Contract advice for physicians leaving the military [PODCAST]

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“Military physicians should also realize that not all employers are equal or treat their physicians equally.

Military physicians entering the civilian job market are in a ‘seller’s market.’ They should get a reasonable employment agreement. It is important to remember that while you were serving your country, you also gained valuable experience as a physician. Do not sell yourself short!”

Dennis Hursh is a veteran attorney with over 40 years of experience in health law. He is founder, Physician Agreements Health Law, which offers a fixed fee review of physician employment agreements to protect physicians in one of the biggest transactions of their careers. He can also be reached on Facebook and LinkedIn.

He shares his story and discusses his KevinMD article, “Military physicians leaving the military.”

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Hosted by Kevin Pho, MD, The Podcast by KevinMD shares the stories of the many who intersect with our health care system but are rarely heard from.

Transcript

Kevin Pho: Hi, and welcome to the show, where we share the stories of the many who intersect with our health care system but are rarely heard from. My name is Kevin Pho, founder and editor of KevinMD. Rate and review the show at KevinMD.com/rate. Subscribe at KevinMD.com/follow. Today we welcome back on the show Dennis Hursh. He is a physician contract lawyer, and his latest KevinMD article that we’re going to talk about today is “Military physicians leaving the military.” Dennis, welcome back to the show.

Dennis Hursh: No, thank you. It’s good to be here.

Kevin Pho: And Dennis has been on multiple times now. For those interested in hearing about his story, just go to KevinMD.com/podcast. In the upper right-hand corner, there’s a search bar. Search for Dennis’s name, and you can hear about his prior episodes and stories. So today we’re going to talk about contractual issues as they pertain to military physicians. So for those of you who get a chance to read your article, just walk my audience through it. Share the story of why you decided to bring it up.

Dennis Hursh: Well, because I’ve represented a lot of physicians leaving the military and getting their first civilian contract, and it seems like they tend to have the same issues over and over again. So I thought maybe I could ease the path for them somewhat.

The issues that I see a lot, and it kind of surprises me, is that in one sense they tend to be almost like a resident or fellow, in that they look at the income and they say, “That’s a lot more than I’m making now.” Well, that’s not the question. The question is: Is the income fair? So you have to look at the Medical Group Management Association, or MGMA. A lot of people don’t know, but one of the ways you can sift that data is years in specialty, which can be very significant. It might be your first civilian job, but you’ve spent years in your specialty, so that should be taken into account.

I mean, MGMA also has things like sign-on bonus, vacation, CME, and call coverage. And one that I see a lot of military physicians gloss over is a relocation allowance. They say, “Oh, the military will pay to relocate you.” That’s true, but what I always try to do is get the employer to move the relocation allowance into the signing bonus. So in that sense, it pays to know what a reasonable relocation allowance is.

Another trap I see these military physicians falling into is what I call the old “standard contract” line. They’ll send you the contract, and they’ll say, “Now, I should tell you, this is our standard contract, and we don’t change it.” And many times that’s the truth, in the sense that the recruiter will say, “I can’t change the contract,” and the recruiter is being absolutely truthful. The recruiter can’t change it. It has to go to legal and a senior executive, but they tend to leave that out. So what you hear is, “That’s the contract, and I can’t change it.” So there really is no such thing as a standard contract. There’s a very small minority of employers in the country that really don’t change anything.

One of the things that I see military physicians get tripped up on is the start date. A lot of times the contract will say something like, “This is your start date, contingent on being fully credentialed with all managed care payers and all hospitals.” So you have to make sure that that start date is far enough into the future that you will, in fact, be able to start then. And the contract shouldn’t say, “If you’re not fully credentialed, then we can terminate you.” They shouldn’t allow you to just go on hold either. I see physicians who move into town, maybe they take on a mortgage or rent payments or whatever, and they think they’re starting on this date, but it turns out that they don’t actually have a job because of this. So the employer should agree to just negotiate in good faith if not everything is done at the start date.

Another thing that’s going to be kind of new for military physicians is the covenant not to compete. A lot of physicians say, “Oh, there’s such a physician shortage, they’ll never enforce that,” or, “But that’s so outrageous, they’ll never enforce that.” And they’re probably right; a court wouldn’t enforce it. But I actually had a case. I represented a physician who had signed a 65-mile covenant not to compete and was looking at a place 63 miles away. The hospital’s general counsel and I were talking, and they said, “That other hospital would be crazy to go to court on this. They’re going to lose. It’s going to put all their restrictive covenants into doubt. They’d be crazy to do it, and there’s no way a court will enforce it.” The bottom line, though, is the hospital didn’t hire them, because they just figured, “We’ll hire somebody else that doesn’t have a lawsuit attached.” So when you’re looking at these restrictive covenants, just understand that the market’s going to enforce it. It’s not as significant whether a court will or not.

And then you have to look at what it is. The covenant should be based on where the physician is spending his or her time, not every place that the current employer has a location. And similarly, where the physician’s new job is should be based on where he or she is located, not every location that the new employer has. And very important for military physicians, there should be a specific exemption that allows you to serve at a Veterans Administration facility. And again, I don’t think that’s a big ask, because it’s not like you’re going to lure all your patients over to the VA. But I think that’s particularly important for military physicians.

Another thing you really have to look at is tail coverage. You know, insurance wasn’t an issue while you were in the military. For civilians, there are kind of two kinds of insurance: occurrence and claims-made insurance. If the employer has occurrence insurance, then you don’t need a tail. But claims-made coverage just covers a claim that is made while you are employed. So if your employer has that kind of insurance, then you need to purchase tail coverage. That’s a big deal, because it can be as much as a third of a year’s annual salary. So it’s very important that there be provisions in there covering tail coverage.

And the last thing that I usually recommend is, not all employers are created equal, so look at some kind of rating site and see what other physicians are saying about that employer. I kind of lean toward RYHE.org, just because it was founded by a family medicine physician who happens to be a friend of mine. But it’s physician-owned, physician-run, and I think they do a pretty good job of rating the various employers.

So I think that’s really the most important thing that military physicians should be looking at in their contracts. And as I said, I’ve seen way too many times where they don’t. They come in and look at the salary or whatever. And as I said, the years of experience, I think, are very critical. I see so many military physicians getting offered what a physician coming out of fellowship is. And you know, fellowship doesn’t train you to be an attending physician. It teaches you clinically everything you need to know, but being an attending is different. When I set up a contract for somebody coming out of training, I always try to get a ramp-up period, because, you know, it’s just different. You need to get your feet on the ground. That military physician doesn’t need that ramp-up. You know, that physician’s been doing it. So I think it’s very important that the payment recognizes years of service, and I think those are the things.

Kevin Pho: Yeah, so just give a little bit of context. When physicians practice under the military, what is their contractual situation, and can you contrast that with the civilian world?

Dennis Hursh: Well, yeah. I mean, you sign up for X years of service, and if you don’t re-enlist, your service ends. But the military doesn’t have things like covenants not to compete. Call coverage is what it is. You know, you don’t get paid extra, generally, for call coverage. So they tend to think, “Well, call coverage is just something I do as a physician,” and it is. But again, MGMA has benchmarks on what is reasonable call coverage and what you should get paid for over that.

So I think a lot of it is they’re very used to being very regimented. You don’t have any choice. You’re going to obey orders. You’re going to do this. And I think the military tends to, and “coddle” is a really bad word, but they know how hard it is to get physicians, and I think they work very hard to try and give the physicians a reasonable work environment. Whereas especially hospitals just treat, you know: “You’re a member of the workforce. Some of the workforce wear white coats, some scrub the toilets. They’re all workforce, and we just get as much out of them as we can.” And physicians are very susceptible to that, because physicians will just work until they drop, you know, to take care of their patients. So I think those are some of the biggest things: These people are not necessarily focused on giving you a good environment when you’re practicing.

Kevin Pho: So is it fair to say that military physician contracts are, in general, less negotiable than those of the civilian world?

Dennis Hursh: Yeah, yeah. I think you sign up and you’re a physician, and that’s pretty much it. You’re a military officer, and your duties are to be a physician. So yeah, I can’t imagine negotiating a military contract. You know, and I think that’s kind of the mindset they come from: “There was no sense in negotiating my employment contract, so now I’m moving over here, and I assume there’s no sense in negotiating that either.” That’s just not the case.

Kevin Pho: So let’s talk about the first point that you brought up, which was the disparity in salary between the military and the civilian world. In general, let’s say a military physician is making that transition. In general, what is the salary disparity?

Dennis Hursh: It can be multiples. I mean, I’ve seen instances where people were getting two and a half times what they were making in the military. And, you know, in defense of the military, there are fabulous benefits that you don’t necessarily get, and you certainly aren’t going to get a pension or anything like that, like you get in the military. But no, it’s typically multiples of what they were making in the military.

Kevin Pho: So give us an example of a typical case that you would see, a military physician now transitioning into the civilian world. Tell us a story that illustrates some of the main points that you brought up.

Dennis Hursh: Well, I had somebody contact me and say, “I’m not even sure if this is appropriate, because the recruiter told me it’s a standard agreement. I know you know a lot about contracts, but this is the standard agreement. Can you tell me what I should be worried about?” And we kind of talked about it, and he said, “Well, they told me that this is what they pay.” And again, in the military, if you’re a major, you get a major’s pay. You might get some increase. But “They told me this is what they pay everybody.” And they didn’t talk about call. They just said, “We make sure that, you know, our patients are covered.” So they said that they don’t put anything about call in the contract.

We started talking a little bit, and the start date was not super aggressive. It was three months from when we were talking, but that’s kind of close, especially over the summer, for hospital credentialing. And as we talked, it was clear the contract said, “We can terminate or put the contract on hold if not everything is done.” Then the covenant not to compete. I honestly was told, she said, “Oh, it’s a really big covenant not to compete, and I know that’ll never be enforced.” I mean, it was literally one case that kind of clicked all the boxes. In that case, she told me the insurance was occurrence-based, so she didn’t have to worry about tail. But other than that, I mean, it literally was, “I’m in the military. I’ve got my job assignment. I do what I do. And I assume when I go out in the civilian world, it’s going to be just as regimented. Everybody’s making the same. There’s no need for flexibility.” And so we had to kind of get out of that mindset and say, “No, you’re in a seller’s market. You know, they desperately need physicians in your specialty. We need to negotiate this.” But that is a classic. Like I said, except for tail coverage, that one physician really clicked all the boxes on all the misconceptions.

Kevin Pho: And when you talk to these military physicians and you try to get them out of that regimented mindset and introduce how negotiable these civilian contracts can be, in general, how do they respond to that?

Dennis Hursh: Oh, it’s like a new lease on life. You know, and I think it’s a one-two. It’s like, “Oh, great, I can make this contract better.” But I think at the same time, they realize, “This is something I didn’t think I had any responsibility for. I thought I would just get a piece of paper and sign it, and now you’re saying this is something we need to pay attention to.” But generally, there’s a lot of relief, because they’ll say, “I saw something in there that seems to say this, and that kind of troubles me.” You know, and it’s very reassuring to hear, “Well, maybe we can get that out of there,” you know, or, “We can mellow it out, at least.”

Kevin Pho: And in general, they don’t get any guidance when it comes to making that transition. A lot of information comes from employment lawyers like yourself, or podcasts, or blog posts. Is it fair to say that they get zero guidance in terms of making that transition?

Dennis Hursh: Well, I think it does, yeah. The military certainly isn’t going to help you transition. You know, “We want you to stay.” And unfortunately, they probably didn’t get it in training either. Just now, a lot of training programs are starting to just touch a little bit on, “Hey, by the way, now that you’re a clinician, you’re also going to have to get a position, and you’re going to sign a contract or something for that.” But even three or four years ago, people weren’t getting any education on this in training. So no, it literally is just a new field for a lot of these physicians.

Kevin Pho: We’re talking to Dennis Hursh. He’s a physician contract lawyer, and his KevinMD article, which we’re going to talk about today, is “Military physicians leaving the military.” So Dennis, what are some of your top tips that military physicians can use when they’re making that transition? What are some immediate things that they should do?

Dennis Hursh: I think the first thing is, there is no such thing as a standard contract. So if you’re seeing something that troubles you, don’t feel that that’s carved in stone. These things can be changed, I think, and all the rest kind of flows from that. Income, salary, is negotiable. There are benchmarks you can check. So it’s not like, if you’re moving to California but you know somebody in Florida, you talk to them and that’s how you base your salary. There are benchmarks that are, I think, very persuasive to employers.

I think also, to the extent they’re going into private practice, they should understand that everybody is trying to get a good deal. But a lot of times, in private practice in particular, it’s not that they think they are really giving you a bad deal. A lot of times in private practice, they don’t have access to these benchmarks, and the way they set the salary was they called around to people that they went to medical school with and said, “Hey, when you hired somebody, what did you offer them?” You know, so assume that the contract is negotiable, assume that there are benchmarks, and assume that there’s got to be a reason if you’re not given that benchmark. You know, I always tell people, and I’ve never actually said it in a negotiation, but, “If you don’t think this physician is median, why are you hiring?” The benchmarks are there. So I think that’s the biggest thing: Just understand that it’s not carved in stone, and understand that there are benchmarks out there that can guide you on salary, vacation, CME, call coverage, etc.

Kevin Pho: And how can people reach you?

Dennis Hursh: Well, my website is PAHealthLaw.com, PA like Physician Agreements, and that’s probably the best place to get a hold of me.

Kevin Pho: Dennis, thank you again for coming back on the show and sharing your contractual tips and insight, and we look forward to having you on again.

Dennis Hursh: Great, thank you.

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