Expert Outlines What To Look for, What To Consider When Signing a Contract
By Christina Frangou
By Christina Frangou
This year, about 1,000 new general surgeons are expected to enter the workforce. That’s about 1,000 new contracts that will be signed for the first time.
These contracts can set the course for a surgeon’s career and life outside work. Yet, they often contain major issues and errors, says Scott Ransom, DO, MBA, MPH, FACS, president of the University of North Texas (UNT) Health Science Center, Fort Worth.
“I daresay that half the physicians I deal with blunder through that first contract in a major way with life-altering consequences,” said Dr. Ransom.
Dr. Ransom has spent many years working with young physicians and health care recruiters. In that time, he’s seen many physicians make mistakes by signing contracts that they have not reviewed thoroughly.
Take this example: In 1994, a new OB/GYN joined a practice in a small town in Georgia. The doctor was offered a $300,000 first-year salary with no income guarantee beyond the first year, an impressive salary for a young doctor with significant student loans.
Just one year later, however, the physician realized that the job wasn’t working out and he wanted to leave. He had been recruited with a claims-made malpractice insurance policy, which did not cover any claims made after he left the practice. He sought tail coverage to cover him for any claims that might come up in future. The cost, $125,000, to be paid in cash.
“That wasn’t a very good thing when he was trying to pay off more than $100,000 in school loans,” said Dr. Ransom.
Such errors are not uncommon, according to Dr. Ransom.
Trainees spend years in medical school, residency and fellowship sharpening their clinical skills. But few programs provide the business and management skills needed for things like contract negotiation and setting up a practice.
With recruiting season kicking into high gear over the next few months, General Surgery Newsput together an edited summary of a speech Dr. Ransom made at the 2010 Clinical Congress of the American College of Surgeons, held in Washington, D.C., in which he outlined practical tips for young surgeons looking to enter their first practice.
Knowing the Goals: Key First Step
The first step is to establish your short- and long-term goals. “That’s absolutely critical,” said Dr. Ransom.
That means goals in every aspect of life. How important is research, teaching, location, family? Is it important to you to leave at 4 in the afternoon or walk your kids to school? Do you want to be on the forefront of minimally invasive procedures?
Have an open discussion with your significant other, too, about his or her needs and interests. Family concerns are among the top reasons that physicians leave their practice. A 2006 analysis from the Cejka Search and the American Medical Group Association’s Physician Retention Survey showed that of physicians who voluntarily resigned from their practice, 14% cited spousal issues and another 21% said they wanted to change location, often for family reasons. (The most common reasons for leaving were practice issues, at 44%, and compensation, at 21%.)
Consider, too, the hospital amenities that are important to you. If you’ve trained in robotic surgery, is that something you want to pursue in your own practice? Do you want a dedicated minimally invasive suite?
It’s important to assess your goals for call schedules outside of the 80-hour workweek mentality, said Dr. Ransom. Younger surgeons who sign on with senior partners are often expected to take on extra call shifts, which can help build their own practice. But remember that no mandatory rest periods exist for practicing surgeons after a busy night’s call. And so, surgeons must evaluate their tolerance for night call both in the short and long term.
“Those things might seem obvious if you already practice, but they don’t always seem so clear in the initial part of the recruiting process.”
Know What You’re Getting Into
Surgeons often only look at what they want from an organization. However, ask why a practice wants to hire you. They may be seeking a surgeon who is willing to work extra hours, who will work all holidays. They might want someone who can perform new minimally invasive techniques or someone who won’t rock the boat. Critically evaluate the organization and the surgeons there by looking at things like financial status, long-term goals, employee turnover and patient population. Find out about the quality of the practice, risk management and state licensing issues.
“Who are you joining? This is something that’s absolutely critical to ask. Is this the best practice in town or the worst practice in town? Is there a huge malpractice risk component to that practice? That’s something you can look up easily online and certainly ask.”
The best sources of reputational information are often residents, the operating room staff and office/hospital staff. “These are all folks who could give you some pretty good insight as to the reputation of a surgeon or a surgeon’s group in practice.
“You yourself might have the greatest reputation in residency, but if you join the wrong practice, your reputation might be ruined permanently and you might be overlooked for that next new job.”
Contract Considerations
When you decide that a practice is the right fit, only sign a contract that is reviewed by a lawyer who specializes in physician agreements.
Contracts should outline precisely what your responsibilities will be and what the organization’s responsibilities will be. Issues and expectations like malpractice, vacation, continuing medical education (CME), travel and professional expenses, plus call coverage and pregnancy leave should be dealt with up front and included in the agreement. Confirm whether there is financial support for licensure, CME and professional dues. And, importantly, every contract should clearly define the salary, including potential bonuses and targets. Ideally, the contract will also outline or incorporate the organization’s process for becoming an equity partner in the practice.
Most contracts will include a restrictive covenant, one of the most frequent sources of frustration for physicians who desire to leave a practice, said Dr. Ransom. A restrictive covenant is a contractual provision between a physician and his or her employer, that prevents the physician from practicing in his or her specialty in a specified geographic area for a given time after a physician’s employment terminates. These clauses help the practice shield its existing patient base and protect employers’ investment in a new physician employee. According to the American Medical Association, most practices use a mileage radius that covers 80% of the patient practice base as the scope of its geographic restriction.
“Know your restrictive covenant and look practically at how it might impact you if the practice situation does not work out as expected,” advised Dr. Ransom.
UNT Health Science Center employs about 250 clinical providers and its restrictive covenant covers five miles from any practice site in the network.
“That sounds like a pretty limited distance until you realize that we have 30 practice sites. That represents almost the entire county. Our contract stipulates you can’t practice for a year in the area without paying the contractually outlined costs equating to the up-front practice expenses for starting the new physician’s practice until the group has had an opportunity to recoup these costs. That’s protecting our interests while recruiting new physicians.”
Approach the contract as if you will leave the practice in two or three years, Dr. Ransom suggested. Studies show that 44% to 70% of new physicians and new surgeons will move from their first practice within three years. Issues that seem minor in the beginning, like a restrictive covenant or malpractice coverage that does not include a tail, can make leaving very difficult.
Keep that in mind, too, when buying a house. It’s best to wait for a year or two before making a major home investment, particularly with the ongoing slump in the housing market.
“If you buy a big house right away, you could be stuck for a long time,” he said. Instead, look for an adequate house or apartment to rent for the first year.
And as soon as the contract is signed, apply for state licensure and hospital privileges. “These things can take up to six months or even a year.”
Ultimately, he said, you’ve worked very hard to earn the privilege of being considered for all of these practice opportunities.
“There are a lot of great opportunities out there. Look at the big picture and make sure that you identify the right practice for you.”
SOURCE: http://www.generalsurgerynews.comThese contracts can set the course for a surgeon’s career and life outside work. Yet, they often contain major issues and errors, says Scott Ransom, DO, MBA, MPH, FACS, president of the University of North Texas (UNT) Health Science Center, Fort Worth.
“I daresay that half the physicians I deal with blunder through that first contract in a major way with life-altering consequences,” said Dr. Ransom.
Dr. Ransom has spent many years working with young physicians and health care recruiters. In that time, he’s seen many physicians make mistakes by signing contracts that they have not reviewed thoroughly.
Take this example: In 1994, a new OB/GYN joined a practice in a small town in Georgia. The doctor was offered a $300,000 first-year salary with no income guarantee beyond the first year, an impressive salary for a young doctor with significant student loans.
Just one year later, however, the physician realized that the job wasn’t working out and he wanted to leave. He had been recruited with a claims-made malpractice insurance policy, which did not cover any claims made after he left the practice. He sought tail coverage to cover him for any claims that might come up in future. The cost, $125,000, to be paid in cash.
“That wasn’t a very good thing when he was trying to pay off more than $100,000 in school loans,” said Dr. Ransom.
Such errors are not uncommon, according to Dr. Ransom.
Trainees spend years in medical school, residency and fellowship sharpening their clinical skills. But few programs provide the business and management skills needed for things like contract negotiation and setting up a practice.
With recruiting season kicking into high gear over the next few months, General Surgery Newsput together an edited summary of a speech Dr. Ransom made at the 2010 Clinical Congress of the American College of Surgeons, held in Washington, D.C., in which he outlined practical tips for young surgeons looking to enter their first practice.
Knowing the Goals: Key First Step
The first step is to establish your short- and long-term goals. “That’s absolutely critical,” said Dr. Ransom.
That means goals in every aspect of life. How important is research, teaching, location, family? Is it important to you to leave at 4 in the afternoon or walk your kids to school? Do you want to be on the forefront of minimally invasive procedures?
Have an open discussion with your significant other, too, about his or her needs and interests. Family concerns are among the top reasons that physicians leave their practice. A 2006 analysis from the Cejka Search and the American Medical Group Association’s Physician Retention Survey showed that of physicians who voluntarily resigned from their practice, 14% cited spousal issues and another 21% said they wanted to change location, often for family reasons. (The most common reasons for leaving were practice issues, at 44%, and compensation, at 21%.)
Consider, too, the hospital amenities that are important to you. If you’ve trained in robotic surgery, is that something you want to pursue in your own practice? Do you want a dedicated minimally invasive suite?
It’s important to assess your goals for call schedules outside of the 80-hour workweek mentality, said Dr. Ransom. Younger surgeons who sign on with senior partners are often expected to take on extra call shifts, which can help build their own practice. But remember that no mandatory rest periods exist for practicing surgeons after a busy night’s call. And so, surgeons must evaluate their tolerance for night call both in the short and long term.
“Those things might seem obvious if you already practice, but they don’t always seem so clear in the initial part of the recruiting process.”
Know What You’re Getting Into
Surgeons often only look at what they want from an organization. However, ask why a practice wants to hire you. They may be seeking a surgeon who is willing to work extra hours, who will work all holidays. They might want someone who can perform new minimally invasive techniques or someone who won’t rock the boat. Critically evaluate the organization and the surgeons there by looking at things like financial status, long-term goals, employee turnover and patient population. Find out about the quality of the practice, risk management and state licensing issues.
“Who are you joining? This is something that’s absolutely critical to ask. Is this the best practice in town or the worst practice in town? Is there a huge malpractice risk component to that practice? That’s something you can look up easily online and certainly ask.”
The best sources of reputational information are often residents, the operating room staff and office/hospital staff. “These are all folks who could give you some pretty good insight as to the reputation of a surgeon or a surgeon’s group in practice.
“You yourself might have the greatest reputation in residency, but if you join the wrong practice, your reputation might be ruined permanently and you might be overlooked for that next new job.”
Contract Considerations
When you decide that a practice is the right fit, only sign a contract that is reviewed by a lawyer who specializes in physician agreements.
Contracts should outline precisely what your responsibilities will be and what the organization’s responsibilities will be. Issues and expectations like malpractice, vacation, continuing medical education (CME), travel and professional expenses, plus call coverage and pregnancy leave should be dealt with up front and included in the agreement. Confirm whether there is financial support for licensure, CME and professional dues. And, importantly, every contract should clearly define the salary, including potential bonuses and targets. Ideally, the contract will also outline or incorporate the organization’s process for becoming an equity partner in the practice.
Most contracts will include a restrictive covenant, one of the most frequent sources of frustration for physicians who desire to leave a practice, said Dr. Ransom. A restrictive covenant is a contractual provision between a physician and his or her employer, that prevents the physician from practicing in his or her specialty in a specified geographic area for a given time after a physician’s employment terminates. These clauses help the practice shield its existing patient base and protect employers’ investment in a new physician employee. According to the American Medical Association, most practices use a mileage radius that covers 80% of the patient practice base as the scope of its geographic restriction.
“Know your restrictive covenant and look practically at how it might impact you if the practice situation does not work out as expected,” advised Dr. Ransom.
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UNT Health Science Center employs about 250 clinical providers and its restrictive covenant covers five miles from any practice site in the network.
“That sounds like a pretty limited distance until you realize that we have 30 practice sites. That represents almost the entire county. Our contract stipulates you can’t practice for a year in the area without paying the contractually outlined costs equating to the up-front practice expenses for starting the new physician’s practice until the group has had an opportunity to recoup these costs. That’s protecting our interests while recruiting new physicians.”
Approach the contract as if you will leave the practice in two or three years, Dr. Ransom suggested. Studies show that 44% to 70% of new physicians and new surgeons will move from their first practice within three years. Issues that seem minor in the beginning, like a restrictive covenant or malpractice coverage that does not include a tail, can make leaving very difficult.
Keep that in mind, too, when buying a house. It’s best to wait for a year or two before making a major home investment, particularly with the ongoing slump in the housing market.
“If you buy a big house right away, you could be stuck for a long time,” he said. Instead, look for an adequate house or apartment to rent for the first year.
And as soon as the contract is signed, apply for state licensure and hospital privileges. “These things can take up to six months or even a year.”
Ultimately, he said, you’ve worked very hard to earn the privilege of being considered for all of these practice opportunities.
“There are a lot of great opportunities out there. Look at the big picture and make sure that you identify the right practice for you.”
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