PERSPECTIVE

Emergency Medicine Physicians are Not Contract Attorneys

One thing they don’t teach in residency is how to look for a job once you’re done. This may be the most important career decision you make and it’s very likely no one has prepared you. Where you work and who you sign on with can determine your lifestyle, your schedule, and your ability to influence how you practice.

Let’s dive into some of the differences between models and some of the terms you will see in various contracts.

Scott Lopata , MD

Regional Director

Published September 19, 2024

Hand holding a pen poised to sign a contract

Hospital Employed vs. Contract Group

This is the most basic delineation. Do you prefer to work for a hospital as an employee or for a group which contracts with the hospital to provide emergency department coverage?

There are advantages to both – with a hospital employment model, you normally have a guaranteed minimum number of hours at a set pay rate. Hospitals will generally be sensitive to the “fair market value” of physicians in the area (how much will the average physician working in the emergency department demand to provide coverage).

With a contracted group, there may be more flexibility to increase or decrease the number of monthly shifts you desire, and you may be able to work at several different facilities vs. a single hospital.

Contract Group Models

There are three basic types of contract groups: private equity funded, debt funded, and self-funded. What makes them different?

Private Equity Funded – these groups receive operational capital (money) from several sources but mainly from billings (direct patient care with reimbursement from insurers and patients) and from an agreement with a private equity firm which infuses the group with money as needed to run the operations. This may allow the group to pay providers at a higher rate than if the group was being funded by patient billings alone.

The downside is that the cash infusion comes at a cost: private equity expects a positive return on their money and payback can come at inopportune times for the group. Examples include the recent bankruptcies of Envision and American Physician Partners (the latter causing hundreds of physicians and Advanced Providers to be suddenly caught in the middle of transitions which occurred with two weeks' notice…and some of these providers are still involved in lawsuits against APP).
Debt-Funded – these groups finance themselves in a similar fashion to the private equity groups but do so using more conventional business loan structures. However, those loans (usually) require intermittent interest payments and, eventually, repayment of principle. As a result, finances of these organizations can look good on the books but in reality are subject to interest rate fluctuations.
Self-Funded – these groups have no debt and are entirely self-funded leaving them to run their operations as they see fit. Make sure you’re asking the right questions – specifically, “does your organization have any debt?”.

Senior Resident Resources

In your final year of residency? Check out the resource section for more information.

Contract Group Considerations

So, you’ve decided to work for a contract group. Your next decision is whether to work for a democratic group or an employed model. At first glance, it would appear the differences are easy to determine. However, the word “democratic” means different things to different people. Let’s look at some of the differences:

Employment Model – as with the hospital employed groups discussed earlier, an employed model is just that. You receive a contract from a group to be their employee. Your contract will outline your salary (usually an hourly rate) along with the expected number of hours or shifts. It may include expected performance and may even allow for bonuses based upon productivity or performance depending on the organizational KPIs (Key Performance Indicators – those items which are being focused on at that moment. Examples include Door to Doc times, Sepsis Compliance, or Patient Experience Scores). Keep in mind, the person working next to you might have negotiated a higher hourly rate and may be making significantly more money for the same job!
“Democratic” groups – these can be divided into the truly democratic vs. “democratic” and can sometimes take a bit of research and asking of a lot of questions.

“democratic” (small “d” intentional) – Being “democratic” only requires voting. Make sure you understand exactly who is voting and on what. Some “democratic” groups will have several owners who make all the decisions while those physicians working in the emergency department will not only work the majority of the unwanted shifts, but those same owners will siphon off a portion of the money earned by the other non-voting members of the group to pay themselves.
Democratic – these groups invite everyone, including those just hired, to participate in the voting process whether at the site or on an organizational level. Most of these are partnership, rather than employment, groups. A partnership means that everyone is a part owner of the organization with the rights and responsibilities of the owner of a business.

If I had 9 hours to chop down a tree, I’d spend the first 6 sharpening my axe.

Abraham Lincoln

Malpractice Considerations

During residency, you have been covered by your institution’s malpractice. As you exit, you need to understand the nuances associated with some coverage.

Claims-made vs. Occurrence – Claims-made policies cover only those incidents which are reported within the policy’s timeframe, unless tail coverage is purchased. Occurrence policies provide lifetime coverage for incidents which take place during the policy period regardless of when the incident is reported.
Tail coverage – Understanding who is responsible for tail coverage (covering prior incidents if you leave the organization or the policy lapses/expires) is key. These days, most practices carry long-tail liability policies that cover both current and former physicians. However, it's worth asking about this when evaluating a benefits package.
Support for disciplinary actions or lawsuits – Whether it’s a poor clinical outcome or a disgruntled patient complaining to the medical board, investigations happen and can be a black mark on your permanent record. Some physician groups choose to settle lower-cost claims rather than defend them. A malpractice claim carries a stigma that will stay with you throughout your career, so it’s important to find out how aggressive a prospective group is when it comes to defending its physicians.

Benefits Considerations

When evaluating an employment opportunity, you must consider the full benefits package, not simply the salary. Being an owner in a physician partnership, for example, can provide significant tax advantages that corporate employment doesn’t offer.

Tax-deductions: While corporations can cover some expenses like healthcare and continuing education, they do not allow you to take any tax deductions outside of a 401(k). By contrast, partnerships permit you to deduct expenses such as CMEs, health plan premiums, home office expenses, and business-related cell phone, travel, and internet costs.
Retirement: While it may seem far away, you should consider your ability to plan for retirement as soon as possible. As you know, healthcare is a taxing profession, so you’ll want to give yourself a good cushion so you can retire comfortably before you become too burned out. Most corporate groups let you aside $23,000-$46,000 per year in a 401(k), including matching funds. At Vituity, however, physician partners can shelter as much as $109,000 a year between a 401(k) and a Defined Benefit Plan.

Retirement Savings - Vituity vs. Competition

At many other groups, you'll need to work eight years longer to reach your retirement goals than you would at Vituity.

Close the Deal on Your Future

When conducting your first job search, always remember to:

Do your homework on potential employers and prepare a list of questions to ask during each interview.
Take advantage of financial planning resources the prospective organization offers to help you understand how the company’s benefits compare to the competition.
Be objective about salary and bonuses and consider the tax implications of the employment arrangement.
Think about what the best choice for you will be in a decade when you are preparing to send your kids to college. Farther down the road, will you be able to scale back your workload or retire when you’d like?

Physician contracts are not “take it or leave it” propositions. There is room to negotiate on things like salary, loan forgiveness, and more. Remember to get everything in writing, because handshake deals are not legally binding. If you don’t like a contract provision, and there is no reasonable way to change the terms, then that is a strong signal to walk away.

Spend those 6 hours sharpening your axe!

Emergency Medicine physicians are not contract attorneys. We’re not business majors, and we aren’t taught how to evaluate potential employers. Know your limitations and do your research. Ask questions - find out about benefits, malpractice, financial solvency.

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