ASSESSING PRACTICE OPPORTUNITIES AND EMPLOYMENT CONTRACTS JAMES T. BREEDEN, M.D.

JAMES T. BREEDEN, MD CERTIFIED FINANCIAL PLANNER DEGREE (CFP) 1985 MASTER OF SCIENCE IN FINANCIAL SERVICES (MS) 1995 PRESIDENT, MJB, INC. FINANCIAL CONSULTING PRESIDENT, CARSON MEDICAL GROUP - 21 PHYSICIAN MULTISPECIALTY GROUP FOUNDER, DIRECTOR CARSON AMBULATORY SURGERY CENTER FOUNDER, DIRECTOR SIERRA SURGICAL HOSPTIAL 2005 – PRESENT ACOG NATIONAL TREASURER NO CONFLICTS OF INTEREST

QUESTION? Are residents and young physicians prepared to evaluate the business and practical aspects of their new career choices? 50% of newly graduated residents change practice locations in the first 2.4 years. Source: The American Academy of Medical Management

Demographics of Practice Women22%26%39%47% Average Age 45.7 yrs47 yrs46.5 yrs 49.5 yrs 44.2 yrs Years in Practice 14 yrs15 yrs 17.6 yrs 12.2 yrs Men – Age Practice 53.8 yrs 22.0 yrs Source: ACOG Socioeconomic Survey of Fellows, 2008: Profile of Ob-Gyn Practice

Practice Setting Trends Source: ACOG Socioeconomic Survey of Fellows, 2008: Profile of Ob-Gyn Practice From 1991 to 2007 –Striking decrease in solo practice (33% to 23.6%) –Single specialty group size increased (4 to 6) –Urban salaried positions are more popular with women –Large increase in salaried employees in private practice groups

Private Practice Settings Source: ACOG Socioeconomic Survey of Fellows, 2008: Profile of Ob-Gyn Practice

Evaluating the Options Livability Factors – Value to Your Life location, family, cost of living, career of partner, recreation, entertainment, traffic, transportation Type of Practice – What type of work Compatibility with the Group number, age, gender of physicians, philosophy of practice, professional credentials Office Management – Facilities, Equipment Business Systems – group governance, payer mix, contracts, billing and collection systems Hospital Characteristics – size, level of services, quality of staff, proximity to home and office

Compensation Offered Source: Merritt Hawkins & Associates Summary Report 2008 Review of Physician Recruitment Incentives

Compensation Offered Source: Merritt Hawkins & Associates Summary Report 2008 Review of Physician Recruitment Incentives Average OfferRange Income$255,000 $160,000- $405,000 Signing Bonus$24,800 $4,000- $200,000 Relocation Allowance $9,800 $1500- $20,000

Fringe Benefits Offered Source: Merritt Hawkins & Associates Summary Report 2008 Review of Physician Recruitment Incentives

Employment Status What will be your relationship with the organization you are joining? –Employee –Independent contractor –Locum tenens –Full-time or part-time At-will employment

Term of the Agreement Length of term must be defined Does automatic renewal occur? Can the contract be terminated? –For cause (defined) –Without cause How much notice required? Will there be a “Non-Compete Clause”?

Liability Insurance Who will pay the premium? What limits will be provided? What type of coverage will be purchased? –Self insured –Occurrence insurance –Claims-made insurance Who will pay for any “tail” or “nose” coverage

Sickness and Disability Will your pay continue during disability or illness? Will disability insurance be purchased? –Elimination period –Own occupation –Benefit level and duration Can you be terminated during disability?

Termination Under what circumstances can the contract be terminated? –For cause (defined) –Without cause How much notice is required? –If you terminate –If the employer terminates

Restrictive Covenant Limiting practice in entire counties or states – probably not enforceable Exclusions from practicing at a given hospital Extended time frame of restriction But if reasonable time and geographic limitations especially if only reasonable monetary penalty, legal in all but 8 states

Future Relationships Establish an understanding of the pathway to become a partner or shareholder Buy-in methodology Decision making Financial risk sharing Ask for a letter of understanding if this is not in the contract

Will arbitration be mandatory? Will the prevailing party be entitled to attorney fees and costs? Contracts should try to avoid litigation as costly and time- consuming Dispute Resolution