Disclosures. Tips for a Successful Job Search. Introduction. Introduction. Purpose. Format 10/16/2015

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1 Tips for a Successful Job Search How to Evaluate Orthopaedic Practice Opportunities Disclosures I have no potential conflicts with this presentation Ryan M. Dopirak, M.D. Wisconsin Orthopaedic Society Meeting October 2015 Introduction The average orthopaedist will make 2-3 practice changes over the course of their career Up to 50% of orthopaedists will make a change within the first 2 years Introduction Changing jobs can result in a great deal of stress and significant financial losses Lost income Moving expenses Malpractice tails Repayment of signing bonuses Purpose Teach residents/fellows how to critically evaluate orthopaedic practice opportunities Learn more about what you are actually signing up for (before you sign a contract) Format List of simple questions to ask each potential employer Decrease likelihood that you end up unhappy Nobody cares about your well-being or your contract more than you do!!! 1

2 Why are they recruiting a new orthopaedic surgeon? Why are they recruiting a new orthopaedic surgeon? They must demonstrate they have a need for your services Impending retirement of partner Desire to add new subspecialty area to practice Need to accommodate increasing patient volumes (population growth) Why are they recruiting a new orthopaedic surgeon? There are numerous groups who are looking to hire for reasons that benefit the group more than the candidate What is the practice setting? Trying to decompress call schedule Trying to dilute overhead Your buy-in will be a buy-out for a senior partner Attempt to increase group size to compete against other groups in their market ( nuclear arms race ) What is the practice setting? Single Specialty Group (SSG) Single Specialty Orthopaedic Group Multispecialty Group Academic / University-Based Advantages Autonomy Ancillary opportunities Usually eat what you kill The classic gold standard Disadvantages Referrals not guaranteed Modest guarantee May require buy-in Hospital Employment 2

3 Multispecialty Group (MSG) Academic Setting Advantages Disadvantages Advantages Disadvantages Automatic referral base Competitive initial compensation package Average overhead is higher vs SSG Specialists sometimes subsidize PCP s Prestige High volume of referrals Opportunity to work with residents/fellows Lower income vs SSG Level I Trauma Call Advantages Hospital Employment Competitive initial compensation package Guaranteed referrals Less administrative responsibilities, able to focus on your practice Disadvantages Limited autonomy Less opportunity for ancillaries vs SSG Hospital Employment Hospital-employed physician model is becoming more common MHA 2015 Review of Physician Recruiting Incentives % of searches were hospital-employed opportunities % of searches were hospital-employed opportunities % of searches were hospital-employed opportunities AAOS OPUS Percent of orthopaedists who are hospital-employed 2012: 9% 2014: 15% Hospital Employment Physicians are looking for stability Less risk / uncertainty with hospital employment Income / salary guarantee» Increased leverage with insurers results in better contracts» Built in primary care referral base = immediate volume» Hospital subsidizes physicians Less capital investment- EMR, facilities, marketing Some physicians are looking for a golden parachute Who else is going to buy the 30 year old outdated office building when the older partners retire? Hospital Employment Hospitals want to align themselves with physicians Ability to control referrals to specialists and ancillary services Enhanced leverage when negotiating contracts with insurers Hospitals are preparing for healthcare reform ACO s Bundled payments Pay for performance Implementing changes will be smoother if physician alignment exists 3

4 Hospital Employment What are the potential risks? Loss of autonomy- you may potentially be taking orders from hospital administrators Very limited opportunity to invest in ancillaries due to regulations pertaining to employed physicians The network or physician division comes first ahead of any specialty group, including orthopaedics Hospital Employment What are the potential risks? Highly compensated specialists- there is always some risk that you will be asked to subsidize lower producing specialties Compensation philosophy may potentially change if there is a change in hospital leadership- the average tenure of a hospital CEO is approximately 5 years Although your initial contract may be favorable, this does not guarantee that renewal contracts will be identical to the first- if your production is not sufficient to cover your salary and expenses, you may be asked to accept a salary reduction Which Practice Setting is Best? These are my personal opinions only! Small independent orthopaedic groups are at risk Large networks are getting larger and significant pressures exist to keep referrals in-network; where will your patients come from? Pressure from insurance companies to contain costs may lead to lower reimbursement to small groups due to lack of negotiating power Ever-increasing regulatory burden from the government favors larger physician networks (EMR, outcomes reporting, etc) The trend is towards increasing size Large single specialty groups Large independent multispecialty groups Large hospital-employed physician networks Current Orthopaedic Workforce AAOS OPUS % private orthopaedic group (SSG) 16% academic practice 13%- salary from academic institution 3%- salary from private practice 15% solo orthopaedic practice 15% hospital-employed 10% private multispecialty group 2% military What is the surgeon density? What is the surgeon density? AAOS OPUS surgeons per 100,000 population 1 surgeon per 11,765 population Also gives surgeon density by state Highest density states: WY, MT, NH, VT, SD Lowest density states: MI, WV, AR, TX, MS 4

5 What is the surgeon density? AAOS OPUS 2014 Use these statistics to gauge surgeon saturation in the market you are considering, BUT Don t write off a highly saturated market if you bring a new skill or unique subspecialty training to the market Success isn t guaranteed in a low density market, as groups in neighboring communities may draw from your area Will I be able to develop an elective practice in my subspecialty area? Will I be able to develop an elective practice in my subspecialty area? Over 90% of graduating residents pursue fellowship training* 93% of surgeons under age 40 consider themselves either a specialist or a generalist with a specialty interest (AAOS OPUS 2014) You need to decide how important specialization is to you Will I be able to develop an elective practice in my subspecialty area? Do you want to develop a 100% subspecialty practice from the start? Are you willing to do a considerable amount of general orthopaedics / trauma in order to find a job in a competitive market? *AAOS data, published February 2006 Will I be able to develop an elective practice in my subspecialty area? Determine if the community can support a busy practice in your subspecialty area Look at the number of partners in the group with the same practice focus as you Also consider demographics of other groups in the market- they will be competing for the same patients Will I be able to develop an elective practice in my subspecialty area? There should be a need for your specific area of specialization, so that you will have the opportunity to develop a busy elective practice Certain subspecialty areas are very competitive, especially in larger metropolitan areas Location vs. Professional Satisfaction!!! 5

6 Is there a restrictive covenant? Is there a restrictive covenant? A noncompete clause states that if you leave the group, you agree not to practice in a certain geographic area for a specified period of time You must determine if the terms of this provision are acceptable to you If you have community ties, you may wish to negotiate the terms of this clause Is there a recapture clause? Is there a recapture clause? Some compensation packages include large income guarantees, signing bonuses, and loan repayment These are often contractually structured as forgivable loans - a percentage of this amount is forgiven each year over a set number of years Is there a recapture clause? If you leave before fulfilling the contract, you may have to repay a portion of the money What is the caseload of each partner over the past few years? There is no such thing as a free lunch 6

7 What is the caseload of each partner over the past few years? Income is directly related to surgical volume Compare volumes to national benchmarks AAOS OPUS 2014 Average FT orthopaedist performs 32 cases/month MGMA (Total Encounters and RVU s) Has anyone left the group in the past 10 years and why? Has anyone left the group in the past 10 years and why? The group will point out its positive attributes during the recruitment process A high rate of turnover may indicate underlying problems with the group and may be a red flag ER Call Contact the people who have left, as they may provide you with a different perspective on the group ER Call How often is call and is it divided equitably? Advantages ER Call Disadvantages How many hospitals will you be covering? Is the hospital a trauma center How often is ortho called in for emergencies? Are you compensated for ER call? Increased caseload Increased income May be compensated for call Disruptive of elective practice and personal life Increased liability Poor payer mix- many patients uninsured or underinsured With increasing focus on specialization, surgeons less comfortable with trauma 7

8 ER Call Trends in compensated call AAOS OPUS 2010 (no data in 2014 survey) 68% of orthopaedists take trauma call 40.4% of those taking call are compensated 2014 MGMA daily rate for compensated call* Mean / Median $1,016 / $1, th percentile $ th percentile $1,050 *n=167; small sample size in most call surveys ER Call Factors in determining daily rate for compensated call Trauma Center designation Volume of orthopaedic consults while on call Payor mix of ER patients Number of orthopods taking call (supply and demand) Call pay has to be at FMV rate Financial Considerations What is the income guarantee? What is the income guarantee? Step 1: Clarify if it is a gross or net income guarantee Gross income: money is used to run your practice (overhead) and pay salary Net income: actual income or salary independent of overhead What is the income guarantee? Step 2: Compare data to national surveys for starting salaries Merritt Hawkins 2014: $497,000 Base salary or guaranteed income only, does not include production bonus or benefits MGMA 2013: $436,000 Median income for general ortho, 1-2 years in practice Not included in 2015 data set 8

9 What is the income guarantee? Step 3: Identify stipulations attached to guarantee What happens if collections don t cover salary, benefits, and overhead??? What is the income guarantee? What happens if collections don t cover salary, benefits, and overhead??? Hospital or group eats losses (least likely) Deficit is forgiven over a period of years Future bonuses used to offset prior deficits Salary reduction for subsequent years What is my projected peak income potential with this group? What is my projected peak income potential with this group? Your ultimate income potential is far more important than your initial guarantee! Awkward to ask how much money do you make? I would suggest asking what is the approximate income range of the partners over the past few years? What is my projected peak income potential with this group? Familiarize yourself with income surveys MGMA 2014: $568,000 median income * AAOS 2014: $370,000 median income ** Why the difference??? *General Orthopaedic Surgery **Full time Orthopaedic Surgeons Income Trends Minimal income difference between SSG vs MSG for general ortho and most subspecialties MGMA 2015 median general ortho MSG: 582K MGMA 2015 median general ortho SSG: 514K Data changes every year; variable between subspecialties Don t chase a number Academic settings often pay the least 9

10 Income Trends Specialists earn more than Generalists MGMA 2015 median income General: $568,000 Foot & Ankle: $508,000 Hand: $539,000 Peds: $529,000 Shoulder & Elbow: $626,000 Spine: $737,000 Sports: $606,000 Total Joint: $617,000 Trauma: $642,000 Income Trends Specialists earn more than Generalists AAOS OPUS 2014 median income Generalist: $300,000 Specialist: $400,000 Income Trends Higher incomes in Midwest compared to the coasts MGMA 2015 median income (general ortho) East: $491,000 Midwest: $616,000 South: $559,000 West: $567,000 Income Trends Income is only 1 of several factors to consider Manitowoc, Wisconsin- October 2006 There is no such thing as a perfect job! Higher incomes in smaller towns vs major cities Supply and demand (surgeon density) Insurance reimbursement Am I eligible for a production bonus in first 1-2 years? Am I eligible for a production bonus in first 1-2 years? Some offers are straight salary to startwithout any opportunity for bonus Senior partners may pass work on you with no financial reward- they keep the extra revenue you generate This may create an unpleasant work environment 10

11 Am I eligible for a production bonus in first 1-2 years? There should be some opportunity for incentive if you generate enough revenue to cover salary + overhead Don t expect to eat what you kill at firstmost groups keep at least a portion of your excess production until you achieve partnership Am I eligible for a production bonus in first 1-2 years? Differences in compensation models for new physicians vs partners typically only occurs when the group is owned by the physicians (SSG s and physician-owned MSG s) In most hospital-employed models, the compensation structure is the same for new physicians as it is for established physicians Base salary with opportunity for incentive based on production Are there other financial perks? Are there other financial perks? Signing bonus, student loan repayment, relocation expenses Remember that any money you receive is considered taxable income Look for the recapture clause - free money is usually structured as a forgivable loan What is the group s overhead? What is the group s overhead? Gross production (total billings, charges) The amount a group bills insurance companies and individuals for medical services performed 11

12 What is the group s overhead? Net production (collections) The amount a group collects after deductions Example I perform CPT Codes 29827, 29626, Charges total $10,000; Medicare pays $1,000 Collections: $1,000 Deduction: $9,000 What is the group s overhead? Collections pay MD s salary + overhead Overhead= cost of running business Collections overhead = salary Overhead includes office space, furnishings, equipment, supplies, malpractice premiums, employees salaries and benefits, physician benefits* *MD s contribution is often considered compensation, whereas group s contribution is considered overhead What is the group s overhead? A group should be able to quantify its overhead as a percentage of collections Compare to national surveys MGMA has the largest data set 2015 median comp/collection ratio: Physician compensation is 22.5 of collections Overhead is 22.5% This data is for general ortho What is the group s overhead? Difficult to define what constitutes a good overhead percentage Overhead is dependent on cost of living, payer mix, number of satellite offices, use of physician extenders Look at the big picture! What are the terms of partnership? What are the terms of partnership? Partnership is typically offered to new members after a specified period of time The criteria to achieve partnership must be explicitly stated in the employment contract 12

13 What are the terms of partnership? Many SSG s and some MSG s require a buy-in A large buy-in is reasonable if it provides you with ownership in something of value (ASC, MRI, PT) Beware of buying into hard assets, as they are usually depreciated The days of buying into goodwill of the group are over Are there opportunities for investment in ancillary services? Are there opportunities for investment in ancillary services? In order to offset decreasing reimbursement and increasing overhead costs, many groups have invested in ancillary ventures ASC Imaging centers PT DME Are there opportunities for investment in ancillary services? Clarify if the group offers ancillary services and if there is an opportunity for new partners to invest in these ancillaries Greater opportunity for ancillary investments in SSGs and physician owned MSG; opportunities are limited for hospital-employed physicians Dopirak s Golden Rules Top 5 Points for Being a Successful Negotiator Dopirak s Golden Rules Top 5 Points for Being a Successful Negotiator Understand supply and demand in the market you are considering Surgeon density Saturation in your subspecialty area Primary and secondary service areas 13

14 Dopirak s Golden Rules Top 5 Points for Being a Successful Negotiator Know your strengths, especially as they pertain to the market you are considering What do you bring to the group/community that is different or better? How can you enhance the group or increase market share? Dopirak s Golden Rules Top 5 Points for Being a Successful Negotiator Know your market value Come to the table knowing what a fair compensation package is for your subspecialty area in that market Familiarize yourself with income surveys MGMA AAOS MHA Dopirak s Golden Rules Top 5 Points for Being a Successful Negotiator The best negotiators are always willing to walk away from the table Before you enter negotiations, decide what you are willing to accept and what is your break point It is a buyer s market- don t settle! Dopirak s Golden Rules Top 5 Points for Being a Successful Negotiator Just like Mikey and T taught us Don t call them back for at least 2 days Don t make any decisions that day! Dopirak s Golden Rules Top 5 Points for Being a Successful Negotiator Don t be a Bull in a China Shop The first goal is to sell yourself to the employer, and everything else will fall into place Don t talk numbers on the first interview Don t start making demands or negotiating until you sense the group is sold on you! Last But Not Least!!! You can never have too much detail in a contract. It is the only thing that will protect you when things fall apart You must use an experienced contract attorney- it is the best investment you will ever make!!! 14

15 References Thank You Evaluating Orthopaedic Practice Opportunities. Dopirak RM. Available online at the AAOS PMC Evaluating Practice Opportunities. Part I. Dopirak RM. AAOS Bulletin 2006;54(1): Evaluating Practice Opportunities. Part II. Dopirak RM. AAOS Bulletin 2006;54(2): MGMA Medical Directorship and On-Call Compensation Survey: 2014 Report Based on 2013 Data References MGMA Physician Compensation and Production Survey: 2015 Report Based on 2014 Data AAOS Orthopaedic Practice in the US 2014 Merritt Hawkins and Associates 2015 Review of Physician Recruiting Incentives 15