Practice Types

Academia

• The advantages include a stimulating environment, a built-in support structure, various institutional benefits (tuition waivers, etc.).
• The disadvantages include a loss of control regarding overhead, income, staffing issues, and space, being micromanaged by the department and institution, and the expectations of the institution (teaching, productivity, research, administrative functions).
• You pay a "dean's tax" for the privilege of working at the university.

Private Practice

• Ask other physicians, hospital administrators and drug reps about opportunities in the area you would like to practice. Headhunters can be helpful, but use as a last resort.
• Start the licensure process early, as well as getting hospital staff privileges, surgicenter privileges, etc.
• Solo Practice
  • Requires money and connections
  • Advantage of not being dependent on other physicians and having total control
• Group Practice
  • Nationally, 60-70% of new ophthalmologists don't stay with their first group (90% in Florida)
  • Lots of INTERRELATIONSHIPS to think about. Everyone has an ego, everyone has a spouse with an ego. From the senior associates point-of-view, you are competition, and they are giving you the privilege of working for their group, which you should be overjoyed to work for.
  • Be wary of any group that uses family members to run the office. If the office manager is the senior associate's spouse, who do you think is going to be favored when it comes to office decisions?
  • Define how expenses are shared. Will the senior partner expect you to see his 200 post-ops the week he is out of town for free? What portion of overhead/marketing/advertising will you have to pay? Will you have to pay for part of the new $100,000 laser that the senior partner wants, but you don't?
  • Maintain similar credentials to your associates (F.A.C.S, etc.) -- it just looks good.
  • Get a good local attorney to review your contracts, and a good accountant to review the books before you buy into a practice
  • Contracts
    • The more thorough a contract, the better off you are.
    • Define every possible scenario, including what happens when you leave (this is applicable to anything involving a contract)
    • Terms to Understand:
    • Moral Turpitude -- Used in contracts as a cause for termination, generally viewed as anything the senior partner finds morally offensive. In other words, anything the partner wants. Saying "gosh-darnit" in the office could be moral turpitude to some, and grounds for termination. Better to have this spelled out if possible.
    • Restrictive Covenants -- A clause that prevents you from starting a practice within a certain distance for a certain time after leaving the group. In some states, these are illegal. In general, make sure the distance is reasonable and it specifies whether it is distance from the main office or from the main and satellite offices. Most contracts will also prevent you from soliciting patients when you move; however, patients may choose to follow you when they leave.
    • Liquidated Damages -- A big contract red flag. If you leave a practice before your contract is up, liquidated damages is compensation for lost productivity. This better be well-defined in your contract, or don't ever plan on breaking it.
    • Cause for Termination -- Make sure these are well defined.

Financial Arrangements

Compensation

• Basic elements of a compensation package include base pay, incentive pay, benefits, moving allowance, and signing bonus.
• Some arrangements may be a set salary alone or payment based on productivity, but most are a combination
• Base pay is basically a salary guarantee so that you have income while building a patient base.
• Incentive pay is a percentage of what you make past a certain level. On average, incentive pay kicks in once your receipts pass 2.5x base pay level. The percentage should reflect your investment in the revenue. In practice, there are three types of investments: the actual work you do, the capital invested in what you do (equipment, building, etc.), and the entrepreneurial investment (risk). In a group practice 25-35% is typical. If you own the building/equipment/etc, you should get more.
• The key phrase is "Fair Market Value". Your compensation should reflect the fair market value for your services. This is the legal key to avoiding the appearance of kickbacks.
• In setting up your group practice, remember that compensation drives behavior.
• Fringe benefits usually equal 20% of base pay. Fringe benefits include health insurance (may or may not cover family members), disability, meeting allowances, malpractice, society dues, journal subscriptions, etc.

The Buy-In

• Terms of buy-in are generally not spelled out in the contract. There may be reference to this in a letter of understanding.
• Some partnerships may have requirements for buying-out existing partners upon their retirement or death.
• Unscrupulous groups may take on new partners to soften their bankruptcy proceedings. Get an accountant and review their books!

Malpractice Insurance

• Types of Policies
• Occurrence Policy: Covers you if you had the policy when the incident occurred no matter how much later it was reported. Hard to find in the malpractice arena, and more expensive.
• Claims-Made Policy: Covers you only if you had the policy when the incident occurred AND when the claim was made. Most Common.
• "Tail" Policy: Extends coverage in perpetuity after a policy is cancelled. Pricing is roughly double a renewal premium. The reason Ob/Gyns stop practicing Obstetrics years before retirement is that they can't afford to purchase a tail when they are still practicing Obstetrics. Think about that when you hear about the Ob/Gyns leaving Mississippi. Purchasing a tail can be a quarter or half a million dollar investment.
• "Nose" Policy: Extends coverage for your new carrier to cover claims where the incident occurred when a prior policy was in force. Price is included in the rate calculation. You don't need a nose and a tail.
• The amount of coverage you need depends on your practice situation. The hospital/surgery center you practice at may require you to carry a certain amount of coverage. The most common policy is a $1 million per incident/$3 million per policy year policy.
• Your likelihood of getting sued as an ophthalmologist is 12% per year. The most common lawsuit is "failure to diagnose". They provided an example of a rather large settlement that was provided because an ophthalmologist failed to diagnose lung cancer. Remember to check (not just order) pre-op chest xrays, and you'll avoid that one.
• Insurance buys you a defense.

Professionalism

Political Activeness/Scope of Practice Issues

• The optometrists have a huge lobby with lots of money.
• The ability to practice medicine is legislated. The US Congress and State Legislators decide who can practice medicine in this country. It is not decided based on who is trained to practice.
• MD's are granted a plenary license, an unrestricted license to practice medicine based on their training. Your ability to practice your profession can be taken away at any time by new legislation.
• Optometrists receive their licencse to practice based on legislation, not training. Can you substitute four years of medical school followed by four years of residency training for an eight-hour course in surgical skills?
• Becoming an advocate for ophthalmology as a profession is about representing the interests of your patients.

Well, that sums up the major topics discussed in the meeting. I'm sure I injected some of my own personal opinion in there as well. I'll close with a quote from Nancy Dickey, M.D., Past-President of the AMA, and President and Vice-Chancellor for Health Affairs of the Texas A&M University System Health Science Center (the old alma mater):