What goes into your compensation figure?

Your compensation will vary according to personal and situational factors and nationwide trends. Here’s what you need to know and expect.

By Scott Files | Fall 2016 | Vital Stats

 

In today’s competitive market, physician compensation can vary based on a variety of factors. The Affordable Care Act has created an increased need for physicians in all specialties, but knowing what to expect when it comes to compensation can be difficult. Of course experience affects what you’re worth to an employer, but there are other factors, too, including location and demand. And you have factors to consider beyond salary—signing and performance bonuses will also affect your overall compensation.

Physician compensation in high-demand specialties

Based on a national sample of physician and advanced practitioner searches, Merritt Hawkins’ 2015 Review of Physician and Advanced Practitioner Recruiting Incentives provides an indication of the types of physicians currently in greatest demand, along with the types of medical settings in which they are recruited.

The chart below shows the average compensation package for physicians for that survey’s top four most in-demand physician specialties, not including production bonuses or benefits.

As you can see, compensation ranges vary widely, even within specialties. For example, a family practice physician can expect an annual salary range between $130,000 and $330,000, with an average of $198,000 per year. The upper and lower limits of this model differ by more than 250 percent, further demonstrating that other factors are in play when determining overall compensation.

Other factors that affect compensation

What are those other factors? To varying degrees, all of the following developments have had an impact on the recruiting incentives offered to physicians:

  • Continued expansion of the Affordable Care Act
  • The accelerating closure of rural hospitals
  • The implementation of population health management through integrated organizations, such as accountable care organizations
  • The expansion of telemedicine, with one third of physicians now using some form
  • Increased scope of practice and demand for advanced practitioners, such as PAs and NPs (NPs can now practice independently in more than 20 states.)

The health care system continues to evolve, but whether care is delivered in small, independent and unconnected silos, orin vast, integrated health systems, and regardless of whether volume or value is rewarded, physicians will be the paramount providers of care and drivers of health care economics.

According to the Boston University School of Public Health, physicians receive or direct 87 percent of all personal spending on health care in the current volume-driven system through hospital admissions, test orders, prescriptions, procedures, treatment plans and related activities. The total combined economic output of patient care physicians in the U.S. is $1.6 trillion, and each physician generates a per capita economic output of $2.2 million while supporting approximately 14 jobs, according to the American Medical Association’s 2014 Economic Impact Study.

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Final thoughts

As a practicing physician, you have lots of options regarding your career. Keep in mind that your skills are in high need, and compensation will vary. The key takeaway is to make sure that you are informed on the recruiting incentives that are being offered in the area where you would like to practice.

There is always room for negotiation, and benefits—including longer vacation time and performance bonuses—can also be factors in determining which type of positions are more in line with not only your career aspirations, but also your specific lifestyle.

 

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Decision tools and medical calculators to use at the point of care

These three apps help you make informed decisions about imaging, diagnoses, treatment and more.

By Iltifat Husain, M.D. | Fall 2016 | Tech Notes

 

In this edition of Tech Notes, we’ll cover three great medical apps that can make you into a more efficient physician: MDCalc, Ottawa Rules and SmartIntern Sepsis. Each of these apps is focused on helping health care providers practice evidence-based medicine. In addition to providing a wealth of information, these apps can be used quickly at the point of care. All of these apps are also free to download and use.

MDCalc: Medical Calculators, Scores, and Clinical Decision Support

MDCalc

Price: Free. App Store Link: apple.co/1Lm4Nac Android Link: Currently not available

It’s hard to find a practicing physician who hasn’t been to MDCalc.com. The popular physician-run website is a go-to for finding medical calculators and clinical decision tools. Thanks to a recent release, the website is now available as an app, also called MDCalc.

This app is now a must-have for any physician; it provides access to nearly every type of medical calculator or decision tool. Although popular clinical decision apps such as Medscape, UpToDate and DynaMed also have their own calculators, MDCalc makes the process much easier because it lets you enter data into decision tools with just one click.

What further separates MDCalc from other medical calculator apps is the amount of evidence-based medicine it teaches. Every clinical decision tool within the app has a section dedicated to the evidence behind the actual equation. Some clinical decision calculators within the app—such as Wells’ Criteria—even have direct quotes from the tool’s creators.

The app is currently free, but in the past the developers have mentioned in its App Store description that they may charge for it in the future.

Ways the app could improve. Unfortunately this app is currently unavailable on Android.

Key ways to use the app. You will no longer need to search for decision tools on Google or on the actual MDCalc.com website. The app loads quickly, and you can use its search function to find the clinical decision tool or medical calculator you want. I would also recommend using this app to learn more about clinical decision tools. If you’re a physician new to the iPhone, this is definitely the most important medical app to download.

Ottawa Rules

Ottowa Rules

Price: Free. App Store Link: apple.co/2a3YHKN Android Link: bit.ly/2auaR3L

In medical school every physician gets taught the decision tools related to the Ottawa rules, which include C-spine, knee and ankle rules. Instead of having to look up these clinical decision tools online, you can now access the Ottawa rules from this free app provided by the Ottawa Hospital Research Institute itself.

Though the app can be used simply to access the tools, it’s much more than that. The app also has videos and commentary that provide a wealth of information about the rules. The videos in particular are a great touch because they explain in great detail the nuances behind the rules.

Ways the app could improve. Overall the app is slick, but it would be helpful if it gave you access to the criteria more quickly. Right now it’s faster to use the MDCalc app or another medical calculator’s decision tools at the point of care. The Ottawa Rules app does, however, contain a wealth of valuable information that still makes it a critical download for those who use these tools.

Key way to use the app. At this time the best way to use this app is for educational purposes. The app is free to download. There are some great figures and algorithms included, and the videos, though not flashy, provide contain great content.

SmartIntern Sepsis

SmartIntern Sepsis

Price: Free. App Store Link: apple.co/2anvtIx Android Link: Not available.

Earlier this year a consensus group published changes to the definition of sepsis in the Journal of the American Medical Association (JAMA), calling for a move away from systemic inflammatory response syndrome criteria in favor of the sequential organ failure assessment score. Also known as “Sepsis 3.0,” this is the first set of new guidelines since 2003.

The SmartIntern Sepsis app takes the new sepsis guidelines and puts them into easily understandable formats. It also has built-in calculators. In addition, the app has educational aspects to it, helping health care providers better understand the new guidelines. There is some controversy surrounding the Sepsis 3.0 guidelines, so it would be prudent for health care providers to read the JAMA study in detail.

Ways the app could improve. Though this app isn’t as popular as MDCalc, it, too, is not available for Android devices.

Key ways to use the app. If you are trying to implement the new Sepsis 3.0 guidelines, this app will help you calculate scores and learn the new algorithms. This app is focused on emergency medicine physicians, critical care physicians and hospitalists.

Iltifat Husain, M.D., is the editor-in-chief and founder of iMedicalApps.com, the leading physician publication on digital medicine, and an assistant professor of emergency medicine at Wake Forest University School of Medicine.

 

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How physicians get paid

Before you can evaluate your offers, you need to understand the lingo used.

By Matt Wiggins | Fall 2016 | Financial Fitness

 

“Why is it that so many of us think that compensation is only about numbers?” asked one internal medicine resident recently. I stared, not knowing how to immediately answer. After helping thousands of physicians with their contracts through the years, I should have a great answer. Then it struck me!

My answer: Most doctors are led to believe that their struggles through training are due to a number, their training program salary, and that everything will be solved by a new number, their attending income.

This means that many physicians probably focus on the numbers in their contracts without understanding the legal apparatus around them. After all, won’t it be the attending income number that helps you pay off your debt? Won’t it be the sign-on bonus number that allows you to cover the expenses during your transition into this next (or first) job?

Compensation types

The best place to start is by understanding the different types of compensation.

Sign-On Bonuses. A true sign-on bonus is given to you within a short amount of time after you sign the contract. A commencement bonus is given to you within a short amount of time after starting your work with the new employer. A sign-on bonus is often preferred as it may give you some cash during a period when you may not be earning any money. A commencement bonus is often preferred by employers since they don’t have to pay it until you are actually working. If you find yourself negotiating between the two, you may have to compromise and take half after you sign and half once you start.

Guaranteed Salary. When it comes to physicians and finances, this is one of the all-time favorite word combinations. Think about it: You have the word “salary” preceded by the word “guaranteed.” Both are good words, and both connote “security.” This is simply a number that is guaranteed by the employer to be paid to you over the course of the contract. Once the contract is signed, it typically can’t be altered by performance or changes within the employer for the duration of the contract. As specialization increases, it seems that guaranteed salaries are less prevalent. Family practice and general internal medicine doctors will most likely see this type of compensation while interventional cardiologists and neurosurgeons will most likely see the next type of compensation: productivity-based.

Productivity-Based Salary. This is when compensation gets exciting and scary altogether. If you are or will be working for an employer that pays you based on your production, you may have the ability to make more money than if you were on a guaranteed salary. However, you also have more risk. If your production is higher than expected, you will be compensated for it and earn more than some of your guaranteed-salary counterparts. If your performance lags behind expectations, so will your income. The most common metrics for evaluating performance are net collections and RVUs although other models, such as capitation methods, are also used.

Productivity Bonuses. By now, some of you are probably thinking that productivity-based income sounds scary and complicated and you will be glad to not have to keep up with such a thing. However, even those of you on guaranteed salaries may have bonuses tied to some production metric. These bonuses are similar to the salary formulas above in that you will only be paid a bonus if your production exceeds the expected metric and covers the base guaranteed salary you are being paid.

Traps and Pitfalls to Avoid

Now I’ll share with you some of the frequent compensation traps and pitfalls we find in physician contracts.

Repayment Obligations. Several years ago, a doctor came to us and told us a story that should cause trepidation in every physician. He had signed his first contract out of training and was looking forward to moving back to his hometown and working as an orthopedic surgeon with the only practice in town. His salary was stated as $500,000 a year. He thought it was a fair offer and signed without much analysis. However, during the course of his first year in practice, some unforeseen matters arose, and he was unable to work as much as was expected. He kept getting paid his salary, for which he was very grateful. However, at the end of the year, the practice sent him a notification that he owed them $300,000! His salary had a repayment obligation on it and, at the end of the year, they would pay him or require from him a surplus or shortfall based on his production. He did not have $300,000 in his checking account and had to borrow the money on top of his already burdensome student debt.

This story is not uncommon and applies to salaries, bonuses and other benefits. Anything you receive from the employer could be required to be paid back in part or full if you are unable to satisfy certain terms of your contract. It’s worth noting that this doctor was savvier than most we encounter and still made this mistake.

Not Knowing or Tracking the Metric. One of the necessities of all sporting events is that the score be kept by an impartial observer or equally by a party from each participating person or team. In the case of production-based salaries or bonuses, many doctors allow one team, the employer, to make the point system and keep score without the doctor, or a representative of the doctor (CPA, attorney, etc.), understanding the system or keeping score simultaneously. One of the top reasons physicians leave their current employers is due to unmet expectations. One of the most prevalent unmet expectations is income and comes from physicians not understanding or keeping track of the variable parts of their compensation.

Assuming the Best. We all know what assuming does … and it can be costly when it involves physician compensation. Don’t assume anything when it comes to your compensation. There is much more than just numbers that impact your income. Miss those items, and your bank account may have the right to sue you for financial malpractice.

Matt Wiggins (mwiggins@oncalladvisors.com) is the lead advisor and partner at OnCall Advisors, which helps physicians educate themselves on the non-clinical aspects of their lives. For more information like this on other life in medicine topics, check out their “Attending Life” online video curriculum.

 

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How tight is the job market in your specialty? Fall 2016 issue

The PracticeLink Physician Recruitment Index can help you gauge the relative ease or difficulty of your job search.

Fall 2016 | PracticeLink Physician Recruitment Index

 

What’s your competition like?

For job-seekers of all kinds, it can be hard to know. A simple PracticeLink.com search for opportunities in your specialty will give you an indication of the demand for physicians like you, but without knowing who else is vying for those jobs, it’s hard to get an accurate picture of supply.

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The Most-Challenging-to-Recruit Specialties

How many other candidates in your specialty are actively looking for jobs at the same time? And how does that number correspond to the number of opportunities available?

That’s where the PracticeLink Physician Recruitment Index comes in. The Index is a relative indication of the ease or difficulty of job searches in various specialties based on supply and demand information gathered by the PracticeLink system quarterly. The larger the “Jobs per candidate” number for your specialty, the better your potential standing in the market.

The change in rank reflects the specialty’s movement since last quarter.

The Most-Challenging-to-Recruit Specialties are those specialties with the highest demand-to-supply ratio in the PracticeLink system. The specialties on this list likely won’t come as a surprise to candidates; they’re often narrow fields.

Demand

The Most-In-Demand Specialties

The Most-In-Demand Specialties represent the specialties that have the most jobs overall posted on PracticeLink—specialties for which the demand for physicians is highest. For the Index, we then rank those in‑demand specialties according to the supply. Those at the top represent specialties with the most jobs available and the fewest candidates per job.

After reading these Indexes, ask yourself: Do these Indexes match your experience of searching for a job in your specialty? Do you need to widen or narrow your job-search parameters as a result?

This PracticeLink Physician Recruitment Index was pulled July 6. Candidate ratios include physicians who have registered with PracticeLink.com within the past 24 months.

 

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The who, what and when of contract negotiations

Your first employment contract may look like it’s written in a foreign language. Here’s a guide to help you know what to look for and what to negotiate.

By Jeff Hinds, MHA | Fall 2016 | Job Doctor

 

Most physicians, particularly those finishing training and looking toward their first practices, have had years of medical training but almost no training about how to find a job—and, once they’ve been offered one, how to determine if contract terms are fair. Here’s some advice on what to look for in a contract and what to know as you head into negotiations.

The Parties Involved

The first step to navigate the negotiation process successfully is to understand who will be involved in the process. From the employer’s perspective, the exact title or role of the individual who handles negotiations will vary by organization—it may be an in-house recruiter, practice administrator, CFO, CEO, attorney or someone else entirely. Regardless of the title or role, it goes without saying that the employer will likely be better versed than you when it comes to the contractual terms within their agreement. It is also worth noting that the agreement was written by an attorney to help protect the interests of the employer. There is too much at risk professionally and personally for you not to ensure the same. Because of this, it is highly advisable that physicians also seek outside assistance from an attorney to help with contract review and negotiation. The investment is minimal when compared to the potential ramifications.

The Proper Timing

It is equally important to know when the actual negotiation process begins. Though certain contractual terms may be introduced early in the process, such as during phone interviews or site visits, formal negotiation of terms should occur later in the process after a contract offer has been made. There may be instances in which employers ask for your feedback on particular terms (e.g., compensation), but it is in your best interest simply to collect the information shared by the employer at that point and hold off on all negotiations until an offer is in hand. Otherwise, you run the risk of being too aggressive and losing a potential offer before it has even been made. Waiting until later in the process will also allow you ample time to collect or research market data, gain feedback from peers or advisers on questionable terms, and assess your overall leverage before determining what to negotiate and how aggressive you can actually be in negotiations.

The Negotiable Terms

Knowledge of which contractual items are actually negotiable is paramount heading into the negotiation process. Though most physician contracts nationwide are similar from a structural standpoint, there are some key provisions/terms that vary by organization and affect the overall quality of the offer. Below are examples of some key items that may be negotiable in any given contract. But again, it is highly advisable to obtain a qualified health care contract attorney to fully assess all terms and determine the most appropriate revisions to seek based on your unique situation.

Base Salary. How does the salary offered compare to published salary surveys and benchmarking data both nationally and regionally for the given specialty? What competing offers exist within the immediate area to determine market value and provide leverage?

Pre-Employment Compensation. What are standard signing bonus and relocation reimbursement amounts for the specialty and region? What is standard when it comes to student loan reimbursement and educational stipends?

Productivity Compensation. What are the metrics used to calculate productivity compensation, and are they reasonably attainable based on the market data available? Will a base salary remain in place for the duration of the contract term, or will compensation transition to productivity-only?

Termination Language. What termination with cause and termination without cause provisions exist, and are they adequately defined? Is there a notice and cure period in place that provides the physician with added protection from termination with cause?

Restrictive Covenant. Does the contract possess noncompete language, and are the time and distance restrictions reasonable? Do the restrictions apply to areas surrounding a single location or to areas surrounding multiple locations that are part of the employer’s network?

Professional Liability Insurance. What type of professional liability insurance will be provided—a claims-made or an occurrence policy? And if applicable, will the employer or the physician be responsible for the full (or partial) expense of acquiring tail coverage?

Scrutinizing your contract, even with a lawyer’s assistance, may seem laborious at first, but it’s time well spent. By negotiating contract terms before you sign, you will reap the benefits of a more advantageous agreement for years to come.

Jeff Hinds, MHA, is president at Premier Physician Agency, LLC, a national consulting firm specializing in physician job search and contracts.

 

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Signing a letter of intent

How does a letter of intent differ from an employment contract? We break down what you need to know.

By Kyle Claussen, J.D., LLM | Fall 2016 | Legal Matters

 

A letter of intent (LOI) or “offer letter” outlines the terms of employment in a much simpler format than what will be presented in a contract. The LOI is a preliminary document based on the mutual interest and good faith of both parties. It acts almost as an informal promise between you and your future employer and can be an important mental step toward solidifying an employment agreement. As helpful as an LOI can be in giving you a sense of the terms of your full contract, you do need to scrutinize the components of the LOI before signing. Here are some of the potential pitfalls of signing an LOI without proper review.

Know: What you’re signing

Generally, an LOI will not be legally binding. It references a future employment agreement that will effectuate employment. There are instances, however, in which certain provisions within the LOI can, in fact, be legally binding. These provisions may include that you will negotiate exclusively with this employer for some period of time or that the negotiations will remain confidential. It’s easy to assume that, because the LOI is less formal than the contract, you can just sign it and look at the contract terms more closely later. This can be a critical mistake, however, because it may cost you leverage when you negotiate some of those major employment terms down the road. Do not sign an LOI unless you are certain that key outlined components such as compensation will meet your needs.

Here is an example of an explicit statement included in an LOI that ensures it is not binding:

“The proposed terms of this letter of intent are non-binding and for discussion purposes only. It is the intent of the parties that these terms and conditions may be modified or changed, in whole or in part, pending a binding agreement to be negotiated and executed by the parties. Furthermore, nothing in this section shall be interpreted as obliging any of the parties to enter into any agreement.”

Check: Is your LOI tailored to you?

An LOI or contract may work for one physician and be totally incompatible for another. When looking at an LOI, it may be difficult to determine whether it’s based on a one-size-fits-all contract. Look out for provisions that don’t reflect the actual position or match your scope of practice. Reusing contract and LOI templates is a much more common practice than you may think. You will typically be able to discern how individualized your LOI is by how well the key terms in the letter seem to match your specific situation.

Understand: What’s not included

Remember that an LOI is not a comprehensive list of the terms of your employment. LOIs are typically composed of the highlights of an employment agreement, such as pay, benefits and length of contract. That means terms with a more negative connotation, such as termination provisions, will be saved for the contract.

One of the important terms that may be missing from your LOI is a noncompete agreement. Noncompete clauses, or restrictive covenants, prohibit a physician from practicing within a certain geographic area after leaving a practice. For example, being restricted from practicing within a 60-mile radius for two years may be more reasonable for a neurosurgeon than a family physician.

Another value point that may not be addressed in the LOI is malpractice tail coverage. Malpractice tail coverage is an extended reporting period endorsement, offered by a physician’s current malpractice insurance carrier, allowing you to extend coverage after you leave a practice. If you have a less expensive “claims-made” policy, then either you or your employer must purchase tail coverage upon termination of employment. If you have the more comprehensive “occurrence-based” policy, then you have malpractice coverage for any claim brought against you as long as you had that insurance carrier during the alleged event.

Know: You can still negotiate

As mentioned previously, an LOI generally won’t be binding on major terms. However, some employers will still see the agreement as a promise, and therefore it can be hard to go back and change or negotiate certain provisions later. Some employers feel as though signing an LOI means making a deal, but remember that signing does not obligate you to fulfill any LOI provisions that are not legally binding. Contract negotiation is not just a mere formality after you sign the letter of intent—it is a legitimate chance for you to adjust any part of the contract that doesn’t meet your needs.

The letter of intent is an important step in moving closer to employment. After you have taken a critical look at the LOI, considered potential pitfalls and signed it, try to begin the formal contract review and negotiation process as soon as possible. The LOI plays a central role in building momentum in the hiring process, and you don’t want the process to slow down or take up any more time than necessary.

Kyle Claussen, J.D., LLM is vice president at Resolve Physician Agency, Inc.

 

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Navigating the rapid growth of telemedicine

Telemedicine is a useful way to practice medicine, but physicians need to be aware of legal and regulatory issues regarding licensure, credentialing and malpractice liability.

By Jeff Atkinson | Fall 2016 | Reform Recap

 

Telemedicine is on the rise. From 2013 to 2015, the number of people using telemedicine increased from 10 million per year to 15 million, according to the American Telemedicine Association. More than half of U.S. hospitals use some form of telemedicine, and insurers are adding telemedicine coverage too.

There are multiple definitions of telemedicine (sometimes referred to as telehealth). The Centers for Medicare & Medicaid Services in its Medicaid regulations states:

Telemedicine seeks to improve a patient’s health by permitting two-way, real-time interactive communication between the patient and the physician or practitioner at the distant site. This electronic communication means the use of interactive telecommunications equipment that includes, at a minimum, audio and video equipment.

Cost-effective visits

Telemedicine is viewed as a cost-effective alternative to face-to-face meetings. It can be particularly important for providing care in rural areas and for patients who have mobility problems. Telemedicine may also encompass remote diagnostic services such as interpretation of imaging studies. Telemedicine is not a distinct specialty, but a method of delivering service.

Telemedicine has been found to be useful in many settings and situations, for instance:

  • For geriatric patients, a televisit may eliminate the need for hospitalization or a trip to the emergency room. This is particularly useful for patients in assisted-care facilities or nursing homes.
  • For patients who have access only to small community hospitals and need expertise beyond what those hospitals offer. In some cases, live consultations with physicians in larger hospitals could prevent these patients from needing to be transported to larger hospitals.
  • For patients who prefer the conveniences of being at home—or want access to medical help at late hours and on weekends—telemedicine provides an opportunity for them to consult with health care providers. In some cases, they can even attach medical equipment to their computers or telephones to transmit information to the providers. University of Iowa Health Care offers such a service to residents of the state via computer, tablet or smartphone, and patients pay a flat fee of $50 by credit card.

Variation in state laws

State laws vary considerably when it comes to telemedicine. A 2015 survey by the American Telemedicine Association reports that, regarding licensure and standards, “22 states averaged the highest ‘composite grade,’ suggesting a supportive landscape that accommodates telemedicine adoption and usage.” Twenty-six states and the District of Columbia were rated “in the middle with room for improvement,” and two states were described as having “many barriers for telemedicine and advancement.”

Texas and Alabama are the two states with the highest barriers. Texas’s barriers include a regulation by the state medical board that requires an in-person physical exam before telemedicine can be utilized. This regulation is being challenged under federal antitrust laws. A trial court enjoined enforcement of the regulations, and the state is appealing the decision (Teladoc, Inc. v. Texas Medical Board, 5th Circuit Court of Appeals, appeal docketed Jan. 8, 2016). Critics of the Texas regulation say the regulation stifles competition and interferes with access to care, particularly in remote areas of the state.

States with laws or regulations that are friendlier to telemedicine do not require in-person visits as a precondition to telemedicine services. Laws in some states require insurance companies to pay for telemedicine on the same basis as face-to-face diagnosis and treatment (when telemedicine services are an appropriate standard of care for the issue at hand). Such laws are sometimes referred to as “telemedicine parity laws.”

Medicare and Medicaid will pay for telemedicine services, although in the case of Medicare, payment is often limited to services provided to rural Health Professional Shortage Areas. There are proposals before Congress and regulators to expand the telemedicine services for which government programs will pay.

Information on state laws pertaining to telemedicine can be obtained from the American Telemedicine Association State Policy Resource Center.

Malpractice issues

An aspect of parity relates to medical malpractice issues. A physician who engages in telemedicine in a state outside the state of the physician’s office will be deemed to have submitted him- or herself to the laws of the state in which the service is rendered, according to the American Health Lawyers Association.

Physicians practicing telemedicine out-of-state (or perhaps in a different area within their state) should consult with their malpractice insurance carriers regarding scope of coverage. Insurance rates may be different when practicing in more than one state.

In addition, informed consent from a patient should include discussion, when applicable, of the limitation of telemedicine compared to in-person visits.

Licensing and credentialing

Physicians considering using telemedicine to deliver care also need to be aware of licensing and credentialing issues. Many states require that, in addition to being licensed in the state where his or her office or hospital is located, the physician who delivers diagnosis or treatment via telemedicine must also be licensed in the state where the patient is located. The license may need to be a full license to practice medicine (such as in California), or it may be a limited license for telemedicine only (such as in Louisiana and Minnesota).

A related issue is credentialing. The Joint Commission on Accreditation of Health Care Organizations (JCAHO) allows, in some circumstances, an institution to rely on the accrediting process of the telemedicine provider if the provider’s institution is accredited by the JCAHO.

Communications technology has enhanced many aspects of life—health care included. In the decades to come, we can expect to see a continuation in the rapid growth of telemedicine.

Jeff Atkinson teaches health care law at DePaul University College of Law in Chicago.

 

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PracticeLink is a physician’s career resource

Wondering how PracticeLink can help you? Our physician relations manager explains what PracticeLink offers to job-seeking physicians.

By Brian Brown | Fall 2016 | PracticeLink Tips | Uncategorized

 

For more than 15 years, PracticeLink’s physician relations team has worked closely with physicians as they search for their first or next practice. Our physician-centered team is trained to help you navigate the job-search process and be a trusted lifelong career resource. More than 5,000 facilities representing more than 28,000 opportunities nationwide post their jobs on PracticeLink.com. We are proud to be the most widely used physician recruitment resource in the industry!

The in-house recruiters who post jobs on PracticeLink pay to post their opportunities, so PracticeLink is always free for physicians to use and enables you to connect directly with the employer. We are not third-party recruiters; we put you in direct contact with the employer or hiring organization.

What does PracticeLink do?

PracticeLink.com lets you easily search for a new practice by specialty, profession, geography, keyword and more. It is an easy, fast and free way to search and apply for jobs that interest you.

More than 80,000 residents, fellows and practicing physicians also receive PracticeLink Magazine, which features quarterly themed content that coincides with your job-search needs: Contracts & Compensation, Quality of Life, Job Search and Interview.

PracticeLink also hosts physician job fairs. At each event, we provide an educational seminar based on our 10-step timeline, “When to Do What in Your Job Search.” Find our upcoming job fairs at PracticeLink.com/JobFair.

Connect with us!

Start browsing jobs confidentially on PracticeLink.com, or create a free account for additional benefits, such as applying to jobs with one click; easily creating, saving and sending your CV to recruiters; and receiving alerts when new or updated jobs are posted in your specialty. We look forward to being able to help you manage your job search and find your dream practice!

Contact the team for free job-search help at (800) 776-8383 ext. 2, PhysicianRelations@PracticeLink.com, or PracticeLink.com/Physicians.

 

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The anatomy of a physician contract

Your employment contract can make or break your practice experience. This guide demystifies its terms—teaching you what to consider, what to negotiate and when to get a lawyer.

By Karen Edwards | Fall 2016 | Feature Articles

 

The contract looked good. Great, in fact. Compensation, vacation, even health insurance—all good packages—but before the physician signed on the dotted line, he consulted an attorney, Gary Sastow, J.D., with the New York-based law firm Brown, Gruttadaro, Gaujean & Prato.

Good thing he did.

If the contract had been left as it was, the physician would have been burdened with $160,000 of tail coverage upon leaving the practice. And he would have been responsible for paying all of it.

The biggest problem plaguing physicians when it comes to contracts, according to Sastow, is that they’re concerned primarily with only one part of a contract. “They want to know how much they’ll be paid,” he says. Though compensation is a significant part of any contract, it’s not the only part, and let the physician beware if he or she doesn’t keep the other sections in mind as well.

A rise in physician employment

Vaagn Andikyan, M.D.

Determining what aspects of a job are the most important to you will help you know where to spend the most time and energy in your contract review. For Vaagn Andikyan, M.D., a New York gynecologic oncologist, a non-negotiable restrictive covenant became a deal breaker. · Photo by Shaina Diaz

Let’s face it: These days, most physicians are looking at employment contracts. A recent report from the consulting company Accenture states that only one in three physicians will be in independent practice by the end of 2016. The report also states that the number of physicians in private practice declined from 57 percent in 2000 to 49 percent in 2005, with most of the physicians who left private practice seeking hospital employment instead.

For some time, physicians drove this trend as they sought to escape long hours, risky revenue streams and increasing regulations, but the 2010 health care reform legislation that gave rise to accountable care organizations also gave hospitals and physicians new incentives to work together. That means today’s physician is likely to be an employed physician, and that, in turn, has greatly increased your need to have at least a rudimentary understanding of employment contracts.

Today the average hospital employment contract is between 20 and 30 pages long and has been prepared by the hospital’s attorney, says Sastow. In other words, there’s a lot of confusing legal jargon that could trip you up, and, Sastow adds, the hospital’s attorney will have written the document to the employer’s advantage.

Gregg Bertram, founder of Pacific ADR Consulting, which handles mediation and arbitration disputes for clients, echoes Sastow. “The contract is not a neutral document,” he says. “Don’t assume it’s harmless.”

Evaluating your contract

So when you’re handed an employment contract, how do you proceed?

“Start any contract review by asking yourself first what you want from the contract and from the job. What’s important to you: Is it your schedule? Your track for advancement? Focus on your career goals, the lifestyle you want to create, and then you can better decide what things you want to negotiate,” says Mathew Parker, J.D., of the management-side labor and employment law firm Fisher Phillips.

Hospitalist Vanessa Frost, D.O., says she prepared a top-three list of things she wanted from a job, and that included pro-rating her sign-on bonus over a two-year contract—advice she received from a mentor. “That way, at the end of the second year, you only owe half of the bonus if you decide to leave. You’ve worked off the other half.”

Once you determine your top priorities, your next step is to look over the contract.

“Some people never read the contract they’ve been handed,” says Sastow.

It’s true many hospital contracts are more or less boilerplate documents, especially for new physicians, says Derrick Handwerk, managing partner of Handwerk Multi Family Office, a Philadelphia wealth management consulting company. Still, he says, “it’s a good idea to know what’s in them before you sign on the dotted line.”

Contract anatomy

Most physician employment contracts follow a similar structure, and though you’ll want to pay attention to the whole contract, the following sections are ones that may deserve special scrutiny:

Job Location and Job Description. “Every contract should have in it a list of your job responsibilities and duties,” says Sastow. And the contract should be as specific as possible—not only in your job description, but also in where you will work and what hours you’ll work.

Sastow says he will put in the specific address of the facility or facilities where his client will work—office locations, hospital locations, clinic locations, whatever might apply. That’s because an employer may close an office location, for example, and want to transfer its staff to a satellite clinic in a nearby town—or, if it’s a multiple-state entity, to a location in a different state entirely.

“There is a lot of consolidation going around,” says Bertram. A move, whether it’s 45 minutes away or several hours away, can have a significant impact on not only the physician’s lifestyle but also his or her wallet. “Be alert to these sections,” says Bertram. “If you are signing with a hospital that has multiple locations, it’s important to nail down the locations where you’re expected to work and ask for notice if they do plan to move you.”

Vaagn Andikyan, M.D., a New York gynecologic oncologist, says he looks for work locations in contracts. “It’s important to look at them before you sign, because you could find yourself spread too thin if the hospital or practice has more than one location and expects you to work at all of them,” he says.

The employer still has the option of making that request or transferring physicians, but if the contract lists specific addresses, such moves are likely to trigger new negotiations regarding call hours or commuting expenses, says Sastow.

Besides job location, Parker also suggests paying close attention to the job description itself. “Responsibilities should reflect those within your field of specialty,” he says. If the contract has a broader statement, such as “tasks as assigned,” that’s worth negotiating, he says. Otherwise, you might find yourself performing tasks that may be above—or beneath—your level of training.

These sections may seem boilerplate, but it’s still a good idea to read them and make sure they reflect what you want from the job.

Compensation. Most compensation guidelines these days are set by corporate boards and groups like the Medical Group Management Association, says Handwerk. “The larger the hospital or group, the more likely it is the compensation rate will be standard,” he says.

And, frankly, there isn’t much room for a new physician to negotiate larger increases. “Young physicians don’t have much in the way of negotiating power unless they are in a specialty that’s needed by the employer,” says Sastow—or they are needed in a specific location.

If salaries are set in stone, Handwerk suggests negotiating other benefits. An inflation rider, for example, is a way to keep your salary from deflating as you work. “…Without a regular increase for inflation, doctors can find themselves working for less and less money each year,” he says.

Also remember that compensation isn’t just about salary. It covers benefits such as paid time off, CME reimbursement, health and disability insurance, forgivable loans, 401(k) contributions and maternity/paternity leave.

“Typically, these benefits are part of a hospital’s policies and procedures manual,” says Parker. “It’s important to understand what those policies are, so if there is something you need or want, like paternity leave, and it’s not in the manual, you may be able to negotiate it into the contract.”

Negotiations are more likely to take place if the employer is a smaller hospital or group, says Sastow. “For larger hospitals, these are usually standard policy and not negotiable.”But, as Bertram says, you never know until you try.

Bertram says it’s perfectly legitimate to ask questions of your own. “Ask employers about the financial strength of the institution,” he says.“If a hospital or group has shrinking revenues, that’s something you should know before you sign up.”

Elizabeth Clark Libert DrPareshMane ElizabethClarkPhotography 36

Thoracic surgeon Paresh Mane, M.D., consulted with an attorney on his employment contract, but ultimately handled negotiations with his employer himself.  · Photo by Elizabeth Clark

“Also, ask the hospital about its volume and growth potential,” suggests Paresh Mane, M.D., a Boston thoracic surgeon.

Call Hours. Next to compensation, call hours may be the most important section for physicians. “On-call hours will affect a physician’s career path and lifestyle,” says Parker. As the new hire in the organization, you can usually expect to work the worst hours, but if they are worse than other new hires, Parker suggests opening a dialogue with employers for a better schedule. “Most employers want to be fair,” he says.

But here again, you might want to ask your own questions, says Mane. For example, “Ask what the hospital will do if you work more than a certain number of hours. What will they do if your cases are above that limit?” He also suggests negotiating administrative time into your schedule so you can carve a day out each week for paperwork. As a surgeon, he has also negotiated block time in the operating room.

In other words, propose the hours you want for the lifestyle you want—but be prepared to negotiate. As long as call hours are kept reasonable and fair, that may be the best you can expect.

Termination and Tails. Employers typically provide malpractice insurance while you’re working at their facilities, but what happens when you leave and a patient files a malpractice suit over something you allegedly did? That’s covered by tail insurance, and that part can be tricky, as the example at the beginning of this article shows.

“Who pays the tail coverage and how much they pay may be negotiable,” says Sastow. But that negotiation is likely to depend on why you’re leaving.

If the contract is up—usually after a year—and you’re moving on to another workplace or if you’ve been terminated with cause, you can expect to pay a fair share or all of the tail coverage. However, you might want to negotiate language in your contract that makes the employer responsible for paying some or all of the tail if you’re terminated without cause. “Who pays for tail coverage depends on the reason the relationship is ending,” says Sastow. He adds: “If you’re dismissed without cause, you should negotiate language that says the employer will pay for tail coverage.”

That’s why it’s also important to pay attention to the termination section of contracts.

“The length of a contract can be misleading,” says Bertram. “Generally, contracts are for a one-year renewable term, but it’s not an absolute. You may be terminated without cause with a 30-, 60- or 90-day notice.”

“All contracts have an out clause,” says Cindy Fiorito, director of physician recruitment for Eagle Hospital Physicians in Atlanta. “Our contracts include without-cause language with a 120-day notice,” she says, adding that they will consider other notice lengths.

Generally, termination-without-cause sections are not negotiable, though most attorneys will try to eliminate the language. If left in place, they are what they are, and you need to be aware that they’re there.

Mane says he was able to negotiate the without-cause, 90-day notice termination clause in his contract to a longer term. “If you’ve moved to the area and just started practicing, three months is not enough time to let you find another job and move again,” he says. His negotiated language called for a 180-day notice period. Six months is long enough to find a new job, he says, adding, “It works both ways. If you don’t care for the environment, you don’t want to lock yourself into place either.”

In addition to negotiating a longer notice, you may also negotiate language that says the employer will pay you a certain amount if you’re dismissed without cause. “Or you may want to negotiate the restrictive covenants part of the contract if you plan to stay in the area,” says Jay Levy, J.D., a Florida attorney.

Just be sure, in any termination-with-cause section, that the cause is defined in the contract, says Levy. “There should be a clear understanding of what constitutes cause.” There should also be a “notice of default” in the contract, he continues. That means the employer will allow you a certain length of time to fix the problem. “That could range from 10 days to 30 days,” Levy says. Unless the offense is so egregious that no repair is possible, a notice of default will give you a chance to fix whatever problem you have or may be creating.

Restrictive Covenants. Of all the terms in a contract, this one may be the most contentious. A non-competition restrictive covenant says that, if you leave a practice (with or without cause), you may not work within a given distance from that hospital or place of employment for a set period of time. A non-solicitation restrictive covenant prevents you from soliciting your former patients for a set period of time.

Restrictive covenants should be taken seriously, says Levy. “Some people think they’re not enforceable. They are.”

If you can look at them from the employer’s side, they make sense, Levy continues. “The employer has gone to the trouble of bringing you in, marketing its practice and building its patient base. They don’t want to lose those patients if you leave. A restrictive covenant protects their business.”

But what if the patient has a good relationship with the doctor and wants it to continue? “A non-competition restrictive covenant doesn’t mean that the patient can’t see you,” says Levy. Of course, it may make their visit geographically inconvenient, but that’s their choice.

“I was ready to sign with an employer until I saw the restrictive covenant clause,” says Andikyan. The employer refused to eliminate the clause, “so I walked out. I wouldn’t sign a contract with a restrictive covenant clause included,” he says.

“If they’re in a contract,” says Mane, “you need to know what the language says. Any hospital facility, including an office that’s 150 miles away, may be included in the restrictive covenant language.” That, he adds, can be crippling if you intend to stay in the area.

Fiorito points out, however, that restrictive covenants may be just as limiting for employers. “If you’re a hospitalist who came to us from another job and you’re working under a restrictive covenant, it can send up a red flag,” she says. “We need to know all of the places you aren’t able to practice, because we may unknowingly assign you to facilities where you won’t be able to go.”

“I learned noncompete clauses are common in contracts where the employer is in a large urban area,” says Frost. In her experience, they are not negotiable, but she says she was able to add language to a contract that allowed her to come back to the restrictive area if she changed her position or if she wanted to return for a fellowship. “I didn’t want to be penalized for either of those,” she says.

Review and negotiation time frame

Once you have your contract, the employer will give you time to consider the offer. In some cases, the amount of time is set in the contract. Frost’s contract, for example, stated she had 14 days to respond to the offer.

That should give you time to consult an attorney with a strong understanding of health care law. If you do choose to use an attorney, most will understand you need a prompt review. “Unless they’re in court or very busy, I would imagine most attorneys will turn around a review in a few days,” says Levy.

Sastow says a week to 10 days is average, and Parker says the review process may take up to two weeks, depending on the size and complexity of the contract.

No matter what the time frame is, however, consulting an attorney may prove to be a wise investment. (See the sidebar “Why Hire an Attorney?”)

Whether you decide to use an attorney or not, physicians should keep one thing in mind, says Parker.

“The contract is the beginning of a relationship, one which has the potential to be long-term and worth millions of dollars,” he says. “It’s easier to dialogue about the parts that are important to you, so decide on those first. When it comes to any negotiations, however, it’s good to take a step back and consider it from the other side. A contract should be beneficial to both sides. You want to build a relationship that goes beyond the document. Keep that in mind when you negotiate, and it will pay dividends down the road.”

Karen Edwards is a frequent contributor to PracticeLink Magazine.

 

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Breaking the chains

Looking for more from your compensation? Develop a strategy for your student loans, and you may free up more income sooner than you think.

By James M. Dahle, M.D., FACEP, WhiteCoatInvestor.com | Fall 2016 | Feature Articles

 

“The rich ruleth over the poor, and the borrower is servant to the lender.” –Proverbs 22:7

There is no greater financial frustration for a resident or young attending physician than a large student loan burden, and the lack of financial training in the medical education system compounds the problem. As Vlad Kononchuk, M.D., an attending psychiatrist in Dix Hills, New York, says, “Frankly I did not have much of a strategy for anything when in residency, at least not for financial matters. It is hard to make those plans when you have so many other things on your plate!”

The costs of attending college and medical school have skyrocketed over the past two to three decades. When I started medical school in 1999, in-state tuition at the relatively inexpensive University of Utah School of Medicine was just $10,000 per year. In 2015, a mere 16 years later, that number had nearly quadrupled to $36,000 per year. Out-of-state tuition was nearly twice as high.

That trend has affected essentially every M.D. and D.O. school in the country. Out-of-state tuition can be particularly problematic, as displayed by the price tag at Michigan State University’s College of Human Medicine, which averages $73,000 per year just for tuition and fees. The Columbia University College of Physicians and Surgeons topped the private school list in 2015, at about $56,000. New York City is also an expensive place to live, so the total cost of attendance (COA) there is estimated to be as high as $94,000 per year for MS3s.

On average, D.O. schools are more expensive than M.D. schools. According to the Association of American Medical Colleges (AAMC), in-state M.D. students average $34,000 per year in tuition, fees and mandatory health insurance. Private M.D. schools average $56,000 per year, and out-of-state M.D. schools average $58,000. The D.O. averages do not include health insurance, but clock in at $44,000 for in-state and $49,000 for out-of-state, according to the American Association of Colleges of Osteopathic Medicine. The average debt upon graduation of those who took out school loans, $183,000 for M.D.s and $229,000 for D.O.s in 2015—as reported by the AAMC and the AACOM, respectively—is actually pretty amazing considering the cost of tuition.

Ethan Handler, M.D.

Refinancing his student loans was like “kicking off the training wheels,” says Ethan Handler, M.D. Doing so, however, also helped him refocus on attacking the debt. · Photo by Kat Schleicher

However, those averages obscure the fact that, according to the AAMC, 32 percent of M.D. students graduate with more than $200,000 in debt, and 8 percent graduate with more than $300,000. In addition, since most residents do not even pay enough on their debt to cover the interest, many of those who start residency owing $200,000 finish owing $300,000 or more. So if you feel you are in a deep hole with your student loans, know that you are not alone. There is little you can do at this point about the depth of the hole, but there is a lot you can do to get out of it as fast as possible if you practice lifestyle control and proper debt management.

Although some physicians will have their debt paid off by their employers or forgiven by the federal government, the vast majority will eventually have to pay off their student loans themselves. The secret to doing this is to live a lifestyle similar to your resident lifestyle for a period of two to five years. For example, if you owe $200,000 and have an attending salary of $200,000, you can live on $50,000, pay $50,000 in taxes and put that other $100,000 toward your student loans, eliminating them completely within two years. In order to do this, however, you will need to resist the siren call you hear from peers, friends and family to grow into (or beyond) your income as soon as you can. With proper lifestyle control, most physicians can be out of debt within two to five years of residency graduation. It isn’t complicated, but it does require discipline.

Unfortunately, the other key to getting rid of your debt—proper student loan management—is far more complicated. In fact, it can be ridiculously complicated to determine the proper path during residency because a multitude of options are available to minimize interest accumulation, minimize payments and remain eligible for government forgiveness programs. Proper student loan management can even affect the best way to file your taxes and the type of retirement account to use as a resident. Much of this information I learned the hard way. As a resident who got sick of financial professionals ripping me off, I decided to educate myself on the basics of personal finance and investing. Since then, I’ve been sharing what I learned with other physicians—both in my book, The White Coat Investor, and on my blog of the same name. In this article, I’ll share some of that same information with you. Due to the complicated nature of the in-residency loan management process, this article will provide only brief general rules for residents while encouraging them to learn more about this complicated topic from other sources or to obtain professional advice. Prior to listing these rules, I’ll define the commonly used federal government programs residents need to know about.

The federal programs you need to know

Public Service Loan Forgiveness (PSLF) is a program that allows for complete tax-free forgiveness of your remaining federal Direct Loans after making 120 qualifying monthly payments, no matter how much debt you have left. The programs whose payments qualify include the standard 10-year repayment plan and the three income-driven repayment plans: Income Based Repayment (IBR), Pay As You Earn (PAYE) and Revised Pay As You Earn (REPAYE.)

Income-driven repayment plans have several common features, but the main one is that the payments are dependent only on your income (and family size) and not on the amount of debt you have or the debt’s interest rate. You can determine what your payment amount would be by taking your income and subtracting 150 percent of the federal poverty line for the size of your family. The remaining amount of money is called your “discretionary income.” IBR requires you to pay 15 percent of your discretionary income toward your student loans, while PAYE and REPAYE require 10 percent. For most residents, those payments don’t even cover the interest on the loans. The discretionary programs have a forgiveness feature too, but physicians rarely take advantage of it because it doesn’t apply until 20 to 25 years have passed, and even then, the amount forgiven is considered taxable income. REPAYE has an additional interesting feature in that half of the interest not covered by the monthly payments is subsidized by the government, effectively lowering your interest rate.

Rules for residents

With that brief introduction to the government programs, let us consider three general rules for residents trying to navigate through these complex decisions.

Rule 1 for Residents: If you hope to obtain PSLF by working for a 501(c)3 nonprofit after completing residency, then you want to stay in a government income-driven repayment program during residency.

Rule 2 for Residents: Minimizing payments, minimizing interest accumulation and maximizing loan forgiveness may be mutually exclusive. For example, the best way to minimize payments is to defer your loans until residency completion, but you’d better expect them to be a lot bigger at the end than they were at the beginning! The best way to maximize loan forgiveness is to make payments that are as small as possible during residency through one of the government programs. Which program will allow you to do that best, however, varies according to your marital status, spouse’s income and the type of student loans.

Refinancing your loans can help you to minimize interest accumulation, but it also turns the loans into private loans, which are no longer eligible for Public Service Loan Forgiveness. The private lenders who refinance loans for residents do, however, allow for very small payments ($0 to $100 per month) during residency. To make things even more complicated, the latest government income-driven repayment program, REPAYE, may partially subsidize the interest on your loans, effectively lowering the interest rate to a level below that which you would get from a private lender. This is because residents don’t typically qualify for the lowest rates from private lenders. Instead of the 2 to 4 percent an attending might be able to get, a resident will probably only be offered a rate of 5 percent.

Rule 3 for Residents: The best government program for most residents is the REPAYE program. There are two caveats to this, however. The first is that, depending on how much their spouses earn, married residents may be better off in the IBR or PAYE programs and filing their taxes as Married Filing Separately. The second caveat is that if you decide to go for PSLF after residency, you will likely want to switch from REPAYE into IBR or PAYE upon residency completion in order to maximize forgiveness. IBR and PAYE payments are capped at the 10-year Standard Repayment Plan payment, whereas REPAYE payments may rise above that level, depending on your income.

Decisions after residency

As an attending, the decisions become much easier. If you are directly employed by a 501(c)3 nonprofit or government employer, you should pick the income-driven repayment plan that gives you the lowest payment, pay the minimum on your loans, and obtain PSLF after 120 total payments. If you are not eligible for PSLF, you should probably refinance your loans with a private lender. Various terms and rates are available from at least 20 lenders, and what you qualify for will depend on your credit and debt-to-income ratios. You may be able to lower the interest rate on your loans from 6 to 8 percent in the federal programs to 2 to 5 percent, saving thousands in interest each year. Of course, just because you refinance doesn’t mean you want to forget about those loans and go on the minimum payment plan. You don’t get out of debt by taking on more debt; you get out of debt by living like a resident for two to five years and throwing a huge chunk of money at those loans every month—whether the interest rate is 7 percent or 3 percent.

Ethan Handler, M.D., an otolaryngologist and cosmetic surgeon practicing in Oakland, California, worried a little bit about refinancing his loans. He knew that he would “lose the government-provided safety blanket” to go into forbearance or have income-based payments in case something happened to his income. He ended up refinancing his loans at 3.5 percent and found that it was like “kicking off the training wheels. Once I refinanced and no longer had the safety net of hardship or forbearance, I took more responsibility for my debt. What had previously looked like a funny and absurdly high number ($240,000 upon residency graduation) on paper became something I’m working hard to erase.”

There is also some risk that the government could change the PSLF program. The Obama administration has made budget proposals that, if passed by Congress, would limit the amount of forgiveness to just $57,000.

Amanda Weinmann, M.D.

Amanda Weinmann, M.D., opted to live frugally while paying off her student loans—a choice that allowed her to pay toward her debt while in residency. · Photo by Tim and Madie Photography LLC

Amanda Weinmann, M.D., an attending family physician in St. Paul, Minnesota, didn’t like that the program seemed so politically uncertain—not to mention the fact that no person has yet received forgiveness through the program. (The program requires 120 monthly payments after 2007, and there have not yet been 120 months since 2007.) The idea of dragging out payments on the $162,000 she graduated medical school with was very unappealing. “I was psychologically uneasy with making payments that didn’t even cover the unsubsidized interest, and I felt that, since I borrowed the money and had the means to pay it back, I should.” By living frugally, she paid off a car, avoided credit card debt, funded a Roth IRA and paid off $64,000 of her student loans while in residency.

Another alternative for those concerned about the political viability of the program (aside from avoiding it altogether as Weinmann did) is to save up the equivalent of the debt on the side in an investing account. If the program disappears or becomes severely limited, the funds in the side account can be applied to the debt. If forgiveness materializes as expected, the side account will provide a boost to your retirement nest egg.

Owen Vincent, D.O., a family physician practicing in Prairie du Chien, Wisconsin, uses this approach. He works for a 501(c)3 and is going for PSLF for his $315,000 in student loans. He states, however, “I’m also saving as much as I pay each month in taxable accounts [above and beyond my retirement savings]; so if [PSLF] doesn’t work out, I’ll throw a lot of money at those loans quickly and get rid of them, and if it does work out, I’m that much closer to financial independence eight years from now.”

Employer loan assistance

In interviewing physicians for this article, I was surprised by just how many of them had received loan assistance from their employers. This is an increasing trend among physicians and non-physicians alike. The classic example is the military with its various programs including the Health Professions Scholarship Program, which pays for tuition, books, fees and a stipend for medical students, and the Financial Assistance Program, which pays an annual grant (currently $45,000) plus a monthly stipend to residents in exchange for a service obligation.

The National Health Service Corps (NHSC) offers similar programs. The NHSC loan repayment program offers up to $50,000 toward your student loans in exchange for a two-year commitment to an NHSC-approved site. The NHSC also offers a scholarship program similar to the military HPSP program in that the student receives tuition, fees, other educational costs and a living stipend in exchange for a commitment to serve in an NHSC-approved job. Each year of support in medical school requires a one-year commitment, with a minimum of two years. The scholarship is generally considered the better deal, but the loan repayment program has its advantages as well. This program, however, is generally available only for primary care providers, mental health providers and dentists.

Vincent, who expects Public Service Loan Forgiveness, found that he also qualified for a state-specific, rural provider, tax-exempt loan repayment of $50,000. Kononchuk, too, was surprised to discover that he qualified for a New York loan repayment program designed for physicians treating underserved patients. He says, “I see way too many people not even consider such programs, as they assume that if they don’t live in a rural area, they won’t qualify. Guess what? I work in NYC and I still met criteria!” If he stays in the same job for five years, the program will have paid his entire $150,000 student loan burden.

The bottom line is that more and more employers, states and communities are offering student loan repayment programs and the qualifications are highly variable. You may be surprised what you can find. Vincent says: “My locale may not be for everyone—as some would never dream of living more than an hour from a Target—but I’ve found the slower pace allows for more meaningful time with family, friends, patients and hobbies. Plus, the much lower cost of living has done wonders for my financial situation.” If you, like Vincent, are willing to work in a geographic locale where few physicians are interested in working, you may find you have significant negotiating power. Even if you cannot get a higher salary, consider asking for assistance with student loan repayment.

Whatever your strategy for your student loans, the keys are lifestyle control and educating yourself about proper loan management. As Weinmann says, “It’s literally worth tens of thousands of dollars to spend a little time educating yourself about loan options. If you compare that to your hourly rate as a resident, you’ll find this to be a great use of your limited free time.”

James M. Dahle, M.D., FACEP is the author of The White Coat Investor: A Doctor’s Guide to Personal Finance and Investing and blogs at whitecoatinvestor.com. He is not a licensed financial adviser, accountant or attorney and recommends you consult with your own advisers prior to acting on any information you read here.

 

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