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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You’ve got the degree and the training. How about the license?

Here’s what you need to know to get licensed and credentialed.

By Kevin Caldwell | Legal Matters | Winter 2017

 

The basis for medical licensure in any state or jurisdiction today is that state’s Medical Practice Act (MPA). In every state, an MPA is the statutory provision for establishing a state medical board, setting standards and qualifications for licensing physicians, and establishing a mechanism for disciplining licensees who have engaged in unprofessional conduct.

In the U.S., there are 70 medical licensing boards: 36 states with a composite board (licensing both M.D. and D.O. physicians), 14 states with separate allopathic and osteopathic boards, and boards for the jurisdictions of the District of Columbia, Guam, Puerto Rico, the Virgin Islands and the Commonwealth of the Northern Mariana Islands. (A complete listing of all medical licensing boards in the U.S. and its territories, including contact information, is available on the Federation of State Medical Boards (FSMB) website.)

Most physicians’ first interaction with a state medical board will occur during residency. The majority of state medical boards (47) issue some form of limited license or training license to physicians in a residency training program within their state. In some instances, this license is issued to the institution based upon a roster of physicians who are enrolled in good standing in the program. A resident license or limited license usually restricts physicians to supervised practice within the confines of a specific institution.

Although the trend in medicine has moved increasingly toward specialization, state boards issue a license to practice medicine as a physician and surgeon. They do not issue licenses limited to the specific focus, orientation or specialty of a physician’s practice.

In general, a state medical board will issue a license based on a physician meeting requirements in three general areas:

  • Undergraduate medical education;
  • Graduate medical education; and
  • Successful completion of a national licensing exam.

State medical boards classify applicants for licensure, in part, by the location of the med school program they completed as part of their undergraduate medical education. Most MPAs draw a distinction between physicians who graduated from med school programs in the U.S. or Canada and international medical graduates (IMGs), or physicians who graduated from med schools outside the U.S. and Canada.

All state medical boards require a minimum of one year of training in a program accredited by the Accreditation Council for Graduate Medical Education (ACGME) or the American Osteopathic Association (AOA), although many require more than one year. Some boards also recognize training through programs approved outside the U.S., such as those approved by the Royal College of Physicians and Surgeons of Canada.

Fifty years ago, virtually every state developed and administered its own exam for licensure. Today there are two national exams used for initial licensure: the United States Medical Licensing Examination (USMLE) and the Comprehensive Osteopathic Medical Licensing Examination (COMLEX-USA). Both are administered as multi-step exams at various points in the prospective physician’s career. Both exams are primarily cognitive tests but have included clinical skills components since 2004. More information on these exam programs is available at usmle.org and nbome.org.

Credentialing

Credentialing is the process state medical boards use to verify an applicant’s credentials. This involves collecting and evaluating credentials earned through education, training and experience. Through direct-source verification and attestations from education and training facilities, state medical boards determine whether a physician is eligible for state licensure and prepared to practice medicine without supervision in that jurisdiction.

Credentialing for state licensure is different than credentialing for hospital privileges or managed care. State credentialing focuses more on the educational curriculum and successful matriculation from undergraduate school to medical school and medical school to residency. Credentialing for hospital privileges or managed care focuses more on a physician’s specific abilities. Hospitals and managed care plans grant privileges to perform specific treatments. State credentialing, on the other hand, is for the purpose of granting a license for the general, undifferentiated practice of medicine.

Both credentialing requirements and how credentials are obtained are unique to each licensing jurisdiction. State medical boards do not adhere to a single national standard for verifying credentials. Physicians will need to familiarize themselves with the requirements of the specific state medical board(s) where they plan to seek licensure. For example, there are currently 14 boards that require applicants to use the FSMB’s Federation Credentials Verification Services (FCVS): Kentucky, Louisiana, Maine (Medical), Nevada (Osteopathic), New Hampshire, New York, North Carolina, Ohio, Rhode Island, South Carolina, Utah (Medical), Utah (Osteopathic), Wyoming and the Virgin Islands.

The FSMB developed the FCVS in 1996 to assist state medical boards in credentialing. Currently all state medical boards, with the exception of Puerto Rico, accept the documents and collection methods of the FCVS to satisfy their particular requirements.

Preparing yourself for Licensing and Credentialing

The pathway from medical student to licensed physician in the U.S. involves many different organizations. To help guide physicians, the FSMB has created an interactive document called “Pathway to Medical Practice in the U.S.” It graphically represents the pathway to licensure and is available for download on the FSMB’s website.

Kevin Caldwell is the Federation of State Medical Board’s senior director of ancillary services, serving as a liaison between the FSMB and its 70 member medical boards. He played a pivotal role in establishing FCVS as one of the nation’s preeminent providers of physician credentialing services.

 

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Negotiating your work visa sponsorship as a physician

If you’re an IMG physician, you have an extra job-search consideration: finding an employer who will sponsor your visa. Here’s what you need to know about finding a willing sponsor.

By Ann Massey Badmus, J.D. | Legal Matters | Summer 2016

 

When searching for job opportunities, physicians have tons of considerations—location, compensation, paid time off, work schedule, quality of life and more. But most IMG physicians have an additional consideration looming over their heads: immigration. If you’re a physician with a work visa, you are well aware that your prospective employer must support or “sponsor” your work visa for you to be able to practice medicine in the U.S. As a matter of fact, without an employer’s agreement to sponsor, there’s really no need to discuss any other aspect of a potential offer.

Knowing this, many physicians ask how and when to bring up the need for sponsorship. They also want to know which sponsorship details should be discussed, negotiated and included in the employment contract. As with all things legal, there’s no one-size-fits-all approach, but here are some tips to make your search to find that willing sponsor a little smoother.

Start your search on time

For the best chance of getting your preferred location and employer, you must start the job search early enough to meet immigration deadlines. In order to do this, J-1 physicians must know the dates when their states of choice accept J-1 waiver applications. You also need to start the search a year before your residency or fellowship ends. For example, a second year internal medicine resident looking to work in Texas needs to know that J-1 waiver applications are accepted beginning September 1, 2016, for the 2017 year cycle. He or she must have an employer lined up by July 1, 2016, for a fighting chance of winning one of the 30 waiver slots in that state.

Similarly, H-1B residents or fellows should start their searches a year before graduation. Ideally, you should look for H-1B cap-exempt employers. If you’re unable to secure a cap-exempt job offer, however, starting your search a year ahead lets you apply for an H-1B cap visa on April 1 of your last training year.

Communicate your immigration status

Some employers are very familiar with work visas, but many are not. Those who have little or no experience in this area may shy away from considering visa candidates. Because you have limited time to search for a job while completing your training, it’s usually best to screen out employers who are not open to sponsorship.

Because of anti-discrimination laws, employers cannot ask you about your citizenship or immigration status before offering you a job. They’re not, however, required to sponsor a work visa once they learn you need one. To avoid wasting time interviewing for a job that won’t meet your immigration needs, include your immigration status in your CV and mention the necessity of sponsorship at the earliest opportunity. Doing so will eliminate employers whose policies do not allow sponsorship and will open the door for you to discuss sponsorship with the employers who are willing to consider it.

Have legal help on standby

Immigration is a complicated legal process that can be confusing and discouraging to employers. Because its complexity may be off-putting to many employers, it’s important to reassure them that the work visa application will not be burdensome or interrupt their operations. To ensure this is the case, you should meet with an experienced immigration attorney before or shortly after starting your search.

This attorney can evaluate your specific immigration background, explain the visa process requirements to you, and prescribe a plan to get you practicing medicine in the U.S. as quickly as possible. Most importantly, the attorney has the credentials and expertise necessary to speak with potential employers and address their questions or concerns about the legal process. Your employer will feel more comfortable knowing you’ve already lined up help to meet the legal challenges of your work visa.

Disclose and negotiate visa expenses

Like any legal process, a work visa application involves expenses, including both attorney fees and government application fees. As previously mentioned, immigration laws are not straightforward, but employers and physicians must be careful to understand and follow all requirements of a work visa and green card before and after an application is approved. The immigration attorney will help both you and the employer navigate the complexities to avoid violations, however unintended.

Employers are required by law to pay some of the attorney fees and costs involved with the work visa and green card applications. For example, at minimum, employers must pay the ACWIA (American Competitiveness and Workforce Improvement Act) fee charged by the government for the H-1B petition, and in some cases, the employer is required to pay all fees, including attorney fees, for the H-1B visa. The immigration attorney can advise you on how the fees and costs should be shared.

Also, if you want the employer to pay more than the required minimum, you should be sure the employer’s agreement to do so is stated in your employment contract. It’s important to know that you and the employer cannot agree that you will pay (or reimburse them for) any fees the employer is required to cover.

Put it in the employment contract

Without a doubt, visa sponsorship is critical to your ability to work. Yet many physician contracts don’t include the language necessary to commit the employer to sponsorship for either the work visa, green card or both. Physicians should work with their employment or health law attorney and immigration attorney to add such language if it’s not already included in the contract. Additionally, they should ensure that the contract does not contain any language requiring the physician to reimburse mandated employer immigration costs upon termination of employment.

Ann Massey Badmus, J.D., is head of the immigration section of Cowles & Thompson, P.C. Since 1993, she has helped thousands of foreign-born physicians and their employers get work visas and green cards. Learn more at immigrationMD.com.

 

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Planes, trains and automobiles: Who pays for what?

Just like in dating, there’s not a hard-and-fast set of rules about who picks up the tab throughout the physician interview process. But here’s a start.

By Bruce Armon | Legal Matters | Spring 2016

 

Who pays for a first date? How about the second? As a relationship progresses, there can be traditional or expected protocols to follow. Same with the job interview process, which also can feel like a dating game.

As a physician considering a new opportunity—whether it’s your first job after training or you’re seeking the next step up on the professional ladder—it’s important to understand your and a potential employer’s role in paying for transportation, lodging, meals and related expenses during the interview process. These are the first “dates” that are the building blocks of your professional relationship.

It’s also helpful to know that those building blocks are variable. There are no absolutes as it relates to these expenses and any other initial start-up costs employers may incur when bringing in new physicians.

Planes, trains, automobiles and lodging

If you’re traveling for an interview, determine in advance what the prospective employer will pay.

If you’re traveling by car, log the related miles and tolls. (There is an IRS-approved rate of reimbursement for each mile traveled that may be used as a benchmark.) If you rent a car for the trip, ask for and retain the receipts. In either case, confirm in advance whether the prospective employer will pay for those expenses.

Traveling by train? Don’t book a business class or first-class ticket without prior authorization from the prospective employer, and don’t forget to record any cab expenses to the train station or parking garage.

If you need to take a plane to meet with a prospective employer, don’t book anything other than a coach ticket without approval first.

You also shouldn’t book a flight that lands only a short time before the beginning of the interview. Flight delays are out of your control and can cause both you and your prospective employer unnecessary angst.

Plan to grab the latest return flight home if same-day travel is planned, or opt to stay overnight so you have ample time to meet as many prospective colleagues as possible. Be sure to ask about the timing to get to and from the airport, too. Will you need to take a cab or rent a car?

If you’re staying the night during the interview, ask your recruiter which lodging to use; there might be a preferred hotel. Don’t expect your prospective employer to pay for room service or in-room entertainment expenses.

If you’re invited to make multiple visits as part of your interview process, confirm before each visit that the expenses will be reimbursed as you’re anticipating.

Your relocation and related expenses

As part of the contract negotiation process, consider the expenses you will incur before the first day of employment. If possible, coverage of these expenses should be built into your employment contract.

House-hunting expenses. It may take multiple visits to find housing, and you may need to bring a spouse or partner along on at least one of the visits. Discuss with the employer which house-hunting expenses, if any, will be reimbursed.

Housing expenses. An employer may consider offering an allowance for short-term housing or for a down payment on a house.

Moving expenses. It is common for an employer to offer a defined amount to help physicians with moving expenses. Call several moving companies to understand the expected fee range.

Review the employer’s policy related to moving expenses. An employer may not, for example, pay to help you relocate a boat or a horse, or pay for two pick-ups as part of the same move. Storage facility costs may also not be covered.

If the allowance that an employer is offering for moving expenses is more than the actual cost of the move, ask if you can use the excess dollars even without direct associated expenses.

Signing bonus. To attract a physician to the job, a prospective employer may offer a signing bonus to help pay for incidental expenses. These expenses may be used to pay your COBRA health insurance expenses, for example.

Student loan expenses. Some employers offer monthly, quarterly or annual payments directly to lending institutions to reduce your student loan balance.

License expenses. You’ll need to have an active license to practice in the state where your new employer is located. Each license may cost several hundred dollars. And if you’re practicing as a locum tenens, you may need medical licenses in many states.

In addition to the costs for the medical license, you’ll also have a DEA registration. Many states have their own DEA-equivalent license that a physician also must obtain.

Your employer’s related expenses

You’re not the only one. Employers, too, incur significant costs before new physicians can begin employment.

An employer may need to hire additional staff, purchase additional supplies or acquire more equipment. Larger or additional office space may be needed.

Considerable staff time will be spent getting the new physician credentialed with each of the employer’s third-party payers and securing hospital or facility privileges. Many hospitals and facilities charge an expense for the privilege of being credentialed by that institution.

An employer also may need to secure an additional electronic medical record license, or purchase a laptop for you.

Protecting the investment

Employers expect to have a return on investment when hiring physicians. That investment may be measured by the clinical dollars you generate, the number of papers you publish, the quality of your teaching or the caliber of your research.

But not all employment relationships turn out as predicted.Some employers may quantify the costs incurred in hiring you—house-hunting and related travel, moving expenses, licensure fees, signing bonus, etc.—and include a clause in the employment agreement that requires repayment if you’re not employed there for a defined period of time.

If a provision like this is included in the draft of your employment contract, understand how each individual cost and the total was calculated, the length of time you must remain employed, and any exceptions to the repayment provision. Exceptions could be related to the reason for termination, whether you generated a “profit” during your time employed, the amount of your account receivables by the date of termination, or other factors.

There are no “rules” when it comes to who pays for what throughout the dating—err, interview—process. Remember, the upfront costs incurred by an employer may be significant, so understand any circumstance in which you may be expected to repay the expenses.

Clearly addressing these issues is a good practice for both physicians and employers and can be used to establish clear parameters once the “dating” is complete and actual employment begins.

Bruce Armon, Esquire, is a partner and chair of Saul Ewing’s health care practice group. Bruce regularly speaks to physician audiences regarding health law legal issues and has helped hundreds of clients with contract issues.

 

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Protecting your free time

Your employment contract shapes your personal time as much as the time you spend seeing patients.

By Clark Jones, JD, MBA & Jeff Hinds, MHA | Legal Matters | Winter 2016

 

The quality-of-life component for every job opportunity you consider is directly tied to your personal satisfaction away from work. But even if the location you are considering possesses all the amenities you and your family desire, what good is it if you don’t have the free time to enjoy them?

Though some elements of your demanding schedule simply come with the profession, there are some contractual items within your employment agreement that can help you preserve a healthy work/life balance.

Work schedule and hours

Does the language of your contract clearly define your work expectations, or does it include vague language surrounding the details of your schedule?

It isn’t reasonable in most practice settings to expect an employer to use language stating that you will work exactly X hours per week. There has to be some flexibility. However, it is reasonable to ask for a cap on your work hours—for example, “shall not exceed 60 hours per week.” It is also important to take it one step further and define and understand whether this is in reference to scheduled office visits only, or if it also includes allocated time for charting, medical staff meetings, inpatient rounding and any other obligations.

Call schedule

There are many variables in play when it comes to the potential call schedule that a prospective employer cannot always control or predict.

But if you are joining a group of three other providers within your specialty and the contract language vaguely states that “call with be shared amongst all providers,” do not automatically assume that this means the call schedule will be a guaranteed 1:4.

A key word missing from the aforementioned example is “equally.” Otherwise, there is nothing protecting you from becoming suddenly responsible for more call than you were expecting. Asking for a cap on your call schedule is highly advisable.

Research/administrative time

If you are pursuing an opportunity at an academic medical center or affiliated practice and have a strong interest in doing research as part of your new position, look for language that allocates protected time on your schedule for this purpose.

You do not want to put yourself into a position where you are obligated to provide 40 to 50-plus hours per week on patient care and are then expected to fulfill your research obligations on your own time. The same can be said if you will be assuming a leadership role—such as chief medical officer, medical director or program director. Make sure you have ample time set side in your daily or weekly schedule to perform all necessary administrative tasks and attend all required meetings.

Paid time off

Many physicians assume that the allocated paid time off listed in the contract is a non-negotiable part of the benefits package, but that is not always the case. Aside from the actual amount of time offered, what is offered and/or how it is structured can differ by employer.

For example, you may notice that some employers will offer both vacation and continuing medical education (CME) time off separately, while others combine them into one “paid time off” pool. It does not matter exactly how it is structured, as long as you are aware whether or not CME time off is included. You can then attempt to negotiate for additional time if desired.

Clark Jones, JD, MBA is partner at Jones, Schneider and Stevens, LLC and General Counsel at Premier Physician Agency, LLC. 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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There are some contractual items within your employment agreement that can help you preserve a healthy work/life balance.

 

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Keep interest and leverage while interviewing

How to address contractual or legal items in an interview that could negatively affect your candidacy.

By Clark Jones, JD, MBA and Jeff Hinds, MHA | Legal Matters | Summer 2015

 

You’ve cleared the phone screen stage of the interview process and now have an on-site interview invitation. Congratulations are in order; many other candidates were likely filtered out following the phone screen. But don’t get too far ahead of yourself just yet!

The employer deemed you worthy enough for an on-site interview via the contents of your CV and successful phone interview, but much more can be learned about you as a candidate—both positive and negative—through face-to-face interactions.

Conversations during the phone interview are often broad; expect more detailed conversations during your on-site visit. More specifically, a few contractual or legal items will be discussed during the in-person visit, and how you address these topics could significantly affect your candidacy.

Work hours and call schedule

During your interview, your work expectations must be fully and clearly defined. You’ll need to understand the minimum number of hours you will be scheduled each week and if a defined weekday and weekend call schedule per month is expected. Inquiring about these expectations is perfectly reasonable.

However, this is not the ideal time to express concern or set demands or limitations on what you consider acceptable.

Even if you are not fully comfortable with the expectations that have been presented, it is in your best interest to wait until an offer has been extended before you proceed with negotiation. If your concerns or demands are too pressing, you risk losing the position before it is even offered. You will have more leverage, and the employer will be more receptive to negotiating such items, after they have chosen you as their top candidate.

Compensation

Discussing compensation during an interview should also be handled delicately. In many cases, the employer will lead the discussion by asking if you have any salary requirements or expectations. Getting the employer to come forward with the first number is preferable. When asked about your salary requirements, a good response would be something like: “Compensation is not the top priority in my job search. I’m most interested in the professional and personal fit within the organization and community. If both sides agree that it’s a good fit, then I’m sure we can come to a fair agreement on compensation.”

If that doesn’t satisfy the push for a specific number, you can rephrase it by saying: “I’m really not focused on a particular number at this time. Share with me what you had in mind.”

If this is your first employed position after residency or fellowship, your response can be expressed this way: “This is my first position out of training, and I’m not completely certain what to expect. Please share your thoughts about compensation.”

Some variation of these sample responses will typically help get the employer to respond with the compensation number or range first. Again, don’t feel the need to commit to or negotiate the number given at that moment. Simply thank them for giving you a better idea of what to expect, then share that the information will be helpful as you look at the opportunity in its entirety. You will be in a much better position to negotiate after you have received the contract. In addition to having more leverage with the actual contract in hand, it will also give you more time to collect other offers or compensation data to strengthen your position.

Background issues

If you have been terminated in the past, have a gap in your employment or training history, or possess an unfavorable malpractice claim on your record, be prepared to discuss these items in a manner that reduces employer concern.

First, be completely honest and don’t hide the fact that you’ve had a past issue. When addressing the subject, your goal is to remain positive and not over communicate more specifics than necessary. The more detail you share about the issue, the more concern you may create for the employer.

Be brief and succinct in your explanation while sandwiching the issue between positives. For example, if you were terminated, start by talking about what you enjoyed about the position, then briefly introduce the issue that led to your departure. Immediately follow up by sharing what you learned from the situation and why you are a better person and clinician today after going through the experience. By presenting the situation as a “lesson learned” scenario, you can ease the concerns the employer may have about this issue arising again. Being negative or blaming former employers or colleagues is the last thing you want to do. Though everything you say may be 100 percent correct, the employer doesn’t know both sides of the story, and you may come across as someone difficult to get along with.

Clark Jones, JD, MBA is partner at Jones, Schneider and Stevens, LLC and general counsel at Premier Physician Agency, LLC. 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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Striking the right balance

Legal Matters | Winter 2015

 

In the absence of an income guarantee or base salary, it is not easy for physicians—particularly those whom are the breadwinners for their families—to strike an acceptable balance between dedicated personal and professional time. But both are vital to achieving a reasonable quality of life. Indeed, this inability to strike such a balance leads many physicians to terminate their private practice employment, where they had initial aspirations of becoming a shareholder or partner, to favor hospital-based employment.

However, even in hospital-based employment models, productivity-based compensation models are gaining popularity —so much so that in the near future (i.e., three years), productivity models will be universal.

The traditional model

Under what is now the “traditional compensation model,” physician employees receive a guaranteed income in the form of a base salary so long as they are employed. (Subject, of course, to renegotiation in light of either party’s ability to terminate at any time without cause upon requisite and agreed-upon advance written notice.)

At its heart, the practice of medicine is a service business. As with any service business, compensation is a direct byproduct of the time spent providing the services that the business provides. For physicians, this has been known to lead to uncompensated call coverage, extended evening clinic hours and weekend hours.

Physicians obligated to provide uncompensated call coverage face additional impediments to spending quality with family or even time alone to decompress and relax. As professional component reimbursements trend downward (with rare exceptions), physicians are forced to dedicate more time and effort to their practice to sustain their incomes. For many physicians, practicing medicine is an all-encompassing endeavor.

A key component of the traditional compensation model is paid time off, whereby a physician has the assurance of sustained payroll disbursements during periods of vacation or approved absence, during which a physician can set aside unencumbered time to be with family and friends.

Productivity model gaining traction

Juxtaposed to the traditional compensation model is the productivity-based model. In this model, physicians typically are not guaranteed any level of income, but are compensated based on the cash collections or work relative value units (wRVUs) generated from personally performed medical services.

Accordingly, when physicians are not working, they are not generating reimbursements. And when not generating reimbursements, the physicians are not generating income. Accordingly, paid time off is not applicable to a production-based compensation model.

This is not to say that a physician in a production-based model is never able to take time away from his or her practice. Similar to how a physician in solo practice must balance time away from the practice with the need to earn a living, a physician in a productivity-based compensation model must balance time away against income.

Though prudent physicians considering employment under either model would evaluate projected patient volume to estimate their income, this is particularly critical in a production model so as not to incur the financial harm of overestimating the need for the incoming physician’s services.

In a cash collections model, regardless of how many patients are seen or procedures performed, the physician’s base income (i.e., base salary) remains the same.

However, in a production model, the physician’s compensation is a direct reflection of reimbursements generated. No reimbursements equals no compensation.

Additional considerations in identifying whether an employment opportunity presents an acceptable work-life balance are employer expectations and culture. For physicians valuing a work-life balance, as opposed to an earn-all-you-can approach, query prospective employers on the organization’s expectations of your daily investment of time.

Important questions to ask include:

  • How many patients on average are expected to be seen in clinic daily?
  • Are inpatient rounds expected to be performed after hours or before the end of the workday?
  • How many hours each week are expected to be dedicated to administrative duties?
  • How many hours, on average, do physicians in the practice/department work?
  • Are physicians encouraged to take vacation?
  • How many days of vacation are taken annually on average?
  • How many days of monthly call coverage would be required?
  • When on call, how much time is spent on the phone or in the hospital?

I find that those physicians desiring to renew a contract (versus terminate a contract in favor of subsequent employment) have achieved acceptable work-life balance.

Two key components of their satisfaction are ensuring that the services they are expected to provide are consistent with their training, and entering a role that is not laden with administrative duties. Put simply, physicians are most productive and satisfied when engaged in meaningful work.

In my practice, it is increasingly common for my clients to negotiate more so for an additional week of vacation or a four-day workweek than an additional few thousand dollars. Other common requests are set aside and capped time for clerical work and other administrative duties, or having a large percentage of those clerical duties delegated to other personnel.

No matter what kind of contract you accept, understand how it shapes your time at both home and work.

Roderick J. Holloman is the principal of The Holloman Law Group, PLLC a health care law firm with clients throughout the country.

 

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Job-search advice from The Rolling Stones

Keep time on your side when it comes to getting, keeping and changing jobs.

By Bruce Armon and Karilynn Bayus | Legal Matters | Spring 2015

 

So goes The Rolling Stones’ famous song: “Time is on my side, yes, it is.” When you’re looking to start a new job, there are certain things that should be done to ensure that time is on your side, too.

These guidelines apply before you start a job, while you are in that job, and when you decide to transition to the next job.

Time for a new job

After you have received, reviewed, negotiated and executed an employment contract, there will be things you need to have in place before you can actually start work.

It is important to remember that a medical practice or medical facility is a business. If a physician can’t provide services and is not generating revenue, a smart businessperson will not let that physician start working for the organization until the provider can generate revenue.

Three items are generally essential to have before a physician can actually start a new job:

  • state license
  • hospital credentials
  • third-party payer credentials

All three of these take time. If they are not each done properly, it may delay your start date.

Licensing

Getting a state license is often a prerequisite to obtaining hospital credentials and third-party payer credentials.

Each state requires physicians to provide different information to obtain a state medical license. In addition to providing basic contact information, a physician will likely have to provide evidence of college and medical school graduation, residency training, test scores and perhaps a character reference.

You’ll want to ask the applicable state’s medical board for a copy of its current licensing requirements and the expected timeline to secure a medical license once the application is deemed complete.

Physicians may also choose to secure a state medical license through the Federation Credentials Verification Service (FCVS). Physicians who participate in the FCVS can aggregate a core set of information that is typically relied upon by state medical boards. It may take several months for you to secure a state medical license even if you submit a complete and accurate application and have nothing unusual to describe.

Credentialing

Once you have a state medical license in hand, you can go about securing hospital and other facility credentials and third-party payer credentials. These two sets of credentials can often be secured on parallel tracks. It is important for physicians to remember that obtaining these items is a privilege, not a right. A hospital or an ambulatory surgery center will likely ask you to complete a voluminous application with many “check the box” answers. If a physician answers a question in a certain manner, the physician may have to provide an explanation on a separate sheet of paper. A hospital or ambulatory surgery center does not want to be embarrassed in the future by a physician’s actions or inactions, so facilities reserve the right to ensure any member of their medical staffs is qualified as they deem appropriate. Similarly, a third-party payer may not make a physician a participating provider in its network until the physician has secured privileges in a hospital or ambulatory surgery center to provide the payer with assurance that another sophisticated organization has vetted the physician’s background.

It is imperative that the physician honestly answer each of the questions asked by a state medical board, a hospital and a third-party payer, even if the physician believes that the answer would not be viewed favorably. If anyone in these organizations thinks they are being misled, the timing of completing the process will likely slow dramatically. Similarly, if an organization learns in the future that a physician was dishonest in his or her credentialing materials, the consequences may be more severe than if the physician had answered honestly in the first instance.

Time in your job:

“Now you always say that you wanna be free.”

Your timing obligations do not end with the initial licensing and credentialing. Once you start the job, new timing issues emerge that are equally if not even more important than the pre-job matters.

Your contract may describe how many patient encounters must occur in an hour or a day or over the course of a contract year. Your failure to meet these thresholds may result in reduced pay or elimination of bonus opportunities.

The physician’s contract or the employer’s policies and procedures may specify how much vacation and continuing medical education and general leave time you may take. The contract may specify how much time must elapse before you may be considered for a promotion.

A physician will likely be expected to complete medical records and claims submissions in a timely manner. The timeliness requirement may be the same business day or within 48 hours of seeing a patient. If a physician does not complete the medical records completely and accurately so that the employer can submit the claim to the payer, the employer will not get paid for the services the physician provided. If the employer is not getting paid, the physician will likely not get paid—or worse, the physician may be in danger of losing the job.

Time to leave a job:

“You’re searchin’ for good times, but just wait and see.”

Your contract should state the length of the initial term and the renewal terms, and the timing of when a decision will be made as to whether the term renews.

Be aware of how much notice is required to leave a job without cause for both you and your employer. (The timing may not be the same.)

In situations where a physician has done something inappropriate and is concerned that his or her employer may terminate the contract, a physician should understand what constitutes “for cause” termination and whether they will get a second chance to correct a breach. The timing for “for cause” termination may be different from “without cause” termination.

A physician’s contract may include noncompete and nonsolicit clauses that prohibit the physician from working within a radius and contacting patients and referral sources for a designated period of time. Be sure to understand these restrictions before securing your next job.

How to ensure time is on your side:

“You can’t always get what you want.”

The Rolling Stones had it right: You can’t always get what you want. However, you can achieve your professional goals by being proactive and securing a state license far enough in advance of a job switch to help ensure the timely receipt of necessary facility and third-party privileges. Understand the timeliness requirement embedded in the contract and the employer’s policies and procedures to ensure satisfaction during your job and to have a smooth transition to your next practice.

Bruce Armon, Esquire is a partner and chair of the Health Care Group and Karilynn Bayus, Esquire is an associate in the Health Care Group of the law firm Saul Ewing LLP. They assist physicians and medical practices with legal, regulatory and compliance issues.

 

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Your guide to your employment contract

Keep these key considerations in mind when you’re evaluating a contract

By Roderick J. Holloman | Fall 2014 | Legal Matters

 

When you’re considering an employment opportunity, look at the whole package; do not focus exclusively on compensation. Factors such as the practice’s reputation, benefits offered, malpractice coverage, your day-to-day duties, and shareholder eligibility should be considered as well.

Ambiguous or vaguely worded provisions can create problems down the road. Pay particular attention to provisions such as “in the employer’s sole discretion” or “in the employer’s sole judgment.” Remember, “the devil is in the details.” If the contract refers to another document, such as corporate bylaws, practice policy or a retirement plan, obtain a copy and be sure it is dated.

Compensation

Base salary. If there is a base salary, it needs to be stated clearly, including the frequency with which disbursements will be made (e.g. monthly or biweekly). To avoid any misunderstanding, it should be clear that unless employment ends, the base salary is guaranteed and is not subject to any reduction and only specified deduction (e.g. ordinary payroll deductions, such as federal and state wage tax).

Productivity-based salary. These arrangements are not recommended for young physicians. This is because the level of proficiency required to generate reimbursements at levels necessary to make this model financially rewarding is rarely acquired fresh out of fellowship or residency. Further, if you are employed to establish a new practice or staff a new satellite office, your compensation may suffer as the practice’s patient volume is established.

Productivity bonus. Be crystal clear on how your productivity bonus will be calculated. Eligibility for a productivity bonus usually begins when you have generated between two and three times the value of your base salary. This allows the employer to cover your salary, expenses, share of overhead, and realize a degree of profit from your practice before sharing surplus profits with you.

Pre-employment compensation. Pre-employment compensation, such as sign-on bonuses, payment of immigration and associated fees, and relocation expense reimbursements are common, particularly with sub-specialists. Beware that an increasing trend is to structure these payments as forgivable loans, such that if your employment ends before a specified date (for example, the second anniversary of your employment), the sums paid to you or on your behalf are reimbursable to the employer.

Post-termination compensation. The contract should specify whether you are entitled to a bonus based on services rendered while employed but the reimbursements for which are recovered after termination.

Restrictive covenants

Covenants-not-to-compete are generally enforceable, except in states that commonly prohibit their enforcement (e.g. Alabama, California, Colorado, Delaware, Montana, Nebraska, North Dakota and Oklahoma) if the restriction is reasonable as to the geographical area, duration and the restricted activity.

The governing standard used by most courts in validating or invalidating restrictive covenants is “reasonableness,” which varies greatly between metropolitan and rural areas, and is determined on a case-by-case basis.

Practical advice: If your employer terminates your employment “without cause,” the effect should not be the same as if terminated “with cause.” As such, you should negotiate matters such as the applicability of the non-compete and post employment reimbursement obligations from this premise.

Physician duties/responsibilities:

Your contract should describe your duties, your professional schedule, and if applicable, any additional practice locations. If the success of your practice is contingent upon ancillary support and/or equipment, your contract should specify that the employer will provide such support in the form of, for example, personnel and equipment.

Professional liability insurance

It is standard practice for the employer to decide upon the type of coverage. The contract should specify the type of coverage and your policy limits. Generally, there are two types of malpractice insurance available: occurrence and claims made.

Termination

Termination may be “for cause” (i.e. based upon a reason or justification related to job qualification or performance by either party) or it may be “without cause” (no reason needed). It may not be for “bad cause” (race, gender or retaliatory, for example).

Make sure the conditions precedent of “for cause” termination are spelled out in detail and do not contain vague descriptions like “unprofessional conduct.”

Keep in mind that equally as important as the actual wording of the contract language is the intent behind such wording. Indeed, deciphering intent is a skill acquired over time and with experience garnered through the negotiation of similar contracts. Understand that contract negotiation is an art, a delicate dance of give and take between you and the employer.

Ultimately, you both want to secure your employment, albeit on different terms (as you of course seek the most favorable terms to protect your interests, and the employer seeks the terms most favorable to its interest).

If you are inexperienced in negotiating employment terms, you would be wise to enlist the assistance of a skilled attorney to review your contract, or advise you on how to structure your arguments (i.e. reasons in support of the employer accepting the revisions you propose).

Roderick J. Holloman (rjholloman@hollomanlawgroup.com) is the principal of The Holloman Law Group, PLLC, a health care law firm with clients throughout the country.

 

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Ask these before saying yes

Be ready to ask—and answer—these questions at your next interview.

By Roderick J. Holloman | Legal Matters | Summer 2014

 

In my practice, I find that a common source of professional discontent among physicians is a less-than-clear understanding or appreciation of the nature of the employment opportunity.

By asking the appropriate questions before accepting an offer of employment, you can better discern whether an opportunity will be a good fit and as a result save yourself a good deal of frustration. This guide was created to assist you during the interview process and alert you to issues you should consider, questions you should ask, and questions you should be prepared to answer.

Pre-interview considerations 

When you research a potential employer’s website before an interview, see if you can find the answers to the following:

1. What type of population or patient mix do they serve?

2. How many providers are in the practice or department?

3. Are any of the physicians within the practice or department particularly well-regarded?

4. How long have the physicians within the practice or department been in practice?

5. How long has the practice or department been in existence?

6. Have there been any recent practice acquisitions or mergers?

7. Are there any expansion efforts underway or planned?

8. How does the practice or department as a whole rank against similar organizations?

9. What is the practice’s mission and vision?

10. Is the practice in a highly competitive geographic area?

In addition to visiting the employer’s website, you should also search online to see if the organization has been in the news lately and for what reason. Write down interesting key facts that you might want to discuss during the interview.

Get in the interview mindset 

Always keep in mind that you are not the only one being interviewed. All parties are both interviewer and interviewee. At the end of the day, what matters most is whether the opportunity comfortably reconciles with your values and preferred lifestyle.

Remember to offer positive feedback. It is best to assume that there are other candidates being interviewed for the position you are contemplating. If two equally qualified candidates are being considered, an organization will virtually always make its offer to the one who shows the most interest in the position and who seems most likely to accept. Make your positive feelings known, particularly those that speak to long-term prospects, and be specific with respect to what aspects of the practice you like.

Objective interview questions to ask 

The structure of your interviews and, in turn, the opportunity to ask questions can vary considerably. Though there are dozens of questions you could ask, you should have a list of your top 10 so that if you have a limited window, you will always remember to pose the most important questions.

Below are suggested questions, listed in order of importance:  

1. What is the average payment type and ratio (Medicaid/Medicare versus private insurance plans)?

2. How does the practice assign patients?

3. How many hours per week will I be expected to spend seeing patients in the office and in the hospital?

4. How many patients will I be expected to see in the office per day? Per week?

5. What kind of physician would be a perfect fit?

6. Will I have to go to satellite locations? If yes, how often?

7. What is the anticipated call schedule?

8. What is the typical age, education and socio-economic level of the patients I will see?

9. What percentage of physicians hired in the past five years are still under your em0ploy? If less than 80 percent, why do you believe this is the case?

10. How long has the position been vacant, and to what do you attribute this period?

11. What support services are offered by the medical practice (assigned nurses, medical lab techs, secretary, transcriptionists)?

12. If recruited to fill a perceived need, what is the evidence that the area needs another doctor with my particular talents and skills?

13. What is the average number of new patients seen per year?

14. Are doctors here expected to dedicate personal time to practice development? If yes, how much?

15. What percentage of a physician’s time in this practice typically is spent on paperwork versus seeing patients?

16. What types of medical procedures are routinely performed?

17. What options exist, if any, for becoming a shareholder in the practice?

18. What are the conditions precedent to becoming a shareholder?

19. Historically, on average, how long does it take to become a shareholder? Who is the most junior shareholder?

20. What percentage of practice revenue is dedicated to overhead expenses?

21. What is the likelihood the practice will be acquired by a hospital in the foreseeable future?

22. Does the employment contract include a non-compete clause? If yes, what are its terms?

23. Are productivity incentives or bonuses included in the physician job contract? If yes, please describe.

24. What benefits are offered (health insurance, vision, dental insurance, license fees, professional dues)?

25. Does the employer pay for tail coverage?

26. How much dedicated continuing medical education (CME) time and expense reimbursement does the employer provide?

27. Exclusive of CME, how many weeks of paid vacation are offered annually?

28. Is relocation expense reimbursement offered?

Subjective interview questions to ask 

1. What do you like best about working here?

2. What bothers you most about working here?

3. Are your aforementioned views shared by your colleagues? If yes, please elaborate.

4. If you were the sole decision maker in the practice, what would be different and why?

Your appearance matters 

The physicians, and particularly the administrators interviewing you, will draw conclusions about your clinical competence and ability to fit into the organization based upon your appearance.

Men should wear dark gray or blue suits, or navy blazers and gray slacks. Shirts should be white, and ties should be silk and can be colorful with a conservative pattern. Socks should be dark and long enough to cover your calves when you cross your legs. Shoes should be black (and polished).

Women should wear conservative business attire, and makeup should be muted. If your jewelry is particularly impressive (such as a very large engagement ring), consider wearing only your band so as not to distract the interviewer (or worse, frustrate the ability to negotiate successfully for higher compensation based on a perception that you are well off).

Ask to bring your spouse

A major reason newly hired physicians ultimately leave is spousal dissatisfaction with the location of the practice. Bringing your spouse shows the prospective employer that you are thoughtfully considering the opportunity and are wise enough to know that more goes into the decision of where you will practice than your own comfort.

In fact, employers recognize that relocating to another part of the country is a family decision and may request that your spouse accompany you to dine with decision makers so everyone can collectively assess whether it would be a good fit. Your spouse, however, should avoid taking charge of the interview or becoming an overly aggressive advocate.

Questions you should be 

prepared to answer 

Before an interview, give thought to how you’ll answer some common interview questions:

1. Tell me about yourself.

2. Why did you choose to go into medicine?

3. What are you looking for in your next practice?

4. Why are you changing jobs?

5. Why did you choose our practice location?

6. What level of compensation do you require?

7. What are your long-term professional goals?

8. Why do you want to work with us?

9. What do you feel you can bring to the group?

10. Can you describe your approach to medicine and practice philosophy?

11. Ideally, how many patients would you see in the office daily?

12. On average, how long do you spend with each patient in the office?

13. What are your strongest clinical areas? Why are you of that opinion?

14. What do your patients like most about you?

15. What do your patients like least about you?

16. What do you feel are the most important contributions you have made to your former or current practice or hospital?

17. Have you ever come before any committee of a hospital or peer review group for review or had privileges revoked or suspended?

18. Have you ever had any disciplinary actions or problems of professional competence?

19. Are you aware of any past or present claims or investigations against you?

20. Have you had any malpractice suits?

Undoubtedly, your journey to this point in your career has not been short or easy, and you owe it to yourself to ensure that your next employment situation is one that suits you well, rewards your efforts, affords professional growth and development, and allows you to spend quality time with the people who mean the most to you.

Roderick J. Holloman (rjholloman@hollomanlawgroup.com) is the principal of The Holloman Law Group, PLLC (hollomanlawgroup.com), a health care law firm with clients throughout the country.

 

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