FINALLY ON YOUR OWN Advice for Graduating Medical Residents and Fellows

1. FINALLY ON YOUR OWNAdvice for Graduating Medical Residents and Fellows Mark W. Delehanty Klampe, Delehanty & Morris, LLC 975 34th Ave NW Suite 400 Rochester MN 55901 507.288.2447 mark@klampelawfirm.com (Adapted from materials originally prepared by Mayo Clinic Legal Counsel Kathleen A. Meyerle)

2. FIRST THINGS FIRST…The Transition into Private Practice Give yourself enough time (start dates are negotiable) Written contracts are the norm Go see the practice/community before committing Talk to a physician who isn’t recruiting you

3. THE “TYPICAL”ARRANGEMENTTHE FIRST YEAR Usually you will be an employee only No buy-in for a few years Some practices will always be employer/employee No physician ownership Physician-Owned practices more common with sub-specialists (Radiology, Ortho, Anesthesiology)

4. ISSUES TO ADDRESS EARLY ON Do they offer a signing bonus? Will they pay a trip to check out the practice/locale? - Spouse too? Practice arrangement: - Number of colleagues - Call schedule (usually not spelled out in the contract) - Any big changes in the works? Production/work hours expectations… - will they give time off for Board Exam and /or pay the fee?

5. LEGAL CONTRACT BASICS KEY ELEMENTS…. The offer Negotiate changes Acceptance (sign the contact) Don’t “accept” (don’t sign) until you know you want to commit and the details are worked out Typically not every single detail is expressed in the contract. There should be a level of trust Many physicians benefit by having an attorney they retain review the contract once they are serious about accepting – ourtypical fee $350

6. TYPICAL CONTRACT TERMS Duties Licensure in order; no restrictions Disclose any prior bad acts Compensation Benefits (often these are not spelled out in the contract, but are on a summary sheet; benefits aren’t usually negotiable – they apply to the whole group equally) Vacation/CME/expenses they’ll pay In Addition…Employer should promise to help with hospital privileges; credentialing; particular State’s license

7. DUTIES Employer… Physician… Compensation Benefits Leaves Expenses Liability Insurance (Malpractice) Facilities and Support • Work Effort/Good Behavior • Standards of Practice • Confidentiality of Records and Business Practices • Non-Compete Agreement • Scope of Services - Maintain qualifications - Board Certification/Eligible

8. FACILITIES AND SERVICES What they’ll provide… Equipment - Spell out anything special you’ll need Facilities Supplies Medical and Administrative Support Books and Records Billing System

9. COMPENSATION FINANCIAL TERMS Guaranteed base salary at first… Other Compensation Terms… Sometimes Production Incentives Time Commitment - usually fulltime required Practice Buy-in: When and How Much? - Curiously…often that is not disclosed in any detail Production Incentive - Sometimes capped Medicare Coding - Physician must commit to honest coding/billing Tax withholding mandatory

10. TYPICAL BENEFIT PACKAGE Health/Dental Insurance (IRS requires these benefits be equal for higher and lower compensated employees - no negotiation) Long Term Disability (usually inadequate) Life Insurance (often only $50,000 - the maximum they can write off) Vacation/sick time PTO Retirement Plan (typically 401k, and sometimes additional profit sharing) Pre-tax Spending (health and childcare)

11. WHICH EXPENSES ARE REIMBURSED? Most contracts say employer will pay: • License • DEA • Hospital Privileges

12. Paid by employer OR set amount to spend from? Contracts vary in how the following are paid: • Dues and memberships • Journals and Texts • Equipment • CME (including CME travel expenses) Most practices give a set amount and you “spend” it how you want Some practices will pay all “professional” expenses without set limit

13. PROFESSIONAL LIABILITY INSURANCE(Malpractice) Two types of coverage… OCCURRENCE (more expensive - less common) The insurance coverage follows you and protects you with the coverage that was in place when the event being sued over occurred (even if the event occurred years earlier) CLAIMS MADE (most common - at least in Midwest) The insurance in place at the time the claim is made against you, covers you (even if the event occurred years earlier)

14. CLAIMS MADE COVERAGE CAN LEAVE A COVERAGE GAP What happens if you move from a practice that had “claims made” coverage to one with “occurrence” coverage? No protection for claims arising from time at first practice but not asserted until after you’re gone Same issue with retirement; military service; move to academic medicine or public sector

15. SOLUTION IS “TAIL” COVERAGE…also referred to as a“Reporting Endorsement” Buy it when you leave a practice with “claims made” malpractice coverage Provides coverage for claims arising from time with that practice but made any time after The longer you practice the higher the cost for the tail THE KEY ISSUE IS…WHO PAYS THE TAIL?

16. WHO PAYS THE TAIL?THIS HAS TO BE AGREED BEFORE YOU SIGN What you can do… Agree in advance the employer pays the tail (about half will) Ask about the cost (primary care is less expensive than many specialties) Some employers agree to pay it all Some employers will pay the tail IF they end the employment “without cause” (i.e. you haven’t done bad things)

17. OTHER IMPORTANT CONTRACT TERMS • Non-compete agreement • Most contracts can be cancelled if the physician does “bad things” (felony; loss of license; loss of privileges, fraudulent billing etc.) • What is the “Real” duration of the contract (many say one year, but can be revoked without cause by either side on 90 days notice, therefore only 90 days is guaranteed)

18. NON-COMPETE BASICS Some states don’t allow them but most do, including Minnesota Courts dislike them, but enforce them Rationale: Protects employer good will and investment in the employee

19. TYPICAL TERMS OF A NON-COMPETE CLAUSE • Enforced no matter why you leave even if forced out • You agree not to practice within specified distance of employer’s offices (up to100 miles is usually ok) • Duration not more than 1 to 2 years • Stiff penalty if you violate Not just money- they can stop you from working

20. Don’t Sign Non-compete Unless You Can Live With Being Bound They are usually not negotiable Expensive to litigate

21. Scope of Work • Procedures • Special patient populations • Work effort • - call schedule • - teaching • - research • Licenses, privileges & certifications • Volunteer Activities

22. Limits on Employer Authority • Standards, policies, record keeping, treatment procedures and fees to be charged, Medicare compliance - coding • Autonomy with patient care decisions • Practice of medicine • Autonomy for patient appointment • Business practice

23. Other Terms • Confidentiality • - Business • - Patient • Use of Employee’s Name • Term • Termination • - Voluntary versus involuntary

24. General Provisions“The Boilerplate” • Notice • Severability • Waiver of Rights • Captions • Ability to Assign • Arbitration • Governing Law • Entire Agreement

25. Negotiating Tips • Evaluate the Offer… • Wants/Needs • Creative • Flexible • Realistic • Negotiate… • Read the Contract • Understand it • Consider professional help • to review terms

26. Other Non-Employment Matters • Consider buying your own… • Life Insurance • Long-term Disability • - not taxable if you pay premiums • - no need to insure entire income • (buy these now while insurable) • Buy good Auto/Homeowners Liability Insurance • Buy Umbrella Insurance (at least $1 million) • …tell your agent you want umbrella policy to cover UM / UIM • Protect Your Family!