This is the second of a two-part series examining each part of emergency physician compensation packages. This article looks at the more creative elements of compensation and the future building blocks of income.

Bonus pools

The hottest thing to hit emergency physician incomes in the 90s was the incentive bonus. It now has become a major portion of many overall compensation packages and highly sought by both experienced physicians and graduating residents.

The initial concept was to create a mechanism whereby those physicians who move patients and document more efficiently could earn more than those who don’t. Today’s situation is quite complex, with no two bonus programs being exactly alike. The variety of formulas is vast and rarely, if ever, guaranteed. The most important things a job candidate needs to look for with a bonus program are:

• the formula for earning bonus money;
• the criteria bonus money is based on … For example, is it hours worked that pay period; productivity; patient feedback; patient complaints; departmental contribution and meeting attendance; director’s discretion; or a combination of all of the above?
• the formula throughout the group. Is it uniform?
• the reward incentive. Does the formula reward good work, or does it set up a billing competition between physicians?

Bonus income should reward the strong clinical skills and documentation abilities of physicians. It should not reward speed and productivity in such a manner that a slugfest for billing ensues. That creates a dangerous environment for both patients and physicians. The best bonus packages are based on a combination of factors and are uniform throughout the group or department. Other questions to ask include how and when the bonus income is distributed.

‘Because so many 401Ks and 403Bs took major hits in the recession, physicians became more interested in immediate cash as opposed to controlled investing.’

RVUs

Relative Value Unit compensation started in California and swiftly worked east, encompassing many employers in the Texas market along the way. Based on billings and collections over a period of time, an RVU is established. It could be $3.45 or $32.85, depending on the department and payer mix. The production of the physician is broken down into RVUs, and the multiples of that equation make up the physician’s earnings for the pay period. It proves that documentation is a key factor in this income model. Sometimes scribes are employed in environments where RVU compensation is applied.

Some employers are converting their bonus pools to RVU compensation in addition to a base hourly rate for a hybrid model. Many physicians working in emergency departments back in the 90s remember this as “Fee For Service.”

The most important thing is to find out what the range is of actual earnings in a chart showing hours worked and RVUs earned per physician. What is the low, the high and the average earned? Find out the time frame for getting up and running with earnings. It can run as long as 3-6 months, so you must determine how to pay bills until then. Many groups establish a base hourly rate for the first few months and compensate additional earnings retroactively when the RVU cycle is complete.

One other very important issue with this model is appropriateness for a graduating resident. Even an experienced physician needs time with the learning curve for this kind of model, and it can take a good deal longer for a new grad. The true value here is making sure you can keep up with the team and not be left behind in income distribution. I often advise grads to wait a few years before going for this kind of job.

Benefits

Medical benefits, whether in a hospital plan or group plan, are definitely true value and should be sought wherever you interview. Make sure they are comprehensive and include family coverage. Look for dental and vision and prescription coverage as well. Disability insurance, both short- and long-term, is important should anything occur that leaves you unable to work. Disability is a big deal. If you don’t have coverage through your employer, get it through a professional organization or through a different avenue.

CME is crucial, of course, and the average stipend in the private sector is $5,000 a year – though most academic positions provide higher levels. Paid leave is hard to find – darn near impossible in the private sector, but if you do find it, make sure other vital elements are not negated to fund it. Most employers work vacations into the schedule these days, so be sure to check how much you would qualify for as a new employee and whether or not it’s negotiable.

Life insurance sounds good, but it costs the employer little and really shouldn’t be a factor in decision-making. Most physicians find that the life insurance policies that they obtain on their own carry more value.

If you take a position as an independent contractor, all of this is moot, as the law prevents the employer from offering benefits other than malpractice coverage. Speaking of malpractice coverage … have you seen the cost of tail lately? Do not be stunned if you are asked to earn your tail over time in smaller groups. In those states where occurrence MP is available, this is not an issue, as tail is included.

But if the coverage is Claims Made, the tail is separate and can be very expensive. Never assume it will be covered. Always ask. If you must earn that coverage as a new doc or as a partner, make sure you know the formula for doing so.

Pensions

Many employers are pulling back on pensions. Because so many 401Ks and 403Bs took major hits in the recession, physicians became more interested in immediate cash as opposed to controlled investing. Most employees of hospitals and health care systems have a pension component. In most cases, the monies going into these pensions come out of the physician’s earnings. The physician can also direct how these savings are invested. For real value, look for an employer that provides a generous match.

It will be a percentage of what the physician deposits. It can really add up over the years. In most cases, you need to be an employee for at least 5 years before you are vested and can take the money with you when you leave. Some employers vest in percentage increments of 20% per year so that it takes 5 years to fully vest. Find out what the specifics are before signing on the dotted line. At the very least, a pension is an enforced savings plan.

Retirement

This is usually the last thing that young physicians consider when evaluating a compensation package. It should be first! This can easily be what makes the difference between retiring with a major chunk of change at 55-60, or working like a dog until you are 70. Ask what the group or employer is offering and, if there is a defined retirement formula, get the details. Many small, democratic groups contribute the maximum amount allowed to each physician … $48,000 per year, instead of paying up front or big annual bonuses. That is true value! But it is often overlooked because it is not cash in hand. If you don’t think this is important, change your thinking and start planning for the future.

Perks

I know of a group that has its own chef in the physicians lounge. I know of another that provides valet parking for their docs. Some get their scrubs and coats cleaned, and others have child care centers available on campus. I once had a hospital in rural Montana offer a physician a free mortgage and discount furniture. Whatever form they take, perks are simply that … perks. When it comes to decision-making between two great opportunities, this is the last category you should focus on. Perks are the category of the least true value.

Summary

Evaluating a compensation plan can be daunting. The trick is to look at your family and decide ahead of time what your specific needs will be. Some employers will negotiate to craft a package that is best for you. Make certain that when you sign on the dotted line, the package you accept is one that contains true value, not just a lot of useless coverage and empty promises.

Ms. Katz is the owner of The Katz Company EMC, Inc., an emergency medicine consulting and recruitment firm. She has been writing about emergency medicine careers and teaching effective job searching to residents for nearly 20 years. She can be reached at katzco@cox.net.