AAP Voices Blog

Tales from the Middle Agers: What We Want You To Know Before Signing Your First Contract

Like most pediatricians, we chose our respective specialties motivated by the desire to help others and to make an impact. We studied hard in medical school, and though we learned how to take care of patients, all those years of training didn’t prepare us for the business of medicine and how to negotiate a contract and understand the value we brought to the job.

From our experiences, we wanted to share what we learned over the years as we negotiated our first and subsequent contracts in both private and academic practices. Here are some tips to help young physicians identify red flags and negotiate their dream positions. 

To Compete or Non-Compete

Physicians living in states where non-competes exist should think ahead, to the “what ifs” of wanting to change jobs in the future. One of our graduating fellows, for instance, asked about adjusting the non-compete in his contract to allow him the possibility of moving closer to his parents and hometown. He knew that this would benefit him greatly as he started to expand his family.  

Know your state’s laws on non-competes before signing a contract and ask colleagues what their non-competes look like. If your non-compete is extensive, you may have to take a job far from where you live, in a location that is less desirable or in a practice that is not your ideal, simply because of the restricted zip codes of the non-compete. 
Not all Malpractice Policies are Created Equal

When signing a contract, most residents, like us, did not consider the different types of malpractice insurance when signing their contracts. This can come with unforeseen consequences later when trying to make a career change. When it comes to medical liability insurance, you may be responsible for paying the “tail” which can end up costing tens of thousands of dollars.

The two most common kinds of medical liability insurance you will be offered are “claims made” and “occurrence” policies. An occurrence policy covers events while the pediatrician is insured, and malpractice claims can be made at any time, during or after the pediatrician's employment. This means the physician is covered in perpetuity for medical liability claims made during their employment under that contract.
By contrast, a claims made policy only covers the physician while they are employed under that contract until the policy coverage period expires. With these policies, physicians need to purchase “tail” insurance to cover claims on events that happened during the policy period but were reported after.   The insurance offered is an important consideration and it should be made clear in the contract if you decide to change jobs who would be responsible for paying the cost of tail coverage. This protects both you and your employer. If claims made policies only are offered, the contract should clearly state who is responsible for paying the cost of tail coverage in the event you leave the position. We recommend negotiating that employers pay the tail if possible and do not in general recommend signing contracts that could incur a tail. 

Nuts and Bolts

When conducting contract negotiations, it’s crucial to have an understanding of what your day-to-day schedule will be like. When Dr. Porto interviewed at his current job, the finance director discussed her expectations in terms of specific templates and clinic numbers as well as the bonus structure. It is important to understand the productivity standards you are expected to achieve -patient facing hours, Relative Value  Units - and whether it is achievable.

Dr. Anthony Porto’s  initial bonus structure was based on whether his collections, the total amount of money collected through insurance reimbursements, exceeded his salary and fringe benefits, rather than on Relative Value Units, or the number of patients he saw over the year. It turned out he was one of the first to ever meet this objective.  Questions about nursing support during the week and on call weekends, telephone calls (is there a nurse or after hour service that helps answer calls, are their residents in the hospital that field nursing questions and orders or do you have to get up in the middle of the night to write an order?) administration support, and on-call duties should be discussed before signing a contract.

Culture

This is probably the most important consideration. Dr. Porto's first job was on call two weeks a month, but it was tolerable. She had known the partner since college and the pair was able to cover the other’s time off seamlessly. 

Often during an interview, you meet with the hiring partners or an associate who is in the practice. Ask how long each member of the group has been working there. This will help you get a clear sense of the practice. It may also be helpful to ask to speak to someone who is leaving or has left the practice. Find out what the office turnover is and if there is difficulty in filling a position. Do doctors and staff seem happy at the practice, or do they appear overworked? This information will help guide your decision.

Where do you want to be in 15 years (Planning for the future again!)

After her fellowship ended, Dr. DiMaggio was so eager and grateful to be hired by a local private practice that she did not hire a contract lawyer, engage in any negotiations, or consider possible ramifications that her first contract would hold her to years down the line. 

Dr. Porto learned from a similar experience he had with his first contract. He made sure to hire a lawyer he could rely on when he transferred from his second position post- fellowship. He has been in that position for nearly 15 years

When Dr. DiMaggio happily started her first job, she assumed that, like the rest of her training, there would be a natural progression to a more senior position. However, private practice contracts should clearly state the path for partnership in the practice and next steps if you do not make partner. Asking when the last partner was made, how long it took to do so, and how many people are up for partner before you may help you to determine if you see yourself staying long term at this position.

When you are negotiating a contract, always imagine how the terms will affect you when you decide to leave. This may sound like a negative way to approach a new job, but it is the exact advice that we give to graduating residents and fellows each year.

In other words: Make sure you know your own worth.

*The views expressed in this article are those of the author, and not necessarily those of the American Academy of Pediatrics.