Jill: Congratulations!
Hopefully you are viewing this webinar
because you have received a job offer
or are getting really close to getting a job offer.
Hello, my name is Jill Maher,
I am the principal consultant
with Maher Medical Practice Consulting
and I've been working with ophthalmology practices
for the past 15 years along with young ophthalmologists
training residents and fellows on business acumen.
I hope this presentation on contract norms and negotiations
will help as a guide while negotiating
the perfect opportunity for you.
I have no relevant financial relationships to disclose,
I am a consultant for medical practices.
Job search timeline.
If you've finished listening to the real world part one
of job search and interviewing process,
you probably saw a similar slide
on this job search timeline.
At this point, you're probably six to 12 months out
before the end of residency or fellowship.
Hopefully you've received that job offer
and you're about to get that contract
to review and to negotiate on.
So that's the part
that we're really going to discuss in this presentation.
Once you have that contract signed
and you assist with the credentialing process,
you'll probably be looking for a home.
And most importantly make sure that you relax
and take a vacation because you have certainly earned it.
Steps of a typical job offer.
The first step is usually being provided a verbal job offer
which might come from the administrator
or from the managing partner in the practice.
After that, they will probably provide you
with a written letter of understanding
which is basically an outline of compensation and benefits.
Not every practice offers a letter of understanding,
however, I encourage practices to do so
because this is really the best time to negotiate
and to make sure that the practice and the candidate
are on the same page.
So it's really important to take advantage
of this letter of understanding
and go through the compensation and benefits
and negotiate at that time.
Once that is agreed upon,
those details will be provided to the practice attorney
who will then prepare the employment agreement.
At that point,
you will want to have your attorney or a consultant
review all the details of that employment agreement
and make sure that you also are reading every single word
in the employment agreement.
Even though it might be 10, 12, 18, 20 pages long,
it's really important
that you fully understand every detail in that agreement.
Once that is agreed upon,
sign and return that employment agreement
in an expedient manner to the practice
so that they can begin the credentialing process.
Considerations before signing an employment agreement.
Vital question number one,
how fair is the compensation package?
Usually what I see offered by practices
is a base salary plus a bonus based on production.
So, the base salary is generally higher in more rural areas,
sometimes less desirable areas,
and it might be lower in more urban
or higher desirable areas.
The compensation which is usually based on production
is usually about 25 to 35% of net collections
exceeding 2 1/2 to three times the base salary,
that's considered the threshold.
So if you look at the example below,
you'll see a $200,000 salary, multiply that by three,
which gives you a $600,000 threshold.
So if you had a net collections
in that first year of $800,000,
you would subtract that threshold of 600,000,
which would give you 200,000,
and then that would be multiplied by the 30%.
Again, it could be anywhere from 25 to 35%.
The average is probably 30%
and that would give you a $60,000 bonus in that first year.
So that is the most typical type of compensation package
that I see practices providing.
However, on occasion, there are practices that provide
a straight percent of production
which is kind of eat what you kill type scenario.
And that could be a range of anywhere from 30 to 40%.
I've seen as high as 50%, which is pretty unusual.
The national base salary ranges
according to the health queer group in 2019
range from 180,000 to 250,000 for general ophthalmologists.
Glaucoma, 190 to 250,
and retina, 230 to 350.
In the last few years,
it's pretty rare that I see practices
offering anything less than 200,000 for an ophthalmologist.
And those ranges could actually go much higher
than 250 or 350 for these physicians
depending on how difficult it is
to find an ophthalmologist in a specific part of the country
or for a specific type of practice.
So these ranges vary greatly
depending on many different factors.
Final question number two,
how competitive are the benefits offered?
Most practices will provide medical insurance
usually with your dependence.
A retirement plan.
And even if the practice does not offer a retirement plan
or 401(k) for staff members,
they almost always provide that for the physicians.
Vacation or CME leave.
Most common, I see about three weeks of vacation
plus one week of CME each year.
On occasion, it might be a week more or a week last
but this is probably the average.
CME allowance is usually about 3,000 to 3,500.
And that covers your registration travel and lodging
when you are attending one of the major meetings
or other local meetings during the year.
Relocation moving expense and assigning bonus.
Those two things
are sometimes being combined from practices.
They're offering kind of a relocation moving expense
and signing bonus all in one lump sum.
On occasion, this will be offered upfront.
As soon as you sign that contract,
you might receive all of that signing bonus
or maybe 50% in that signing bonus
and the other 50% you would get on your first day of work.
So when that's being lumped together,
I'm seeing ranges of anywhere about $10,000
all the way up to $50,000.
Probably the median or the average is around 15 to $25,000.
And then finally,
expenses required to fulfill the term of contract
are normally paid in addition by the practice.
So this could be all of those other things
like a DEA registration, hospital dues, cell phones,
malpractice insurance, society dues,
and mileage between the offices as well.
Of course, all of these things are negotiable
but these are the things that are most common.
Vital question number three,
how equitable is the allocation of duties?
As the newbie in the practice,
don't assume that you're going to have
all the same allocation of duties as the other physicians
who have been there for 15, 20 years.
Call schedules. There is a chance
that you might have different call schedules
than some of the other physicians.
Clinic locations. Are you spending more time
at the location furthest from your home
or furthest from the main office?
Will you be spending more time at the satellite offices
and having evening and weekend hours as well?
Really important questions to ask in advance.
And then patient types.
Are you going to be expected
to see certain patient types by payer?
Maybe you're only seeing the Medicaid patients or by case.
Make sure you know where your patients are coming from.
This is probably one of the most important questions
before you start with the practice.
If a physician is about to retire
and you're just walking into their shoes,
you're going to have an influx of patients
and a full schedule from day one.
However, some practices might expect you
to go out and market yourself as well.
So make sure that you really understand
where your patients are coming from.
All of these things, these allocation of duties
may not be in black and white in the contract,
so it's important to ask these questions in advance
just in case they are not outlined in the contract.
Vital question number four.
Who owns the patients? The practice or the physician?
You are correct, it's the practice who owns the patients.
Which is why a restrictive covenant
is almost always included in an employment agreement.
This is also known as a non-compete clause.
Most non-compete clauses run for about 24 months
after the termination of a physician,
but it could go up to 60 months.
The distance is usually about five to 10 miles
from the satellite offices in an urban or suburban setting,
but it could go up to 50 miles in a rural setting.
So it's really important to understand
what your longterm career goals are
in case you have any thoughts of working
for other practices in the immediate area.
I did recently work with a young ophthalmologist
who had a restrictive covenant in a contract
she was about to sign
that was 10 miles from the satellite offices.
Unfortunately, she was very, very interested
in working with teaching institutions at some point
and those were located about eight miles away
from the satellite offices.
She was able to have that negotiated down to eight miles
so that she still left that door open to work in academia
at some point in her career.
So yes, you can negotiate on a non-compete,
but expect that the practice may not budge at all.
Vital question number five.
What is tail insurance and who pays for the tail insurance?
Tail premium extends the coverage
for claims filed after the policy period has ended.
Payment is made in a lump sum,
so just one lump sum upon termination of the physician
and provides coverage for all claims
that may arise during the period
in which the doctor was employed by the practice.
The cost will depend
upon the length of time you've been insured,
your retroactive date, and your coverage history.
Usually, the tail costs will be approximately 185%
of the base annual premium,
in fact, at the time of termination.
Usually the tail insurance is reasonable,
around 8,000 to $15,000 in most locations.
But tail insurance could be in excess of $20,000
depending on the location.
And that's usually in places like New York City or in Miami.
Now, if you join another practice
with the same malpractice insurance from OMIC,
the tail premium is waived.
Because the majority of ophthalmologists
are covered by OMIC Malpractice Insurance,
there is a good chance that you might be joining a practice
or transferring to another practice that has OMIC Insurance
where there would not be a tail premium.
Most contracts require the terminating doctor to pay.
However, it is a negotiable issue.
And in some cases,
the practice will pay the full payment
of malpractice tail insurance.
And in other cases, you might be able to negotiate
and have the practice pay 50%,
and you pay 50% upon your termination.
But of course,
this is something that needs to be determined in advance
and placed in that employment agreement.
Vital question number six.
How might I qualify for future ownership in the practice?
As a young ophthalmologist,
this question might be extremely important to you.
So it's important to understand how buy-ins work
within the practice that you want to join.
Usually it's based on the number of years
with the practice or productivity.
The most common requirement I see is two years
or a million dollars in net collections.
Of course, this might vary by practice as well.
It's normally not part of a contract,
but a written summary helps to reduce misunderstandings.
For practices who have not had a physician
buy-in to partnership in 10, 15, 20 years,
they might have a hard time giving you a summary
of what it means to buy into the practice.
For other practices that have recently hired a new doctor
and that doctor is maybe in the process of buying in
to the future ownership of the practice,
they will have a lot more details to provide to you.
So make sure that you ask some of these key questions.
When will I be eligible?
What percentage will I be offered?
Is it a 50-50 ownership
or are you going to get a minority ownership
of the practice?
How will pricing be determined?
What payment terms will be offered?
How will income be distributed among owners?
And how are ownership interests redeemed?
These are all important questions to ask.
You might not get all the answers that you're looking for,
but this will give you a pretty good idea
of how easy it's going to be
to buy into the partnership in the practice.
Make sure you rely on your sixth sense
to judge the opportunity.
Intuition is truly a valuable ally.
If you are interviewing with a practice
or considering joining a practice
where you have not been allowed
to meet the other physicians within the practice,
that might be a concern. It might be a red flag.
If you are joining a practice
where there are two practice owners
and you have not met with them together in the same room
or they don't speak highly of each other,
that also might be a red flag.
So make sure that you really listen to that sixth sense,
decision should be made more rationally than emotionally,
but any indications of problems
should be resolved immediately and not ignored.
Some final thoughts.
Demonstrate respect and appreciation for the opportunity.
Make sure you thank the administrator
or the managing partner for the job offer
in the first place.
And focus your attention on the main aspects of the deal.
What are your priorities?
What do you really need in this contract?
Make sure you focus on those details of the contract.
Ask questions to clarify.
It's important to really fully understand
what you're walking into,
but also when you ask questions to clarify,
it also is a good start to any negotiations
because it also indicates to the practice
that you may want something a little bit different
than what they have offered.
Review and analyze the contract thoroughly
and choose just one to three aspects to negotiate.
If you are wanting to negotiate
on every single little detail in the contract,
it might not be the right offer or job opportunity for you.
So make sure you really focus
on just those one to three aspects
that are most important to you.
Show flexibility and a willingness to do whatever it takes
to help the practice.
So when they ask for the contract to be signed,
sealed and delivered by a certain date,
make sure that you respond to them by that certain date
with the signed contract or at least with questions by then.
And make sure you also provide them
with all the information that they need
to get you fully credentialed before your first day of work.
And utilize those available resources
that are out there to help support your negotiations.
The American Academy of Ophthalmology
has tons of great information and resources
on their website.
So when you want to negotiate anything with a compensation
or with the benefits,
make sure you are utilizing resources
to help support those negotiations.
And make sure above all, enjoy the process
and you will make the right decision for you.
Again, congratulations,
and I wish you many years of success in your new career.
Thank you for listening.
And if you have any questions,
please do not hesitate to contact me.
Have a wonderful day.