Life after residency―The money factor

By Jeff Eckert, MBA, CFM, CMA – President, MediCo Unlimited, LLC

As residents and fellows complete their training, they face significant professional choices. Some may choose to work for hospitals, others may opt for private practice, and still others might be drawn to academics or to start their own practices. Whatever the individual choice, compensation is always a key factor of employment. There are many resources that define compensation expectations for various specialties, but the details that go into arriving at that number are often difficult to find. It is risky to “hang your hat” on that single number without understanding the underlying structure of the compensation. As we all know, the devil is often in the details. Hopefully, this brief synopsis of a highly complex issue will help prepare you to gather vital information before you place your signature on the dotted line.

Whether you choose to work on a fixed salary or on some type of productivity system, your income will ultimately be tied to expectations that affect your compensation. You should have a clear understanding of what those expectations are, and you should make sure that you are responsible for only those issues that are under your control. It is important that a feedback system be in place that will communicate those expectations to you, especially until you reach partner status. Some of the basic expectations that are typically required under any pay system are described in the list that follows. All of these are under your control, and failure to meet these expectations can affect either salary or productivity pay plans.

· The minimum number of clinical hours you will be expected to work

· Board certification requirements, including time limits to achieve certification

· Amount of call coverage expected of you

· Minimum patient/staff survey scores expected of you

· Expectations for your participation in meetings, conferences, committees, etc.

· Minimum annual RVU generation expected of you

· Timeliness of medical records and dictation

Activities that are out of your control, such as those that follow, should not be part of the pay system.

· Billing office efficiency. Tying your income to the percentage of billings collected; i.e., the collection factor.

· Arbitrary allocation of costs that you do not control; e.g., pro rata cost sharing of external transcription costs that you do not utilize

· Annual changes in RVU’s by CMS, without corresponding adjustments by the corporation

· Structural shortfalls; e.g., lack of clinic time due to a shortage of exam rooms

There are four global compensation questions that need to be answered to your satisfaction. These questions address fairness, common values, and full disclosure, the cornerstone of long and successful relationships:

· Has the practice or the hospital quantitatively defined “productivity” or the requirements for obtaining full pay?

· Are the requirements reasonable, and do they reflect annual market changes?

· Is the compensation system aligned with the corporation’s value system and your own personal values? For example, does the hospital that serves the poor allow for a significant amount of non-revenue producing indigent care?

· Does the compensation system consider differences in individual physician roles? For example, one physician may be involved in research and new program development, while another may not.

Other compensation issues that are often overlooked include the following:

· What external physician earnings belong to the group; e.g., expert witness fees, honorariums, inventions, books, moonlighting, etc?

· Should you leave your place of employment, what accounts receivable will you be allowed to keep?

· What pre-tax physician expense account is available for clinical purchases?

It is always important to realize that there are flaws in every pay system. No system is perfect. In fact, it is unrealistic to think or demand otherwise. Relying on anecdotal data is a trap that poisons physician/employer negotiations. It is better to focus on asking the right questions, and the dollars will take care of themselves.

For more information on this topic and to request a comprehensive productivity pay checklist, you may contact Jeff Eckert at 913-851-1887 or e-mail jeckert@medicounlimited.com.