We realize that most of you won’t start out solo. Ho Sun did it straight out of training; I worked two jobs before I went solo. So this post is to assist those of you who desire to evaluate employment opportunities. Pay special attention to the restrictive covenant (especially if you might want to stay in the area) and who pays the malpractice tail. Your fit with the group determines your happiness, not how much you get paid; while you want to make sure you are reasonably compensated with room for growth, I would advise against selecting a job solely because it pays the highest.
There’s no such thing as the perfect job. Even being in solo practice isn’t the perfect job, although I’d take it any day over joining a group. So don’t expect to be able to positively answer each and every questions below, but make sure you can live with the job. But there is a reason why 80% of ophthalmologists leave their first job out of training within several years!
The larger the group, the less likely they are to negotiate. But a complete lack of willingness to negotiate says something about the group. Here are some things to consider. Keep in mind it may not be polite to ask each and every single question listed below directly to the owner, but there are ways you can discreetly get the answers from other doctors, previous associates, pharm and equipment reps (although reps might be biased towards heavy users of their products) etc.:
Location: most important. Will you be happy living here, is there room for growth or a saturated area? Even if it’s saturated, a good doctor is a good doctor and will be able to thrive, regardless of whether they are solo or in a group.
Personality match: is this the type of practice that you are expected to see 50 patients a day with two weeks of vacation per year or only 15-20 with five weeks of vacation and Friday afternoons off? How many patients do they see every day? What are their typical hours? If all of them are there until 7 PM and take only one week of vacation every year I wouldn’t want to work there for lifestyle- but you might, for earning potential! Is it the type of practice where you go back and forth between four exam lanes and someone is there to turn on and off the lights for you? Or is it a concierge type practice?
Culture of practice: What are the other docs like? Do they get along with each other? How long have the staff been there, do they appear to enjoy working there and be interested and invested in their jobs? Do they order a lot of tests, routinely do surgery on 20/25 patients with minimal complaints, and churn patients just to bill insurance and make a lot of money, or do they practice more conservatively? Do new patients only want to see the senior doctor? If the practice is named the Jones Eye Clinic and you aren’t Dr. Jones nor related to him, is it gonna work out? If the office manager is the senior doctor’s spouse or brother and half the staff are cousins ask yourself if this is a tenable situation.
Financial efficiency of practice: sound billing practices, with low accounts receivable? Verify patient eligibility and collect patient responsibilities at time of service? Keep in mind that your bonus is based on collections, and you see a patient and are paid zero due to your practice’s poor collections and receivables practices, you are doing work for free! Do they outsource their billing (a flag for inefficiency in my mind) or keep it in house? A 96- 97% collections rate of allowed amounts is the minimal accepted industry standard. If the practice you are employed with collections 96% instead of 99%, and your yearly collections are $700,000 and your bonus 50% of collections, they’re costing you $10,500 out of your pocket per year, or $210,000 over a 20 year career. Overstaffed with disgruntled employees that sit around, who owners aren’t willing to get rid of due to loyalty? What’s the practice overhead? Most group practices are around 45-55%, but many folks in our google group are much lower. Is overhead trending up or down, and what is being done to improve it? Is the practice in a lot of capacitated plans, Medicare Advantage HMOs (more in our blog), or plans with low reimbursement, that the owner wants to dump on you? Medicaid? Is the owner happy with payer mix?
Decision making: who manages the group? For equipment- everything you need or is owner willing to buy? Will your input be taken into account for hiring, firing employees, or expanding practice, etc? I know folks who made $300,000 a year but left due to lack of autonomy…
Division of patients: where will your patients come from? Associate that left, doc that is retiring, or build your own? How will your practice promote you? How do your senior partners feel about sending patients to you? What will the division of new patients be? Is the division of patients based on insurances equitable among everyone in the group? Will you be in “competition” with others in practice or owner for patients and cases? Will you be seeing all the postops and taking all call?
Your skill set: if you are fellowship trained, are the other doctors in the practice fellowship trained or comprehensive? How much of the practice do you expect to devote to your fellowship training vs comprehensive? Are there other doctors in the area that are fellowship trained with the same sub specialty as you? For retina, it will be difficult to generate external referrals from comprehensive ophthalmologists outside of your group if you are joining a practice with comprehensive ophthalmologists (better to join an all retina practice). So if you’re retina, make sure there are enough comprehensive docs in your group (usually ten) to support you. The same could hold true for oculoplastics depending on geography and your practice locale. Most areas have a shortage of glaucoma and neuro- oph so it matters less if you’re trained in one of these.
Surgery: what is the surgical volume? How quickly does the owner expect yours to build up? Where are the surgeries done, at a ASC, hospital or office? All ophthalmology or multi specialty ASC? Is the ASC corporate owned or surgeon owned or mixture? Will there eventually be the potential to buy in? Is the turnover time efficient? Will you get block time or just fit in two cases late in the afternoon when the owner is done with their 18 cases? What type of equipment do they have there? What type of cases are currently done there, if you’re the first oculoplastics surgeon it might be a rude awakening to find that they don’t have many instruments you need. Are there other ASCs in town to choose from? Hint: the ASC staff can often give you the inside scoop about a practice, what associates have worked there before, etc.
Call: how is call divided? Many times call will be pooled with several practices in the community. How big is the pool, how many calls do the doctors receive per night, and how many weeks of call per year? Is there call for a hospital? Is the hospital a level one or two trauma center? If so, are you reimbursed for it, how much? How many calls per night and are you required to perform surgery? Is the hospital well equipped for eye traumas? If taking hospital call are you required to do inpatient consults? Paid for doing them?
Satellite offices: where are they, and is it with or against traffic? How many are there, and how often are you expected to go? To all of them? Do you have to stay overnight or fly? When I worked for the Indian Health Service I flew six times a month and twice stayed at the bottom of the Grand Canyon for a week. Try to get this in the contract if it’s important to spend a certain number of days at the main office.
Your salary and earnings potential: are you being compensated fairly? Typically compensation is a $180-250k base salary for comprehensive, and $200-300k for retina. Usually there is a incentive bonus of 20-35% for collections 2-3X over base salary. Here’s a post about how productive you need to be to reach your bonus. Has the owner calculated what your projected number of patients, collections, and bonus will be? Have the other associates been offered buy ins? Is there a chance of a buy in, who decides and what are the criteria? How is it calculated, is the buy in fair? Heck, if you pay me $2 million you can have my practice tomorrow…
Hint: don’t buy a house until you’re sure you don’t have to move, which usually means you have been offered, negotiated and accepted partnership. And if you can live like a resident for a few years and save the money for retirement or startup funds in case you need to go solo and go without income for a few months, you’ll be light years ahead and have more flexibility in your life. If you can delay gratification a little at the beginning of attending hood, it pays off in multiples later.
Other sources of income: most contracts expect you to devote exclusive efforts to the practice. If the senior partners are involved with outside activities they might let you do so. Are you allowed to have outside sources of income from speaking, consulting, running clinical trials, working with industry? What percent of the outside income goes to the practice? I would say some of it is fair, because these activities detract from generating revenue for the practice.
EHR: does the practice have a EHR? For how long? Easy to use, are they happy with it? Who made the decision to buy it and how? Have they switched EHRs recently? Have they met MIPS (Medicare quality programs, formerly known as meaningful use and PQRS)- if not you may be taking a haircut on your Medicare payments in future years.
Restrictive covenant: if the job isn’t forever can you at least stay in the area? Restrictive covenants are enforceable in most states. Google your state name with “physician restrictive covenant litigation” to see if there is any case law for your state (keep in mind that every situation is different, but how the courts in your state have previously adjudicated is a good indicator). Typically they have to be reasonable (in distance and time). In the Upper East Side of NYC it might be a few blocks, while in a more rural area it might be the entire county. In most suburban areas 5-10 miles is reasonable, but make sure it is compatible with the drawing area of the practice.
In terms of time, six months is reasonable for the employee as that’s how long it takes to start a practice; you should be saving six months worth of living expenses as an emergency fund anyway. One year is pretty typical and I have seen people get around this year opening up two offices, one outside of the covenant area, and a second office as soon as the restrictive covenant expires. More than one year may be excessive, try to negotiate it down.
Sometimes there is a clause for specific liquidated financial damages if you violate the restrictive covenant. Of course whether the covenant is enforceable depends on how much time and money you or your former employer choose to invest in litigation. I have heard of some doctors breaking their restrictive covenant without consequence, and also know of several people involved in litigation. This is why it’s so important to negotiate it upfront.
Additionally, there is typically a non-solicitation clause (of patients, patient lists and employees), as well as a confidentiality clause.
Malpractice insurance: which company is it with? Typically should be $1 million/ $3 million. There are two types, occurrence and claims made. Occurrence covers claims regardless of when they are made, even after employment ends. For claims made, there is a tail that needs to be paid for claims made after employment ends. The tail is typically two years’ premiums ($20,000 as a guestimate for ophthalmologists; I personally know of a general surgeon that paid a $80,000 tail out of their own pocket).
Obviously, if you are fired due to Medicare fraud or illegal drug use, the practice shouldn’t have to pay your tail, but you can try to negotiate it down in the contract based on number of years worked or if you are let go without cause. Even better, if your practice uses a company like OMIC, the insurance might be portable, meaning that if you continue to pay the premiums, you continue to be insured when you switch jobs or start your solo practice.
This post from our blog has more details about malpractice insurance.
Why did the other associates leave? Find out who they are and do digging no matter what. Just because a few associates left doesn’t always mean it’s a red flag. It might not have been the right fit, but if the last four associates left due to the same reason say lack of surgical cases because the senior partners were shifting cataract consults onto their schedule, it’s a red flag. Or if no one has been offered partnership and the compensation is below average compared to overhead it’s a red flag.
Fringe benefits: it’s pretty typical to have $2000-3000 for CME, 3-4 weeks off plus major holidays, health insurance, practice pays for DEA, license, credentialing, and hospital fees. Some practices might pay for cell phone or computer, term life insurance, and retirement plan match (be sure to ask whether there is a retirement plan, and what the investments are; best to have low expense ratio, no load index funds). If disability insurance is offered it should be post tax so if you ever need it paid out it is post tax, and should be portable (most practices won’t offer disability so definitely get your own).
I recently went to my lawyer to discuss my employee contract that I signed 3 years ago. I am in California and I want to open my own practice 5-20 miles away from my current practice. My contract have a non-compete of 50 miles x 1.5 years. I understand that non-competes in California can not be enforced. My concern is that anyway they can sue me. How much a litigation can cost in California? Any recommendations?
Firstly, this should serve a lesson to those in training reading this: negotiate the non compete BEFORE you sign a contract. If the employer is unwilling to negotiate that says something.
Any judge can decide whatever they want based on the evidence and case law. If either party doesn’t agree they can appeal to an appellate court or even the state’s Supreme Court.
I have heard that in CA judges are less likely to enforce overly broad restrictive covenants and it sounds like 50 miles for 1.5 years is overly broad.
The cost of litigation depends on how far it goes. If there’s a quick settlement then the cost may not be as high; if it goes to trial much higher. Some employers won’t fight you so it won’t cost you anything. Others with deeper pockets or a grudge might try to rack up your costs by prolonging the action.