During the course of your career, you will make many changes: finishing training and taking that first job, advancing within an organization, switching jobs, moving to a different town or, eventually, retiring.
You may initiate many of these changes. Family situations may cause some. Your employer may precipitate others. Still others may result from mergers, acquisitions, affiliations or consolidation as health care continues to evolve. Regardless of the cause of a change, when it is about to occur, you will need to know how to compare physician job offers.
Comparing opportunities by weighing the costs and benefits of various options is critically important. And crucial to a proper cost/benefit analysis is the understanding of what is most important and viable to you in both the short- and long-term. Which job will protect your future and provide you the flexibility you need for the next opportunity you’ll pursue down the road?
Opportunity factor #1: Familiarity
The road through residency and fellowship can be long and winding with an uncertain future. After finishing training, you might weigh the option of staying at the same academic medical center.
There are benefits to staying in the same environment: continuity, familiarity, and the opportunity to teach junior residents whose strengths and weaknesses are known. There are also potential costs to staying at the institution where you trained.
You may struggle to be seen as a peer rather than a trainee. You may find upward advancement difficult in a crowded division or department. And you may be more accepting of less compensation in exchange for the comfort of staying at a familiar institution.
To help you evaluate
If you’re considering whether to stay in your current program or not, ask yourself:
- What is my relationship like with my mentors here? How long will they practice here?
- What are the growth opportunities?
- Will I always be viewed as a resident or fellow, or will I be able to be viewed as a colleague?
- Would I be better off in a different environment that would broaden my professional experiences?
Caren Kirschner, M.D., had three primary considerations when comparing opportunities after completing her residency at St. Christopher’s Hospital for Children in Philadelphia: geographic location, quality of life and benefits. Each was of equal priority, and more important to her than other criteria such as starting salary or advancement opportunities.
Kirschner chose to join a private practice, but familiarity still played a role. “I grew up in the Philadelphia area and went to medical school and completed my residency in Philadelphia. I knew I wanted to stay in the immediate Philadelphia area, and I really wanted to avoid an unpleasant commute,” she says.
Opportunity factor #2: Geography
As in Kirschner’s case, geographic location is a top consideration for many physicians comparing job options. Geographic preferences are mostly personal, but there are also practical and legal issues regarding the area in which you choose to work.
Professional liability insurance costs vary among regions largely because of each region’s reputation of being provider-friendly in legal matters and because of its history of suits, judgments and settlements. If the cost of professional liability insurance is significantly more in one community than another, that may affect the salary that can be offered by an employer—and your choice to practice there.
Noncompete clauses prohibit physicians from practicing within a certain distance from their previous employer for a certain amount of time after they leave that employer. A clause’s scope may vary depending upon your specialty, employment setting and the competition in an area.
If you know you want to be in a specific community for a long time, a noncompete stipulation may be the most important section of your contract. In states that prohibit noncompetes, you may find that employers include a liquidated damages clause to ensure that physician employees pay damages if they practice within a certain radius during a certain time frame after their employment ends.
Cost of living is another consideration tied to geography. How much of your salary will go toward housing, property taxes, groceries and transportation? Will you need to budget for private school tuition in one practice location and not another?
To help you evaluate
Plan to talk with realtors, local school district officials, leaders in the local hospital and others who will provide objective information. Ask about anything that’s particularly important to you: cost of housing, school options, athletics and other recreational activities, and turnover of other physicians.
Knowing the standard of living that your base salary would provide in a community is also important, particularly when you are considering relocating to an area with which you have limited familiarity. Get a clearer picture of the areas you’re considering with help from these websites:
- CNN Money: A straightforward online calculator.
- Sperling’s Best Places: A calculator that factors in food, housing, utilities, transportation and health costs.
- Bankrate: Detailed cost comparisons for a few dozen common cost-of-living items, from ibuprofen to tennis balls.
- The U.S. Department of State: A list of helpful resources regarding salaries, cost of living and relocation, including links to various chambers of commerce as well as realtor and retirement information.
Opportunity factor #3: Compensation
Two jobs that both pay $150,000 annually may result in very different standards of living depending on where each is located. But there are also other factors to consider as you compare compensation. The salary in the contract is just the beginning.
A fundamental premise that you must understand as you compare compensation offers is that your total pay (base salary, bonus, benefits) will be based upon some variation of return on investment—the return you provide on the investment employers make in you. Employers will pay you less than what you generate in revenue because the resulting margin will help fund their other operations, which may include less profitable practices. Your responsibilities—whether clinical, administrative, research or a mix—also affect your compensation.
Employers typically pay physicians based on one of three models: straight salary (with or without bonus opportunities), productivity, or profit-centered.
Straight salary. The straight salary model guarantees you a specific amount of pay for a defined period of time. No matter how hard you work, how many patients you see or how many procedures you perform, your salary remains the same.
Productivity. Under this model, you are paid according to your personal productivity. This may be measured as cash in the door, work relative value units (wRVUs), patient encounters, number of call shifts, overnight shifts or another standard. This model often includes a lower base salary or draw, but the more productive you are, the more money you can make.
The wRVU measurement eliminates bias based on the payer mix of a physician’s patients. For instance, a physician who treats only uninsured patients likely generates far less cash in the door than a physician who treats only privately insured patients. But if they work the same number of hours and see the same number of patients, they should have the same number of wRVUs.
Profit-Centered. A profit-centered model bases your salary on both your productivity and your expenses. Your compensation depends on both the opportunities you have to generate revenue and your ability to keep expenses to a minimum.
If you’re considering an opportunity with this payment model, it is important to understand the approximate revenue you can generate and how expenses are calculated. Are expenses determined pro-rata (for example, if there are five physicians in the profit center, they are each responsible for 20 percent of the expenses), or are they based on some other formula?
For some employers, the compensation model may be negotiable. If you’re more comfortable with one model over another, it’s worth asking your potential employer if their model is flexible. The response will likely depend on the size of the practice and how developed its infrastructure is. Other employers may start you with a straight salary that shifts to a productivity model at some pre-determined point in time.
To help you evaluate
Diane Godorov, D.O., is a pediatrician who has worked in several different settings including private practice and urgent care. “It is important to know what you are supposed to earn and how realistic it is that you can attain proposed bonuses,” she says. “Having an objective, unbiased resource to help you set compensation expectations is very important.”
One source of objective data is the Medical Group Management Association (MGMA), which publishes several reports compiling annual compensation data for physicians. MGMA data shows how salaries are affected by factors such as specialty, years of experience, size of practice and geographic location and can help you understand the physician marketplace.
For physicians pursuing academic medicine, the Association of American Medical Colleges (AAMC) publishes physician compensation data. AAMC reports include detailed information about how compensation is affected by faculty level, departments and specialties, and the mix of clinical work, teaching and research.
Many employers use national surveys such as the above to set salary and bonus caps at the median or 75th percentile. By creating this cap, an employer can ensure that compensation is based on fair market value and balanced among peers. Ensuring there is a salary floor, too, can ease your anxiety of switching from a job with a guaranteed salary to one that may be variable and based on factors outside your control.
Another compensation factor to be aware of is that, if your practice includes clinical or academic research, your employer may expect you to secure grant dollars to cover part of your own compensation. If the grant dollars are eliminated or reduced, your compensation may be adjusted accordingly. In many instances, receiving additional grants may not increase your compensation, but it can allow additional research to be performed by hiring additional staff.
Opportunity factor #4: Benefits
Benefits are an often-overlooked piece of the compensation package, but they can make a significant difference both in dollars and in quality of life.
For Kirschner, “maternity leave was an important consideration of any job offer.” As a pediatrician and a hopeful mother, she prioritized this benefit as part of her job search.
It’s important to understand how the benefits you’re offered compare both monetarily and toward your quality of life. What is the value of the health insurance and vacation time offered, or the funds available for CME? How about the value of the retirement program or the professional insurance coverage offered?
An opportunity with a lower base salary but excellent benefits may actually be better than one with a higher base salary and few or no benefits.
Opportunity factor #5: Family fit
Stuart Ort, M.D., was a successful otolaryngologist in California for eight years. He practiced with one other physician and had no employment-based reason to switch jobs. But as he weighed his happy job situation with a desire to be closer to family in the New York City area, family took the higher priority.
In his search for a new practice, Ort says his “major consideration was finding a non-academic institution or group where I would be able to focus the vast majority of my time and energy on clinical work.”
Ort reached out to friends in the New York City area and ultimately identified a large single-specialty ear, nose and throat practice. Even though it is a much larger practice than his former employer, Ort reports that he is “very happy with how transparent the practice is and the fact that no one feels like they are missing out or are getting unfairly treated.” Despite moving cross-country to a very different practice environment, Ort says his new practice is a “great fit.”
To help you evaluate
To help ensure your new practice and community meet you and your family’s needs, ask these questions:
- What is the real estate market and school district like?
- Does the community offer access to my and my family’s religious, educational and extracurricular needs?
- How close would I be to family and friends?
- How is the climate and environment?
- What community do most physicians live in? What is the commute like?
- What do physicians in the area do when they’re not working?
- What do other physicians and their families like best about living and working there?
Final thoughts on comparing your options
Some physicians compare the job-search process to a dating game: you meet a lot of different people interested in getting to know you better, and they all want to see if you are compatible with them. Once you are interested, the employer prepares a contract to make the relationship official.
Mike Srulevich, D.O., who recently changed jobs, was philosophical as he considered a new opportunity. A change in jobs “can be transformative on several levels,” he says. “You may have been doing the job for years, but all of a sudden it’s a new culture, a new schedule and a lot of different personalities.”
Taking a new job, he says, is “like buying a new house: Finding it might be the easiest part.” Once you sign the employment contract, you must “navigate the paperwork, coordinate schedules and unpack life as it formerly was [in order to] start a new and different professional life.”
Just as in house-hunting or dating, physicians who are comparing options must understand and prioritize their own short-term and long-term goals. Choosing among multiple options is never easy. As you weigh the costs and benefits of opportunities, make sure you have carefully defined your own objectives.
Additionally, make sure that the language of your final contract is consistent with these objectives and matches your impression of the opportunity. Identifying what matters most to you will help you make the choice that is most professionally and personally gratifying.
Bruce Armon is chair of the health care practice group at Saul Ewing LLP and frequently speaks to physician audiences and other health care audiences. He has helped hundreds of physicians and practices over the years with contractual, compliance, reimbursement and regulatory issues