Physician’s job hunting timeline 

Getting your job application ready 

Writing a good cover letter 

 What do physician employers want?

How to handle the telephone interview

Anatomy of a physician job interview 

In the restaurant with physician employers

Do’s and Don’ts in a doctor job interview 

Interview Dress Code for Doctors

Evaluating a physician job opportunity 

Physician Employment Benefits

Using an attorney to review your physician employment contract 

Understanding physician employment contract 

Physician Contract Negotiations 

How to negotiate physician employment contract 

Getting ready for your first physician job 

To make the point clear let me use some examples:

SCENARIO A: Imagine you are in a medical practice, practicing medicine and your yearly earning reports looks as follow.

Gross Revenue: $200,000 per year.

Overhead: $150,000 / year  [Overhead is the cost of doing business eg. expenses including rent, nurse salary, equipment and supplies cost etc.]

 In the above scenario, a physician is better off being an employee than a partner in the medical practice. Why? Because a physician employee salary is guaranteed. Even though there is $200,000 in gross revenue, the net profit is only $50,000 and would be the take home income of a medical practice partner.

Lets look at another aspect:

SCENARIO B: Few years later, your  earning reports look like this:

Gross Earnings: $500,000 / year

Overhead: $ 200,000 / year 

 As you see, the increase in gross earning does increase the overheads, but not proportionately. The increase in overheads is because of increased volume of patients resulting in increased use of supplies and increase in the number of support employees. The disproportion is because of fixed costs such as rent and malpractice insurance. But here the Net Income is $300,000 and would be the take home income for a partner in the medical practice. If, as an employee, a physician is being paid significantly less than this amount as salary, then it makes more sense for him to buy in and become a partner in the medical practice.

If the salary is only few thousand dollars less than the above amount, the only reason for becoming a partner is for job security and sense of ownership. Because, with partnership in the medical practice, also comes the never ending responsibility of managing the business aspect of it.

Before a physician even raises the issue of becoming a partner a look at the current year earnings’ and projected earnings in the next few years, is vital. Nobody wants their income to go down. Especially if you have to pay money to buy into the business. If the numbers don’t look right, it is probably better to wait an year or two before reconsidering the medical partnership.

This is the biggest problem with those jobs which offer mandatory partnership in one year. The problem is that the physician has no clue what his earning will look like at the end of the year. So for accepting a physician job with an opportunity for partnership, make sure becoming a partner is not manadatory in the contract, to continue practicing in the same medical practice. 

1) Physicians are intelligent and independent creatures. They became physicians in the first place to call the shots.

2) Physicians have high sense of self esteem and this fuels their stubbornness and inability to follow orders. They rather command than follow.

3) Over time physicians develop a relationship with their patients – a sense of owning them aka being responsible for their well being. This creates a conflict about who owns the patients – the medical practice or the physician. (My take on it? It is the patient who owns the physician or medical practice!)

4) Becoming the owner or partner appears lucrative – both financially and spiritually.

What are the ways you can own a medical practice ? There are only three:

1) Start your own medical practice

2) Buy a medical practice

3) Become a partner in already existing medical practice ( i.e. buy a share of the medical practice) 

Pros of becoming a partner in a  medical practice:

1) You do not have to start a medical practice from scratch

2) Already operating infrastructure available to you in the medical practice.

3) Business risk is shared in a medical partnership.

4) Easier to get business loans once a business is deemed established. Usually two years of operation is considered adequate by the banks.

5) More flexibility in scheduling vacations.

6) Already existing networks and word of mouth reputation established. (Hopefully good reputation!)

7) Ability to get higher reimbursement rates from the insurance companies.

You do get business related tax breaks. 

Cons of partnering with a medical practice:

1) Income levels not guaranteed. They may vary based on overhead for that year.

2) You still are not the ultimate boss you dreamt of. The most senior partner usually retains the ability to call the shots.

3) You still cannot do whatever you want. You have to go through a partner voting system.

4) Medical partnership usually retain a restrictive covenant in the contracts.

5) Getting out of partnership is akin to a messy divorce.

 

Why should you learn these fundamentals? Because you will be employing staff. And it is your responsibility to provide them with a stable and flourishing employer (aka job safety). So it is not selfish – it is altruistic.

Before we go around looking for bankers to finance the medical practice there are lot of things to understand. You should be able to talk finance before getting financed. Here are few of the terms and concepts you need to understand before opening the business.

1) BUSINESS PLAN: It is a written document which describes the business (in this case a medical practice), its operations, allocation of funds, staffing etc.. Not only you need a the business plan for the banks, but you may need to use it to refer to during the course of the business. It is the map to success.

2) CASH FLOW: Cash is the lifeline of business. It is like the blood in your body. When the cash runs out–the business dies. Even if there was a good chance of success few weeks later, a cash strapped business cannot survive.  Just recently I was shocked to see the doors  shut down on an upscale restaurant in my neighborhood after just one year of opening. There were lot of customers (Including me!) but I guess they let expenses run high.

3) REVOLVING LINE OF CREDIT: It is a loan offered to the medical practice for its operational and daily expenses. You can withdraw it all at one time or slowly, leaving some for the rainy days. As you pay it back, it increases back to its original value.

4) CASH FLOW STATEMENT: It is a projected expenses and earnings on an excel sheet on a monthly basis for atleast an year.

5) BREAK EVEN POINT: The time or earning at which the medical practice becomes profitable. On your cash flow statement you can estimate after how much time your medical practice will break even. Also you should be able to tell how much cash the medical practice needs to earn to become profitable.

6) OVERHEAD: The total expenses of running a medical practice. You need to earn more than the overhead to be able to make a profit  (i.e. your salary) 

I wil introduce more terms as we go deeper into the topic in the later posts.

Authors Recommendation: If you plan to open a medical practice or any other business you need to attend the classes offerred by the organization SCORE. These are retired executive volunteers who offer free advice to young entreprenuers regarding business. I got my first lesson on cash flow (the most important one!) at one of the classes of SCORE. And don’t take the advice lightly as some of these volunteers have run mega million dollar industries before. I think I should do what I always wanted to do that is write it here ‘THANK YOU SCORE ‘

One thing I will recommend is reading the book “Personal Finance for dummies" at least two times. It is a well written book about personal finance in a simple language. You will be surprised how it will change your outlook forever.

Financial responsibility is a habit and it has to be developed. Saving is difficult in the beginning but, as you see your money grow in your saving account, it can become very addictive.

So let me give you few recommendations on what you can do. However you need to do more research to find out if it suits your situation. I am not a finance specialist, I am just a doctor:

Learning to manage your finance is a process. You don’t have to be an expert in the beginning but you need to start it right away.

Most the medical residents or physicians shy away from negotiations during their physician job search and would want their lawyers to negotiate with the employer. But remember not all lawyers may negotiate for you. Most of the lawyers will review your physician employment contract and tell you about the potential pitfalls. Then it is up to you to bring it to the employer. If you want your lawyer to do the contract negotiations, make sure it is clear in the beginning before you sign an attorney client relationship.

There is a trade off as to who should negotiate the physician job contract with the employer. If it is the attorney then the process is usually slow, out of your control and can be expensive. But it is professional work, saves you from the pain of negotiating and may benefit you especially if your negotiating skills are poor. On the other hand you can decide to negotiate yourself. It also can be worth the experience as well as effective, educating and free.

HOW TO NEGOTIATE YOUR OWN CONTRACT

You can negotiate with your employer. There should be no stigma attached to it. Here is one of the ways to do it:

STEP 1. Ask the prospective employer to send you the physician job contract. Do not start negotiating until you receive the contract.

STEP 2. Review the physician employment contract at least three to four times word to word yourself. Make a list of sentences or conditions that bother you.

STEP 3. Get the physician contract reviewed by the attorney. He will give you a list of conditions which you may need to address with the employer. Also discuss the list you made in step 2 with the attorney and add relevant topics to put up for discussion.

STEP 4. Call your employer and tell him that there are some concerns regarding the contract which you would like him to address. His response to you will be “This is a standard contract for everybody.” But politely insist that you would like some changes in it and offer to email or fax him the list. The employer may want to discuss it right then and there, but if the list is too long, do let him know. It is a good idea to give them some time to think on it. The employer usually will also run it by his attorneys.

STEP 5. Neatly type up the requested changes in bullet points on a word processor. Do make reference to page number, section, sub-section and line number. Also add an excerpt of the sentence you want changed and the language of the new sentence. Make separate bullet points for asking increase in salary, vacation days, sick leave etc. Send this list to the employer.

STEP 6. Most likely you will receive a call back from the employer, who by that time would agree to some of the changes and will decline the others. Now it is your turn to think whether the declined changes are significant enough for you to refuse the offer. Tell the employer to give you a day to think and then call him back later regarding your decision.

Remember you will not get everything that you wanted. The principle of negotiation is to meet half way where both parties feel they won.

STEP 7. If you feel that there is something which definitely needs to be changed then inform the employer about the same. Be clear. Usually this is a gamble because if the employer really cannot give it up then most likely he will go for another candidate. But remember he has spent some amount of time and money trying to negotiate the contract with you. So it is not easy for him to back off too. He will try to either convince you to give it up or may try to work out an alternate solution. If nothing works then he may either give in or let you go. You can execute this step very well if you have an alternate physician job or plan in hand. In that case power balance tilts in your favor. The upper hand in a negotiation is of a person with a plan B.

STEP 8. You will receive an amended physician contract from the employer. Again carefully review the contract and make sure the agreed upon points have been added or amended in the contract. Have the amended physician job contract reviewed by your attorney again.

STEP 9. If the new contract and conditions are agreeable to you then go ahead and sign the physician contract to seal the deal.

If you have already read about my post on Internal Medicine salary trends, there will be a serious short fall of IM docs. But there is a difference between the supply of Internal Medicine physicians and family practice docs. Physician Jobs in Internal Medicine nowadays can be categorized in three different types:

The point is that not all of Internal Medicine graduates churned out by residency mills are ending up in out patient primary care practices anymore. Therefore the short fall is much more steeper than Family Practice. Many hospitalist programs employ Family Physicians. But most of the FPs continue to enter outpatient settings as they are more comfortable with it because of the nature of their residency training.

Financially the Family Physicians are becoming more business savvy by offering patients quite a number of procedures at their office. The patients find it convenient and the medical practices are able to keep the revenue in their practices. The hospitals hate it! As I said before, most of the technology is becoming cheaper and affordable for the docs to keep procedures in house.  

So the prediction: Family practice salaries will continue to show 7-10% rise but I do not expect it to be spectacular (like the radiology salaries in late 90s). Internal Medicine salary spikes will probably be more substantial when we compare two primary care specialties.

WRONG! Negotiations are an acceptable part of corporate America. Remember you are no longer a resident who is supposed to learn and to work eighty hours on bare minimum compensation. Now you are physician businessman with a degree and training in the mighty American capitalism. By practicing medicine we do serve humanity but remember we have medical school loans to pay, a family to support, kids to send to school and plan for the retirement.

Always practice good medicine, ethical medicine and competent medicine. But practicing good medicine does not mean that you settle for a lower compensation, less vacation or lesser benefits. If you do settle for less you are serving your employer not humanity.

Remember job satisfaction comes from performing your work you like to do with utmost competence and receiving adequate compensation from the same. How would you feel if you settled for $10,000 less in salary and three weeks vacation while your physician colleague gets four weeks vacation and higher pay doing the same work?

TAKE HOME MESSAGE. Negotiations are acceptable in business including in the business of medicine. It is accepted that you will try to negotiate your physician employment contract. Nobody minds it. That is one of the reasons the initial  physician employment contract offered by private medical practices have two weeks vacation, No CME reimbursement, lesser compensation etc. This will be more explained in the principles of negotiation which will follow.

Compensation as a physician employee consists of salary plus benefits. You need to know what benefits you can get before you begin negotiations. If the physician employer is not willing to raise the physician salary,  you can ask for more benefits and add value to the compensation. Also the benefits can help you differentiate between two jobs offering the same physician salary.

Sometimes benefits offered have to be same for all employees in the corporation by policy or law. Therefore there is little an employer can do about them. But CME leave, CME expenses, Vacation etc. is negotiable and should always be negotiated.

Following list of benefits may not be complete but covers most of them. Many corporate employers also offer additional benefits such as day care, even pet day care etc.

HEALTH BENEFITS: Most of the employers offer health benefits. It is very important to have health insurance. Medical Bills are one of the most common causes of bankruptcy. A single catastrophic medical emergency can wipe away all your savings and put you under more debt.

Read your physician employment contract very carefully. It should say whether the employee or the whole family is covered under the health insurance. If your family is not covered then you will have to pay additional out of your pocket cost to get coverage for them. And you should.

High deductible insurance has nowadays become very popular amongst employers. It requires them to pay lower premiums. For employees it opens up another venue to add to their saving and get tax breaks via Health Savings Accounts. However because of its high deductible, it discourages normally healthy people to go for medical check ups. So review the health insurance policy carefully before you make a choice.

VACATION: Please make sure the number of “paid vacation” or “paid time off” is always listed on your physician employment contract. Also it should specify separately the number of sick days, maternity leave, paternity leave, CME leave etc. It should also be clear whether holidays are included in the number of days mentioned or does it mean business days only.

CME EXPENSES: To maintain your medical license you have to complete certain hours of accredited medical CME every year. The medical CME expenses, including travel expenses ,are usually reimbursed by the employer up to a certain amount. That amount should be disclosed to you and written in the physician employment contract or physician employment agreement. It is also negotiable.

MOVING EXPENSES: Most of the times physician employers will offer to reimburse your moving expenses. If they do not offer it, be sure to ask. It can help offset your cost of moving to a different city or town. Remember, you cannot claim moving expenses you did not incur. So save your bills.

LIFE INSURANCE: Many physician employers may provide life insurance. Review the policy carefully because most of the time it is for a very small amount, e.g. $50,000. Also it usually pays the employer as a beneficiary to cover their cost of loosing an employee. In that case it is useless for you and I would suggest purchasing a separate policy. Larger corporations may provide more meaningful life insurance coverage.

DISABILITY INSURANCE: Most practices offer disability insurance. Do clarify if it is ‘short term’ or ‘long term’ disability insurance. Short term disability insurance usually covers disability for one to three months only. During this period physician employee will receive disability pay which is a percentage of your income. Long term disability covers disability up to age 65 and is preferable. Combination of both will give you maximum protection.

401K: Most medical employers offer 401K plans. Many of them match your contributions about 3% to 6%. So if you contribute to 401K (which you should) you will “earn” that extra money just for saving for yourself. Also it will give you tax breaks. Hospitals and larger institutions may provide 403b or other kind of tax shelters. Always find out how long you have to be employed by the corporation before they will consider you vested, partly or fully, to claim the employers contribution to the account upon leaving.

MISCELLANEOUS: Many larger organizations such as hospitals may provide wide variety of unconventional benefits such as day care for children (and even for pets at times!), concierge services for physicians, further education etc. All of these, based on your needs, may add value to the compensation package.

Remember to read the Physician Employment Contract yourself, at least three to four times before you even send it out to your attorney for review. You may not be able to understand it the first time but by the fourth reading you will definitely have some idea.

Some of the contracts are written in a simple language, but others may be more difficult than reading the unabridged Shakespeare play. In the following pages, I will list some of the things you need to watch out for in a physician employment contract. Remember, if it is not written, it is not agreed upon.

This is not a legal advice and you must consult your attorney prior to signing any contract. The post is for informational purposes only.

Here are some of the essential components of an employment contract which you may find: