FEATURE ›› ASSESSING YOUR FIRST JOB OFFERS

ASSESSING Your First Job Offers

Key points to consider before you sign on the dotted line.

BY DESIREE IFFT, CONTRIBUTING EDITOR

It would be nice if interpreting the legalese in the job offers you’re about to receive came as naturally to you as reading an OCT. But considering you just spent the past umpteen years studying to be a doctor, not a lawyer or business owner, it doesn’t. That’s still no excuse to sign a contract you don’t understand, which could cause you serious trouble down the road. Here are some insights from leading ophthalmic business consultants about the key elements of employment contracts for new retina specialists.

COMPENSATION

As Bill Rabourn sees it from his national perspective as founder and managing principal of Medical Consulting Group, retina specialists are in high demand. That bodes well for the salary numbers you’re likely to see in the employment contracts presented to you. “If you do some research, you should be able to get a good idea of your value and also how salaries differ regionally,” Rabourn says. He notes that there isn’t one central source for reliable salary data, but you can make use of a variety of sources, including state or national professional societies, other ophthalmic/medical organizations that conduct research in this area, mentors or other contacts, and friends who entered the work force before you.

New Retinal Physician also checked in with the Medical Group Management Association (MGMA), to see where its research places current starting salaries for retina specialists. According to MGMA’s most recent Physician Placement Starting Salary Survey, the median guaranteed starting salary for ophthalmologists, whether they’re first year out of fellowship/residency or established doctors starting in a new practice, is $225,000. (For more information, visit mgma.com/store) The American Medical Group Association’s (AMGA) latest Medical Group Compensation and Financial Survey puts the median salary for an ophthalmic surgeon just starting out at $250,000. The MGMA and AMGA did not report starting salary information specific to retina specialists in their survey results, but Richard Koval, principal and senior consultant with BSM Consulting, says it typically is in the range of $175,000 to $350,000. “The higher end is what you would tend to see in offers from retina-only practices, in particular if they don’t offer incentive pay based on production in addition to base salary,” he explains. “In the past, retina-only practices had been less likely than comprehensive ophthalmology practices to include incentive-based compensation, although the vast majority do so now.”

BENEFITS

Your employment contract should also specify what benefits your employer will provide. “Most practices offer a $5,000-$10,000 relocation allowance, approximately 3 weeks of vacation, about a week’s worth of time off for CME and somewhere around $3,000 annually for CME expenses such as transportation, lodging, meals and conference registration fees,” Koval says. “Some contracts state that you’ll be paid for mileage for travel between facilities, but due to IRS regulations that doesn’t include travel to and from your home. In other words, you may get reimbursed for driving from the office to the hospital and vice versa, but not from the hospital to home.”

Koval also points out that almost all practices offer paid health insurance, which may or may not include dependent coverage. Koval also finds that some but not all practices provide a retirement plan contribution. You likely won’t see a mention of sick leave in a job offer, he says, mainly because “doctors tend not to use it.” He advises female physicians who plan to have children to ensure their contract has at least a 90-day disability provision because maternity leave is generally considered short-term disability/unpaid leave. In addition, he says, “It would be unusual for a practice not to cover the costs involved in fulfilling the contract, such as DEA registration, professional licensing fees, dues for the hospitals or ASCs you’d be operating in, and professional society dues.”

MALPRACTICE INSURANCE

Most practices hiring you as their new associate will pay your malpractice insurance premiums. If they don’t, Rabourn says, it may be cause for concern, although they may make up for that by paying a higher salary or using a more attractive incentive compensation formula.

Koval recommends paying special attention to whether your contract says your employer will also pay for an extended reporting endorsement, which is known as tail coverage. Tail coverage ensures that you have continuous malpractice insurance coverage for events that occur during the employment period even if you leave a practice or otherwise switch insurance carriers. It also comes into play because most practices have “claims-made” policies, which only cover liabilities if the event and the filing of a claim both fall within the same policy period. Say, for example, the practice’s policy period is January-December 2014. If Mrs. Jones suffers a complication in February 2014 but doesn’t file a lawsuit until January 2015, the doctor she’s suing wouldn’t be covered unless he/she or the practice purchases tail coverage. “This is an important contract issue because if the practice hiring you intends that you should be responsible for purchasing tail coverage, the cost to you could reach into five figures,” Koval explains. “I recommend that the tail premium be shared between the practice and its physician employees. However, you can make the argument that the practice should pay all of it, and some do.”

RESTRICTIVE COVENANT

In the most general sense, a restrictive covenant is wording in a contract that requires one party to do — or refrain from doing — certain things. In the context of your retina specialist employment contract, the restrictive covenant is the practice’s way of protecting itself from your leaving and opening a practice with which it would directly compete. “Restrictive covenants are typically defined on the basis of protecting a specific geographic area for a defined period,” Koval says. “The prohibited timeframe is often 1 to 3 years, and by law, the extent of the restricted area must be reasonable. The restricted area is normally a function of the patient service area, which means it may be larger for a retina practice than for a comprehensive ophthalmology practice.”

He also notes that restrictive covenants are based on state law, so what is permissible can be different in each state. In Massachusetts, the covenants aren’t enforceable at all for doctors; in California, they’re enforceable against employed doctors, but not necessarily physician practice owners. In Texas, Colorado and other states, a doctor can’t be prohibited from practicing competitively, but a practice may be able to demand damages in return. “Most states will enforce a covenant, so if you sign one, be prepared to abide by it,” Koval says. “Exceptions do occur. For example, there have been instances in which a court has decided a practice acted in bad faith, or the covenant is excessive, so it’s redrawn or thrown out. A court may also make a public policy decision, ruling that the need for a vitreoretinal surgeon in a certain area is of greater importance than enforcing the covenant. However, regardless of whether a contract’s covenant language seems unreasonable, it’s unwise to sign any agreement in hopes that a court will later rescue you from those terms.”

FUTURE CO-OWNERSHIP

Whether you eventually buy into a practice and become a partner is based on mutual agreement between you and the practice owners. They aren’t obligated to offer and you aren’t obligated to accept a co-ownership offer, so you may not see details about any such plan in your employment contract. You may see a phrase indicating the practice’s intent to proceed in that direction along with an indication that terms would be developed later. “When I’m advising young doctors on this point, I tell them the absence of details about eventual partnership in the contract doesn’t necessarily mean the position is a bad opportunity,” Koval says. “Practices bringing in their first associate may not have enough experience to craft this part of the contract up front. However, that entails more of a risk that you could end up with an unviable buy-in proposal that would force you to move elsewhere.” To remedy this situation, Koval recommends asking the practice for a letter or memorandum that covers these six issues:

›› 1. What is the timeframe to co-ownership?
Often, it’s 1-3 years.

›› 2. What is the percentage of co-ownership offered?
It’s usually equal among all the partners, but there can be exceptions.

›› 3. How will your price for the share be computed?
You’re not looking for a dollar amount here, but how they will establish the price

›› 4. What are the payment terms?
Terms are usually structured by the practice; rarely would you have to get a loan.

›› 5. How is income to be allocated among co-owners?

›› 6. How are co-ownership interests redeemed?
This pertains to how you would be bought out and what your obligation would be to others when they are ready to be bought out.

NEGOTIATE PROFESSIONALLY

Any part of a job offer you receive is negotiable, Rabourn says, but he also suggests your main goal should be that the contract you sign is a win-win for you and your employer. “You could barter your way to another hundred grand or make other demands, but you need to ask yourself whether you’re in this for the long term,” he says. “Ideally you are, and you’ll want to pursue partnership, so the last thing you want to do is give the impression that it’s all about you and not the group.”

Koval agrees, and recommends not giving potential employers a laundry list of contract items you want them to change. “In the majority of cases I’ve handled, practices are amenable to some changes,” he says. “I’ve only seen two instances over many years when a practice withdrew an offer because of feedback from the candidate. That said, focus the practice’s attention on important items. Some things just don’t rise to the level of requiring revision. Asking for too many changes may ‘paint’ you as compulsive or nitpicky, and creates a chance that the practice will change less important items while ignoring more important ones.”

Communication with the practice you’re considering is important, too, Koval adds. “If you haven’t heard anything in the week or two since your visit or phone conference, go ahead and call to reiterate your interest and ask if you can provide any further information,” he continues. “Sometimes a kind of ‘game of chicken’ goes on where the candidate thinks the practice must not like him or her, while the practice thinks the candidate must no longer be interested in the position. Frequently neither is the case, and the lack of communication is counterproductive for everyone.” Asking your practice liaison questions you may have about your job offer directly, rather than having a lawyer or consultant ask for you, can be beneficial as well. “This helps to show the practice you’re engaged in the process,” Koval says. “Also, they may be more likely to make a change if the manner in which they’re approached doesn’t feel adversarial.”

MAKE AN INFORMED DECISION

Of course, in order to ask questions about your contract, you have to acquire at least some understanding of it, which brings Koval and Rabourn to these important pieces of advice for job-hunting residents and fellows. Make an informed decision about whether to sign the contract. Educate yourself on the terminology and what’s currently standard in employment agreements for new retina specialists. Use a variety of resources, the ones mentioned above and others, such as sitting in on seminars on this topic — even if they’re designed for practices. Get clarification about everything you don’t understand. Ultimately, even if you hire a lawyer or consultant to walk you through the process, it has to be you that’s understanding and agreeing to the terms. NRP

QUICK TIP

Asking your practice liaison questions you may have about your job offer directly, rather than having a lawyer or consultant ask for you, can be beneficial.