Selected Podcast
Contract Considerations for Physicians
Are you accepting your first position as an employed physician or maybe changing your current practice arrangement? This podcast begins to explores contract considerations for the physician looking to enter into an employment agreement.
Featuring:
Sheila Mints, Esq.
Ms. Mints’ experience in healthcare transactional matters includes shareholder and employment agreements, purchases and sales of medical practices, including ACO and IPO transactions, and practice mergers. Ms. Mints acts as general counsel to many large practices and ambulatory care facilities, assisting with transactional, tax, human resources matters and negotiation with payors and vendors. Ms. Mints also handles governmental and commercial payor investigations and audits into health care billing and coding practices. Ms. Mints has taught numerous classes and seminars on an array of issues related to the business of medicine. Transcription:
Caitlin Whyte (Host): Hello and welcome to the American College of Osteopathic Internists podcast, Docs Off The Clock. Juggling the business of medicine and caring for patients means doctors always seem to be on that clock, Docs Off The Clock features some of today's best voices in healthcare with tips on how to live a better, balanced life. Thanks for stopping by today. The purpose of this podcast is to begin to explore contractual considerations for new physicians entering into their first employment agreement, as well as practicing physicians who might be a little further into their career and looking to change their practice arrangement.
We are joined by Sheila Mints, who is a Chair of the Healthcare and Cannabis Law Practice at Capehart Scatchard. Sheila, what are the basic questions a physician should ask before entering any employment agreement?
Sheila Mints, Esq. (Guest): Depending on whether you're a more experienced physician or a new physician, I think people coming out of a residency or fellowship probably have really no idea of what to ask because unfortunately they don't really teach the business of medicine in medical school or during fellowship. And many of them have enormous amounts of student loans. So, they're really looking at the money. And that is kind of the thing that they're, that they're focused on, where, you know, they should be asking for you know, a lot of other things.
The more experienced physicians, I think have a better idea of what to look for. But they should really be looking for not only the money, but, you know, the restrictive covenants, the workplace culture, if it's a private practice, then what are the opportunities of becoming, you know, a partner in the practice? What would the buyin be? You know, all of those things would be likely discussed with a more senior physician coming into a new private practice.
If they're going into a hospital-based practice, which many of them are at this point, there are just fewer and fewer private practices; then the same issues apply. I think, to be cognizant of the restrictive covenant and the way compensation is calculated. There is not only the compensation calculation, but when you're in a hospital-based practice, typically there, the compensation is based on productivity, which ends up being RVUs, which are relative value units.
But there is not only that, but it's also adjustments. I, what I'm finding in a lot of hospital-based practice contracts are the type of adjustments to salaries for not meeting targets, which are specified. Sometimes the targets are rather loose. So, they can essentially be what the hospital wants them to be. So, I mean, I think when you're going into these types of arrangements, you have to be aware of the fact that, you know, yes, there are, there are benefits to not having to deal with the back office issues and administrative issues that go along with private medical practice; but there are also detriments in terms of, you know, releasing basically all control over the amount of, of autonomy you have over your, the way you practice medicine.
So, I mean, that's, that's kind of a long answer to a short question. So, I think looking at the number of patients, you're going to be expected to see, the number of RVU's you're going to be expected to produce as to whether you're going to be able to see, you know, you're going to be required to see somebody every 10 minutes, you know, it can really affect people's ability to practice good medicine.
And I think that, you know, everybody that I know, all the physicians that I know, want to practice good medicine. So, I think that they have to not just dollars and cents, which obviously are important and the restrictive covenant, also important. But the question is how are you going to feel about what you do every day?
And a lot of that is going to be the culture of, are you on, are you, are you on a hamster wheel, running from room to room constantly, or are you able to spend time with a patient and actually practice good medicine?
Host: And how can the provisions of a contract impact productivity?
Sheila: That basically is just what we were talking about with the, are they going to, if they're on productivity based compensation, which most physicians are, whether they're in a private practice or they're in a hospital-based practice, but especially in a hospital based practice.
Usually with people coming out of fellowship, they kind of understand that there's going to be a learning curve before someone is truly productive and able to treat a large number of, of patients. So, then they, they usually will offer a base salary for a year or for two years. And then after that they will put someone on productivity.
So, that would be what you would look at is how much are you expected to, to provide, how many services are you expected to provide? What is your target for RVU's or for your, the percentage of your collections to be able to then get the kind of compensation that is being contemplated. And that's not always an easy question. And so a lot of times it's a very difficult question.
Host: Moving on. What is it a restrictive covenant and how does it impact future employment options?
Sheila: A restrictive covenant basically is there's several components to it. There's confidentiality. There's non-solicitation. And there's what people really focus on and probably should focus on is the ability of where you can practice medicine if you leave that employment. And that varies wildly from state to state. So, it's usually in New Jersey and New York where I practice most of the time, the restrictive covenant that's, that's pretty well accepted is two years from the termination of the contract and, you know, a 10 mile radius from the office location where you practiced.
So that being said, I wouldn't just go by the 10 mile radius because that can be very, very tricky. If you have a large, you know, supergroup practice, which may be private, but has many, many locations, you have to be very careful to make sure that your restrictive covenant, that 10 mile radius, the geographic restriction is based simply on the location where you practiced as opposed to the location of every single office of that particular practice, which may have, you know, practices in New Jersey.
It's very, it's a small state. It's highly populated, but a very small state. So, it's pretty easy with some of the supergroups to be locked out of work in New Jersey. If you enter into that restrictive covenant, it's not just the, the mileage. It's also, what's the center of the circle. When you're, you know, when you're drawing a circle, you have the middle point, which is where the radius is for those people.
Everybody I'm sure has taken geometry at some point. So where, where is the center of that circle? And if it's every single practice or every single location of that practice, then you, you may have a problem. And also you have to keep in mind if you're a surgeon, for example, and your covenant is also based on just not an office location, but the hospital where you provided services or any of the ambulatory surgical centers where you've provided services, then that also would increase, would have the effect of increasing the radius.
So it can be tricky. Just, you know, a couple of words about the confidentiality is just that you're not going to use their confidential information and give that to another practice. So, I mean, I've never really seen a problem with that. I guess it would depend on the language what's confidential.
Solicitation is a little bit more complex. Usually it's non-solicitation of employees, or current employees and it's also non-solicitation of patients. So, it's really that solicitation comes down to what you might consider. What do you consider to be solicitation? Usually it's direct email, direct telephone calls, you know, letters directly to the patients saying we want you to you know we, you know, I'm leaving. I want you to know, come with us. And depending on the state, it may be that you're not you're precluded from, the practice is now it's precluded from not telling the patients where a new physician is, but that varies on a state by state basis. So, you would need to check with the state that you're in as to whether you can fully like not disclose to a patient, but in New Jersey and New York, if a patient wants to know where the person has gone, the practice is supposed to tell them in theory, and that, you know, maybe something that, that needs to get worked out when somebody terminates their employment.
A lot of times I'll design a script that's going to be used. Now, ideally, is it something that people are going to fight over. Probably not, but under certain circumstances it might be. For example, you know, I was just doing a contract for a client where the restrictive covenant and the solicitation provision of it said that her setting up a website or a social media account for any new practice would be considered to be solicitation of the patients of the practice.
I'm going to fight very strongly with the attorney to, to get that removed because in this day and age, I don't see how she would be able to practice anywhere else. Any other practice that this doctor might go to would necessarily create a website and a social media presence that she is in fact, there. Those kinds of things can get a little bit egregious and you don't want to end up in court over something silly like that. So there's a lot of things to keep an eye on.
Host: Looking at compensation again, what components of the contract can impact pay?
Sheila: Okay. So obviously if it's a straight base salary, then that's pretty simple. It's 200,000, 300,000, whatever it is for the first couple years. But then, then you also want to look at productivity in terms of then there is bonus structure. Which is a little bit different. So, that's usually based on a portion of productivity. That would be a portion of net collections. So, the collections that would come to the practice as a result of the services that the physician has provided. That, you know, after the after the practice would recoup their costs and overhead, that's related to having the physician be there, which is not an inconsiderable expense, the physician would then get a portion of the collections and that incentivizes people to work harder so that they collect more and they see more patients and they, you know, all of those things.
So, and then, you know, the other portion of, you know, as I mentioned before, especially hospital-based practices, you know, you have the RVU component, which we probably should just do another podcast about because that's very, very tricky, but that's relative value units and there's a number that's attached.
There's a number of points basically or units that is attached to every, every action that a physician performs that was created by I think it was created by Medicare, but I think it's now proprietary to the AMA, but anyway, so there's a point system essentially based on what someone might do. And there are expectations for the number of RVUs that someone might provide.
And there's a way to calculate that. And there are different databases and there are different valuation expert companies that determine average RVUs and someone who is going into an employment situation where they're going to have an RVU based compensation would be, you know, very well advised to have their attorney investigate what the level of RVUs that, or the amount of RVUs that are being offered, you know, whether that makes sense and whether that's in line what they should be paid and what there's a dollar amount per RVU. I won't get into it. It's not that long of a presentation. But, they would be well advised to investigate the amount of RVUs, the number of RVUs they're being required to perform and the dollar amount that they're going to be getting for each RVU.
Host: And wrapping up here, what steps should be taken before signing any contracts?
Sheila: Oh, number one, get an experienced healthcare attorney to assist you. I know that people coming out of fellowship have a lot of debt for the most part and you know, every dollar counts, but most healthcare attorneys, at least I know I do, have a kind of a flat fee rate for people coming out of fellowship, because we don't want to kill people. We recognize that they have a lot of debt. I think that, you know, it's so important to have these reviewed by a healthcare attorney because there is just no way that a physician can truly understand all of the nuts and bolts of a contract and what the implications are of entering into that.
It's not just, you know, people get blinded by the money and they say, well, it's going to be, I'm going to be making, you know, $400,000 right out of the box, which is great. I mean, I'm not saying that it's not great, but what's also important is, everything else that goes along with that $400,000. It really is something that people need to do immediately and not go back and look for your brother-in-law's cousin, who is a real estate attorney.
You really need to speak to someone who has experience in, in healthcare, because that's a, it's just critical to your future to, you know, you don't want to find out in two years, then you're not going to be able to to practice anywhere in the location where you work, particularly after you bought a house and you've started raising a family and your kids are in school or, or whatever.
And you know, your, your husband or wife may have employment that they don't want to leave. And then, you know, you decide, oh, well, I'm really gonna, I'm gonna move on now. And then you find out that you really, you really can't. So, you know, that's, you don't ever want to be in that position. and I've talked to a lot of people who have been, so that would be my one piece of advice is get a, a really good, intelligent healthcare attorney who will work with you, number one.
Host: Well, thank you for spending a little time with us today. We look forward to future podcasts where we will continue to explore issues of importance to you. For additional information, please contact the ACOI directly at 1-800-327-5183. That's 1-800-327-5183. Or visit us online at acoi.org. You can also email us at This email address is being protected from spambots. You need JavaScript enabled to view it.. Until next time, be well.
Caitlin Whyte (Host): Hello and welcome to the American College of Osteopathic Internists podcast, Docs Off The Clock. Juggling the business of medicine and caring for patients means doctors always seem to be on that clock, Docs Off The Clock features some of today's best voices in healthcare with tips on how to live a better, balanced life. Thanks for stopping by today. The purpose of this podcast is to begin to explore contractual considerations for new physicians entering into their first employment agreement, as well as practicing physicians who might be a little further into their career and looking to change their practice arrangement.
We are joined by Sheila Mints, who is a Chair of the Healthcare and Cannabis Law Practice at Capehart Scatchard. Sheila, what are the basic questions a physician should ask before entering any employment agreement?
Sheila Mints, Esq. (Guest): Depending on whether you're a more experienced physician or a new physician, I think people coming out of a residency or fellowship probably have really no idea of what to ask because unfortunately they don't really teach the business of medicine in medical school or during fellowship. And many of them have enormous amounts of student loans. So, they're really looking at the money. And that is kind of the thing that they're, that they're focused on, where, you know, they should be asking for you know, a lot of other things.
The more experienced physicians, I think have a better idea of what to look for. But they should really be looking for not only the money, but, you know, the restrictive covenants, the workplace culture, if it's a private practice, then what are the opportunities of becoming, you know, a partner in the practice? What would the buyin be? You know, all of those things would be likely discussed with a more senior physician coming into a new private practice.
If they're going into a hospital-based practice, which many of them are at this point, there are just fewer and fewer private practices; then the same issues apply. I think, to be cognizant of the restrictive covenant and the way compensation is calculated. There is not only the compensation calculation, but when you're in a hospital-based practice, typically there, the compensation is based on productivity, which ends up being RVUs, which are relative value units.
But there is not only that, but it's also adjustments. I, what I'm finding in a lot of hospital-based practice contracts are the type of adjustments to salaries for not meeting targets, which are specified. Sometimes the targets are rather loose. So, they can essentially be what the hospital wants them to be. So, I mean, I think when you're going into these types of arrangements, you have to be aware of the fact that, you know, yes, there are, there are benefits to not having to deal with the back office issues and administrative issues that go along with private medical practice; but there are also detriments in terms of, you know, releasing basically all control over the amount of, of autonomy you have over your, the way you practice medicine.
So, I mean, that's, that's kind of a long answer to a short question. So, I think looking at the number of patients, you're going to be expected to see, the number of RVU's you're going to be expected to produce as to whether you're going to be able to see, you know, you're going to be required to see somebody every 10 minutes, you know, it can really affect people's ability to practice good medicine.
And I think that, you know, everybody that I know, all the physicians that I know, want to practice good medicine. So, I think that they have to not just dollars and cents, which obviously are important and the restrictive covenant, also important. But the question is how are you going to feel about what you do every day?
And a lot of that is going to be the culture of, are you on, are you, are you on a hamster wheel, running from room to room constantly, or are you able to spend time with a patient and actually practice good medicine?
Host: And how can the provisions of a contract impact productivity?
Sheila: That basically is just what we were talking about with the, are they going to, if they're on productivity based compensation, which most physicians are, whether they're in a private practice or they're in a hospital-based practice, but especially in a hospital based practice.
Usually with people coming out of fellowship, they kind of understand that there's going to be a learning curve before someone is truly productive and able to treat a large number of, of patients. So, then they, they usually will offer a base salary for a year or for two years. And then after that they will put someone on productivity.
So, that would be what you would look at is how much are you expected to, to provide, how many services are you expected to provide? What is your target for RVU's or for your, the percentage of your collections to be able to then get the kind of compensation that is being contemplated. And that's not always an easy question. And so a lot of times it's a very difficult question.
Host: Moving on. What is it a restrictive covenant and how does it impact future employment options?
Sheila: A restrictive covenant basically is there's several components to it. There's confidentiality. There's non-solicitation. And there's what people really focus on and probably should focus on is the ability of where you can practice medicine if you leave that employment. And that varies wildly from state to state. So, it's usually in New Jersey and New York where I practice most of the time, the restrictive covenant that's, that's pretty well accepted is two years from the termination of the contract and, you know, a 10 mile radius from the office location where you practiced.
So that being said, I wouldn't just go by the 10 mile radius because that can be very, very tricky. If you have a large, you know, supergroup practice, which may be private, but has many, many locations, you have to be very careful to make sure that your restrictive covenant, that 10 mile radius, the geographic restriction is based simply on the location where you practiced as opposed to the location of every single office of that particular practice, which may have, you know, practices in New Jersey.
It's very, it's a small state. It's highly populated, but a very small state. So, it's pretty easy with some of the supergroups to be locked out of work in New Jersey. If you enter into that restrictive covenant, it's not just the, the mileage. It's also, what's the center of the circle. When you're, you know, when you're drawing a circle, you have the middle point, which is where the radius is for those people.
Everybody I'm sure has taken geometry at some point. So where, where is the center of that circle? And if it's every single practice or every single location of that practice, then you, you may have a problem. And also you have to keep in mind if you're a surgeon, for example, and your covenant is also based on just not an office location, but the hospital where you provided services or any of the ambulatory surgical centers where you've provided services, then that also would increase, would have the effect of increasing the radius.
So it can be tricky. Just, you know, a couple of words about the confidentiality is just that you're not going to use their confidential information and give that to another practice. So, I mean, I've never really seen a problem with that. I guess it would depend on the language what's confidential.
Solicitation is a little bit more complex. Usually it's non-solicitation of employees, or current employees and it's also non-solicitation of patients. So, it's really that solicitation comes down to what you might consider. What do you consider to be solicitation? Usually it's direct email, direct telephone calls, you know, letters directly to the patients saying we want you to you know we, you know, I'm leaving. I want you to know, come with us. And depending on the state, it may be that you're not you're precluded from, the practice is now it's precluded from not telling the patients where a new physician is, but that varies on a state by state basis. So, you would need to check with the state that you're in as to whether you can fully like not disclose to a patient, but in New Jersey and New York, if a patient wants to know where the person has gone, the practice is supposed to tell them in theory, and that, you know, maybe something that, that needs to get worked out when somebody terminates their employment.
A lot of times I'll design a script that's going to be used. Now, ideally, is it something that people are going to fight over. Probably not, but under certain circumstances it might be. For example, you know, I was just doing a contract for a client where the restrictive covenant and the solicitation provision of it said that her setting up a website or a social media account for any new practice would be considered to be solicitation of the patients of the practice.
I'm going to fight very strongly with the attorney to, to get that removed because in this day and age, I don't see how she would be able to practice anywhere else. Any other practice that this doctor might go to would necessarily create a website and a social media presence that she is in fact, there. Those kinds of things can get a little bit egregious and you don't want to end up in court over something silly like that. So there's a lot of things to keep an eye on.
Host: Looking at compensation again, what components of the contract can impact pay?
Sheila: Okay. So obviously if it's a straight base salary, then that's pretty simple. It's 200,000, 300,000, whatever it is for the first couple years. But then, then you also want to look at productivity in terms of then there is bonus structure. Which is a little bit different. So, that's usually based on a portion of productivity. That would be a portion of net collections. So, the collections that would come to the practice as a result of the services that the physician has provided. That, you know, after the after the practice would recoup their costs and overhead, that's related to having the physician be there, which is not an inconsiderable expense, the physician would then get a portion of the collections and that incentivizes people to work harder so that they collect more and they see more patients and they, you know, all of those things.
So, and then, you know, the other portion of, you know, as I mentioned before, especially hospital-based practices, you know, you have the RVU component, which we probably should just do another podcast about because that's very, very tricky, but that's relative value units and there's a number that's attached.
There's a number of points basically or units that is attached to every, every action that a physician performs that was created by I think it was created by Medicare, but I think it's now proprietary to the AMA, but anyway, so there's a point system essentially based on what someone might do. And there are expectations for the number of RVUs that someone might provide.
And there's a way to calculate that. And there are different databases and there are different valuation expert companies that determine average RVUs and someone who is going into an employment situation where they're going to have an RVU based compensation would be, you know, very well advised to have their attorney investigate what the level of RVUs that, or the amount of RVUs that are being offered, you know, whether that makes sense and whether that's in line what they should be paid and what there's a dollar amount per RVU. I won't get into it. It's not that long of a presentation. But, they would be well advised to investigate the amount of RVUs, the number of RVUs they're being required to perform and the dollar amount that they're going to be getting for each RVU.
Host: And wrapping up here, what steps should be taken before signing any contracts?
Sheila: Oh, number one, get an experienced healthcare attorney to assist you. I know that people coming out of fellowship have a lot of debt for the most part and you know, every dollar counts, but most healthcare attorneys, at least I know I do, have a kind of a flat fee rate for people coming out of fellowship, because we don't want to kill people. We recognize that they have a lot of debt. I think that, you know, it's so important to have these reviewed by a healthcare attorney because there is just no way that a physician can truly understand all of the nuts and bolts of a contract and what the implications are of entering into that.
It's not just, you know, people get blinded by the money and they say, well, it's going to be, I'm going to be making, you know, $400,000 right out of the box, which is great. I mean, I'm not saying that it's not great, but what's also important is, everything else that goes along with that $400,000. It really is something that people need to do immediately and not go back and look for your brother-in-law's cousin, who is a real estate attorney.
You really need to speak to someone who has experience in, in healthcare, because that's a, it's just critical to your future to, you know, you don't want to find out in two years, then you're not going to be able to to practice anywhere in the location where you work, particularly after you bought a house and you've started raising a family and your kids are in school or, or whatever.
And you know, your, your husband or wife may have employment that they don't want to leave. And then, you know, you decide, oh, well, I'm really gonna, I'm gonna move on now. And then you find out that you really, you really can't. So, you know, that's, you don't ever want to be in that position. and I've talked to a lot of people who have been, so that would be my one piece of advice is get a, a really good, intelligent healthcare attorney who will work with you, number one.
Host: Well, thank you for spending a little time with us today. We look forward to future podcasts where we will continue to explore issues of importance to you. For additional information, please contact the ACOI directly at 1-800-327-5183. That's 1-800-327-5183. Or visit us online at acoi.org. You can also email us at This email address is being protected from spambots. You need JavaScript enabled to view it.. Until next time, be well.