Remember graduating from residency and mentally composing your venn diagrams galore trying to make sense of your job options? Or maybe you’re still a resident and just beginning to consider the differences. From outlining your personal and professional goals, the pros and cons of each job, understanding the differences in work-life balance, etc., there lies a mess of confusion. But alas, ultimately you pick a job, for better or for worse! Maybe now you’ve been an employed physician for the past five years and are looking to transition to academics or private practice. Or perhaps you are within a few years of retirement after decades at a stable private practice and are looking for a clinical opportunity to ‘semi-retire’ for those final few years. Regardless of where you are in your career, the differences between job opportunities abound and are worth a refresher. In this blog we review the 5 key differences between various job types, i.e. locum tenens, employed, academics, private practice.
I list this first because I recognize this is nearly every physician’s primary concern, but please don’t disregard the remaining four categories. Compensation models and rates are highly variable amongst jobs. The three most common models are salaried, wRVU production-based, and collections models. To briefly define each of these, a salaried model is a set compensation rate typically by time (ex. $285,000 per year or $178 per hour). A wRVU (“work relative value unit”) production-based model includes a conversion factor agreed upon in the contract (for example, $48 per wRVU) and calculates the wRVU value associated with each clinical event you perform to determine your total salary or an production-based bonus above your base salary. The Center for Medicare and Medicaid sets an RVU value for each clinical activity and the wRVU is the portion for which the physician is compensated. In a collections model, physicians are compensated based on the income they generate for the practice, or what is “collected” for the work that they have provided. Unlike in a wRVU model, in which the physician is paid on production, in a collections model the physician is paid based on the physician’s service actually being reimbursed to the practice.
These models can also be mixed and matched by an employer and/or can evolve the longer you are with a practice. Generally, salaried models are most common in locum tenens and in the early years of any private practice, employed or academic physician, although this can also be dependent on your clinical field. Many hospitalists, OB laborists, and ER physicians will have an hourly or shift-based rate by contract. Many early-career physicians will be on a salary guarantee for two to three years, then transition into one of the alternate models. For employed and academic physicians, this is most likely a wRVU production-based model. Private practice physicians will often transition to collections-based models.
Additionally, compensation rates are often highly variable by job type. Locum tenens often pays the highest, although it is important to recall these are typically Independent Contractor positions so no benefits are included and you are responsible for your own taxes and social security tax, which is often of huge monetary value. Academics tends to pay the lowest, at least initially, but there may be pay increases with faculty development, non-clinical stipends for committee or administrative work, or opportunities for non-wRVU based bonuses as well. Private practice often compensates at a low value on initial guarantee, but over time, with autonomy, flexibility, and creativity, physicians in private practice can earn around 15% more than their hospital-employed peers. And finally, employed practice will often pay the highest, at least initially, when you consider both salary and benefits. I cannot emphasize enough the importance of considering your contract as a whole (as well as your personal and professional short- and long-term goals), and not just focusing on the compensation value itself; as you can see here, the compensation is a small portion of the greater picture.
Benefits are huge! Don’t forget about benefits. There are a number of benefits that can be provided by a practice and these are important to review with the Human Resources representative at your potential employer to best understand the full extent of opportunities, which can be valued at upwards of $30-60,000 per year above and beyond your compensation. Some of the primary expected benefits include health/dental/vision insurance, life and disability insurance, retirement plans, paid time off, and CME. Beyond that you may see options such as discounts on auto/home insurance, gym memberships, legal access, child care, parental leave.
For starters, locum tenens opportunities are generally 1099 and therefore have no benefits included. For providers who have a significant other employed in a full-time position, you may be able to sign onto a family insurance plan. For others, you can look at private insurance or on healthcare.gov for Marketplace coverage. Retirement options are available such as SEP IRA or Solo 401(k) plans and options pertinent to you can often be best explored with your financial advisor. Disability insurance and life insurance are available for purchase as private plans.
Academics, especially if you’re working for the state, will often have strong benefits packages – pension plans, excellent and inexpensive health insurance, multiple retirement account options with a strong match, perhaps ongoing-learning incentives for additional degrees, etc. Employed physicians will probably see a variety of benefits, similar to their academic counterparts, perhaps with a slightly higher rate or with other caveats such as a delayed retirement match. Private practice may be a little more limited as you and your partners are contributing to the cost of all of these, so there may not be certain benefits such as a retirement match or disability insurance included.
With all practice types, it is important to explore all of the benefits in detail and also remember to ask when benefits take effect. When does your health insurance begin? When can you start contributing to your retirement plan and when will the employer match begin to take effect? There are often one month to even multi-year delays for these options. As with the entirety of the contract, the devil is in the details.
As we all know, make sure you have an appropriate malpractice insurance policy for your field and that you know who is paying for it! Locum tenens physicians working with a locums company should have malpractice covered by the company – these vary by state and specialty and hospital requirements and are often occurrence based policies or claims-made with tail, but one can never assume, so please do your due diligence to confirm the limits and the terms of the policy with your locums company.
Academic practices generally will supply an appropriate policy and may even have state-based policies that provide excellent coverage for their physicians. Employed physicians may offer any number of possibilities, so please review accordingly. Although many have transitioned to occurrence based policies or claims-made with tail, there is no guarantee of this so the details must be explored thoroughly. Lastly, private practices again will consider cost, so they are the most likely to have a claims-based policy without tail included, so please remember to either negotiate that coverage into your contract, budget accordingly for when you leave the practice, or identify another creative strategy. It is never fun to be caught with an unexpected 6-digit bill (a cautionary tail was a young OBGYN physician who was hit with a $184,000 bill for tail coverage, ouch!) that is due upon receipt.
Restrictive covenants, arguably most importantly the non-compete, are often seen in employed or independent contractor deals, not usually in locums agreements. There are many state differences and this is constantly changing.
Keep in mind there is a sort of non-compete in locums contracts. In the locums world, this generally means that if one company presents you to a hospital, you cannot be presented to that hospital by another company nor can you seek a job there on your own without violating your locums contract and/or the original locums company receiving a kickback, which may be due by you or the hospital and could potentially cost you a signing bonus. This restriction typically expires after 24 months.
Non-competes for academic and employed positions are often more restrictive. They may not, for example, allow you to work in clinical medicine for 1-3 years within a few blocks to up to 100 mile radius of any location at which you provided clinical care. Knowing these details upon initial review may allow an opportunity to negotiate a less restrictive non-compete or agree upon some exclusions ahead of time (for example, a OBGYN may have an exclusion that allows him or her to work as an OB hospitalist within the radius and during the time of the non-compete without violating the contract). Generally volunteer positions or federally qualified health centers are exempt from this clause.
Private practices may have an equally restrictive non-compete as outlined above, an entirely unique one for those who are partners to prevent starting a competing private practice, or may have none at all. When you are working with and negotiating with fellow physicians, you are likely to find we are often more reasonable and physician-friendly than a large corporate employer may be…go figure!
All good things must come to an end, and it is well worth your time to be prepared for that moment. Understanding ahead of time termination processes, protocols, and costs is critical to a smooth exit. Life changes and so oftentimes our jobs need to as well.
For locums, it is important to determine your termination notice and the hospital’s (typically 30 days for both parties), and what impact that may have on you. Often if either party cancels >30 days from the assignment there is no penalty, but termination <30 days requires payment for the services that were not completed. This should be clearly defined in your contract. Most have a 30 day termination provision. Generally this is equal for both parties. Please be on the lookout for unequal provisions (ex. the provider has to give 60-days’ notice while the facility gives only 30-days’ notice) and consider how that may impact you.
For private practice, being aware of termination costs within private practices will help protect you mentally and will financially prepare you for that transition. For example, private practices are less likely to cover your tail insurance, so knowing this ahead of time, receiving quotes for tail, and putting that money aside for future access will greatly relieve future headaches. Another question to consider is what happens to the shares/partnership if you pass away or become disabled. And finally, confirming how you will be paid for all of the services you provided even when collections occur after your final work date or if a private equity acquisition occurs, provides you full compensation for the duration of your time with the practice.
Academics and employed positions are similar to the above considerations. Know your termination notice, which is more likely to be in the 90 to 180 day range, and the associated costs. Additionally, some academic and employed positions are now incorporating a two to three year time in which you cannot terminate without cause, so you are essentially beholden to the company unless something egregious occurs and you are able to terminate with cause or both parties reach a mutual agreement.
In summary, although the above five areas highlight key differences, a complete review of your contract remains critical. If you are interested in more details regarding locum tenens or private practice, please dive into their associated blogs, or one of the many others we have available to better support our physicians. Additionally, negotiation strategies may change depending on the practice you are considering. Often there is more leverage to negotiate with a private practice than a large academic or employed institution, however I always remind my fellow physicians, everything is negotiable! At minimum, please do your due diligence to thoroughly review your contract, understand the nuances and the risks and benefits, and negotiate any areas you may need to in order to achieve a contract that reflects your own personal and professional goals. Here at Contract Diagnostics, we can expertly help educate and guide you through every step of the process!