Episode 2: Physician Compensation (Transcript)

SPEAKER_01: Welcome to the Heroes of Health Care podcast special edition. I'm your host Ted Wayne. Our guest today is Roger Bond's CEO of PhysicianCareerAdvisor.com. He has advised physicians on their career for over three decades and has reviewed over 3,000 physician employment contracts and physician partnership agreements with private practices, hospitals, academia and managed care companies. He speaks at medical seminars and conferences with over 2,000 presentations attended by over 150,000 medical and health care professionals. We're excited to have Roger here. So let's jump right in. Before we jump into today's topic on compensation, this is just a reminder to our listeners that this is not to be considered tax advice. Please check with your tax professional before making any financial decisions. So Roger, what effects of physicians' compensation, fellowships, RVU's experience, how can they tell if they're being fairly compensated for their qualifications? Excluding money, what types of compensation can physicians discuss? You know, equity, stake, medical building investments? And as always, what are some of the red flags one should consider when discussing compensation?

SPEAKER_00: Compensation is affected by so many variables. And yes, it's going to depend on what your training is. But of course, it's going to depend on are you a sub-specialist? Are you actually working as a generalist? But it could be, let's say you're a general or yourrologist and you're in a big city and you're going to be paid extra million dollars, probably the bigger money. But you go out to a rural environment and you think, well, that's probably going to be smaller money. But wait a minute, what about the factor? Are they able to recruit someone in that smaller community? And if they can't recruit someone, then the money goes up, up, up, and that has not as much to do with what your training is. But it could be that you're training you think, well, I'm sub-specialized in female pelvic reconstruction and that you should automatically get paid more. And then you find out, wait a minute, I'm being paid less than the general urologist. And why is that? It's because the procedures are paid. And depending on how much time you have to spend on those sub-specialized procedures, there are many variables. We're going to look at what region of the country you are in. What is the pay or mix? Hello, the money that's coming in. Is this going to be from Medicare and Medicaid? A lot of this is at private pay. It's going to be a good insurance program. Again, are you in a more rural area or is it a metro area? You could be in the metro area and there's a lot of competition with other specialists, your specialty. And you just can't have as high rates on this. So all of these can be considered. But perhaps the biggest factor in today's market is your productivity that's measured by work RVUs. And these relative value units, how many do you have per week, per month, quarter per year. And compensates you on that. Now these numbers can vary dramatically where the weather is the individual work RVU or it could be that you're paid a base salary plus RVUs. And where do they get those numbers? Well, first of all, they can rely on these salary surveys and there are many, many salary surveys out there. I enjoyed yesterday looking at Docksimity's newest salary survey information. But the ones that have been around for many years, I did the intensive investigation on salary surveys for the nation's largest medical specialty association. And what they had me do is look at this so carefully and see what is the source of the data and be able to compare these, trying to figure out what is the best that they can provide to their membership. And when my report, a long report came back to them, I think they were shocked. Frankly, I didn't know that much until I investigated this either to compare these like that. And it was shocking to see how different the numbers were. Now the larger of course the population is probably the better the data is going to be, but it still can be quite, quite different. So what do we do when we're looking at national data? Of course, we hope there's enough data, but it depends on your specialty or your sub-specialty that regional data is enough to be dependable. And then how old is that data and who reported it? Let's say how old that data is. If you are going to take a position next year and you're trying to quote, negotiate this agreement this year, but it's based on the salary survey data that's from the last year, look at the amazing length of time between those. And in turn, if you take that position based on that old, old number, well, the employers are hoping that's what you'll go for. I worked with the employers. I've consulted in 46 different states. I've had tens of thousands of them attend my training intensive five day course on how to contract, compensate and employ physicians. I know what they're talking about. And behind closed doors, they'll even take those salary surveys, see which one of them works best for them, for the numbers that they want. And sometimes they'll even merge those surveys and say, well, we're going to take an average of averages. Well, the survey is an average of averages in the first place, but they're coming back with the number that's going to work better for them. Also later at the salary physician income committee, what are they going to be looking at? Well, they're going to look at the data that's provided to them. And again, it may be the ancient old salary survey information that you're looking at. Now what you have to do is know what the current market pays for your specialty, subspecialty, and that particular geographical area at that time. And if we're talking about next year for your subspecialty in that particular city of Chicago, then we need to know what the physicians are making in that environment. Is this one of the smaller hospitals? Is this one of the larger ones? What type of private practices? This is going to be one of the big managed care companies. Once you have that information, if you have enough networking or like I do so many of these, then we know much better. What's the real number? And we're not basing it on what some salary survey said. Salary surveys are good, but that's just foundational information. There are so many red flags when it comes to compensation. Gosh, where do we start? One of the big red flags is, is the information they're giving us? Is it realistic? Is it believable? What are we going to have there? And you may need to ask around. We may need to ask around to see what we think is going to be realistic in your particular situation. Now whether you've been practicing for years or if you're just starting out, we need to look at these numbers. And I especially want to know, what are you going to earn for year one, year two, year three? Now year one, they may or may not have some sort of productivity bonus on that or maybe they do. But oftentimes, so tell you, oh, productivity bonus starts day one, but we need to get some realistic information. What sort of productivity can you have? And then what is it going to be for year two? Maybe that productivity is starting to kick in and maybe it's year three. But they can have all sorts of bonuses there. Like for year one, maybe they're giving us that signing bonus. But maybe at the end of year one, beginning of year two, they have what they call a retention bonus. You know, it's another 25,000, number 50,000 automatically. It doesn't have anything to do with the productivity bonus. But then they may have some sort of quality bonus that you're going to be offered. That quality bonus could be a little, could be a lot. Sometimes they'll have that information, the basic information in the agreement. But they don't tell us how much it is. And it's not only how much it could be, oftentimes that's the number when we ask how much might this be. And they say, oh, it's $25,000. We need to know what percentage of the time is paid out or even better. What's the average amount paid out in my specialty from your particular hospital or group practice? What have you? And we get some realistic numbers there. By the way, though, you have to see if you think you can trust them and forgive me. And I've worked with so many, many of these employers coast to coast, but not all of them are going to be upfront with you and give you the proper information. I'm trying to be kind with my words at the moment. I'll give you an example, one of the largest healthcare systems, hospital systems in the nation. They gave my client the numbers we were asking for. And I looked at it and went, I know that state. I know their hospitals. They used to be a major client of mine. And some time ago, there was no conflict. And I know what other specialists, the same specialty, are earned in that state because of the volume seen each year. And this does not sound realistic. So I said I want historical data. What other physicians in this specialty have been earning at this particular hospital? So well, the hospital has made so many changes that we can't really give you pertinent information. Then they came back with, well, that's all proprietary information. What nonsense? We aren't asking for anybody's name or MPI number, anything like that to associate with this. And so I was begging my physician client, please don't sign this. This sounds very suspicious. I don't say how you're going to make this kind of money. You're looking at dropping out of an illustrious career where you are moving halfway across the country. And I don't think you can make this kind of money. And the big reason this individual was making the change was to earn more, and deserve to earn more. We finally got some information from them. And it was from a couple of other hospitals that they had that they thought, well, this would be comparable. We looked at the numbers. We verified the numbers as best we could. And you know what? That was what I call a pseudo-bonus plan. That compensation was completely made up. Was it misleading? Yes, it was. As a matter of fact, it's not unusual that physicians who are misled on something like this, they turn around and sue the employer. That's what I teach why I'm working for the employer side. And they come to one of our conferences teaching on this telling you better not exaggerate. Because you can be sued for this sort of thing. Well, here we had in this large healthcare system, you know, like no one's in charge and someone within that division, they're so large they have different divisions geographically and by size of the hospital that no one is taking responsibility. They're just throwing numbers out there and they were about to abuse this particular physician. Well, of course that physician went somewhere else. That same individual company in a different region, I thought, well, that's isolated because I'd not seen them do that before, but we were very careful. It was in another state and it was six months later, exactly the same thing. But my radar was really up on that particular company in the first place that gave us the historical information of what this physician should be able to earn based on what others have earned. And in turn, it was a pseudo made up compensation plan. By the way, that physician still wanted to move there because the physician's significant other was from there and we said, well, that's not realistic if you will increase the base by $100,000. We'll go ahead and take this. Well, they needed a doctor very badly. They tried it in turn though and they'll do this quite often, putting in some more parameters such as, oh, instead of a three-year agreement, we need to do a five-year agreement on this. And the physician said, no, I'm not signing a five-year, half a decade contract with you. And if you'll pay me this kind of money, which was reasonable, you'd definitely make that kind of money, but they wanted to make a big profit on that. And if he would be able to earn that kind of money, he would go ahead and sign. Well, they signed him and they gave him other money that he had been asking for and it worked out. But please be very, very careful. We need to project how much money you are going to earn for year one, year two, year three. Usually by the third year, you are now at the level that will be your standard for years to come. Of course, there'll be fluctuations in variables with that. But overall, once we get to year three, that's your income.

SPEAKER_01: Thank you for these insights, which are really valuable for our physician community. If you enjoyed this information, please look out for the other topics we'll be covering with Roger. If you want to learn more, visit PhysicianCareerAdvisor.com. Thanks for joining us on this special edition of the Heroes of Healthcare podcast. We'll see you soon.