This week’s episode is a cross-promotion with the Health Logic Podcast hosted by Dr. Anita Gupta. Dr. Gupta and I discuss some of my own passion behind why I do financial education and financial planning. I also talk about some specific ideas and observations about why doctors don’t negotiate, and frequently don’t see themselves as real participants in the business of medicine.
Justin (00:02):
Hey, it’s Justin Harvey. Thanks for tuning in to the anesthesia and pain management success podcast. With APM success, we take a close look at important topics pertaining to business, practice management, personal finance, and careers for anesthesiologists and pain management physicians. We work hard to take your critical questions straight to the experts. Thanks for listening. Hey, Justin here. Thanks for tuning in to anesthesia and pain management success really enjoyed last week’s discussion with Dr. Josh Sudirman if you missed it, Dr. Sudirman is one of those doctors trying to make medicine better for everyone. And he goes to great lengths for public advocacy to remove barriers to care for prior auth specifically in pain management, but he has a lot of wisdom to share. And a lot of people out there are benefiting from the work that he’s doing, whether they realize it or not. So if you haven’t heard last week’s episode about his story of his path to partnership would definitely encourage you to check that out.
Justin (00:57):
During our discussion, we both realized that we’re both fans of Brené Brown’s work. If you haven’t read any of her books, there’s a great one hour talk available on Netflix. We’ll link to that in the show notes, highly recommend, as far as understanding what does it mean to be vulnerable and understand how to lead, how to connect with people in an organization. And just as a human, a lot of great stuff there for anybody who’s a leader or aspires to be one this week on ABM success, I’m doing something a little different. I recently talked to Dr. Anita Gupta on her podcast called health logic. You may remember Dr. Gupta from episode 51 of this podcast, where she talks about building a personal brand as a physician. This time we’re spinning the mic around and she’s interviewing me for her show, which we’re, crossposting here as this episode of APM success.
Justin (01:46):
In this episode, I share some of my own passion behind why I do financial education and financial planning. And I talk about some specific ideas and observations about why doctors don’t negotiate and frequently don’t see themselves as, as real participants in the business of medicine. And I also share why I think they need to be and how to get started. I don’t just think they need to be because it’s better for doctors, which it is. But I think that we need doctors involved in the business of medicine because as a patient myself, just in talking, I want doctors making all of the important decisions related to my care and creating the infrastructure that’s hopefully going to as effectively as possible serve the American populace. So we’re going to share this episode, which first aired on health logic with Dr. Anita Gupta. If you haven’t heard her great podcast, go check it out as always. Thanks for tuning in.
Dr. Anita Gupta(02:37):
Well, welcome Justin. Thank you so much for joining health logic today. Dr. Coupa, it’s a pleasure to be here. So given the time that we’re in, there’s a lot of businesses that are undergoing a lot of challenges. And one of the important things about this current pandemic is people are changing jobs, including physicians and new businesses are growing as we, and so looking at contracts and negotiations has become a significant priority right now. You know, what are your, what is your take on this and what are your thoughts on negotiations and contracts for businesses?
Justin (03:12):
Yeah, great question. So we just had the end of the academic year recently too. So there’s probably a lot of physicians who either recently transitioned or who are maybe coming up in their last year of residency and fellowship and have an upcoming transition. So this is hopefully a precious discussion. There’s a lot that can be said, the place I would want to start is from a place of empowerment. So I’m, I could soapbox on this for a long time. I won’t do it for too long, but my wife is an anesthesia resident here in Philadelphia, and I have many friends and clients that are physicians and I at every turn desire to see them empowered and equipped and enabled to be able to make good decisions, not only on behalf of their patients, but on behalf of themselves and their practices. And unfortunately, as you probably know, med school and residency and or fellowship, if applicable do a generally not that good of a job in preparing physicians to be able to make informed decisions as it relates to business and contracts and compensation mechanisms and reimbursement and all these other things that are critically important for our physicians, financial wellbeing.
Justin (04:14):
So I think the first thing I would say is I’m really, this gets me fired up. It’s like let’s equip and empower our physicians who are so important as far as just taking care of all of us to make good decisions and to not get burned out, which is a common outcome of like not being informed, getting a bad deal, a bad contract, a practice it’s not doing well because of some of these fundamental gaps in information. So one of the things that I try to do in my financial planning practice at APM wealth and with my, I have a podcast called anesthesia success where you, Dr. Gupta were kind enough to be a guest in the past. I try to take a specialty specific view on this to answer these questions for anesthesiologist and pain management docs. But a lot of these principles apply broadly and it starts with just an understanding that what you do is deeply valuable.
Justin (05:04):
Number one, and number two, there’s a lot of information out there that you need that you probably don’t have at baseline to be able to negotiate well for yourself in the marketplace. And it’s simple capitalism to say, like, if I’m making a bargain, the thing that’s going to be in my best economic interest is to pay the least I can for a good or service, or to get the most I can if I’m selling that good or service. And so as a physician, your labor is very valuable. You spent, you’ve gone into probably hundreds of thousands of dollars into debt for undergrad and grad school, and then you’ve trained for years. And what you have is very valuable. So you want to make sure that you give that the appropriate amount of care and consideration, and that you self-advocate when you’re looking at employment agreements or contracts of any sort, because no one is going to do this for you.
Justin (05:55):
No one is going to, when they’re sitting on the other side of the negotiating table, no, one’s going to say, you know what, Dr. Smith, like, we know that you worked hard and we know that you feel bad and we’re going to offer you X, but instead we’re going to offer you 1.2 X for your starting salary, because we just, we see all that. You’ve, I mean, maybe they’ll say that, but that’s not really what’s happening. And so coming in with that awareness, that there’s an information gap that needs to be closed in all likelihood for you to be your own effective self advocate is I think the beginning of approaching this topic from the right place.
Dr. Anita Gupta(06:29):
So these points are really important, you know, making sure that there’s a mutual understanding of value, you know, and driving value, empowering, you know, your voice, you know, at the table and having a seat at the table, you know, and prioritizing, you know, making sure that particularly as physicians, that you know, what your worth is, you know, and I think that’s critically important, particularly when you’re coming out of training or even starting a business, you know, w whether you’re negotiating with the big private group or a healthcare system, or, you know, just trying to rent space it could be critically important. You know, what are your, some of your top tips, you know, in that negotiation, you know, when you’re sitting across the table, you know, determining an initial offer or a compensation package you know, what are some of those priorities that, you know, we can take home with us.
Justin (07:19):
Great question. I would say if we’re talking about an employment agreement for a physician from the viewpoint of the physician this is probably what I would say to start with is you’ve got to know your counterpart, the person with whom you’re negotiating. There was a great book by a guy named Chris Voss called never split the difference all about negotiating. Interestingly, I know you’re at Harvard right now. He talks about going to Harvard and talking to some of their top negotiators, and he pulls some, like, I dunno, Jedi mind trick on, on one of the professors there and ends up winning this negotiation, very humorously, but it’s a key, a key to consider here is to know the party with whom you’re negotiating. It has a lot to do with the kind of flexibility that you’re going to have in the kind of leverage that you’re going to have and the kind of things that they want.
Justin (08:02):
Is there a sense of urgency to fill a spot as soon as possible? Is there a desire to get you specifically with your specific skillset and your interpersonal relationships with your patients and the other clinicians with whom you’re going to work? Are they willing to pay a premium for that? And so understanding the dynamics, understanding your counterpart and what it is that they value and the things that are important to them is a great place to start. You may you know, glean that at the outset, there’s going to be a difference, right? If you’re going to university hospital ABC down the street, versus if you’re going to be the third partner in a currently to physician partner practice, those are two hugely different scenarios. And one would give you probably a greater degree of flexibility than the other, if you’re negotiating with the two physicians, rather than somebody in the HR department at the university hospital.
Justin (08:53):
So even just having that little bit of context can give you some direction and some just baseline understanding for like, where do we begin? How do I understand what my counterpart is looking for and how do I perhaps give them what they want, and also communicate some things that are valuable to me and be able to get the best deal that I can for myself. And the second thing that I would say is having a baseline understanding of your own value. And I always like to try to triangulate this as many ways as possible. So if we said, if we take anesthesia for an example and say, you know, an anesthesiologist makes whatever number $375,000 a year on average, according to the MGMA survey, 50th percentile in 2019 or whatever, I just made that number up. If that’s the case, how does that break down by region?
Justin (09:39):
How does it break down by practice type? And what does it mean for me as a specific doctor, looking at a specific role, what kind of compensation should I expect? And then understanding that benchmark get as many data sources as you can, including talking to your mentors and seeing what they think, looking at other offers in the region and seeing where they come in and talking to your other friends, if they’re looking at offers and hearing, how is their compensation structured and what is their total comp looking like? And using all these different data sources to try to triangulate as many benchmarking services, et cetera because looking at one data source can be skewed and can be incorrect. And the more data that you have, the more you can, again, level the playing field. And again, always assume coming in, you are at an informational disadvantage, and there’s a gap that needs to be closed. If you come in with that mindset, you’re going to arm yourself with necessary information in order to make a, a robust offer of your own services when the time comes.
Dr. Anita Gupta(10:39):
So, as you know, you know, one of the, one of the challenges right now, you know, on the front lines, you know, for healthcare workers is this issue of compensation and productivity. And, you know, we continually have the pressures to still, you know, drive productivity, meaning, you know, let’s try to see as many patients as we can, whether it even be through telemedicine or face to face visits, but still drive, you know, best outcomes for our patients. And that’s ultimately, what’s most important to clinicians and end to patients, you know, and, and not, you know driving that burnout that you mentioned earlier on, you know, what is your take in balancing that, you know, productivity, but still maintaining a, you know, a sense of balance and empowerment with physicians and how can we build that in to contracts if at all,
Justin (11:35):
That’s a great question. And I think the most obvious solution that comes to mind for me is, is involve as many doctors as possible in administration, in decision making, in policy, in oversight. And I know I’m preaching to the choir on this probably, but having physicians who understand what it’s like to be a doctor, to be a provider of care, and also to have the intellectual background in the policy and in the, you know, doing the MD MBA track or whatever, it looks like having a physician who’s sort of setting the terms, I think is going to be, societaly kind of our best chance for success. There are some specialties that most lend themselves to a, a procedure based compensation. And I think, you know, every model has its Achilles heel. And obviously if you’re getting paid on our views, relative value units, every time you do a surgery or do a procedure, you get a certain number of RV use in your account, and then you get paid on the productivity.
Justin (12:31):
In that way. It’s a little bit of a blunt tool to say, you’re just incentivized to see as many people as possible, as fast as possible. And there’s not as much focus on outcomes, but then if we introduce more of a value discussion and you know, we’re paying somebody on salary and maybe with a value metric performance bonus, then we have physicians who are incentivized to perhaps not have the same workload that they would if they were working on production. So it’s sort of a classic age, old question. And I think there’s not the most clear answer I can think of is that we should have the decision makers be governed by the Hippocratic oath. And there are certain specialties and certain scenarios in which probably a productivity compensation mechanism is appropriate to be able to run efficiently and see as many patients as we can and not have an adverse outcome impact adverse outcome impact. Whereas on the other hand, there were maybe some specialties or some care contexts were going straight RV use, or another similar model is detrimental and not in the patient’s best interest. And I think having a physician who understands all of those different dynamics and can weigh them with wisdom is probably the best way to tackle it. That’s probably a little bit of a cop out, but that’s how I feel about
Dr. Anita Gupta(13:51):
No, no, look, you know, I’ve read a lot of contracts over the years and, and, you know, it’s tough, it’s tough going through them and can be overwhelming, you know, and look, you know, and in that, in that I will say that look, you know, there’s always a lot of clauses and you know, it’s, sometimes it can be, it can be overwhelming. And so what are some of the ones that we have to look out for? You know, can you give us some clarity, you know, which ones do we need to understand and which ones do we have to be careful about?
Justin (14:21):
Yeah. So the first thing that people always want to know is how much am I getting paid for the service that I’m rendering? And that is while significant, certainly not the end of the story. There’s a lot of things that you need to think about. The first thing I would point to is sort of related to your last question, the compensation mechanism understand on the upside. If I work really hard and do a ton of good work with good outcomes and good productivity who makes more, does the institution who employs me own the upside, or does the physician own the upside? One of the benefits of the productivity model is if I do a lot of great work, I get paid a lot. If I do no work or very little work, then I get paid a little and that benefits the institution on the downside.
Justin (15:02):
But the physician on the upside, I think that’s one of the, a two edged swords of that model. So understanding what that means for you, the physician and how you’re being incentivized. Am I being incentivized to see 60 patients a day in the pain clinic, or am I making your salary, whether I see four patients or 40 that matters. And so understanding the upside downside incentive is really important. Not it’s setting aside the number, but just like, what are you getting paid more to do? In addition, I would say, you know, aside from the compensation itself, there’s a lot of I’ll call them like qualitative considerations. They’re they’re, they don’t have immediate monetary impact, but they can really have monetary impact, especially at termination. A couple that I’ll just touch on briefly would have to do with insurance specifically malpractice insurance, what type of insurance you have, what the limits are, who pays for it at the outset, and then who pays for it based on certain circumstances around the conclusion of your employment, meaning if you quit or walk out or have to take a job in another city or if you give notice, or if you’re fired or laid off, like who’s paying the tail coverage, if there is tail coverage for that insurance, if you have an occurrence policy, which is there’s two types of malpractice insurance occurrence and claims made occurrence is going to be not have tail premiums applicable.
Justin (16:34):
Whereas claims made, if you have a claims made policy, your radar should be up here thinking, okay, if I leave someone needs to cover the tail on this policy. And that doesn’t mean anything for me, monetarily today, one of my happily employed physician, but if my apartment gets downsized or I want to take a job with a competitor or move out of state and take a job, and it has to be on shorter notice than I want or whatever, there’s probably terms in the contract that will govern, who’s going to pay the Taylor premium. And that could be tens of thousands of dollars. So again, it doesn’t matter on the front end, but on the backend, if you quit your job and move across the country, and then you get a bill in the mail for 40 grand, that’s a real bummer. And so you want to make sure that you go in a tuned to those types of questions.
Dr. Anita Gupta(17:18):
Sure. And so, you know, these are very, very important points. You know, the, the coverage liability, you know, obviously compensation and in addition, you know, partnership you know, those things are also very, very important. And I think, you know, those can certainly make a big impact, you know, and I’ve always wondered about a competition, you know, once you leave, you know, any thoughts on, on that, does that have any impact, you know, the radius and the duration. So this is another one that gets me
Justin (17:50):
Fired up because I refuse to believe that if an anesthesiologist leaves their Orr at this hospital and goes to the hospital across the street, that hospital a is going to be like this Lee permanently mortally wounded. I just, I have a hard time believing that, but anesthesiologists are pretty much forced to sign something that says that and, or fight it in court if you want to. So this is definitely something to be aware of. It varies by state. I’m not an attorney. So I would say this is a perfect place to have your local attorney healthcare attorney review your contract, sharpen their pencil on this clause in particular and say, what does it mean? What is the enforceability of it? Are we talking about a 20 mile radius from the main hospital where you work? Are we talking about a 20 mile radius from every hospital in the network, and maybe it’s a regional hospital and you basically have to move out of state.
Justin (18:36):
If you stop working with this institution, that’s definitely a very important clause that it’s worth understanding if you move to a city or there’s only one game in town, it’s one big practice and you have to leave that practice for whatever reason, especially if your family is in this city. And like you grew up here and you wanted to die here. And then things don’t work out with that job. The noncompete can have pretty onerous implications. And so understanding that is certainly a very important part of this process. Right? Right. The thing that I’m like, and I think it varies a little bit by specialty, but understanding what I’ll call ancillary business opportunities, whether it’s a surgery center buy in or intellectual property or other associated companies there can be an opportunity for physicians to economically participate in these types of companies. Some practices will have that sort of running in parallel with partnership.
Justin (19:31):
When you’re a partner in the practice, then we’ll let you buy into the surgery center. We’ll let you buy into the lab and do these other things. Whereas other employment agreements and other practices basically will permanently lock you out. Those ancillary opportunities can be major levers for building wealth for physicians. And I’ve seen some clients of mine use those to great effect, and I’ve seen others basically be locked out of those. And there’s a significant economic impact as a result. So if you’re somebody who, you know, again, in my little corner of the world with pain management, for example, if you want to do consulting, and you’re doing a lot of STEM trials, and you want to have a piece of that surgery center and you want to pay it in these other businesses on the side, you want to make sure you have a practice that’s amenable to that.
Justin (20:15):
And you want to make sure that it’s clearly outlined in your contract. And this is another one of these things that, although it doesn’t have, it’s not like a dollar impact in the compensation, but it does have economic impact. And it needs to be negotiated up front. Often contracts are silent about these types of things, especially the intellectual property clause. If you’re consulting with big pharma or a med tech company, and you guys come up with some, is there something in your contract that says that you’re practice actually owns that intellectual property? Or do you have a carve out to protect that so that you can enjoy the economic benefits of your hard work? These things are important to understand and important to outline in advance
Dr. Anita Gupta(20:51):
Very, very important and critical, you know, for your career success down the road and important considerations for sure. And partnership. Is there a timeframe? Is it clear? And is it defined? Are there checkpoints that we should think about? Yeah.
Justin (21:09):
Yeah. That’s a great question. I would say partnership is an important thing to understand. First of all, ask her like, no thyself is probably rule number one here. Do you want to be a business owner? Partnership means you own a piece of the business. You want a piece of the revenue. You want a piece of a loss. You own some fragment of HR responsibilities and billing and the EMR, and whenever stuff breaks, like you’re one of the people potentially that’s going to get called to fix the business problem. If you’re somebody who enjoys patient care and none of the business responsibilities, maybe you don’t want or need partnership. But if you are somebody who wants to participate in the business, definitely outlining, this is really important. Hopefully it’s not longer than a couple of years, you know, two or three years to sort of test the waters during what I’d call the dating phase and just make sure everything is contractually laid out are, like you said, are there checkpoints?
Justin (22:00):
Is there like a six month check in? You know, if you’re, if you’re wanting to buy into a pain practice and you can either do 400 K a year for the non partner track as your income, your base salary, or two 50 K for two years, and that’s like your sweat equity, it would be a real shame to earn 250,000 for two years only to find out at the end of 24 months that you basically took a $300,000 haircut on your salary for two years only to find out the partners didn’t like you and didn’t want you anyway. Then they kick you to the curb. You would want to know that before you get to the end of that 24 month horizon. So what I would recommend is have contractually outlined checkpoints every six months. You know, maybe you start in making that two 50 and then six months in there, like, you know what you’re doing. Okay. But we don’t see you as a real part of our future from a practice ownership standpoint, as a clinician or a physician, I would want to know that. So I have the opportunity to either try to change my situation, or maybe bump up to the 400 K or maybe just go elsewhere where a partnership is going to be more of an option. So there’s a lot of business specific considerations around that question that are definitely worth carefully considering.
Dr. Anita Gupta(23:07):
So thank you. I think these are such excellent points. Are there any other final tips or pearls of wisdom you want to carry on to our listeners?
Justin (23:18):
I would say don’t, don’t be afraid to engage a professional. I would always recommend using an attorney or contract review service or a financial advisor who understands these dynamics to be able to give you, you know, to close that information gap. Like I said, you walk in as that relatively green physician, fresh out of fellowship or somebody who’s moving in from out of town. You don’t probably know what the job market’s like. You probably don’t understand what a normal compensation mechanism is and who gets the upside and who gets the downside and how the math works. Having someone explain all that to you, even if not to negotiate on your behalf, if we set that aside for a minute and just to say, we’re going to explain all the different potential outcomes of this contract as written, and then we can tailor parts of it that are not in accordance with our desires, that can be immensely valuable.
Justin (24:05):
And then obviously there’s the negotiation part where I would, this is the last thing I would say is always negotiate. Even if it’s with big academic hospital, ABC, and you know, you want to go there and you know, there’s a line of 75 doctors behind you that they’re going to take the job. If you don’t, it never hurts to ask for a signing bonus. It never hurts to ask for them to pay for your moving expenses. It’s, what’s it cost you argue that if you asked for something like that and they say not interested next in line, then maybe the culture there is kind of, it’s not as physician friendly as you would want your employer’s situation to be. So that’s, that’s just my 2 cents.
Dr. Anita Gupta(24:42):
I think that’s excellent. I mean, I love how you’re connecting all of this together and, you know, our, our ability to negotiate the contract is connected to our productivity and that productivity is actually connected to our financial Mormons ultimately. So it’s all connected.
Justin (25:00):
Yeah. And then your, your personal wellbeing and your relational harmony and your marriage and the stresses of your life, and like, can we send our kids to private school or not like it’s all tied together? Absolutely.
Dr. Anita Gupta(25:12):
That is. So I think it’s such an important discussion and very important to our listeners. So I thank you for your time here today.
Justin (25:21):
Thank you, Dr. Gupta, it’s been a pleasure If you liked what you heard this week, head on over to APM success.com, where you can find more content and free resources to help you build a successful career in anesthesia and pain management. If you wanted to leave a review in iTunes, I’d also really appreciate it. Thanks for using some of your valuable time to join me today on APM success.
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