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Welcome to the latest episode of the Physician Cents Podcast, where we explore complex financial topics tailored specifically for physicians. Whether you're a medical student, resident, fellow, or attending physician, you're going to find valuable insights that can help you increase your financial IQ, further your financial journey, and improve your overall well-being. Hosted by Chad Chubb and Tyler Olson, let’s dive in!
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Imagine this: You're a new physician, fresh out of residency. You're handed a contract and told, "It's standard. Everyone signs it." Seems simple, right? But what if that "standard" contract isn't so standard after all? What if it's leaving money on the table or locking you into terms that could hinder your career?
The truth is, physician contracts are rarely as straightforward as they seem. Understanding the details is crucial for your financial well-being and career satisfaction. Today, we're diving into this topic with Kyle Claussen, CEO of Resolve, who specializes in physician contract review. Let's uncover the myths and realities of physician contracts. Resolve -- Use the code "PhysicianCents10" for 10% off!
Where does this idea of "standard contracts" even come from? Maybe it's from hospitals trying to speed up the hiring process. Or perhaps it's from senior physicians who assume everyone gets the same deal.
The reality is that contracts are rarely truly standard. This is especially true with physician contracts. They can vary a lot between different employers. Even physicians in the same specialty within the same organization might have vastly different agreements.
These seemingly small differences in contract language can have big effects. They impact your income, benefits, and career flexibility. So, don't assume anything.
Here's some common advice given to residents: "Don't waste your money on an attorney to review your residency contract." Is this good advice?
According to Kyle, it usually is. For standard residency contracts, an attorney review isn't usually necessary. Most of the time they are signing off on a one page document. The compensation is usually set and standard.
However, there are exceptions. If you're going to an unaccredited program or a unique fellowship situation, it might be worth getting a second opinion.
Now, let's talk about your first attending contract. New attending physicians are often told by partners or colleagues that their contract is "standard" and unchangeable. This is a dangerous assumption.
The truth is that contracts can and should be adjusted. Don't just accept what you're given.
As a physician, empower yourself. Advocate for your needs. Don't rely solely on the experiences of others. Just because someone else didn't negotiate their contract doesn't mean you shouldn't.
Even if no changes are made, it's essential to understand your contract. Know the risks involved. What happens if there's a terrible non-compete? Do you have tail coverage? You need to be aware of these things, even if you don't negotiate them.
Salary is just the beginning. Many other factors can significantly impact your financial future. Be aware of these overlooked details in your physician contract.
For example, consider the OB/GYN who got hit with an $80,000 bill upon leaving a job. She was completely surprised. Tail coverage can be a massive expense that you need to plan for.
Non-compete clauses can also limit your career mobility and earning potential. Be sure to understand the restrictions before you sign.
A lower starting salary can have a ripple effect. It affects your future earnings and benefits. For example, it impacts your retirement matching and life insurance.
It also affects your disposable income. This is the money you use for investments and other things. It is part of your overall happiness in your career.
New attendings may feel that any increase from a resident's salary is enough. This isn't always the case.
Transparency is key. Know the median salary for your specialty. Negotiate accordingly.
Compensation surveys are important. They provide a starting point and are often used for compliance purposes. Check out the CMS compensation guidelines.
However, experienced negotiators understand the market. They know the true value of a physician's position. The more offers you have, the better you'll understand your worth.
Approach contract negotiations as a business transaction. It is in your best interest to understand this process.
When it comes to contracts, be careful not to be overconfident. There are a lot of moving parts, and you might miss key items.
Use both market data and your personal data when negotiating. It can be valuable to use someone with experience to ensure you are fairly advocated for.
What is tail coverage? It's malpractice insurance that covers you after you leave a job. It's necessary because lawsuits can be filed years after an event occurs.
Many employers have claims-made policies with no tail coverage. This leaves the physician responsible for the cost.
Tail coverage costs can vary a lot by specialty. For example, OB/GYN is often higher due to the longer statute of limitations for potential lawsuits involving children.
Tail coverage can be more important than signing bonuses or salary increases. Be sure to consider this in your negotiations.
There are four main ways to handle tail coverage issues:
When reviewing tail coverage, check the time frame. Make sure it covers the appropriate statute of limitations. For OB/GYN, this may need to be longer due to potential lawsuits involving children.
Also, check the scope. Ensure the coverage includes both office-based and surgical procedures. Some employers may try to limit coverage to only office-based work.
Financial planners can review contracts to extract financial data. They can also assess benefits packages.
However, financial planners should not provide legal advice. They should not overstep into contract negotiation.
Attorneys carry malpractice insurance for a reason. This is to protect them when giving legal advice.
Be cautious of giving legal advice if you are not an attorney. A financial planner can advise on the benefits, such as 401k match, life insurance, and disability insurance.
The most important section depends on your individual priorities. But for most people, compensation is the top concern. See this Bain & Company report for more information.
Your duties and responsibilities are also very important. Make sure the job aligns with your expectations.
Make sure the workload is manageable. It is important to ensure the lifestyle will work for you.
For example, make sure you aren't hired as a hospitalist and then switched to a nocturnist. Lifestyle concerns are a primary reason people change jobs.
Call responsibilities affect your lifestyle. Make sure you are fairly compensated for call.
Consider your workload, schedule, and support. How much support staff will you have?
Take this real story of a physician who was expected to be on call Q3. They only got paid if they performed procedures. In the end, they negotiated a set dollar amount per call shift.
Review call responsibilities. They are a key detail to negotiate.
Non-competes are likely here to stay for the foreseeable future. The FTC ruling has faced legal challenges.
If there is a non-compete in your contract, address it now. Even in states with bans, non-competes are still included in contracts.
Always try to solve termination issues right away.
Imagine an employee who stays simply because they are happy and paid fairly. That’s what we should aim for.
Imagine more people were happy to stay with an employer. They wouldn't need to be locked in by non-competes.
Discrimination is the worst thing to see in physician contracts.
Some examples include a contract labeled as a "female contract" or a "black contract." These are minority situations.
There have also been violations of Stark and Anti-kickback rules. In these cases, you should not sign the contract.
Fully paid maternity leave is one of the best things to see in a physician contract. This is rare to find. This is an action that creates a happy employee long-term.
Consider this story of a client who was offered a contract with a 10% pay cut for 24 months. This was after having or adopting a child.
This is an outrageous thing to include in a contract. You can see how emboldened someone can be in their own bubble.
She didn't take the job.
One could argue that parents are more productive after having kids. They know how to manage their schedule.
They should get a 10% raise instead of a deduction in pay!
Burnout often stems from lifestyle issues. These can be addressed in contract negotiations.
You can negotiate for the specific days you want to work in the contract. Higher compensation can alleviate financial stress and provide more freedom.
The more flexible an employer is, the better chance they will have at keeping employees. If you take care of your people, they won't leave you.
Physician contracts are rarely "standard." They require careful review and negotiation.
Educate yourself, seek expert advice, and advocate for your needs. It's important to take the time to understand and improve your own terms. You can also contact Resolve to get assistance with your contracts.
The best of the best list is a paid sponsorship, but these are professionals/companies that Tyler and Chad collaborate with within their own practices or have been vetted to earn a spot on this list. By supporting our sponsors, it allows Chad & Tyler to dedicate more time to you and the Physician Cents community. If you ever have a question (or not a great experience, which we don’t expect!) about a sponsor, please let us know. We call it the “best of the best” for a reason, and we will maintain that standard for our listeners & viewers.
This information is for general purposes only. This information is not intended to be a substitute for specific professional financial, tax, or legal advice, as individual circumstances vary. Please see a financial professional, CPA, and/or an attorney in regards to your own individual situation.
Wealthkeel’s Advisory Services and Financial Planning offered through Vicus Capital, Inc., a Federally Registered Investment Advisor. WealthKeel LLC, 615 Channelside Drive, Suite 207, Tampa, FL 33602 -- 267.590.9533.
Olson Consulting LLC, Offering Advisory Services and Financial Planning, is a State-Registered Investment Advisor.
A podcast designed specifically for physicians, offering a breakdown of complex financial topics to help you develop your financial IQ, further your financial journey, and improve your well-being. Whether you're a medical student, resident, fellow, or attending physician, you're sure to learn something new that will benefit your journey.
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