Ancillary Services – A Win for Physicians and Their Patients

For physicians, the issue of whether to offer ancillary services to their patients can be a difficult one. The availability of ancillary services boasts many up-sides, including an increase in patient satisfaction and a boost in practice income, but they can also complicate matters. Consideration must be made for the associated legal issues, including Stark Law compliance. We all know that physicians do a lot of good, but they are rarely lauded for their business acumen. Sean Weiss, a consultant with DoctorsManagement, does not hold back on this issue. “Physicians are horrible at business. Physicians make the worst business decisions that you can imagine.” Despite this opinion, many physicians are in fact business-minded and appropriately utilize ancillary services in effective ways. By consulting with the appropriate counsel and receiving guidance from experienced practice administrators and financial professionals, there is no reason why physicians shouldn’t take the opportunity to expand their practice’s offerings.

Not every practice takes advantage of the opportunities correlative with ancillary services. It appears that certain medical specialties are far more likely than others to offer ancillary services, with orthopaedic surgeons taking the lead, and primary care physicians (PCPs) offering the least. However, nearly every specialty has a plethora of ancillary services that couldbe offered to patients: ultrasounds; medication dispensing/in-house pharmacy; diagnostic testing; imaging services; nutrition counseling; cosmetic services; physical therapy; acupuncture – the list goes on and on. Consider each and every service that a physician might recommend and therefore refer out. If the physician/practice offered those services rather than referring out, the result would be more money in the physician’s pocket. Not only would the services translate to increased profits for the practice, it also gives physicians the opportunity to have a higher level of control over patient care, with each aspect of care taking place under one roof. And finally, patients, particularly those who are feeling sick, achieve a great deal of relief from having multiple services available at one location. This one-stop-shop approach is a great way to make patient satisfaction a priority. After all, medical practices are businesses and customer satisfaction is key to long-term success.

Perhaps the most important issue from the perspective of physicians who do not yet have an ownership stake in their practice is whether and how the physician-employee actually realizes any benefit or income from the services. When ancillary services are available as a revenue stream, practices take a variety of approaches to distributing income from the same. As attorney-agents who analyze and negotiate physician employment agreements, we have seen countless approaches to this issue. Some practices take a hardline approach with employees, providing that “all fees and charges related to ancillary services are the property of the Employer.” Others permit their physicians to realize income from the services pursuant to a productivity model that assigns income for “wRVUs generated for Physician that are billed by or on behalf of Employer for professional and ancillary services personally performed by Physician.” In any case, it is imperative that physicians understand the terms of their employment contract in order to accurately determine their potential income from ancillary services.

If you have questions about your employment agreement and compensation plan, contact the attorney-agents of Lauth O’Neill at (317) 989-4833 or loneill@lauthoneill.com.

Physician Job Searching in the Millennial Age

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Our previous post discussed the current playing field for physicians entering the employment arena. For some docs, the healthcare field is in a completely different state than it was when they began training. Now that they are searching for jobs, the various factors coming into play can be overwhelming. However, as we discussed, young physicians are very much in demand and have a great deal of power at their hands to secure very gainful employment.

Although a lot has changed, young physicians are approaching the job search in many of the same ways that their predecessors have relied on for decades. That is, primarily through networking and referrals. In this sense, millennial physicians appear to be relying on these tried and true approaches. This is surprising, considering that millennials are the social media generation and rely on social media in one way or another for a variety of aspects in their lives. Whether it’s posting family vacation photos to Facebook, selling old furniture on LetGo, or meeting a significant other through a dating app, it’s safe to say that millennials are tied to their smart phones and definitely know how to work them. Despite this social media marriage, a recent survey indicated that only one percent of millennial physicians found employment via social media.

How do physicians find jobs?

If a referral opportunity is not available, many people begin first with the job post websites, of which there are many: Practice Match, Practice Link, MD Search, Doc Café…the list goes on and on. While these sites can be helpful for the obvious reason that they quickly identify current openings based on location and specialty, they also have downsides. One of the biggest drawbacks of job sites is that they may give a physician a false sense of assurance that they are conducting a thorough job search, when in fact the opposite is true. By relying on job board sites, a physician is immediately and inherently putting a very narrow scope on her job search. Only some employers and practices utilize job board websites, and therefore they do not in any sense represent the full scale of job opportunities out there.

Another aspect to consider is the fact that job sites are sometimes a last resort for employers who are desperate to fill a position. Accordingly, the jobs represented there are often on the less-appealing end of the spectrum. However, in this regard, it is important to point out one upside. Physician jobs that are located in very rural and underserved locations, while perhaps not the most attractive, often come with the biggest income opportunities. In this sense, focusing on “less desirable” positions actually enables a physician to earn incredible amounts of money, so long as she is willing to live anywhere. You may be wondering, if job sites aren’t the answer, how do I know where to look? The answer to this question is not an easy one because it requires a lot of time and work. Essentially, the best way to go about the job search is to cast a very wide net, exploring employment opportunities in each city/geographic region in which you are willing to live. Exploring those potential opportunities means reaching out to the relevant practices and employers and inquiring about your interest, regardless of whether any positions are advertised (formally or informally) as open. This way, you put your name in front of potential employers and best position yourself in case there is an opening or an impending opening. Researching potential employers takes a great deal of time, as does reaching out to them. It is best to reach out with a formal cover letter that addresses each employer specifically, and a copy of your up-to-date CV. Then, it is imperative to keep track of all correspondence so that you are always on top of who you have already spoken with and who you need to follow-up with. Again, very time-consuming and somewhat tedious work. However, this grassroots, bottom-up approach is well worth the effort. Only by exploring every single potential opportunity can you be certain that you are making the best possible decision for your career, your family’s future, and your well-being.

Who has time for all of this? The short and sad answer is: pretty much no one. Job-seekers are often working crazy hours while completing training, studying for their Boards and are possibly in the midst of a move. In other words, they are likely at the busiest point of their lives. We know this from experience, and for this reason, the attorney-agents of Lauth O’Neill offer a concierge-style job search service specifically tailored to physicians. As your agents, we will conduct and manage each and every aspect of your job search. From fine-tuning your CV and drafting, printing and mailing cover letters, all the way to reviewing and negotiating the employment offers you eventually receive (we are attorneys, after all). We do everything we can along the way. To learn more about the services we offer, please reach out to Leigh Ann at (317) 989-4833 or loneill@lauthoneill.com.

Physician Job Search: The Current Playing Field for Young Docs

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Healthcare in the US is in a strange place. A variety of converging factors have significantly affected healthcare, both in terms of the delivery of medical services and the actual practice of medicine. To be employed as a physician is not what it used to be – not even close. The job itself (regardless of specialty) has transformed so dramatically that the previous generation’s physicians already find it nearly unrecognizable. Where health reform is headed is anyone’s guess, creating a level of uncertainty for healthcare professionals. Reimbursements are declining, and the requirements surrounding electronic health records (EHRs) and other administrative tasks make physicians’ day-to-day lives borderline unbearable.

All of the these factors have very real effects on the healthcare profession. There is a shortage of physicians in the US, with the shortage growing every year. The Association of American Medical Colleges projects a shortage of between 42,600 - 121,300 physicians by 2030. In lieu of pursuing careers in health care, millennials and Gen Z have their sights set on STEM jobs (occupations that require an education in science, technology, engineering or mathematics). In fact, even among those that enter the healthcare field, it appears that many are second-guessing their decision. A recent survey showed that among young doctors, 22% said that they would have chosen another field if given the chance.

Despite it all, there is no doubt that becoming a physician remains a very real dream for many. Approximately 19,000 students graduated from medical school in 2017. Given the physician shortage and negative perceptions surrounding the healthcare field, those who actually do pursue a medical license may find themselves in a very beneficial situation.

All these factors and moving pieces beg many questions: How can the future doctors of America enter professional life in the smartest way possible? How can they find a job that not only pays the bills, but satisfies everything that their personal lives and family lives demand? And finally, how can physicians make the right job decision the first time and avoid going through the job search process twice or multiple times throughout their careers?

Supply and demand is very straightforward. A physician shortage means that young doctors are in high demand. Recently surveyed doctors in their final year of residency reported huge amounts of job solicitations (via phone calls, emails and direct mail from recruiters), with 70% of them receiving 50 or more, and 50% of them receiving 100 or more. Mark Smith, president of Merritt Hawkins, likened the need for newly trained doctors to a “feeding frenzy” and said, “there are simply not enough physicians coming out of training to go around.” Such high demand clearly puts physicians in a unique position of bargaining power, but only if they realize it.

Those entering the workforce owe it to themselves (and their families) to harness this power, and make wise decisions in order to come out on top. Next week’s blog will focus on how physicians go about finding jobs, and the ways in which they can best position themselves for a successful and happy career.

Lauth O’Neill Physician Agency provides employment-related services to physicians and other healthcare providers, including contract review and analysis, and concierge-style job search assistance. Call or email Leigh Ann to learn more: 317-989-4833; loneill@lauthoneill.com.

Physician Job Search Timeline: What You Need to Know

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This time of year is particularly exciting for our Premier Opportunity clients. These are the clients we assist, in a concierge fashion, start to finish, in their job search process. Many of them don't know exactly where they want to land their first job, and some aren't even sure which type of job they want once they finish training. But they know it's crucial to start the process now- during the end of summer. So we are diligently working away to ensure our clients are in the best position to land the best deal in their first job out of fellowship.

When our Premier Opportunity clients come to us, many are not sure exactly what is involved in the physician job search process, and when they need to complete the various components of the search. So we thought we would put together our ideal timeline- what we aim to achieve as we assist our clients through this enormously important process:

First- you have to identify the geographic regions you are interested in. If you don't have particular cities in mind, then make a list of important features of a desirable location to live. Do you want to have various outdoor activities available? Maybe you would like to live somewhere with excellent public schools. Each and every component of daily life should be considered. Once you have a good idea of the important features, you can move on to identifying cities that meet your criteria.

Second- you have to find ALL employers who offer your specialty of medical care. Do not stop at what is posted on job websites. Many times jobs are filled by word of mouth and never make it to a job posting board, so don't miss out on what might be a more desirable job. Research all employers that could employ someone with your training and background. Find the contact information for the person to whom you need to send your information. If you haven't done this yet, get started TODAY!

Third- draft a cover letter that expresses your interest in the particular employer, and explains why you would be a good fit for them. The cover letter should give helpful and insightful information about how your training makes you a valuable asset, and why you are attracted to the potential employer.

Fourth- fine-tune your CV. Make sure it is completely up to date, listing all publications, your residency completion date, where you are currently in fellowship, and your new contact information. Including a permanent email address is a good idea, rather than one associated with your current training program.

Fifth- disperse your cover letter and CV to all potential employers. This step can be extremely time-consuming and tedious, but it is KEY. It is a great idea to make sure you've sent your information to all potential employers at one time. This should happen in August or September. This will help keep you on track for well-timed phone calls and interviews. Having your interviews bunched up into a narrow time frame will help ensure that job offers come in around the same time, which will allow you to use the multiple job offers to negotiate for better terms.

Sixth- conduct more in-depth research about potential employers who have shown interest in you and with whom you are set to interview. When an interview is coming up, it is best to know more about about the potential employer and use that information to develop a list of thoughtful questions you can ask during your in-person interview. Hopefully your interviews take place somewhere around October-November.

Seventh- once you have completed interviews, and job offers have come in, have them reviewed by a physician employment contract lawyer. Ideally you have at least 2 job offers in hand. Have them reviewed by a lawyer who frequently reviews physician job contracts so that you can be sure you are getting the most relevant feedback. That way, you will know what to ask for when it comes time to negotiate.

Eighth- once you have identified key points in your physician employment agreement, it's time to start negotiating. Physicians commonly tend to shy away from asking for changes to their employment agreements, but do not be bashful! You do not want to find out later that another colleague, hired by your employer, received higher compensation or better legal terms. If you don't feel comfortable doing it yourself, ask your lawyer to do it for you! Trust us- it's very common- we do it all the time!

Ninth- after changes to the contract have been agreed, you need to review any new version of the contract and make sure all is in writing. Do not fall for the 'ol "it's fine, this is our standard contract, we don't need to put any of this in the contract." Once all is as it should be in your physician employment agreement, you can sign it! The contract review/negotiation/re-review/signing step of this process should ideally take place between December-March. Unfortunately, the going back and forth can take months.

Finally- apply for your new license if you're moving to a new state. We always recommend this process begins in March or April as many states can take a LONG time to approve a license application. You will need your new license number in order to begin the credentialing process so that your new employer can begin billing for your services. As you can imagine, it's best for everyone if the credentialing is finished by the time you start your job, which will likely be August or September. And just like that, the year has gone by.

So as you can see, this process takes a long time. Typically a full year if you're going to do it right. The last thing you want is to procrastinate and wind up in April with only one job offer, and then you have zero leverage because you MUST take a job somewhere. So we suggest you start today!!

We know firsthand that this process is extremely time-consuming, can be tedious, and stressful. So if you feel like you'd rather spend your free time with your family and friends, call us today and find out how we can help. We provide our Premier Opportunity physician job search service based on a flat rate, and most of our clients don't start paying us until they get their first paycheck! Call or email Leigh Ann today to find out more- 317-989-4833; loneill@lauthoneill.com.

Physician Employment Trends: What Will My Practice Setting Look Like?

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Physicians entering the workforce are facing a very different playing field than their predecessors. The healthcare industry is constantly evolving, and in recent years, changes are occurring at an especially rapid pace. Medical students and young docs wrapping up their training likely wonder, what will my practice setting look like? Are my employment options broadening, or will I be forced into a particular employment setting?

             Compliance costs are at an all-time high, and physicians are burdened more than ever by everything from EHR requirements to new payment models. Essentially, doctors face more red tape than ever before in their delivery of medical services. As a result of these burdens and their inherent costs, it has become less and less sustainable for physician to own their own practices and work in independent settings. Large hospital systems have taken advantage of this trend, snapping up physician practices like never before. Between 2012-2015, hospitals across the country purchased 31,000 physician practices – causing an 86% increase in the number of practices owned by health systems. Practice acquisitions occurred at such a rapid pace, in fact, that the trend has now significantly stalled due to the simple fact that hospitals have “as many practices as they can handle at this point,” according to a senior economist with the AMA.

In addition to health system acquisitions of practices, hospitals are also hiring physicians as direct employees at higher rates. Accordingly, a record-setting number of physicians today are employed by hospitals, and for the first time ever, less than half of practicing physicians in the US own their own medical practice. Today, only about 47% of physicians have ownership stakes in a medical practice, which is about a 6% decrease since 2012.

Another factor contributing to these trends lies in the physician jobs that are available. For instance, the position of a “hospitalist” is actually a very recent development. The term hospitalist was not even used until 1996, and only a couple hundred physicians occupied that role. Today, over 50,000 physicians work as hospitalists. Hospitals further employ physicians at higher rates than ever due to the availability of locum tenens positions. While there is not one clear or exact cause for the boom in these positions, the data shows that hospitals are hiring physicians for locum tenens positions at the highest rates in history. Filling both part-time and full-time roles, an estimated 48,000 physicians worked in locum tenens positions in 2016, marking a roughly 10% increase since 2014.

For a variety of reasons, it is tougher than ever to work as a physician. Today’s doctors face hurdle upon hurdle in their delivery of medical care, to the point where it can seem nearly impossible to work independently. Therefore, it is not surprising that young physicians are increasingly lured by the prospect of hospital-employed positions. Such a role often gives physicians a greater sense of stability and security, while also giving them the privilege to stay away from the business aspect of medical care, which has become a nightmare for many.

Wherever the employment opportunities lie, the attorney-agents of Lauth O’Neill Physician Agency are experienced in helping physicians secure the jobs of their dreams. Whether you require assistance with your job search or you already have employment offers, we can help! Reach out today to learn more about our services.

Physician Recruitment Agreements: Tax Considerations

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Our previous two posts examined a variety of issues related to Physician Recruitment Agreements. Recruitment agreements are complex, and have very serious implications that make it necessary for physicians to be well-advised before signing. Because recruitment agreements provide for a unique manner of compensation, it is critical that both the hospital and physician manage the payments appropriately.

Loans are often extended to physicians in order to attract them to a certain geographic area for a specified period of time. These “loans” are structured such that they are forgiven over time, allowing a physician’s repayment obligation to completely disappear after he has completed his commitment period. However, if the loans are mismanaged, they could be mischaracterized as income. In this circumstance, the physician would face unexpected taxes on that compensation.

A recent Tax Court examination of one such loan to a newly recruited physician highlights important considerations and portrays one situation where a physician actually aimed to characterize his payment as an advanced payment of his salary rather than a loan. In that case, the Hospital transferred the sum of $146,500 to the Physician pursuant to a recruitment agreement providing that Physician would practice in the area for at least 36 months. The recruitment agreement contained a compensation guarantee with forgiveness agreement and a promissory note. That year, Physician did not report the $146,500 on his 1099. Approximately two years later, Physician terminated his relationship with the hospital and therefore fell short of his 36-month requirement. Accordingly, Physician had to pay the Hospital the sum of $46,884 as repayment of the remaining balance on the Hospital’s loan. Physician then took the position that the $146,500 paid to him was an advance on his salary rather than a loan, thereby allowing him to claim the $46,884 repayment as a deductible expense on his Schedule C, Profit or Loss from a Business.The IRS challenged this deduction, contending that the original payment of $146,500 was in fact a loan.

In determining whether the original payment was a loan, the Tax Court pointed to two factors that must exist for a transfer to be considered a loan for tax purposes: 1) the repayment obligation placed on the transferee must not be subject to a condition precedent; and 2) the transferor must unconditionally intend to secure repayment of the funds. Physician argued that he was not unconditionally obligated to repay the amount transferred to him because he would only be required to repay if he breached the agreement. However, in examining the recruitment agreement and the related promissory note, the Tax Court disagreed. The Court found that all signs pointed to the fact that the payment was a loan, and that Physician had an unconditional obligation to repay the loan, even though the obligation was subject to a condition subsequent(i.e. the loan would be forgiven if the doctor continued to practice in the area and met all other requirements). Further, the Hospital did not report the transfer on Form 1099-MISC and the Physician did not include it in his 2009 gross income. Accordingly, the Tax Court ruled that the payment was in fact a loan and that Physician was not entitled to claim the $46,884 repayment as a deductible expense.

This case highlights a unique scenario in which the physician aimed to mischaracterize his recruitment payment as his salary in order to achieve a tax benefit after he was forced to make repayment on the loan. This should be instructive to physicians for two reasons: first, the repayment obligations pursuant to recruitment agreements are very real and physicians will in fact be held liable to make repayment if they fail to fulfill their obligations. Second, once repayment takes place, a physician will not be able to use creative accounting in order to lessen the blow of that liability.

Conversely, physicians may find themselves in trouble if they fail to acknowledge a loan as income at the appropriate time. In cases of forgivable loans, the amount received by the physician becomes taxable income once it is forgiven. Therefore, as a physician continues working and fulfilling his obligations, the loan becomes taxable income incrementally. This can be confusing, as a physician may realize taxable income even if there was no transfer of funds in that year.

For these reasons and more, it is imperative that physicians consult with a tax adviser immediately upon signing a recruitment agreement so that a clear tax payment plan can be delineated.

To learn more about the potential implications of your physician recruitment agreement, or to have your physician employment agreement analyzed by a physician attorney, call Laura Lauth Andrews at 317-979-0081 or Leigh Ann O'Neill at 317-989-4833.

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Physician Compensation Data: What Does it Mean, and What Can I Expect?

If you're a physician coming out of residency and about to head into your fellowship, you probably have your job search and that first GIANT first paycheck on your mind. After all, you've been training for years and years by now, and the light at the end of the training tunnel is in sight! If you're like most of our physician clients, you are wondering what you can expect to be paid once you start your job. You're also wondering how do you position yourself best for successful physician employment contract negotiations? One of the most important things you can do is inform yourself. First, keep in mind that you have gone through elite schooling and training to get where you are today. You are surrounded by top-notch colleagues, and you're each worth a lot! In fact, you may be worth more than you're comfortable saying out loud. You need to get the facts on the physician compensation data so that you have at least a ball park figure in mind on what your overall compensation should be. Which brings us to the next crucial point- once you see those all important numbers, you must become comfortable with them. They're not abstract, or subjective. They are representative and demonstrate what a physician in your subspecialty is earning.

So if you are an orthopaedic foot and ankle surgeon who is taking a job in Alabama, for example, and you look at the Medical Group Management Association's 2018 Physician Compensation Survey, and it tells you that the median total compensation for an ortho foot and ankle surgeon in the South is $525,000, then that is what you should aim for when it comes time to negotiate your contract.

If you are armed with the relevant information, you can rid yourself of the guilt sensation that so many physicians experience when they go to negotiate their physician employment agreements. Instead, you can feel confident that you are worth a certain amount in your given market, and you can approach the negotiation phase knowing that you aren't leaving money on the table, and you aren't selling yourself short.

For more information on what you can expect in the way of your physician compensation under your first employment contract, contact Leigh Ann O'Neill at 317-989-4833 or loneill@lauthoneill.com. Leigh Ann is a lawyer who focuses her practice on assisting her physician clients through the review and negotiation of their employment contracts. As part of this process, she is also able to assist clients by providing them the relevant MGMA compensation data. Call today to find out more!

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Physician Recruitment Agreements: What Are They and What Do They Accomplish?

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            Physician employment agreements, while oftentimes unnecessarily long and convoluted, are relatively straight-forward in comparison with physician recruitment agreements. Physician recruitment agreements take on an entirely new level of complexity in that they involve threeparties, as opposed to two in a standard employment agreement. In a recruitment agreement, the physician, the employing practice, and the recruiting hospital are all parties to the agreement, each with varying motivations, obligations and benefits.

So – what is a recruitment agreement? Young physicians often misunderstand recruitment agreements as an opportunity to be paid the big bucks for an ordinary job that they might take anywhere else. However, this is a mischaracterization. Recruitment agreements, while usually providing for generous compensation, always have very strict requirements attached and therefore have very serious potential consequences.

In a recruitment arrangement, the hospital essentially provides financial backing for an employing practice’s recruitment of a physician to join the practice. It can be very expensive to recruit and hire a new physician, and it can also be risky in that there is no guarantee that the employment relationship will go well (i.e. that the physician will be a good fit). In order to lessen the burden of these expenses and risks, the hospital steps in and assumes the responsibility for certain expenses associated with the new physician, generally paying the physician’s base salary for a set period of time. In turn, the hospital realizes the indirectbenefit of having the physician in its geographic region, ostensibly providing referrals to the hospital as well as performing treatments and surgeries at the hospital. Hospitals often benefit substantially from the fees generated by treatment of a recruited physician’s patients, and therefore the arrangement usually can be extremely beneficial to all parties involved.

As compensation for the recruited physician, the agreement will set out what is called a “guarantee.” The guarantee is usually applicable for one year, and during such time the physician is guaranteed to earn a certain level of compensation. This is effectuated by the hospital supplementing, as necessary, the physician’s collections. For example, if a physician is guaranteed $35,000 per month and her collections fall short of that, the hospital pays the difference. This way, a physician has a level of security in her income as she works to build and grow her practice.

As touched on above, these arrangements do not come without strings attached. Inherent in every physician recruitment agreement is a strict commitment to a geographic area. By signing a recruitment agreement, a physician is agreeing to continue practicing her specialty on a full-time basis in the hospital’s service area for a designated period of time (usually range from 2-4 years). If this commitment fails, the physician will be in breach and liable to pay back the hospital all or some of the compensation paid to her by the hospital. This pay back responsibility is memorialized and enforced through a promissory note, which is always executed pursuant to a recruitment agreement.

Beyond the basic aspects discussed here, physician recruitment agreements are incredibly complex and require careful scrutiny and consideration. Our next blog post will continue on this topic, focusing on particular considerations and cautions to keep in mind.

For help with your physician recruitment or physician employment agreements, contact our physician contract review lawyers at 317-989-4833.

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Physician Student Loans: What Are Your Options?

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We all know that physicians are put through the ringer before they are finally able to place that “M.D.” behind their names. Years and years of education and training, around-the-clock shifts, sleepless nights, and a general sacrifice of time and freedom – these are only part of the burden that the doctors of America face. The biggest burden, with arguably the most serious and lasting effects, is a financial one - the amount of debt that physicians accumulate.

The average cost for one year of medical school in the US is $35,932 for an in-state school, and upwards of $60,000 for out-of-state and private schools. What’s more, these figures don’t factor in books (which are incredibly expensive) or general necessities like food, housing and insurance. The result is that students graduating from med school have an average debt of $189,000. Even worse, a third of graduates have lingering debt from their undergraduate education, with an average balance of $25,000.

No big deal, because doctors make a lot of money, right? Wrong. Physicians in residency earn only about $50,000 a year. This paltry salary is barely enough to pay the rent, let alone start making payments toward student loan debt. Facing this conundrum, young physicians have limited options for dealing with a very real problem. Some docs find themselves with no choice but to enter forbearance over the 3-5, 6, 7, or more years of residency. This temporary “solution” to the problem (if you can call it that) can add as much as $40,000 in interest to the total outstanding debt balance.

So, what options are there, and how can physicians best position themselves to manage their debt efficiently?

Refinance

Almost any type of loan can be refinanced, and student loans are no different. Using the refinance approach, you can take out a new loan and use those funds to pay off the existing loans. While this seems counterproductive, the benefit is that it gives you the chance to amend your repayment schedule and most importantly, secure a more favorable interest rate. An adjustment to the interest rate can be hugely beneficial, considering that the types of loans extended to med students are sometimes charged at the highest rates – the Grad PLUS Loan rate was 7.0% in 2017-18. Assuming student loan debt of $189,000 with a 7% interest rate, the borrower ends up paying about $74,000 in interest alone. Therefore, refinancing down to a more manageable interest rate can literally save a borrower thousands of dollars.

Lump Sum Extra Payment

            While receiving a windfall is not necessarily an option for all doctors, it is something to keep in mind. Today, the majority of physicians entering employment receive some form of signing bonus. Whether the bonus is $10,000 or $50,000, that extra money can make a significant difference to your outstanding debt. Of course, bonuses always come with strings attached. They generally require a physician to remain employed for a certain period of time before the bonus is fully “earned,” and they are of course taxed at a high rate (*see our previous blog post on Signing Bonuses). Nonetheless, applying the bonus (i.e. what you take home after taxes) as an extra payment to your student loan balance can save you thousands in interest. 

Income-Based Repayment

Another option is utilizing an income-based repayment plan. There are different federal income-based repayment programs, which set your monthly payments based on your current salary and cost of living. Depending on eligibility and the various repayment structures available under a plan, these programs will help to quell the balance increase from added interest. While these programs can be better than entering forbearance, they are not the most efficient option, and will not be your fastest or cheapest approach to eliminating student loan debt.

Student Loan Forgiveness Programs

             There are various programs around the country that will help pay off your student loan debt in exchange for a service commitment. These programs generally require you to work in a high-need, underserved area for a set number of years. Of course there is the trade-off to consider, including limits to your specialty, practice location and type of employer. Physicians can even explore repayment assistance programs offered by the military, regardless of whether they have served in the past or where they are in their career. Each branch of the military offers physicians the opportunity to enroll in service and receive student loan assistance in exchange. Lastly, there are many state-sponsored programs aimed to help physicians with their debt.

Employer Assistance

             For some lucky physicians, their future employer will offer student loan repayment as an added incentive pursuant to their employment agreement. This extra perk is something usually offered by larger hospital systems (as opposed to private practices), and is more commonly available in “less attractive” geographic regions of the country. When offered, employers will typically set out an amount to be paid per month or year toward the physician’s outstanding balance, and will sometimes make the payments directly to the lender. As with signing bonuses, loan repayment usually has strings attached and will generally be conditioned on a certain length of employment. Considering the long-term benefit that could be achieved, physicians should consider asking for loan assistance pursuant to their employment agreement, particularly physicians in high-earning specialties and those who have multiple employment offers.

For questions regarding physician employment, including review, analysis and negotiation of your employment agreement, contact the attorney-agents of Lauth O’Neill today at 317-989-4833 or loneill@lauthoneill.com.

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Restricted Activities: How Does Your Physician Employment Agreement Restrict Your Behavior and Income?

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As a physician, when you are offered an employment agreement, you expect it to outline your role and responsibilities, and tell you how much you will be paid. What you may not expect is the many ways in which the agreement can restrict your behavior. Whether entering employment in a hospital or a private practice, it is a near certainty that your physician employment agreement will prohibit certain activities on your behalf, and also may restrict your rights and interests to property and income. Two common provisions of physician employment agreements are addressed below: outside professional activities and intellectual property.

Outside Activities

Physician participation in professional activities outside of the employment agreement is an issue addressed in almost every single agreement that we see. When a physician enters an employment arrangement, the employer often wants to ensure that the entirety of the physician’s professional time and focus is dedicated to the employer. While this is not terribly surprising or unreasonable, such provisions can have far-reaching effects.

There is a plethora of activities that are uniquely available to physicians as ways to earn additional income and expand their professional focus. These activities include moonlighting, researching, teaching, serving as an expert witness on legal matters and working as a consultant for drug or device companies. Depending on what your employment agreement states, you may be entirely restricted from engaging in these activities. Further, employment agreements sometimes take a somewhat deceitful approach by sneaking in language indicating that if you do engage in outside activities, any income you earn will be the employer’s property.

Close attention to the applicable language is necessary to determine what exactly the employer aims to restrict, and then to decide on an approach for negotiating any disagreeable language.

Intellectual Property

Somewhat of a less common issue in physician employment agreements concerns rights to intellectual property. Generally found in agreements with large hospitals and academic institutions, these provisions aim to assume ownership for any intellectual property that a physician develops during the term of his employment. The agreement will state that the Physician irrevocably assigns to the Employer all rights, title and interest in inventions, discoveries or patents that the physician develops. In other words, if you develop any money-making ideas while working for the employer, you may in fact have no rights to them. Such provisions sometimes even go further to extend beyond the term of the employment agreement, such that any intellectual property developed within x years of the Agreement is also assigned to the employer.

While this type of provision is not problematic for all physicians, those who are affected should be mindful. Is it conceivable that you will engage in developing intellectual property in the future? If so, what rights will the employer assume by virtue of your employment relationship?

Before signing an employment agreement, physicians should take the time to seek the advice and counsel of an attorney experienced in physician employment matters. To consult with an attorney-agent about your employment agreement, please contact Lauth O'Neill at (317) 979-4833 or loneill@lauthoneill.com.

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Compensation Caps in Physician Employment Agreements: Why Do They Exist, What Are Their Implications, and How Can You Protect Yourself?

Compensation caps can be confusing and frustrating for the physicians who are subject to them. Instituted as a mechanism to avoid violation of federal laws, compensation caps aim to limit the compensation paid to physicians at a level that is “reasonable” and representative of fair market value (FMV). Why Do They Exist?

 Compensation caps are seen most commonly in the case of non-profit hospital employers that are exempt from federal income tax under the Internal Revenue Code. Accordingly, these hospitals must follow certain rules for how they compensate their employees (i.e. the pay must be “reasonable” for the services rendered), or else they risk losing status as a tax-exempt entity. Anti-kickback and Stark laws are additional causes for compensation caps, as they restrict compensation that may be construed as improper remuneration in exchange for patient referrals. Therefore, employers are very motivated to ensure that the compensation they pay is considered commercially reasonable, so as to quell any possible implication of improper behavior.

What is a Compensation Cap?

 Compensation caps are identified in the applicable employment contract. If a physician is subject to a compensation cap, her employment contract will identify the threshold of the cap, and will dictate the procedures that will take place if and when the physician’s compensation reaches the threshold. A cap may be “hard,” in which case there will be a definite stopgap on payment, or a cap may be “soft,” which means that the employer will initiate a review process in order to determine whether the compensation is reasonable and justified. The threshold at which a cap is set will depend on the physician’s specialty, and also will likely depend on the region of the country in which the physician works. There are various national surveys that track physician compensation (i.e. MGMGA, AMGA), and often the cap will be set at or near the 90th percentile mark for a given specialty and geographic region. For instance, the MGMA data tells us that for Hematology/Oncology in the Midwest, physicians in the 90th percentile earn an annual total compensation of $692,253. Therefore, an employer might set the cap for a comparable physician at this level.

Who is Subject to a Cap?

Theoretically, any employed physician who earns income on a productivity basis is subject to a compensation cap. However, logic tells us that only physicians who are highly productive will run the risk of reaching their cap. Consider, for example, a young physician in a high-earning specialty who does not have children or otherwise has the time and ability to work as much as possible. Think of those physicians who live to work and gear most of their focus toward solely their job. Another likely scenario is a physician who is the only available provider in her specialty in the region and therefore her services are in especially high demand. Of course, there is also the possibility of bad actors whose wrongful behavior results in especially high payment and triggers a cap, such as physicians who “upcode” or use other inappropriate coding/billing practices.

How to Protect Yourself

            If an employer includes a compensation cap pursuant to your employment agreement, it is there for a reason and you likely will not be successful in negotiating the cap out of the agreement. However, there are a few things that a physician can do to protect herself and ensure that she receives the compensation she deserves.                                                                            First, physicians should ensure that they have a clear understanding of what the cap is, and the employer’s protocols surrounding the cap. For instance, is the cap “hard?” Or if it is “soft,” what exactly does the review process consist of? And further, if the review process results in a finding that the compensation was not reasonable, what will happen? Will you be required to pay back a portion of your income? Will you stop working for the remainder of the year?

Second, physicians should have a firm grasp of their earning potential and how much they are earning as the year progresses. Accordingly, it is advisable to document the hours spent working, services provided and the compensation received. This way, you will have abundant evidence to support your argument that the compensation was fair and reasonable in light of how much you worked. In other words, you want there to be a clear and undeniable connect between the work you’re doing and the compensation you receive.

Lastly, if faced with a compensation cap, physicians should ensure that their contract entitles them to notice in the event that the cap and/or compensation review process will be initiated. This way, you will not be blindsided if it comes into effect. You will have the chance to get organized in terms of your documentation, and also to consult with an attorney or FMV consultant.

If you have questions about compensation caps, or other matters regarding your physician employment agreement, contact the attorney-agents of Lauth O’Neill.

Gender Pay Gap Among Physicians

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If you have not been blasted with reports about the gender pay gap in Hollywood, you may be living under a rock. Recent news articles and headlines have scoured the issue, and just about everyone is weighing in on the disparity between men and women’s incomes. Liam Neeson, for example, thinks the pay gap is “f---ing disgraceful.” While opinions and frustration levels vary, it is pretty much safe to say - nearly everyone is troubled by the pay gap.

Despite all the recent reports, it is important to note that the gender pay gap is not limited to those that grace the silver screen. Rather, the pay gap affects people across all professions and industries in the US. People, however, may be surprised to learn that the gender pay gap is alive and well among one of our country’s oldest and most revered professions: medicine. That’s right – although the year is 2018, reports indicate that female physicians – across all specialties - earn an average of 74 cents for every dollar that male physicians make. This figure translates to an approximate $90,000 per year. Even when the data is broken down based on medical specialty, there is no area where women earn as much as men. Of course, it is not news to anyone that the medical field is one that has historically been dominated by men. While male doctors still greatly outnumber females – approximately 66% of physicians in the US are men – women are entering the medical field at unprecedented rates. The number of women enrolled in medical school recently reached a 10-year high, and in 2015, female medical school graduates outnumbered males in several states.

One of the largest factors affecting compensation among men versus women is geography. The statistics prove that where you live does matter. In several cities, the pay gap is 30% or more (including Charlotte and Durham, North Carolina; Orlando, Florida; and Pittsburgh). Five other cities have pay gaps of at least 29%. It appears that the pay gap was the least significant (relatively speaking) in Sacramento, where female physicians earn 19% less than their male counterparts.

Perhaps the most disturbing aspect of this issue is an examination of when, if ever, the gap will close. Although the gender pay gap has certainly been inching closer and closer together (no one can deny the progress made in women’s education and workforce participation since the 19070s), the rate of change simply is not happening fast enough. Experts estimate that if the rate of change experienced between 1960 and 2016 continues, then women are expected to achieve pay equality in 2059. However, experts also advise that progress has slowed in recent years (since 2001, specifically), such that if the more recent and slower rate of change continues, women will not achieve pay equality until 2119. So, even if we take the more optimistic stance, women will continue to earn less money than their male counterparts for another staggering 41 years.

Having presumably achieved the same level of education and training upon entering the work force, why do female and male physicians get paid so differently? Unfortunately, there truly is not a good answer, but it appears that at least part of the problem is self-doubt and reluctance on behalf of women. Reports indicate that, in general, women feel less comfortable than men when it comes to negotiating their compensation, and therefore simply accept what is offered to them. Therefore, although the problems working professionals in our country face require a systemic response, it is clear that we also need women to stand up for their value and for female voices to be heard.

The physician-agents of Lauth O’Neill work solely on behalf of health care providers, and are experienced in the analysis and negotiation of physician employment contracts. If you have questions about your contract or compensation plan, contact the physician-agents of Lauth O’Neill.

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Physician Burnout – More Prevalent Than Ever

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Professional dissatisfaction among physicians is at an all-time high, with satisfaction rates steadily and steeply declining in recent years. Interestingly, dissatisfaction levels among other working adults and professionals in the US have seen only minimal changes.

A 2015 comprehensive study of physician satisfaction and perceived quality of life revealed that only 41% of physicians are satisfied with their work-life balance. Comparatively, 48% had reported satisfaction only three years earlier.

Dr. Christine Sinsky, a representative of the American Medical Association (AMA), co-authored the study and indicated that the causes of physician unhappiness are well known. Sinksy noted that physicians today face an unprecedented number of administrative tasks and documentation because of the demands imposed by electronic health records. Further, physicians feel pressure to relinquish elements of control over their practices to third-party payors and government regulators. She said, “It’s a cumulative effect of well-intended efforts adding up to a burden of work that no one anticipated…Physicians feel they’re spending their days doing the wrong work, and that leads to burnout.”

Beyond the demands related to EHRs, many physicians spend an exorbitant amount of time each week on various other uncompensated tasks. A survey found that internists spend between 12 and 17 hours per week on uncompensated tasks, and that physicians in general spend 21% of their time on non-clinical paperwork. Unsurprisingly, this time inevitably overflows into physicians’ private lives as they use personal time to tackle piling tasks that are necessary to maintain an efficient workday.

According to Dr. Joseph Valenti, a board member of the Physicians Foundation (a non-profit physician advocacy group), a variety of factors have made physicians less efficient and less profitable than ever. In addition to the amount of physician time dedicated to uncompensated tasks, there are rising costs associated with the need for additional medical assistants, nurses and administrative employees necessary to complete all the required work. Valenti says that this lack of efficiency equates to at least $50,000 of lost revenue per physician annually. Just four years ago, this figure was estimated at $25,000.

As physicians spend less and less time with their patients and more time than ever on the computer, the heightened level of physician burnout is not terribly surprising. After all, physicians go to medical school and rigorous years of training for a reason – to serve and heal patients, not to spend entire days checking boxes and filling out forms on a computer. While there is little anyone can do to combat the myriad factors creating this burnout-inducing atmosphere, there are some things that physicians can do to battle the burnout. Experts say that the most effective thing physicians can do is to create a game plan that focuses on the art of delegation. For many docs, this means hiring staff who are singularly devoted to particular administrative duties, such as obtaining prior authorizations. While there are certainly associated costs, not limited to these individuals’ salaries, experts say that the benefits achieved likely outweigh the costs. With the administrative work in the hands of appropriate staff members, physicians can refocus their time and attention in a way to create more satisfying and fulfilling workdays.

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Physician Employment Signing Bonuses: What You Need to Know

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Reports indicate that about 80% of physicians are offered a signing bonus with their employment contract. The prevalence of employers offering such bonuses has grown, and depending on the specific employer, there are varying reasons why a bonus will be offered. Some employers advertise the opportunity for a signing bonus in order to create more interest in the position and attract more candidates. Alternatively, some employers prefer to offer the bonus only after negotiations have begun, and then use the bonus as a closing tool to guarantee that the physician will not renege on accepting the position.

3d4bc84Golden Handcuffs

The use of the bonus as a “closing tool” can be very important, particularly for physicians who are just coming out of training. First off, young docs (more often than not) are in unstable financial situations. Meager salaries paid during residency and looming student loan debt leave many in a precarious situation and therefore they need a bonus just to make ends meet. A bonus may be used to help with the down payment on new home, or provide cash flow during the job transition, particularly if the doc’s significant other is seeking new employment as well. Also, employers need a way to guarantee that the physician who signs their employment agreement will actually honor that agreement and show up to work. Physicians just out of training may be fickle with their employment decisions, and may sign an agreement and then change their minds. If they have received a bonus and are contractually bound to pay back that bonus if they do not honor the employment arrangement, then they are obviously much less likely to break the deal. Hence, why signing bonuses are often referred to as “golden handcuffs.”

So – how do bonuses work? Bonuses are generally either offered as a lump sum payment, or otherwise are paid in one or two installments. As noted above, most physician employment contracts that provide for a bonus will require that the physician pay back the bonus if she does not show up for work, or if she does not remain employed for a specified period of time. In these cases, the applicable provision will provide that for every month that the physician remains employed, the requisite repayment will decrease on a pro rata basis, such that if the physician remains employed for x years, no repayment will be required at all. In this sense, the bonus is more like a loan that is forgiven over time. Alternatively, some employers will offer the bonus as a true bonus, with no strings attached. This is more common in situations where the doc is highly sought after, or the practice or hospital is underserved and in dire need of the provider’s services.

Will I Receive a Bonus? What to Expect:

Generally, hospitals are more likely to offer signing bonuses than are private practices. Furthermore, bonuses are more substantial when offered by hospitals and practices in rural areas. Conversely, employers in bustling metropolitan areas offer substantially smaller bonuses – surely a disappointment for physicians determined to live in big cities that undoubtedly have much higher costs of living. Bonus values also obviously vary based on specialty. Physicians specializing in family medicine will receive a lower bonus than an orthopaedic surgeon, for example.

Another important factor to consider in receiving a signing bonus are the tax implications. Bonuses are considered supplemental income, and on a federal level this type of income is heavily taxed. Further, state (and possibly city) taxes will further erode the bonus’s value. Specifically, the IRS specifies a flat rate of 25% on supplemental income. In some instances, an employer will a pay a bonus with a physician’s regular paycheck and treat it like normal W-2 wages, deducting the taxes before it is paid. More often, however, employers simply cut a physician a check for the full amount of the bonus, and then it is up to the physician to ensure payment of the requisite taxes when due. It is important for docs to also consider if receipt of the bonus pushes them into a higher tax bracket for the year, thereby having a further impact on the overall tax liability. These potential liabilities make it essential to discuss your bonus with your tax adviser.

For further information on physician contract review, analysis and negotiation, please contact the attorney-agents of Lauth O’Neill.

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Hospital Employment vs. Private Practice: What You Need to Know

In a previous blog post, we touched briefly on the issue of hospital-based employment versus private practice. Physician employment trends have seen drastic changes in recent years, with a myriad of factors leading the change. This post will shed some light on exactly what differentiates hospital employment and private practice, and the practical implications on physicians’ lives and careers. Employed vs. Not Employed?

Whether you are an established, working physician or a young doc just finishing training, you have probably either read or heard – physicians are seeking “employed positions” at higher rates than ever before. You may be wondering, what exactly does this mean? What is the alternative to being “employed?” For physicians, there are generally two different routes to take when searching for a job: either as an employee working for a hospital/large organization, or entering private practice (either as a partner in a group or as a solo practitioner). Upon joining a private practice, you will be an employee for a period of time (usually two years), and then you will (hopefully!) be offered the opportunity to “buy in” as a partner. While private practice used to be the gold standard for physicians, the climate has drastically changed.

Between 2000 and 2010, the number of physicians employed by hospitals grew by 34%. A 2016 report by Medscape (Read the Medscape report here). showed that roughly 80% physicians today are employed by hospitals, with 20% of physicians reporting a self-employment position. This shift is further evidenced by examining a breakdown based on age. For physicians 55 years and older, 45% are self-employed and 36% are employed. Conversely, for physicians younger than 40, 23% are employed and only 11% are self-employed. However, although older physicians continue to occupy self-employed positions at higher rates, they too are contributing to the shift to employment. Since 2014, the number of older physicians in employed positions has risen by 8 points.employ by age group graphWhy the shift?

A variety of factors have caused these changes, with health care market dynamics and physician preferences leading the way. To begin with, health care reform and declining reimbursement in many specialties has meant that physicians feel more uncertain than ever about the future. Together with this uncertainty is the fact that many private practices struggle to manage their overhead costs and in many ways, cannot compete with large organizations. Lastly, there appears to be a change in mentality of physicians leaving training wherein their priorities revolve around patient care and their daily practice, rather than any sort of entrepreneurial endeavors. In fact, physicians surveyed about their employed positions overwhelmingly reported that their favorite thing about being employed is “not having to deal with business of running a practice,” with the second leading response being “not having to deal with insurers, billing and other administrative aspects.”Docs like about employment graph

A Breakdown of the Differences

Where and how you are employed can greatly affect everything from the way in which you are paid, to the benefits you receive, to your ability to strike a work/life balance. Below is a breakdown of some of the most significant aspects of employment and how those aspects might vary based on where you work.

Compensation

Employed Position: Often times, starting salaries offered to physicians in employed positions are higher than those in private practice. Employed physicians are also generally afforded the ability to earn productivity or incentive income in addition to their base salary. As employees of large organizations, employed physicians do not feel financial insecurity and do not fear any possibility of their payroll check bouncing. Lastly, while signing bonuses are typical in both hospital employment and private practice, the bonuses tend to be higher for those in employed positions.

Self-Employment Position: While base salaries may be lower and there may be less opportunity for incentive income, private practice does offer substantial money-making potential. Once a partner in private practice, you are entitled to portions of net profits, and you can also earn additional income from ancillary facilities and services. Although overhead may be high and cash flow might be a concern, private practice certainly has its benefits, not least of which is the many benefits derived from ownership and the equity-stake.

  • It is important to note that the 2016 Medscape report indicated that employed and self-employed physicians are satisfied with their incomes at nearly identical rates. 38% of employed physicians reported that they are “satisfied” and 16% reported they are “very satisfied” with their income. Similarly, 36% of self-employed physicians reported they are “satisfied” and 17% reported they are “very satisfied” with their income These satisfaction rates suggest that any perceived differences in compensation are likely either negligible or are off-set by other benefits.

Benefits

Employed Position: Working for a large health system generally means that you will be exposed to less risk in terms of the compensation and benefits that are promised to you. As a hospital employee, you can likely rest assured that the benefits you are offered are comprehensive and that they will not be arbitrarily amended or revoked. Further, employees of large organizations have more certainty that they are being afforded the exact same benefits as their colleagues.

Self-Employment Position: While working for a private practice does not necessarily mean that you will not receive sufficient benefits or that they will be taken away from you, there is generally some more wiggle room for the practice owners to amend benefit plans based on practice needs and improving their bottom line. In some senses, however, the benefits offered may not be as substantial as in an employment setting. For instance, it is normal for physicians to receive reimbursement for their annual CME expenses and expenses associated with professional dues, memberships and subscriptions. A small practice may cap that reimbursement at a lower figure than a large organization. Another important benefit is malpractice insurance coverage. While it is the norm for physicians to have their coverage paid for by the practice or hospital, a private practice may be more inclined to leave the responsibility for tail coverage to the physician.

Restrictive Covenant

Nearly every physician who begins employment, regardless of where, is required to sign some form of restrictive covenant (covenant not to compete) in conjunction with their employment contract and/or partnership agreement. In fact, as attorney agents who specialize in analysis and negotiation of physician employment contracts, we have only ever seen a handful of contracts that did not contain a restrictive covenant.

The validity and enforceability of a restrictive covenant depends on state law, and the precise terms and restrictions of covenants vary. Whether a physician goes into employment in a hospital or private practice, it is a near certainty that she will be restricted from certain behaviors if the employment relationship terminates. The only way to ensure that the restrictive covenant is as least restrictive as possible - and therefore most favorable to the physician – is to have it reviewed and negotiated by an attorney experienced in these matters.

Work/Life Balance

Employed Position: One of the benefits of working as an employee is the comfort that comes with having your duties and obligations clearly defined, and therefore limited. In general, employed physicians report that they have a better work/life balance than their self-employed counterparts. Part of this work/life balance is the fact that employed physicians generally enjoy more regular hours than self-employed physicians, and therefore can rely on time away from work. Further, employed physicians generally have less on-call responsibilities than self-employed physicians. Notably, however, despite the favorable regularity in hours, employed physicians report that what they dislike most is that they do not have control over their hours and are completely subject to management’s direction and rules. In other words, they lack autonomy.

Self-Employment Position: For anyone who is self-employed, no matter what the field of work, there is always a certain level of autonomy and freedom. Self-employed physicians report satisfaction with their ability to “practice medicine my way” and have a higher level of control over their schedules. Certainly, this autonomy comes at somewhat of a cost. Self-employed physicians often carry much more personal responsibility and are required to partake in business management aspects that employed physicians never experience. It appears that self-employed physicians are happier and more satisfied than employed physicians, which may be a result of their enjoyment of having control. 63% of self-employed physicians reported that they are satisfied with their work, compared with 55% of employed physicians.

  • Interestingly, satisfaction rates among both groups have significantly decreased since 2014, especially for employed physicians. The satisfaction rate for self-employed physicians fell from 74% to 63%, and the satisfaction rate for employed physicians fell from 73% to 55%.

If you are a physician who has received an employment contract offer from a hospital or private practice, and you would like a lawyer to review your contract and assist in negotiating changes to the contract, please call Leigh Ann at 317-989-4833, or email her at loneill@lauthoneill.com.

FINAL INSTALLMENT: Top 10 Reasons Why Physicians Should Seek Legal Review of Their Employment Agreements…

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9. Avoid Awkward Confrontation – Have Your Lawyer Handle It Instead!

             For many, it is simply human nature to avoid confrontation. Particularly in an employment setting, individuals are more likely to let certain things slide rather than “ruffle feathers.” As touched upon in our initial post in this blog series, this attitude, in conjunction with a physician’s desire to simply seal the deal and begin working, often results in a hastiness in signing the employment contract they are offered.

Upon receipt of your employment offer, any number of things may cross your mind.

I thought that my base compensation would be higher…

 Why should I have to pay for my malpractice insurance tail coverage?

 Are my call responsibilities reasonable and fair compared to the other physicians?

            Despite lingering concerns, you may feel pressure to simply accept the offer as is. Furthermore, you may have a feeling of guilt or unease with regard to requesting amendments to the agreement. After all, you do not want to appear greedy in the eyes of the person or entity that just offered you a job. As a result of these feelings, many physicians sign the employment agreement they are offered without engaging in any negotiation at all. Without the representation of an attorney experienced in these matters, that may be exactly what you do.

If you hire an attorney to review your employment contract and negotiate it on your behalf, all of your unease will be erased. First, for any requested changes to the agreement, those requests will not be coming from you and you will not have to feel like the “bad guy” (even though you shouldn’t, anyway). Instead of saying, “I want to be paid more” you can say, “My attorney advised that the offered compensation is lower than the MGMA median data for my specialty, and I would like to explore ways to improve this.” Better yet, if you hire an attorney to do all negotiation on your behalf, you won’t have to say anything at all. Your attorney can handle the negotiations directly with employer’s legal counsel from start to finish, and you can sit back and relax until the agreement is ready for your signature.

10. Peace of Mind

             Finally, we have arrived at our final reason why physicians should have their employment contracts reviewed by legal counsel – peace of mind.

Entering into a contract is always a serious step, no matter what the subject. Whether you are hiring a contractor to work on your home, or memorializing a multi-million-dollar business deal – the stakes are always high because you are legally binding yourself to an agreed-upon arrangement.

Physician employment agreements are no different. They are legally-binding contracts with far-reaching effects. Further, they are always written by attorneys representing the interests of the employer, rather than your own. The inevitable bias that always exists in the creation of an employment contract is reason enough to seek review by someone who is obligated to protect your interests.

There is a simple solution to alleviating that inevitable bias and diminishing mounting anxiety – hire an attorney whose only job is to represent and protect your interests. Achieve peace of mind knowing that you made the right decision and that all your bases are covered before taking the next step of your career.

The attorney-agents of Lauth O’Neill Physician Agency work exclusively on behalf of physicians (as well as other medical providers, such as Physician Assistants and Nurse Practitioners). We offer a flat-rate contract review service, and also will negotiate your employment agreement on your behalf. Please reach out if you would like to learn more or have any questions about what we do!

Leigh Ann O’Neill

loneill@lauthoneill.com

(317) 979-4833

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Top 10 Reasons Why Physicians Should Seek Legal Review of Their Employment Agreements…

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Our continued blog series on why physicians should seek legal review of their employment contract....

9. Ensure Your Right to Access Information During and After Employment:

 Physician employment contracts are typically very comprehensive, addressing just about each and every issue that could potentially surround or arise out of a physician’s employment. As such, the attorneys that draft physician employment agreements on an employer’s behalf work very hard to cover all bases so that no loose ends remain, regardless of how the employment relationship ends.

From an employer’s standpoint, having a comprehensive employment contract that protects all employer interests is the ultimate goal. Unsurprisingly, an important part of this is ensuring that the employer’s confidential information and documents are protected. Therefore, a provision that we see in just about every single employment contact that we review is one that addresses documents and patient medical records. More often than not, the applicable language will read something like this:

All patient records, documents, reports, notes, forms, recordings and information are the exclusive property of Employer. All such documents and memoranda kept or made by Employee during the course of her employment and related directly or indirectly with the business of Employer or duties of Employee with Employer shall remain the property of Employer and shall be returned to Employer upon termination of this agreement for any reason.

While these provisions are entirely understandable and reasonable, they can always be made more favorable to the physician-employee. Physicians often do not realize that they may require access to such documents and information following the term of their employment for a variety of reasons. For instance, if a malpractice claim arises, the physician will require certain documents in order to defend herself. For this reason, we always advise the inclusion of language that will specifically permit the physician’s access to employer’s medical records (following termination for any reason) in the event that the employee requires the documents to defend herself in any sort of case or proceeding where the documents are relevant.

Further, another important issue to consider is the documents and information that a physician might be working on pursuant to any research projects. Consider if you have an ongoing research project, and then your relationship with your employer turns sour. If employment is terminated and employer has retained its right to keep all documents and records as its exclusive property, then you may have no choice but to leave behind the research that you’ve been working so hard on. While this sounds nightmarish and certainly unfair, this might be exactly what the language of the employment contract dictates.

While the access to documents and information following a physician’s employment is crucial, it is also important to address access to particular pieces of information during and throughout the employment relationship. In many cases, a physician’s compensation is partially or entirely comprised of productivity income (i.e. income that is dependent on the type and frequency of services provided by the physician). Additionally, the calculation of a physician’s income may take into account overhead and other expenses of the practice. In these cases, management or administrative staff will calculate the compensation due to the physician based on those services that she provided and any applicable deductions. Therefore, it is important for a physician relying on such calculations to be in a position to review the applicable information and ensure that her compensation is accurate. In these situations, we always advise the inclusion of language that will entitle the physician to reasonable access to financial and other information in order to verify the calculation of her compensation under the agreement.

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Top 10 Reasons Why Physicians Should Seek Legal Review of Their Employment Agreements…

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Continuing our blog series on the Top 10 Reasons Why Physicians Should Seek Legal Review of Their Employment Agreements

6. Potential Liability for Events Out of Your Control: 

            Physician employment contracts often contain provisions that put physician-employees on the hook for potential liability arising from various events and circumstances that are out of the physician’s control. Conversely, employment contracts often exclude language that would indemnify physicians from particular sources of liability. As attorney-agents working on behalf of physicians, our job is to identify those potential sources of liability and amend the applicable contract language so that our physician clients are not held accountable for issues or circumstances that are outside of their control.

One potential source of liability that we regularly work to avoid is damages arising out of billing and collection practices. When a physician works for an employer, whether it is a hospital or private practice, the responsibility to bill and collect for the physician’s services is almost always placed on the employer. This work is typically done by billing staff who use physicians’ provider numbers to enter the information and then bill and collect for the services. In the event that the billing staff makes an error while using a physician’s provider number, the physician may be held accountable, despite the fact that the physician made no errors himself.

Another area that we often see physicians being placed in unfair positions is with regard to termination provisions. Most physician employment agreements contain both “without-cause” termination provisions and “for-cause” termination provisions. Generally, the for-cause provisions indicate that the physician can be immediately terminated if he commits certain acts of wrongdoing, such as being convicted of a crime or losing his license to practice medicine. However, employers sometimes try to include for-cause termination provisions that are completely out of the physician’s control. One example is a provision that reads: Employer shall have the right to immediately terminate the Agreement, without prior notice, in the event of the bankruptcy, receivership, dissolution or merger of the Practice. Provisions like this are troublesome, as it does not seem fair or reasonable to terminate an employee immediately and “for-cause” based on the employer’s insolvency or change in business organization.

7. Understanding the Effect of Termination Provisions:

In the excitement of being offered a job and the hastiness that often causes physicians to hurriedly sign the employment contracts that they are offered, many important contract provisions are merely skimmed over or entirely overlooked. One of the most important aspects of an employment contract is the termination provision, and it is imperative to review that provision closely and have a clear understanding as to your rights and the employer’s rights.

As mentioned prior, employment contracts generally contain both “without-cause” termination provisions and “for-cause” termination provisions. The without-cause provisions allow both the employer and the employee to terminate the employment agreement, for any reason or no reason at all, upon providing the other party with a specified number of days of advance notice. The number of days of notice required is very important. The notice periods we often see range from 60 days to 180 days. If a physician wishes to leave his current employment position, he will have to plan substantially ahead in order to adhere to the notice requirement. The period of notice is also important as it may make the difference between a physician moving seamlessly to another employment position or having a period of unemployment. In the event that an employer desires to terminate a physician’s employment without cause, the physician will have to use that time to job search and secure a different employment position, and so a sufficient amount of time is desirous for the employee in that situation. It is also important to note that if an employer wants to terminate an employee, it will almost always do so via the without cause termination provision. This is because using the for-cause termination rights opens the employer up to challenge and law suits if it is not clear that the employee has committed any violations or wrongdoing. Rather than face the possibility of challenge or backlash, employers prefer to simply utilize the without cause right and make a clean break.

For-cause termination provisions will allow the employer to terminate an employee based on the employee’s commission of various wrongdoings, one of which is often a blanket provision including “any material violation of the employment agreement.” While employees are held accountable to adhere to the employment agreement and avoid any violations of the same, employers are often not held to the same standard. For this reason, it is important that employment agreements always include language that similarly holds the employer responsible for adhering to the agreement. In the event of the employer’s failure to fulfill its duties and obligations under the agreement (i.e. failing to pay the physician in accordance with the applicable compensation provision), the employee should have the right to terminate the agreement for cause.

Finally, when considering a contract’s termination provision, another crucial aspect to consider is how termination will affect your compensation. Will you be paid for services provided up to and through the actual termination date, or will compensation cease upon receiving notice of termination? Especially for physicians being compensated under production models, it is very important to clarify these aspects.

To learn more about these and other key provisions in your physician employment contract, please contact Leigh Ann O'Neill at 317-989-4833 or via email at loneill@lauthoneill.com.

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Me vs. My Employer: Part 2

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At the end of last month, we began our blog series on our Top 10 Reasons Why Physicians Should Seek Legal Review of Their Employment Agreements. Part 2 of the series continues below:

3. Knowledge of What is Fair and Reasonable. As we discussed above, physicians are often eager to sign the employment agreements that they are offered, almost without even a second thought. Coming fresh out of training, young physicians are accustomed to earning a pittance for their hard work and time. So it is no surprise that when they see that first offer and realize they will soon be paid a real and substantial salary, they are ready to dive right in. The only problem is that these physicians are not in a position to gauge whether the offer is fair and reasonable based on current market norms and standards. Obviously the salary offered is a huge part of this, but there are a variety of other aspects to consider as well, including but not limited to the following: fringe benefits; reimbursement for relocation expenses; reimbursement for CME expenses and professional subscriptions and dues; and contribution toward student loan debt. The truth is, the only people who are really capable of offering an objective review of whether a contract’s terms are fair and reasonable are professionals who work with and on behalf of physicians. Such professionals (attorneys and CPAs, mostly) review and analyze a large number and variety of physician employment agreements and as a result, have an objective understanding of what physicians are being offered. Further, such professionals have on objective understanding of what physicians can reasonably and justifiably request of their employers. Additionally, only certain individuals have access to the facts and statistics concerning physician income. The Medical Group Management Association (MGMA) publishes annual data that breaks down physician compensation based on specialty and the geographic region of the country where the physician is employed. The MGMA does not make this information available to the public, but rather is only accessible to members who subscribe and pay a substantial fee

4. Lifestyle Factors You May Not Consider. When a physician receives an employment offer, her eyes are bound to go straight to the Compensation provision, paying little to no attention to the remaining terms. While the compensation offered is certainly important, there are additional provisions of any given contract that are even more likely to affect a physician’s day-to-day life and lifestyle.  For instance, physician employment agreements often lay out a physician’s on-call responsibilities, but do so in a very vague way. Such ambiguous terms often put physicians in a position of agreeing to responsibilities that are completely open-ended and undefined. – basically an “agree now to what we may or may not dictate later” sort of situation. Not good. Physician employment agreements similarly often dictate that a physician will be responsible for certain administrative duties, with the extent of these duties being undefined. Agreeing to such responsibilities without an understanding of what they entail can have serious effects on a physician’s practice and quality of life.  Aside from contract provisions relating to aspects that are analogous to medical practice, there are many that influence your life in more direct and significant ways. Practice locations, for example, are often undefined and may require a physician to serve any and all existing and future locations. You may assume that this is standard, but consider the potential repercussions. If a new practice location is opened an hour drive away from your home and you are subject to serve it, your daily life could be greatly impacted. Consider also if a contract requires your residency within a particular county, zip code or mile radius of a practice. Such fine print is often overlooked and can have enormous effects on your life and the life of your family.

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Physician Employment Benefits – Part 2: What questions should I ask, and are these provisions negotiable?

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In part 2 of this blog series, we are continuing our discussion of the benefits that are generally offered pursuant to physician employment agreements. Last week, we outlined the benefits that are typically provided to physicians, and the manner in which they might be offered. This week, we are examining each category of benefits and guiding you in terms of what questions should be asked, and what you can (or should) expect from your future employer.

 Health Insurance: Because employment contracts are typically devoid of any details or particulars regarding the coverage to be provided, it is important to address this issue before executing an agreement to ensure that you and your family will be adequately covered. Employers usually can provide term sheets and/or explanation of benefits for the policies they offer.

Disability Insurance: In analyzing the disability coverage offered, it is recommended to obtain the following information: What is the definition of “disability”? Does an accident or illness qualify? How long must one be “disabled” in order for coverage to apply? Additionally, a consideration that is especially important for physicians is whether the definition of disability includes “own occupation.” Inclusion of “own occupation” in the definition can ensure that a physician will be covered if he/she is unable to perform the duties of his/her specific medical specialty.

Life Insurance: The most important questions to ask regarding life insurance offered through employment are: 1) What is the amount of coverage? and 2) Who is the designated beneficiary? Employers generally allow physician employees to designate his/her beneficiary, however, this is not always the case. For instance, when working for a private practice, a physician might be required to name the practice as the beneficiary if and when they become a shareholder/partner. In any case, make sure you know exactly who will benefit from the life insurance policy that you have been offered.

Malpractice Insurance: Professional liability insurance will almost certainly be addressed in an employment contract, and the type of coverage offered should be specified. If the malpractice coverage offered is claims-made, it is necessary to clarify whether tail coverage will be provided, and specifically, who will be responsible for obtaining and paying for the tail coverage. If the coverage offered is occurrence-based, then tail coverage is not necessary. Additionally, regardless of which type of coverage is offered, the coverage limits should be at least $1 million per occurrence/$3 million in the aggregate, and may have state-law-specified required limits.  It is important to consult with an attorney to ensure your medical malpractice coverage offered is adequate and compliant with any state-specific requirements.

Vacation and PTO: This is an area of employment agreements where deciding to ask for more should be carefully considered. A physician may not want to come across as lazy or wanting to work less. Further, employers often will simply not amend these provisions, as they are typically set policies applicable to all physicians. However, it is nonetheless important for physicians to be aware of the applicable vacation/PTO policies. Employment agreements will often dictate the number of days a physician can take per year, and also might provide the relevant procedures for scheduling time off.

CME Expenses and Professional Dues: Before executing an employment agreement, it is important to clarify exactly what the employer will provide in this regard, and what expectations the physician needs to fulfill. Will you be required to maintain memberships with professional organizations, or subscribe to professional journals? How many CME events will you attend each year? CME reimbursement rates can often be negotiated, and the physician’s bargaining power is strengthened if he/she can clearly outline the expenses that will be incurred annually. The attorney agents of Lauth O’Neill can offer further guidance as to significant expenses you might incur during your first years of practice, and how to alleviate the burden of those expenses.

Retirement: A physician employee will almost certainly not have a say in the type of retirement plan offered; however, it is still important to be knowledgeable about the plan. One important consideration to keep in mind is when the physician becomes eligible for participation. Sometimes employers require that a physician be employed for a period of time (i.e. up to one year) before becoming eligible. Once you know what type of retirement plan you will be participating in, it is recommended you speak with a financial advisor to ensure you are taking full advantage of any tax savings that may be available.

Relocation Expenses: Relocation expense reimbursement is another issue that can usually be negotiated based on the reasonable and realistic needs of a physician. It is advisable to explore the available vendors and get multiple quotes. Further, physicians should consider whether they need additional funding for one or more house-hunting trips to their future hometown. The attorney agents of Lauth O’Neill can advise you as to the average reimbursement rates offered based on their experience, and give you maximum bargaining power.

Considering an employment contract and all of its implications can be incredibly daunting for a physician. In addition to the often cumbersome language and complexity, employment contracts are also intimidating because physicians have no way of knowing what is “normal” or what provisions should be included in the contract. Only an experienced physician attorney agent can adequately guide you through this process to ensure that your interests are protected. If you have questions or concerns about your employment contract, contact Lauth O’Neill to learn more about how we can help.

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