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We dive into navigating stipend structures for final-year medical residents with insights from Jon Appino, the CEO of Contract Diagnostics. He shares expert advice on what to consider when evaluating stipend offers, understanding repayment clauses, negotiating terms, and safeguarding your future salary. Learn how to approach early job commitments, manage non-compete clauses, and leverage negotiation tactics to secure the best outcome as you prepare for your fellowship or attending role.

Jon Appino has been the driving force behind Contract Diagnostics since 2011, where he leads a dedicated team on a mission to empower physicians with the knowledge, tools, and confidence to negotiate robust employment contracts and secure the best compensation packages.

He discusses the KevinMD article, “Navigating stipend offers: a resident’s question.”

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Transcript

Kevin Pho: Hi, and welcome to the show. Subscribe at KevinMD.com/podcast. Today, we welcome back Jon Appino. He’s the CEO of Contract Diagnostics. Today’s KevinMD article is titled “Navigating Stipend Offers: A Resident’s Question.” Jon, welcome back to the show.

Jon Appino: Thank you for having me, sir. Always, always, always fun to be.

Kevin Pho: All right, so Jon’s been on multiple times, of course, talking about all things contract-related for clinicians. What’s this latest one about navigating stipend offers?

Jon Appino: Yeah, we had a question that came through one of our national discussions, our national educational events that we did, and we thought other people might benefit from it. We wrote and published something on it. It was about stipend plans. I think the verbiage can be taken in different ways by different people, but stipend in this situation referred to a physician asking: Should I sign a contract early to receive a stipend?

This is mid-to-late 2024, Q3, and the physician was looking at signing a contract for 2026. So, they were considering signing 18 to 20 months in advance. They were thinking, “Is this in my best interest? There’s a stipend they’re offering me. How should I look at the stipend? How should I navigate this process?” They were just looking for some general advice.

Kevin Pho: So, just to be clear, to sign that contract committing them to a job 18 months in the future, that job would give them a stipend in order to commit that early? Is that what I’m hearing?

Jon Appino: Yeah. So, having a stipend plan is a benefit to many people. The organization might have a retiring physician, and they’ve had plenty of notice, so they want to replace that physician. Maybe they just know they’re going to be busy and want to have appropriate staffing in place 24, even 30 months down the road. Some specialties are hard to recruit, or they’ve got predictions and projections on volume increases.

Employers like to lock in physicians early to know what their staffing models will look like. I think we’ve all seen the physician supply and demand curves for the next 30 years, and they don’t look good for a lot of employers. So, they’re thinking, “How can we fill our roles quickly and protect our time?”

Physicians might know where they want to go—for example, Chicago, the Midwest, or Southern California. They might think, “Why wait? I like this employer, and they’re offering me a stipend plan. I’ll go ahead and sign.” It could be a win-win for many, but it can also go poorly in some cases.

Kevin Pho: In cases like this particular question, was it a physician in their last year of residency or fellowship?

Jon Appino: Yeah, it was an orthopedic surgeon doing additional training years and considering signing early. They were being offered $4,000 per month for the next 12, 14, or 18 months during training. I don’t know current salaries for residents and fellows, but I know $4,000 can make a big difference. It was a benefit to this physician and their family, as they had two or three kids, plus rent or a mortgage. That $4,000 extra per month was going to be a big help. They figured, “If I’m going to take the job anyway, I might as well take a little extra money during training.”

Kevin Pho: So, in terms of that stipend plan, it was $4,000 a month for 14 months as long as, of course, they followed through and took the job?

Jon Appino: Yeah. They provide the income to the physician, essentially as an advance. Many still offer signing bonuses, loan repayment, relocation assistance, and a healthy salary. The stipend is an additional benefit for signing early. If the physician doesn’t show up, they owe that money back, with interest most often.

That’s where the crux lies. It could be wonderful for a physician and their family, but if they don’t show up or get a better offer, they might regret it. Believe it or not, Kevin, we’ve had physicians call us three, four, or six months after signing a contract saying, “I’ve got a better offer. How do I get out of the one I already signed?”

Jon Appino: It’s one of those things where there’s a lot of risk involved in these agreements. For example, you might sign a contract that offers a $4,000 stipend per month for 12 to 18 months. Then, when you start, you might also get a $50,000 signing bonus, relocation reimbursement, and a $400,000 salary with an RVU rate of $61. The contract locks in all these figures.

Now, if the median salary for the specialty is $400,000 at the time, that might seem reasonable. But during your final months of training, you might start getting offers of $430,000, $440,000, or $450,000 with RVU rates of $66 or $72. It can be painful to show up at your job making $400,000 with a $61 RVU rate, knowing that the place down the street pays much more.

Plus, you could be locked into restrictive covenants or non-compete agreements. If you leave after your stipend is paid off, you might also owe tail insurance. There are many factors to consider in these stipend agreements that extend far into the future. Physicians need to think carefully before deciding that $4,000 a month is worth it.

Kevin Pho: So, what specific questions should physicians ask themselves to evaluate a stipend plan? How did you advise this particular physician?

Jon Appino: First, we always tell physicians that if they know the group is where they want to work, then a stipend plan could be a great opportunity. We also advise understanding how the taxes work. Will they receive the full $4,000, or will it be taxed?

Second, they need to understand what happens if something unexpected occurs—like they can’t start the job on time, or they leave after one or two years instead of staying for the agreed-upon term. It’s critical to review the repayment provisions in case of a death, disability, or other unforeseen circumstances. Most agreements will require repayment if you choose not to show up, but sometimes life intervenes in ways beyond your control.

Additionally, we recommend asking how the salary is structured. Will it be adjusted for market changes? For instance, if the group hires at the 50th percentile, what happens if market rates increase between now and your start date? We encourage physicians to ensure their contracts specify adjustments only upward, not downward.

Finally, we emphasize the importance of robust conversations with employers. Ask how compensation is determined, how it evolves over time, and what happens if market dynamics shift. Employers might claim they rarely lower salaries, but it’s vital to have protections written into the contract. These discussions ensure the physician fully understands the risks and benefits of their decision.

Kevin Pho: In terms of jobs that typically offer stipends, are we talking about hospital-based systems, academic medical centers, specialists, or primary care?

Jon Appino: Great question. We mostly see stipends offered by hospital-employed positions. Rarely do we see them in academics or private practices unless the private practice has a recruitment agreement with a hospital. Hospital systems with long-term planning needs are the primary players here.

For example, specialties like cardiothoracic surgery and urology often see stipend offers because they are in high demand. Urology is currently the oldest practicing specialty, with a significant wave of retirements expected in the next few years. A urologist coming out of training now could likely sign a contract with favorable terms and significant negotiating power.

Primary care is always in demand as well, though stipend offers are less common in highly sought-after metropolitan areas. These agreements are more typical in rural or mid-sized cities where recruiting can be more challenging. However, the specifics vary depending on geographic and market factors.

Kevin Pho: What happens if a physician wants to get out of a stipend plan? What scenarios should they prepare for?

Jon Appino: If a physician decides not to show up for their position, they usually owe back the stipend plus interest. For example, if they received $4,000 per month, they’d repay the total amount received, possibly with additional tax implications. Most contracts require repayment within 30 to 60 days, though some might allow for a payment plan.

We also recommend considering creative solutions. For instance, if the physician receives a better offer, their new employer might agree to pay off the stipend amount as part of their contract. This could even provide tax benefits, depending on how it’s structured. Consulting with a tax accountant in these situations is crucial.

Unpredictable scenarios, like a hospital closing or the job location becoming undesirable, are harder to address. These situations emphasize the importance of thoroughly reviewing contract language before signing. Signing a contract for a start date far in the future introduces more uncertainty than one with a start date just a few months away.

Kevin Pho: What range of stipend amounts have you seen offered? You mentioned $4,000 in this case—what’s typical?

Jon Appino: We’ve seen stipends range from $1,000 to $5,000 per month, depending on the timing and the job specifics. For example, a physician signing 12 or 18 months before starting might receive a higher monthly amount than someone signing six months in advance. Sometimes, a stipend plan functions as an advance on a signing bonus or salary. For example, if the employer offers a $50,000 signing bonus, the physician might request to receive it in monthly installments instead of as a lump sum.

Kevin Pho: If a physician is negotiating a job that starts in the future, should they consider introducing the idea of a stipend?

Jon Appino: Absolutely. Many employers understand the role of stipends and are open to discussing them. We encourage physicians to bring up all types of pre-starting incentives, such as stipends, signing bonuses, and loan repayment, during negotiations. These discussions help ensure the compensation package aligns with the physician’s needs.

Kevin Pho: We’re talking to Jon Appino, CEO of Contract Diagnostics. Today’s KevinMD article is titled “Navigating Stipend Offers: A Resident’s Question.” Jon, as always, let’s end with some take-home messages for the KevinMD audience.

Jon Appino: First, practice interviewing. Physicians don’t interview often, so getting practice helps them become more confident and informed. Second, seek multiple offers. Competing offers not only improve negotiating power but also provide insight into market trends.

When you get a letter of intent, don’t sign it immediately. Many physicians mistakenly think letters of intent are non-binding, but they often set compensation expectations. Instead, negotiate terms at that stage and have your contract reviewed by an expert to avoid unpleasant surprises later.

Finally, remember that contract negotiation doesn’t have to be stressful. At Contract Diagnostics, we strive to make the process fun and rewarding for physicians. We’re here to help ensure you’re set up for success.

Kevin Pho: Jon, as always, thank you so much for sharing your perspective and insights. Thanks again for coming back on the show.

Jon Appino: Thanks for having me.