Should I be employed or have my own practice?
The vast majority of young physicians today are taking jobs with group practices, health systems, or other employers. There are, however, some physicians who are joining established practices as either a partner or as an employee with partnership possibilities. Much of this depends on how much time and energy you want to spend on practice administration and business decision-making. While running your own practice can cause more headaches, you also have great autonomy and you’re more likely to reap the rewards of your hard work.
How do I start my own practice?
The best thing to do is to hire a seasoned consultant who can help get you set up. We endorse PMSCO Healthcare Consulting for practice start-up services. In addition, the Pennsylvania Medical Society offers a wide variety of resources to our members, including “Practice Transitions: Starting, Stopping and In Between.” Read the article “Starting a Practice” on our website.
Should I stay in Pennsylvania to practice?
Pennsylvania is a great place to live and raise a family. It’s a diverse state with world-class cities and world-class natural beauty. Our medical schools and hospitals are highly regarded. And our physicians are second to none (but, then again, you’d expect us to say that). That’s why many physicians choose to practice here.
You need to know, however, that Pennsylvania’s medical liability insurance rates are very high and some of our big, market-dominant insurance companies pay poorly. For those two reasons, a number of physicians have relocated. Our medical schools and residencies have great difficulty keeping their graduates in the state.
How can I learn more about the business side of medicine so I know where my paycheck is coming from?
There are lots of seminars and online resources to use. The Pennsylvania Medical Society website has a whole section on practice management plus a number of short, easy-to-read publications. One of the most beneficial things you can do is to take a coding course. It will really open your eyes to how your services are billing and reimbursed. Another great resource is the website of the Centers for Medicare and Medicaid Services.
How can I balance my personal life and my work life? Should I consider working part time to spend more time with my family?
As one Pennsylvania Medical Society leader states, “Time taken from family and personal pursuits of various kinds cannot be replaced, and at the end of the day, too often is recognized as simply lost.” How you balance your personal life and work life varies from person to person. It takes discipline to not allow your work as a physician to overwhelm everything else in your life.
As for part-time work, many younger physicians are considering that in order to raise their children or care for an elderly relative. Much of it depends on the specialty you are in and the opportunities that present themselves. Unlike many other professionals, physicians can work part time and still earn a fairly decent living.
What kind of malpractice insurance should I have? What does claims-made versus occurrence insurance mean?
Claims-made policies are becoming more and more common. so there’s a good chance you won’t have to make this decision. But here are the distinctions:
- Occurrence policies cover claims involving an incident that OCCURRED while the policy is in force, regardless of whether the claim is filed/reported during the policy period or afterwards.
- Claims-made policies cover claims that involve incidents that either: occurred after the policy retroactive date; or are made and reported during the active policy period.
Claims-made coverage first-year premiums are low but step up over a three- to five-year period. "Tail" coverage is required for physicians who terminate claims-made policies to cover claims reported after the termination of the policy.
Pennsylvania Medical Society members can order a printed copy of “Explanation of Occurrence vs Claims-made Coverage” or read it on our website.
What is the Mcare fund?
The Mcare Fund is a state-run medical liability coverage fund. In Pennsylvania, physicians must carry $1 million in liability coverage. The first $500,000 can be obtained from private insurers or the Joint Underwriting Association (JUA). Physicians must pay an assessment for the second $500,000 of coverage from the Mcare Fund.
Unlike a traditional insurer, the Mcare Fund is a pay-as-you-go operation, setting aside no reserves to pay future claims. It simply charges physicians, hospitals, nurse midwives, podiatrists, and nursing homes an annual assessment to pay current claims and operating expenses.
Read more about the Mcare Fund at www.pamedsoc.org/mcarenow.
Why should I care about Mcare, particularly if I do not own my own practice?
If your employer pays for your liability insurance and pays your Mcare assessment, you may think that you are not affected. But your liability insurance and Mcare costs are part of your compensation package, whether you know it or not. When those costs go up, your opportunity for pay increases and bonuses goes down. Lower pay means that it’s harder to recruit other physicians, making your job harder. Employers will look for other ways to cut costs, too, like hiring fewer ancillary staff or delaying purchases of new technology and equipment.
What is an RVU, and how are they used to determine some physicians’ salaries?
RVUs stand for Relative Value Units. While there are several methods to determine RVUs, the most commonly used is Medicare’s Resource Based Relative Value System (RBRVS). This is an arbitrary method that, because it is generated by a government agency, is based on fiscal budget constraints. Many employers will use this method to track productivity.
Typically, physicians beginning employment should have a base salary that guarantees them a certain level of compensation until patient/procedure volume can be established. Sometimes, employers will establish a lower base salary for a new physician but offer a bonus if productivity exceeds a certain threshold. This can be an ideal situation.
There are three components to Medicare’s RVUs: work, practice cost, and medical liability. Most compensation models use work RVUs, which are based on the complexity of the procedure, skills required, and time. They vary significantly depending on the services performed. Other considerations for a physician moving into a productivity-based system are how the billing system tracks providers, what reports are offered physicians on a regular basis, and the integrity of the data from the billing system.
In rare instances, employers offer a new, employed physician compensation based on 100 percent RVUs to start. That can be a concern, particularly if your position is new and you must build a patient base from zero. On the other hand, if you are sure you will have a large patient base immediately—perhaps you are the only specialist of your kind in a geographic region—you may do very well in a productivity-based reimbursement system.
How do I find out if a starting salary is fair for my specialty and the area where I’ll be practicing?
There are published benchmarks that identify RVUs by specialty as well as salaries. Most of these are proprietary but some are available online, such as the American Medical Group Association’s 2009 survey.
What should I be looking for in a contract?
Every contract should cover two main categories: the responsibilities of the employer and the responsibilities of the physician. In particular, all contracts should include, at a minimum:
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The length of the term with no right to terminate without cause during the term
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A comprehensible compensation package
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Professional liability insurance coverage to be paid by employer
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If possible, no restrictive covenant or, if included, a reasonable restrictive covenant
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A provision that describes what happens to patient records upon termination
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The buy-in process, where appropriate, to become a partner in the practice
It’s not a requirement but another important consideration is whether the contract provides funding to help you meet Pennsylvania’s CME requirements.
A contract review by an experienced health care attorney is always a good idea. You may want to consider using the Pennsylvania Medical Society contract review service.
What is a restrictive covenant? How big of an area is fair for a restrictive covenant?
A restrictive covenant is a prohibition against certain competitive activities both during and after the term of the agreement. It may include an agreement not to solicit other employees, vendors, or payers of the practice for some period of time, and an agreement not to compete within a certain geographic area for some period of time.
The covenant will be enforced by a court of law if reasonable in geographic scope and time. The doctor should assume that the covenant will be enforced and should negotiate it accordingly.
The size of the area for the restrictive covenant varies depending on the setting (rural, suburban, or urban). A contract for a rural practice may include a restrictive covenant that covers a radius of 100 miles, while a physician contract in an urban could be only 10 blocks. The question is this: Will the restrictive covenant cause you to relocate your home and family should you leave the medical practice? If you are looking to stay in the area for a long time, then try to negotiate the smallest geographic scope possible.
Contributors: Kenneth Certa, MD; Isis Shanbacky, MD; Bernie Lynch, Pennsylvania Medical Society Staff; and Bonnie Meisel, PMSCO Healthcare Consulting