice that is sometimes awkward to ask for in person, and surely isn't provided to students at any point in their educations!

 

[f_w]

But those incentives and compensation packages are for becoming hospital employees, right? And that breaks the never ever not ever never rule.

No necessarily. Often they are 'R&R incentives'. The hospital essentially gives you a loan for your first 1-2 years of practice to establish the necessary cash-flow for your practice. Then, if you stay for a stipulated period, they will forgive you the amount of the loan piecemeal. Can be a good deal if you truly want to practice in one of these communities (iow if you like to trick fish and kill various four-legged animals in your pasttime).

I'm just wondering how much leverage you have if you go the private practice route. If they're offering 200k loan repayment for 5 years, and the salary is good, are you really shooting yourself in the foot?

For those terms (200/5year committment), most rads won't agree to go to a rural practice.
If you go out an approach rural hospitals as a single radiologist, you will be able to pick up a couple of contracts in no time if you are willing to provide something the group or telerad company they are contracting doesn't offer (if they offer 2 half-days on-site, you offer 3, if they offer 24hr turn-around, you offer 6).
There is plenty of room for enterpreneurial single radiologists. All you need is some drive possibly a plane to get you around

 

[osli]

Thanks for the advice. I have a lot of bridges to cross before I really have to worry about it, but this thread piqued my interest... and the advice probably applies to a few other disciplines as well if rads just doesn't work out.

 

[The Long Way]

Thanks to F_W and Osli for the interesting discussion.

The reason I started the post is that I am from a rural state and there are some attractive incentives. As such, they have a hard time recruiting physicians of any specialty to the state, not specifically to the hospital.

Being a home town product and being married to a home town girl, it is likely that I'll be coming back. The community is really not bad (about 200k+ people, things to do, etc.). But the winters are cold and it is hard to recruit people that are not local.

I do not know about the group or multi-specialty options, but I have recently seen job postings on Radiology Jobs starting at $450-500k, with malpractice insurance, CME money, 10-12 wks vacation, etc. to begin. If the hospital is going to pay me an additional $2000 per month during residency plus pay my student loans, and then pay me a cool half million a year, what are some of the drawbacks? Are the hospital issues primarily financial, or are such arrangements loaded with so much administrative B.S. that you are more of a slave than anything else?

I have no business training and frankly, the idea of even partially managing a group practice is somewhat intimidating.

p.s. I really appreciate the insight

 

[osli]

I feel like I might be faced with a similar sort of decision in a couple of years... or at least I'd love to be because it would mean that I had passed some critical hurdles. Except that the summers are too hot instead of the winters being cold.

For someone who has been through the med student grind for four years and likely coming straight from the college grind before, saddled with enormous debt and used to the student lifestyle, it's just hard to imagine how $400K plus some loan repayment plus a stipend during residency in any way shape or form can be bad. Right now, I'd shovel some pretty nasty things for a career for that kind of guarantee. I entered medicine because it's what I wanted to do for the rest of my life, just like a lot of people, but debt has a way of making you look at things a little differently.

I think it's tough to know how to approach these decisions partly because it is a bit of a taboo to really talk about salaries and such as a med student. We're supposed to be in it for the love of medicine, not the money. It's awkward to ask for advice, and people never like talking about how much they make. There are a few threads here that have offered some honest information in the past, which is very helpful. But it's difficult to know what the alternatives are and how they compare. I can certainly understand that being your own employer has many desirable advantages over being under the control of the hospital, but are there financial advantages as well? I think a lot of students have the idea that going out on your own means sinking money into some sort of practice (or maybe joining one... not sure if that would require buying in or if instead it might mean a bonus for joining?), and starting with a lower income and working your way up. With debt way above our eyeballs, "long term" is not quite as appealing as the here and now. About as far as my mind will let me see is how a stipend at residency start compares with a loan repayment offer upon residency completion. I'm like that teenage kid who is smoking that can't appreciate the long term impacts to my health, but can appreciate that girls won't kiss me because I smell like ass or my track times are dropping.

I really wish this wasn't something that was totally ignored in our medical educations. About the only thing our school bothered to teach us about the "business" of medicine was what part A, B, and C of medicare meant, and that you need good documentation for the times when you get sued. I'm hoping that residency (in whatever field) will offer the chance to befriend colleagues that somehow have already figured this out and don't mind sharing some of the more personal aspects of finances to help me make better decisions.

 

[f_w]

it's just hard to imagine how $400K plus some loan repayment plus a stipend during residency in any way shape or form can be bad.

Ghee, let me see. Some possibilities for how this could be bad:
- the guys you work for a slave-drivers who force you to cover a volume you are not comfortable with at a quality level that is dangerous to your professional future ?
- you are forced to take 1:3 overnight call because they are too cheap to pay for appropriate teleradiology coverage ?
- the private practice in town offers you 500+/year for a 8-5 gig without nights or weekends and a 2 week on 1 week off schedule (but they are looking for someone NOW and can't wait the 3 years until your indentured servitude is over) ?

If you are planning to go into family practice, tying yourself to one of these deals may be a consideration as you are looking at a 15-20 year payback on your student loans otherwise. If you are set on anything that makes you decent money, don't constrain your choices unneccessarily early on.

 

[osli]

Thanks for the response. I hope that as I move from student into residency in the not so distant future I'll get a little more exposure of the opportunities that are really out there, and hopefully keep a level head when making those kinds of decisions.

It's hard to explain to students how a huge chunk of money may not be a good offer... so I promise to come back to this thread and revisit the never ever not ever never rule if I'm in doubt.