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Join Jonathan Appino, founder of Contract Diagnostics. He discusses a unique approach that provides comprehensive contract reviews, custom-built solutions, and vital educational resources to empower physicians. We delve into the intricacies of complex compensation models, staying updated on health care trends, and ensuring privacy throughout the process.

Jonathan Appino is founder, Contract Diagnostics.

Contract Diagnostics offers comprehensive consulting services tailored to physicians and their families, addressing employment contracts and compensation structures. Our expertise spans contract physician compensation, schedules, benefits, and more.

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Transcript

Kevin Pho: Hi, and welcome to the show. Subscribe at KevinMD.com/podcast and get CME for this episode by clicking on the CME link in the show notes. Today we welcome Jon Appino. He’s the founder of Contract Diagnostics. The Contract Diagnostics team offers comprehensive consulting services tailored to physicians and their families, addressing employment contracts and compensation structures. We’re talking about the KevinMD article “Why your physician career needs more than a contract lawyer for maximum compensation.” Jon, welcome to the show.

Jonathan Appino: Thanks for having me, sir. It’s been a pleasure reading a lot of your work over the years, and I appreciate all that you do.

Kevin Pho: So we’ll get into your article in a little bit, but first off, just briefly share your story and journey.

Jonathan Appino: My story: I’ve been in health care, in various roles, for 20 to 25 years. Based on what we felt was a market need, which relates to what you just said about the article we wrote, we created Contract Diagnostics 12 years ago. I’ve always loved being helpful to physicians in many different ways, and now we get to talk about compensation structures and contracts all day, every day. It’s been a pleasure to serve tens of thousands of physicians.

Kevin Pho: So you’ve been in this business for more than a decade now. What would you say are some of the biggest surprises you’ve discovered over the past years when it comes to physician contract negotiation?

Jonathan Appino: I think one of the big ones is that a lot of physicians feel that if a contract is nonnegotiable, and I think whether that’s true depends on who you ask, but if they’re told it’s nonnegotiable, they feel they should not have it reviewed by an expert. Just because it’s nonnegotiable, or the employer won’t change it, doesn’t mean it shouldn’t be reviewed by somebody who does a lot of physician contracts. It’s one thing to be able to negotiate it. It’s another thing to understand it, and to have lots of questions to ask about clarifications, things that may be left out or what would happen in certain situations. That’s one of the things I’ve been surprised by: These are very important documents that physicians work very hard to obtain, that potentially contain decades and millions of dollars’ worth of earnings, and they don’t have them reviewed, because they don’t think it’s important, they don’t have time or they don’t think it’s negotiable. So that’s one of the big surprises I’ve had over the past decade.

Kevin Pho: So I’ve talked to several contract attorneys and physician contract review firms on this podcast, and they’ve written on KevinMD, so in my world it’s a no-brainer that every physician should get their contract reviewed by an expert. But if you take a step back from this world, in general, from what you see, do you have a general percentage of how many physicians just go it alone and don’t have their contracts reviewed by experts?

Jonathan Appino: I’d be guessing, but my guess would be 50 percent. So I think it’s high, and I’m not quite sure exactly why, whether they think they can do it themselves, or that it’s not necessary, or that it’s not negotiable. But I think it’s a fairly high percentage.

Kevin Pho: All right, so your KevinMD article that we’re going to talk about today is “Why your physician career needs more than a contract lawyer for maximum compensation.” How did this particular article come together?

Jonathan Appino: Again, based on our frame here, we do think it needs more. Employers, whether it’s negotiable or not, typically don’t like to just have a redlined version of the contract sent back. Oftentimes, if you’re one of the people who chooses to have it professionally reviewed, maybe by an attorney, the attorney might redline the contract and send it back to the employer for you. Or maybe they just send it to you, you never even talk to the attorney and you forward the redlined version to the employer. Number one, the employer doesn’t want this, and they may not be willing to change anything. Number two, your intent, why you want something changed, may not be conveyed the right way just by forwarding a redlined copy.

And on top of that, it doesn’t tell the story. Just receiving a redlined copy of the contract, or hopping on the phone with an attorney and being told something is good or bad, or legal or not, doesn’t put into perspective the frame that physician might have, their story, the reason they want the job. It may not put into perspective what the employer is looking for either. So we feel much more is needed than just a redlined copy, or an attorney going through the contract from their perspective. We think it’s much more holistic. That’s why it’s not just having somebody review the contract when you go in and sign for the position, but having somebody explain it to you, give you good questions and give you a good frame for how your story can be affected by your negotiations with the employer.

We also feel that having it reviewed today is one thing, but you shouldn’t just leave it for a decade, or for five or seven years; you should keep revisiting the contract. Maybe the contract is just fine and nothing needs to change in it three, four or five-plus years down the road. But if they’re not updating your compensation package, or even if they are, those things should be revisited. Just because you’ve done it once, with or without a contract lawyer, doesn’t mean you should shelve the employment agreement, shelve the structure and shelve the decision to talk about it until five, seven or 10 years down the road. We believe a checkup is a very good thing, and it should happen every so many years, no different from my running in to have my cholesterol checked or an exam done on a routine basis to make sure my physical health is in good order. Physicians put so much time into their craft and into training themselves, and they need to keep up with what their market value is, and not just have a number but have a story to tell the employer about why they should get a raise, or why the employer should look at increasing their compensation or a bonus plan, or fill in the blank.

Kevin Pho: So give me an example of what this holistic approach looks like in action. In my world of primary care, let’s say I got a contract from an employer, and I’ve heard good things about you and your firm, and I present that contract and say, “Jon, I’ve been told by many podcasts to have this contract reviewed.” Walk us through the next steps after you get that initial contact.

Jonathan Appino: First off, understanding what the contract says is obviously vital for every physician, but it’s also having us understand your story and your frame. So we ask a lot of questions: Do you want to be there for a long time or just the short term? Have they hired anybody in the past six months, or in the past five years? Maybe you’ll be the first physician in the practice. What are your goals? What are their goals? We’ll ask a lot of questions to get the perspective. Maybe the job has been open for two or two and a half years. Maybe they’ve replaced a physician every year for the last three years, and there’s a problem with the position, and maybe you have more negotiating power because of those things, or maybe you don’t even want the position, based on a couple of things we uncover. Or maybe the employer has hired five people in the last five years and everyone’s been paid the same. Or maybe the employer tells you that they look at the median compensation from MGMA, so what is that number?

So I think one of the things we do is make sure we understand the physician’s frame, their intent with the position and what they’re looking to get out of it, and then present that back to the physician in whatever way is in their best interest. That could obviously be very different for a primary care physician like yourself versus someone working to support a spouse who’s going through a two-year fellowship before relocating, versus somebody who wants to stay in the community long term. The way we might present the contract back to them, or the advice we give them about how to negotiate, what to negotiate and how to ask, might be two very different things in those situations.

Kevin Pho: A lot of times, physicians receive a contract offer and are told, “This is what we give every physician. This is our standard contract. It’s nonnegotiable.” And you mentioned that physicians encounter that scenario a lot. From your experience, what are some common areas that are typically negotiable in these, quote unquote, standard contracts?

Jonathan Appino: It may be none; it just depends. There might be certain language they’re willing to change. They may say it’s nonnegotiable, but there might be two or three sections they’re willing to change. Maybe it’s taking a noncompete from any location to the primary location. Maybe it’s a little fluidity in the signing bonus but not in the base salary. Or maybe the RVU rate is static for everybody, but they’re willing to adjust the dollar amount for relocation. Again, if you’re an experienced attending physician, you may have more things, and your relocation would be bigger than a new grad’s starting a new position. So those are some of the things that might be a little flexible, depending on the employer and the, quote, standardized contract.

But again, sometimes it comes down to this: It’s not negotiable, and they really mean it. “This is what we pay every single hospitalist. This is what we pay every surgeon, and it’s not going to change for you.” That doesn’t mean the physician shouldn’t ask a lot of questions. Even if it were my position, and I was interviewing and was presented a contract and told it was completely nonnegotiable, of course I’d have it reviewed. And even if it’s nonnegotiable, I would do a lot of due diligence on that position to make sure it’s the best fit for myself, my career and my family. It might be nonnegotiable, but that doesn’t mean you shouldn’t ask a lot of questions.

Kevin Pho: So the article implies that a physician may need more than an attorney to review the contract. Tell me about the other members of the negotiating team a physician may need to optimize their contract.

Jonathan Appino: We have great attorneys here, but we also feel that just having it looked at the first time and then shelving it is not appropriate. So it’s making sure people understand compensation. I remember one of the reasons we started this company 12 years ago: I had a friend who was an oncologist, and he signed a contract. I said, “Tell me about the process.” He said, “I called a lawyer, and they looked at it. I talked to him for 12 minutes on the phone, and he said everything looked just fine.” I said, “Did he teach you anything?” He said no. I said, “Did he tell you about the compensation?” He said, “I asked him if the RVU rate was good, and he said, ‘I don’t know anything about RVUs. I’m a lawyer.'”

So I think it’s vital to have experts in compensation on your team, not just someone who can look at the MGMA data and tell you it’s the 62nd or 52nd percentile, but someone who understands trends and keeps up on trends. But it’s also important, when you talk about your team, that they’re not just giving you the number. It’s one thing if I know my cholesterol is 200 and my A1C is 6. It’s another thing to have a plan from a physician about what I should do with that. And it’s a whole other thing for my physician to understand my history: Do I have diabetes? Do I smoke? Do I have a family history? Because all those things play into whether my cholesterol of 200 and my A1C of 6 are good or bad, and what John should do in that situation. So just as my care is customized by my physician, we feel the approach should be customized for the physician in this situation.

Again, it’s understanding the story, which the attorney who reviewed my friend’s contract did not do. It’s understanding the contract, which the attorney did, but he didn’t explain it to my friend, so my friend didn’t get a good, holistic way of asking the employer a lot of questions and understanding compensation and benefits. And then, of course, it’s how to go back and how to frame those things. So maybe having a bit of a sales background, to be able to train the physician, in the limited time we have, on how to go back to the employer and ask the questions without saying the wrong things or putting themselves in a bad light. Because sometimes it’s not just the question you ask; it’s how you ask it, or who you ask it of, or whether you send an email or call them on the phone. So I think all those things are important to discuss, and that’s what I think a holistic approach means, not just having somebody redline the contract for you and then emailing it to the employer.

Kevin Pho: Now, I was wondering if you could tell us a success story where a physician came to you with a standard, nonnegotiable contract, you applied this holistic approach and you moved the needle for them. Just tell us a story that really illustrates some of the concepts you’ve been talking about.

Jonathan Appino: Well, we’ve got a lot of them. One story about a nonnegotiable contract that I would call a good success was actually like the situation I mentioned earlier. She was an OB/GYN taking a job in a city while her spouse was finishing fellowship training. She was going to be there for, I can’t recall if it was one year or two years, but as an OB/GYN she was interviewing with lots of different practices. One of them was a private practice, and the contract just said, about malpractice insurance, “The employer will provide malpractice insurance.” Again, it was a nonnegotiable contract, but it didn’t say what type of insurance, and it didn’t say who buys tail insurance. As you know, an OB/GYN tail policy is quite expensive, and if a physician is planning on being in a situation for one or two years and then leaving, and they need to buy tail, they’re going to be buying their own tail insurance.

So in this situation, we explained to the physician that the document was unclear. Even though the document was nonnegotiable, we were able to give her the tools and resources to go back, ask the right questions of the right physicians, obtain a copy of the policy and understand the policy. In this situation, the nonnegotiable contract wasn’t necessarily changed; it was better understood. And she ended up not signing with that practice. She signed with a different practice where tail was covered, even though it paid her $20,000 less, because at the end of the one- or two-year period, whichever it was, she and her family were going to come out ahead financially by not buying tail insurance. So that’s one of the many examples I would have of a nonnegotiable contract, not necessarily changed or modified, but clarified based on the perspective we gave the physician.

Kevin Pho: Physicians now have several options when it comes to their contract reviews. There are national firms like yours, and local attorneys as well. What are some things they should be asking, and looking out for, to find out what’s the best contract review option for them?

Jonathan Appino: I think it’s making sure they understand a lot about physician contracts, meaning they specialize in this or do it a lot. There’s no designation for physician contracts from any bar association. But you want somebody who really understands the lingo, who understands the difference between dermatology and a Mohs surgeon, or between a cornea surgeon and a comprehensive ophthalmologist, or between interventional cardiology and interventional radiology. And not just being able to speak the lingo, but also understanding the compensation data, and not just saying, “Here’s some data,” but being able to understand trends. I do think it’s important how many reviews that firm or that person does in a year. I do think it’s important that they actually speak with the physician, get on the phone and don’t just do everything through email or by redlining contracts. And obviously, pricing transparency is important. If I’m buying something, I usually don’t want to be charged per hour, or I want to have some expectation of how many hours it will be. Good turnaround times and good access to the attorney, or the team of folks helping you with the contract: I think all those things are vital.

And no conflicts of interest. In this day and age, there are companies that want to get your data and outsource you. Do they do the work themselves, or do they send you to third parties? Do they do the work themselves and then sell your data to other companies that might want to sell you disability insurance or physician mortgages, or manage your finances, with or without your permission? So if you’re calling somebody for a contract review or a compensation analysis, I would hope they would do just that and nothing else. I think those are important considerations when any physician, nurse practitioner or anyone else is choosing a firm or an individual to review their contract.

Kevin Pho: Now, what about the differences between national and local, where a local attorney may be more attuned to some of the politics of a specific hospital, versus a national firm that may not be aware of that? Talk a little about the pros and cons.

Jonathan Appino: It’s an important consideration. A local attorney is going to know more about the specific changes in that locality. They may also have conflicts of interest with the facility; we’ve worked in some areas where a physician says, “I can’t find anybody local, because the hospital has a conflict with all the attorneys here.” But yes, there’s definitely an advantage in understanding the politics of an individual town and market. States do have changing policies, regulations, laws, et cetera, and it’s important that whoever’s reviewing the contract keeps up on those things. I think that’s an important consideration. We would never say anybody’s making a bad decision by choosing somebody locally, as long as they check all those boxes, making sure the contract is reviewed by somebody who really understands physician contracts and compensation structures.

Kevin Pho: We’re talking to Jon Appino. He’s the founder of Contract Diagnostics, a team that offers comprehensive consulting services tailored to physicians and their families, addressing employment contracts and compensation structures. Jon, tell us some of the take-home messages that you want to leave with the KevinMD audience.

Jonathan Appino: I think the one thing I would inspire everybody to look at, as we mentioned earlier, is not just signing your contract, whether or not you have it reviewed, then putting it on a shelf and never revisiting it. I don’t think it’s any different from checking in with your financial advisor, or, as I mentioned earlier, going to see my primary care physician for my annual physical. Just as I have my health checked, we hope to help physicians, and I think physicians should actively seek out somebody to help them with updates to their contract. If they’ve had no raises for three or four years, or if there are changes to their contract, they shouldn’t just sign something saying their RVU rate goes from 60 to 62, but have somebody help them through it and make sure 62 is the right value. Shouldn’t it be 64? If so, how do we have that conversation?

So the one thing I would leave with every physician out there is: Don’t just sign your contract. If it’s a forever position, that’s fantastic, but don’t just sign it and shelve the agreement forever. Make sure you keep doing checkups every so many years on whether you’re paid fair market value, whether you’re paid what you’re worth. Because just because you might be paid well doesn’t mean you’re paid fairly. That’s what we do here every day: help physicians and their families analyze and understand whether that’s the situation.

Kevin Pho: Jon, thank you so much for sharing your time and insight, and thanks again for coming on the show.