Tail coverage
Malpractice tail coverage often can be an issue as well. For many years, physician employers routinely paid the cost of tail coverage for a physician employee after termination of employment. Tail coverage is necessary because most malpractice policies are claims-made insurance instead of occurrence insurance. This means that the insurance is applicable when a claim is filed versus when a malpractice act or omission occurred. Because of the significant cost of tail coverage, many physician employers attempt to transfer this financial responsibility to physician employees. Depending on a physician’s specialty, tail coverage can be quite costly. Consequently, it behooves physicians to carefully negotiate this issue. If a physician employer is unwilling to provide tail coverage, a compromise may be proposed whereby the physician employee is responsible only for the cost of tail coverage if he/she terminates the employment agreement without cause or if the physician employer terminates the employment agreement for cause. Conversely, the physician employer would be responsible for the cost if the physician employer terminates the employment agreement without cause or the physician employee terminates the employment agreement for cause.
Equity accrual
Finally, new physicians always should ask whether there is an opportunity to obtain equity in the organizations that hire them. Many for-profit physician employers provide such an opportunity to new physicians after 2-3 years. However, timing is just one factor. Importantly, the cost of the buy-in is critical especially to new physicians with student loans. Recognizing this problem, the trend today is for physician employers to have nominal buy-ins. Notwithstanding this trend, some physician employers also own ambulatory surgery centers and the buy-ins for these entities must be at fair market value and cannot be financed by the center or its owners under the law. Consequently, the buy-in for ambulatory surgery centers is usually substantial and requires a physician to obtain outside financing.
In conclusion, when evaluating the viability of a physician employment opportunity, salary should be only one factor considered. Fringe benefits, the opportunity for equity, and the fairness of the employment agreement also should be weighed heavily by a physician. It is important for a physician to be comfortable with his/her peers and work environment. Selecting the right job opportunity can be challenging. However, the process will be much easier if you remember the basic principles of negotiating.
