Physician Contract Negotiations: Don't Miss Out!

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I recently spoke with a group of medical residents and their spouses and we discussed the value in negotiating their physician employment contracts, and whether doing so was really necessary or of benefit to the physicians.  It was suggested that they may have previously been hesitant to negotiate, but they had recently learned of specific instances of physicians employed by one of their training hospitals that changed their minds. In the specific instance they cited, three physicians had recently started jobs at the training hospital, and they were all joining the same departments and with the same salary and employment offer, except one physician was given an additional $10,000 in moving expenses that the other physicians did not receive.  The residents I was speaking with were surprised to learn why the one physician was given the extra $10,000- simply because the physician asked for it!

This is a typical example of the difference that can be made with some simple physician contract negotiations. And I always cringe when I hear stories of this sort from the side of the physicians who didn't ask for any changes to be made to their contract. When you know how to tactfully and respectfully negotiate your physician employment agreement, it is possible to obtain added benefits and even higher salary and other forms of compensation.  An experienced physician agent has knowledge of what perks physicians can expect from their employment offers, and they know how to successfully negotiate to ensure that those added benefits are not left on the table.

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Physician Employment Contract Negotiation Tip: Look Out for Practice Location Terms

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In a time of decreasing reimbursement rates, it is becoming more and more popular for hospital systems and some larger private physician groups to open rural clinics and other types of practice sites. This trend is on the rise because reimbursement rates tend to be better in rural areas, and other regulatory rules are often relaxed for rural health care providers. Due to the influx in rural clinics and practice sites, physician employers are obviously faced with who will staff these additional locations. Of course, many employers simply hire physicians to work only in these rural locations, but other employers are staffing the locations with their physician employees who work the majority of their time in more urban practice locations.

Because it is often more difficult to find physicians who are willing to work only in the rural locations, the employers are faced with ways of staffing the rural practice sites with their urban physicians, and many times it ends up being the more junior physician employees who are called upon to commute to the rural locations on occasion. With this increasing trend, it's not surprising that many physician employment contracts these days are coming with provisions that require the physician to provide services at "any practice location the Employer owns or provides services." This is becoming one of the classic contract provisions that seems harmless and just like any other "standard" contract language, but it can bring significant discontent on the part of the physician once the job actually begins. While the physician employment contracts should always stipulate an actual address of the office location where the physician will be providing services, physicians should be weary of this additional "catch-all" sort of language that may require them to provide services at other office locations that may not have been specifically set out in the contract.  Keeping an eye out for this type of vague language and amending it to provide only specific requirements on the part of the physician is always a good idea so that the physician can begin his or her job and be confident there are not any unwelcome surprises down the road.

For more information on how Lauth O'Neill can assist in your physician job search or physician employment contract review, please contact Leigh Ann at 317-989-4833 or loneill@lauthoneill.com.

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Physician Contract Legal Review: "I Just Don't See the Point."

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This is literally a quote I have heard from physicians finishing up their residency and fellowship training.  When confronted with the option of having a lawyer review their physician employment agreement, they feel that paying someone to do so won't make any real difference, or they are afraid to get into such a legal review because they don't want to come off as being difficult or hard to work with.  Or, as one of the most commonly cited reasons to not have a lawyer review their employment agreement, physicians will say that the employer told them the contract is all just standard language that all employees agree to.  Well, that may be the case, but it certainly doesn't mean it's language you should be agreeing to.

No matter how "standard" the language is, you may not want to agree to pass on all income you receive as a physician to your employer.  For example, let's say that, outside of your employment duties, you consult with and do research for a pharmaceutical or manufacturing company and they pay you a fee for your work- does it make you greedy or difficult that you'd like to keep that money for yourself to help pay off your loans, or take a vacation once a year?

Or, as another example, consider a contract provision that requires you to provide services at all locations where the employer provides services.  This provision seems fairly simple and harmless at a glance, but if you knew the employer runs a clinic 200 miles away from their home office, you likely would not want to agree to providing services there, would you?

These are just 2 of the many, many examples of physician employment contract terms I see regularly that are not favorable to the physician, and that need to be re-written in order to be absolutely fair.  While it is true that many physician employment arrangements go just fine without the involvement of any lawyers, it is unfortunate when a physician ends up getting the short end of the stick in an employment deal gone badly because he or she never had someone in their corner protecting their best interests.

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Physician Contract Review Tips: Beware of Billing Responsibilities

 

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When a physician is offered an employment contract, particularly with a private practice, some of the medical service billing responsibilities sometimes rest on the physician.  As if it's not enough to worry about caring for your patients and taking care of other administrative duties, physicians are often faced with various billing tasks that require enormous attention to detail and experience in an area that has become its own industry.  It is, of course, part of the job- knowing what CPT codes fit which service, and which modifiers go where; but one can't help but wonder if there might be someone better suited than a physician to handle the nitty-gritty billing concerns.  After all, there is an entire industry of professionals whose exact job it is to ensure that medical services are billed properly.  So beware of vague or overly-broad billing responsibilities in your physician employment agreement.

Of even more significant concern in some instances is where the physician employment contract expressly assigns the billing responsibilities to someone on the billing staff, but also holds the physician responsible for any payment recoupments or audit recoveries that occur due to incorrect billing. While it very well may be the fault of the physician in some instances of billing errors, the last thing you want is to be held accountable for someone else's mistake. For instance, in some physician employment contracts, the billing staff is responsible for coding the services and sending out the bills, but then the physician is held responsible if something is billed incorrectly and a payor recovers their payment. In this type of arrangement, it is helpful for the physician to have some amount of oversight or appeal rights when it comes to the practice's internal billing practices and policies.

For more information on how the details of your physician employment agreement may significantly impact your practice of medicine and your income, please contact Leigh Ann O'Neill at lone ill@lauthoneill.com or 317-989-4833.

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Physician Employment Contracts: Medical Malpractice Provision Tips

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When a physician receives an employment contract, they are typically pretty savvy about knowing to look for the medical malpractice coverage provision to see if it provides them adequate coverage. In most employment agreements, the employer will cover the physician's medical malpractice coverage. Sometimes the cost of this coverage is taken out of the physician's practice income, and other times the coverage is provided at the expense of the employer, under a large umbrella policy like the ones hospitals and large practices have. While who ends up paying for the coverage is obviously important to the physician, there are issues of even greater import that should be more concerning to physicians. Most physicians have heard terms such as, "occurance-based," or "claims-made" and "tail coverage." But knowing which type of insurance is or is not included in your agreement, and what additional insurance you may need, is something best left to a physician contract lawyer to decipher. Without experience with medical malpractice coverage provisions, it is difficult to know with certainty whether the employment contract may leave you exposed. In addition to the type of insurance offered, and whether tail coverage may be needed, a separate issue that is often unknown to physicians are specific state law requirements that can have an enormous impact. For example, some states have patient compensation funds for which physicians may be eligible if their malpractice coverage is adequate. Such funds may provide additional coverage to physicians in instances where they are found liable in a malpractice lawsuit. Therefore, whether your employment contract complies with such state law provisions may have a significant impact on your potential exposure to medical malpractice liability. A thorough legal review of any physician employment agreement is crucial to ensure you are appropriately covered under the medical malpractice provision included in your contract. To learn more about physician contract legal review assistance, please click here to read about our Analyze & Shape service.

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Physician Employment Contracts: Termination Provision Tips

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One aspect of physician employment contracts that are often overlooked are the termination provisions. When physicians sign an employment agreement without having it reviewed by a health care lawyer, there is a good chance that the contact included unfavorable termination provisions. For instance, it is important for physicians to know how to protect themselves in instances where the employment arrangement terminates for some reason that is no fault of their own. Unfortunately, it is common for unfavorable contract terms, such as non-competition covenants, to continue to be enforceable despite the termination of the employment due to some fault of the employers. Many physicians find this possibility shocking, but this sort of language can be easily amended at the suggestion of a physician agent or physician health care attorney.

A second type of common and unfavorable termination provision is one that allows the employer to terminate the employment agreement without cause, even where no similar termination right is available to the physician. It is desirable for both parties to have a termination right that allows either party to terminate the agreement upon a breach by the other party of a material contract term and failure of the breaching party to cure the breach within a set number of days. A mutual term such as this is balanced and fair and is one example of the reasonable terms physicians want to negotiate into their employment agreements.

For more information on how we can assist physicians in negotiating their employment contract terms, please visit us at www.lauthoneill.com.

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Physician Employment Contract Review: Is That Really Necessary?

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This is a question I hear all the time.  As a physician agent and a lawyer, I often have physicians ask me: do I really need to have my employment contract reviewed by a lawyer? An interesting fact I have come to notice with regard to this question is that I never hear it from physicians who have been out practicing for several years.  I imagine part of the reason behind this phenomenon is they know by now that the answer it most certainly "yes."  It is always the younger physicians who are just finishing up their training who are inquiring about whether a legal review of their physician employment contract is necessary.

It's hard to blame young physicians for being somewhat skeptical about the need for a contract legal review- after all, as they are finishing up residency or fellowship, they have come to trust the attendings they work with, and see them as mentors who will look out for their best interests.  And that is certainly the case.  However, it is important to realize that actual employment as a practicing physician is an entirely different animal than the highly-regulated world of residency and fellowship.  Such training programs are government-funded, and are meant to provide young physicians with the training and experience they need to become practicing physicians.  Employment as a practicing physician, on the other hand, occurs in the "real world" where everyone is looking out for their own best interests.  In fact, the hospital or practice personnel young physicians deal with when seeking a new job are obligated to protect the best interests of the entities they work for when they make an employment offer.  And you wouldn't expect anything different.  Picture yourself joining a private group that will one day offer you partnership- would you want to be a partner in a group that hands out freebies and doesn't protect itself?  I doubt it.

So if they're protecting the employer's best interests first, there is no room for them to be looking out for yours.  This isn't to say they are out to intentionally offer you a bad deal, or try to compromise you in some way.  But when they tell you not to worry about the terms of your contract because it's all "just standard language," you should not simply take their word for it and stop there.  What does that mean anyway?  "It's all just standard language"?  That isn't very descript or helpful when you're looking out for your own legal and financial well-being and trying to understand what your obligations are under the employment agreement.

I always encourage physicians to have their employment contracts reviewed by a lawyer, and specifically one experienced in physician contracts, because even though a potential employer may not be trying to do you any harm under your contract, they are not working to  protect your best interests- they're protecting their own.

Click here to learn how we help our physician clients, or contact Leigh Ann O'Neill at loneill@lauthoneill.com.

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Physician Compensation: What are the Various Models?

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When a physician employment contract is offered, often the first thing physicians look for is the compensation section to see how this offer stacks up against others.  What physicians sometimes find, is that rather than a simple 3-sentence paragraph outlining the annual compensation, and the payroll policy, there is a reference to an exhibit at the end of the agreement that sets out, over multiple pages, the compensation methodology according to which they will be paid.  While every individual agreement is different and should be reviewed by your individual lawyer, it is helpful to generally review some possible scenarios in order to gain some understanding of what payment methodologies are commonly used.

100% Straight Salary Guarantee

One of the most common physician compensation methodologies is the 100% straight salary guarantee.  In a time of hospital systems sweeping up private groups left and right, and physicians becoming employed in the majority of instances, the straight salary guarantee is a hugely common payment method.  This type of payment methodology is pretty much exactly how it sounds- the physician is guaranteed an annual salary of a certain amount, and such total salary is paid to the physician in accordance with the employer's regular payroll policy.  With this methodology, there is no incentive or bonus pay tacked on based on productivity.

Salary Guarantee + Incentive Compensation

In a payment methodology that includes a salary guarantee, plus incentive compensation, the physician is guaranteed a minimum annual base salary to be paid in accordance with the employer's payroll policies, and they are also eligible for additional compensation that can be based on a variety of factors.  Such incentive compensation can be paid on a quarterly or end of year basis, and may be based on factors such as wRVUs billed, wRVUs collected, quality incentive measures, or a variety of other factors.  When the incentive compensation is based on production, such as according to wRVUs billed or collected, the incentive compensation only kicks in once the physician has produced enough to cover his or her minimum base salary.  At that point, the methodology often calls for payment to the physician of a bonus in the amount of a certain percentage of his or her collections above the minimum guaranteed salary.  Take, as a basic example, a physician who has a minimum base annual salary of $100,000 per year, and an incentive payment of 30% of the collections the physician brings in over $100,000.  In this instance, if by the end of the fiscal year the physician has brought in collections of $200,000, he or she would have surpassed the base salary threshold, and would be paid a $30,000 bonus.

How the incentive compensation is structured exactly can vary widely depending on the specific agreement, and sometimes is dependent upon a base number of billed or collected RVUs or wRVUs, any excess of which can earn a bonus payment of $xx per RVU or wRVU billed or collected above the base amount.  Again, these are only a limited set of basic examples.

Pure Production Compensation

A third compensation methodology is one based purely on production, sometimes referred to as "eat what you kill."  This methodology is most commonly seen in private practice settings, and within those, it is mostly partners of the private practice who are compensated this way.  Under this methodology, a physician is paid a certain percentage of what he or she brings into the practice.  The remaining collections are typically paid to the practice in order to cover overhead expenses, such as real estate, malpractice insurance, support personnel, equipment, and supplies.

In this scenario, as well as the Salary Guarantee + Incentive Compensation methodology, the details of your employment or partnershipagreement are critical. Differentiation in single words can make an enormous difference in the compensation you end up being paid.  Therefore, it is highly recommended that you obtain a detailed legal review of your physician employment agreement to ensure that you are receiving the terms most favorable to you.

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Physician Employment Contract Negotiation Tip #1: Know What You're Worth

If you're finishing up residency or fellowship, you've spent the last 4, 5, 6, 7, maybe even 8 years being paid about 18 cents per hour. Now you're out there looking for your first "real" job. So when someone comes along and offers you a 6-figure salary, it's tempting to accept it, no matter how unfair the offer actually is. Unfortunately, some employers are anxious to take advantage of young physicians who are desperate to take any job that will help them begin to pay off their enormous student loans. So many times young physicians wind up accepting compensation under their physician employment agreement that is not up to par with market standards. After all, it's hard to know what the market standard is when you don't have access to national physician compensation benchmark data. That is where a physician agent can help you. In providing our Premier Opportunity service to our clients, Lauth O'Neill utilizes our access to the MGMA and other important surveys to ensure that our clients receive the compensation and benefits they deserve. Before you accept a physician employment contract offer, be sure someone is looking out for your financial and legal interests.

Physician Contract Reviews: Keys to a Good Deal

In my years as a health care lawyer, I have reviewed many physician employment contracts for clients. I have also worked for hospitals and other employers in drafting the offers they make to physicians. This experience has given me the benefit of knowing both sides' angles in this process. After a long and laborious job search process, the acceptance of a physician's first employment offer is often a foregone conclusion. Unfortunately, not only do many physicians take the first set of terms offered to them, but many physicians do not seek legal advice at all.  After seeing how incredibly different the second version of a contract can be from the first, I cannot urge physicians enough to hire someone to do this important work on their behalf.

The makings of a good and fair physician employment contract include balanced terms, fair market value compensation, and benefits such as health, life and disability insurance, and reimbursement for various typical business expenses. Of course this list is not inclusive, but only mentions some of the points a physician lawyer will be looking for when reviewing an employment agreement.

The "take-home" point for physicians, especially those straight out of residency or fellowship, is that having a legal review of your employment offer will pay for itself many times over.  New physicians often don't take advantage of the bargaining power they have, and a formal legal review can provide exponential benefits.