by Ryan M. Dopirak, MD
It is estimated that the average orthopaedic surgeon will make at least 2-3 career changes over the course of his or her career, with approximately 50% making a career change within the first 2 years of practice. This may result in a great deal of stress, wasted time, and lost income. In order to avoid costly mistakes, the orthopaedic physician must possess the necessary skills and knowledge to critically evaluate practice opportunities.
There are many factors that must be considered when evaluating employment opportunities, and each individual has a different set of priorities. This article provides a comprehensive overview of questions to ask potential employers, so that the orthopaedic physician will be well-informed when making important career decisions.
- Why are you looking to recruit a new physician?
It is imperative to determine why the group is looking to hire a new physician, as it can have a significant effect on your job satisfaction and financial bottom line. The group must convince you that there is a demand for your services. Acceptable reasons for recruitment include the impending retirement of a senior partner, or desire to add a fellowship-trained subspecialist in an area that is not presently represented within the group. The group may also have a need to add orthopaedist due to inability to accommodate increasing patient volumes. It is important to verify how far in advance the office is scheduled for new patient appointments.
Some groups may be looking to recruit a new physician in order to decompress the call schedule or overhead of the other partners, regardless of whether or not there is enough volume to support a new physician. This is a much less favorable situation.
- What is the type of practice setting?
There are many different types of orthopaedic opportunities, including single specialty orthopaedic groups, multispecialty groups, academic positions, and hospital-employed positions. Each type of opportunity has distinct advantages and disadvantages..
A single specialty orthopaedic group (SSG) provides the most autonomy and entrepreneurial opportunity, but does not provide a guaranteed referral base. Additionally, the income structure is typically productivity-based with only a modest guarantee, and it is common to have a "buy-in" to partnership.
A multi-specialty group (MSG) provides an automatic referral base of orthopaedic patients. However, it is not uncommon for the orthopaedists in the MSG to pay a higher overhead compared to those in a SSG, essentially subsidizing the overhead and/or salaries of the primary care physicians in their MSG.
Academic positions offer a great deal of prestige and exposure, typically generating a high volume of patient referrals. Yet, incomes for orthopaedists in academic institutions are typically lower than those for orthopaedists in private groups.* Additionally, orthopaedic surgeons at academic institutions are commonly required to take Level I Trauma Call..
Hospital-employed opportunities commonly entail competitive income guarantees, as well as potential for signing bonuses and student loan repayment. Typically, you will have an automatic referral base and the hospital will assist with marketing of your practice. However, there is a relative lack of autonomy as compared to the SSG, as you must report to hospital administrators. Additionally, investment in ancillary ventures is more complicated for the employed physician.
*Reference: AAOS Orthopaedic Medical Income in the US 2004-2005
- What is the draw area for the practice and how many orthopaedists serve that area?
You will ideally want the opportunity to develop a busy practice. This is most likely to occur if the market you are entering is not already saturated with orthopaedic surgeons. In 2004, the average density of orthopaedic surgeons in the US was 6.2 per 100,000 population*.
If surgeon density in your area is substantially higher than this, it may be difficult to develop a successful practice.
However, do not automatically dismiss an opportunity with high surgeon density, as statistics may be deceiving. For example, some of the orthopaedists in your community may be nearing retirement, and others may not have a sound reputation. Additionally, you may bring unique training or skills to the community, which would help you build a successful practice. For example, there may be 20 orthopaedists in a community of 100,000, but if you are the only fellowship-trained hand surgeon you will have a distinct advantage in that market.
Alternatively, do not assume that you will be successful in a market with a low density of orthopaedists. There may be groups in neighboring communities that attract patients from your draw area, thus negatively impacting your market share. In this scenario, established referral patterns may be difficult to change.
*Reference: AAOS Orthopaedic Practice in the US 2004-2005
- What exactly will be expected of me? Will I have the opportunity to develop a practice in my subspecialty area or will I be expected to be a true general orthopaedist?
If you have spent a year or more in fellowship training, you will ideally want to build a practice focusing on your subspecialty area. You should get an idea of whether or not the market can support a busy elective practice in your subspecialty area.
Most opportunities will require you to take some ER call and provide some general orthopaedic care, regardless of fellowship training. However, you should have the ability to determine what is outside of your comfort level and transfer the care of those patients when appropriate.
Some groups may expect you to function as a true general orthopaedist for financial reasons- any patient that is turned away from the group is considered lost revenue. It is ethically unacceptable to provide care to patients with disorders that are outside the realm of your training and abilities. From a medicolegal perspective, this also increases your liability.
- Which subspecialties are represented within the group already?
If you have completed an orthopaedic fellowship, one of your goals will be to develop a practice in your subspecialty area. It is important to determine the scope of practice for each individual in the group. For example, if you completed a total joint fellowship, but every one of your partners performs hip and knee replacement, it may take some time for you to establish a busy elective practice. In contrast, if you are the only fellowship trained spine surgeon in a group of 10 orthopaedists, you may have the opportunity to build a busy spine practice in a short period of time.
Ideally, the fellowship training and skills you bring to the group will be unique. If there are already orthopaedists in the group in your subspecialty area, there should be some evidence that sufficient volume exists to support an additional subspecialist in that specific area.
- What is the future vision for the group?
You should have an idea of the group's plans for expanding the practice through hiring of additional physicians. For example, if you are a general orthopaedist, you may be hesitant to join a group who is also recruiting a sports medicine fellow and/or a total joint fellow. If you are fellowship trained, the ideal group will be comprised of fellowship-trained surgeons in subspecialty areas different from yours, so that you may have the potential to develop a busy elective practice.
- How are new patient referrals directed?
There are numerous ways that new patient referrals may be directed. Nonspecific referrals to the group may be assigned to physicians by chief complaint and subspecialty area. The referral process may alternatively be hierarchical, with all new patients or consultations going to the senior partners. Ideally, referrals sent to a specific physician will be directed to that physician, and not redirected by chief complaint or seniority.
There have been horror stories of new patient referrals being triaged by insurance carrier. Patients with good insurance are directed to the senior partners, while self-pay and Medicaid patients are directed to the younger physicians. This is obviously very unfavorable.
- Does the contract include a restrictive covenant if I should leave the group?
It is common for contracts to include a restrictive covenant, also know as a "non-compete clause". This typically states that if you leave the group, you agree not to practice in that geographic area for a certain period of time. You must determine if the terms and length of this provision are acceptable. If you have ties to a community and are not willing to relocate if you leave the group, this may be something you wish to negotiate.
- Is there a "recapture clause" if I should leave the group?
It is common for compensation packages to include signing bonuses, student loan repayment, and large income guarantees. Although appealing for obvious reasons, one should be cautious as these financial perks often entail some contractual stipulations.
Signing bonuses, loan repayment, and income guarantees are commonly considered forgivable loans. A percentage of the total amount is forgiven each year over a predetermined number of years. If the physician resigns before fulfilling the terms of the contract, they will likely be required to repay a portion of this money. For this reason, it is imperative to read the fine print.
- Has anyone left the group in the past 10 years?
During the interview process, the group will be certain to point out their positive attributes. What you must realize is that no job opportunity is perfect. You need to ask if anyone has left the group in the past 10 years, and if so, clarify the circumstances surrounding their departure. You should also contact these departed members by telephone, as they will likely provide you with an honest opinion of the negative attributes of the group.
- Does the group utilize Physician Assistants or Nurse Practitioners?
Utilizing physician extenders in the orthopaedic practice has many advantages. It may increase patient volume in the outpatient setting and may increase efficiency and outcomes in the OR. However, it will also increase overhead of the practice. For some surgical procedures, it is allowable to bill separately for a PA's services. However, the fees generated directly by physician extenders may not always be sufficient to entirely cover their salary and benefits. It should be determined whether the many benefits of physician extenders outweigh the increased overhead and costs.
- What is the surgical caseload of each of the partners over the past few years?
The income of the orthopaedic surgeon is directly related to his or her surgical volume. You should know the surgical caseload of each of the partners in the group with whom you are interviewing. This will give you a general idea of how busy you will be if you were to join them. The average orthopaedist in the US performs 31 procedures per month (372 per year), with subspecialists having a slightly higher surgical caseload than general orthopaedists.*
*Reference: AAOS Orthopaedic Practice in the US 2004-2005
- How often is call and is it divided equitably within the group?
ER call is an unfortunate reality for most orthopaedic surgeons. It is important to understand expectations for call coverage prior to entering into an employment agreement. In addition to clarifying how often call is required, you need to also determine how call is divided within the group. Some groups divide call equitably amongst all members. In other groups, the senior partners take less call or no call at all, placing the burden of call responsibility on the younger physicians.
ER call may allow you to get busy early on by increasing your caseload. However, it will not necessarily help you to build a subspecialty-based elective practice, and it will place increased demands on your time. Call expectations and requirements should be included in the employment contract.
- How many hospitals will I be covering on call?
It is not uncommon for orthopaedic groups to cover multiple hospitals. This allows for the potential to increase patient volumes and market share. However, it also may place increase demands on your time, as you may be making multiple trips to different hospitals throughout the day to round on inpatients or evaluate patients in the ER. If you spend a substantial amount of time driving between hospitals each day, this may have a negative impact on your financial productivity as well as your lifestyle.
- Is the hospital a certified "Trauma Center"?
If a hospital is a certified "trauma center", it is likely that trauma patients will be transferred from outside institutions to your hospital on a regular basis. You must determine if you possess the training, skills, and desire to function at times as an orthopaedic traumatologist. You will certainly be held to the standard of care of the orthopaedic traumatologist from a medicolegal perspective. You must also consider your lifestyle expectations before agreeing to take call at a trauma center.
There are some potential benefits to providing orthopaedic trauma coverage. This may enable you to increase your caseload while you build your elective practice. Additionally, some hospitals will compensate orthopaedic surgeons for taking trauma call.
- How often does the physician have to come into the hospital for emergencies in the middle of the night?
You should get an idea of how busy the orthopaedists are while on call, which must be compatible with your lifestyle expectations. This may be difficult to objectively quantify, as many factors come into play. You should consider the total number of annual ER visits and whether or not the hospital is a trauma center. In a largely industrial community, one may expect a relatively high volume of work-related hand injuries requiring orthopaedic care.
If your ER physicians are well-trained and motivated, they may be able to handle basic orthopaedic injuries. This may have a positive effect on your lifestyle.
- Does the group provide care for patients with spine, pelvis, and acetabular fractures?
Regardless of whether or not your hospital is a trauma center, there will be times when patients with pelvis, acetabular and/or spine fractures end up in your ER. Unless you have completed an Orthopaedic Traumatology fellowship, it is unlikely that you would (or should) provide operative care to patients with these types of injuries. You must determine if there are established referral patterns that will enable you to transfer care of complex trauma patients when appropriate.
- Is there digital radiology which can be accessed from home (PACS)?
Technology will undoubtedly have a significant role in the future of medicine. Digital radiology is one example of a technological advance that has relevance to orthopaedic surgery. Digital radiology will enable the orthopaedic surgeon to make well informed decisions about ER patients from a remote site. This may decrease the frequency the orthopaedist has to unnecessarily come into the ER while in the office or at home.
- What is the income guarantee and what stipulations are attached?
There is a high demand for orthopaedic surgeons in today's market. Groups in larger markets continue to recruit fellowship-trained surgeons so that they may offer the full complement of orthopaedic subspecialties. This may enable them to increase their market share. Hospitals in small and mid-sized markets are now establishing orthopaedic centers of excellence, in order to stop outsourcing of orthopaedic care and increase revenues.
Because of the great demand for orthopaedic surgeons, employment opportunities are plentiful. Many opportunities include large income guarantees* which may be very appealing to the new graduate. However, it is absolutely imperative to understand the how the income guarantee is structured and what stipulations are attached in the fine print of the contract.
The first step is to clarify whether the guarantee is a "gross income" guarantee ("production" guarantee) or a "net income" guarantee. With a gross income guarantee, you will be given a certain amount of money, which will be used to both run your practice (pay "overhead") and pay your salary. Be wary of an income guarantee that sounds extraordinarily high. This may in fact be a gross income guarantee, which may not be a true representation of your take home income. In contrast, a net income guarantee is your actual income, and should be guaranteed regardless of overhead costs.
The next step is to clarify what stipulations attached to your guarantee, keeping in mind that you are not going to be given something for free. Income guarantees are often contractually structured as loans. When your actual production is not sufficient to cover both your overhead and your salary, a deficit results and the hospital (or group) is left holding the bill. The hospital commonly considers this a loan to you. Some hospital will require you to repay the loan over time, offsetting future production bonuses against this debt. Other hospitals may "forgive" this loan over a specified number of years. This could be very unfavorable in certain circumstances.
Here is a common scenario: Dr. X signs a contract with a $400,000 income guarantee for 2 years. Due to poor payor mix in the market, Dr. X collects only enough money to support an income of $300,000 per year for the first 2 years, resulting in a $200,000 debt to the hospital. The contract specifies that 25% of the debt is forgiven each year over a period of 4 years, commencing after the initial contract term has been fulfilled. Dr. X. is then faced with 2 undesirable options: (1) remain in this market for another 4 years making substantially less income than anticipated, as the income guarantee was only for 2 years, or (2) relocate and write the hospital a check for $200,000.
In order to avoid these potential pitfalls, the orthopaedic surgeon should always seek the advice of an orthopaedic business consultant and a health care attorney prior to signing an employment contract.
*Source: MHA 2005 Review of Physician Recruiting Incentives
- What is the projected peak income potential if I join this group?
Your ultimate income potential with a group is far more important that a short-term income guarantee. You will be able to get a general idea of your income potential by looking at the income range of the other physicians in the group over the previous few years. It may be uncomfortable to ask the partners to discuss their income, but this information will be critical in your decision-making process.
There are many income surveys you should familiarize yourself with as you explore your career optionsa,b,c According to the 2004-2005 AAOS survey, the median income for US orthopaedic surgeons is approximately $320,000*. Subspecialists generally make more than general orthopaedic surgeons. Orthopaedists in the Midwestern and Southern states typically have higher incomes as compared to those in other regions.
- AAOS Orthopaedic Medical Income in the US 2004-2005
- MGMA Physician Compensation and Production Survey: 2004 Report Based on 2003 Data
- MHA 2005 Review of Physician Recruiting Incentives
- What happens when production exceeds the income guarantee in the first few years? Am I eligible for a production bonus?
In most groups, you will be required to work for a few years before you are offered partnership. Most groups will offer some sort of income guarantee or base salary during this initial period, typically 1-3 years. This may or may not include an incentive or "bonus" structure.
Some groups pay new physicians a strict salary without any opportunity for a bonus, regardless of productivity. In this scenario, the potential exists for senior partners to dump work onto the new physician. There is no financial reward for the younger physician despite the inequitable distribution of work, as the excess revenue he or she generates is split between the senior partners. This may lead to feelings of discontent in the work environment.
Ideally, if your production exceeds salary plus overhead, you will be eligible for a bonus. However, it may be unrealistic to expect that your bonus will be 100% productivity-based until you achieve partnership.
- Is a signing bonus offered?
Many orthopaedic opportunities include a signing bonus. The amount is highly variable, depending on supply and demand. Remember that the signing bonus is often considered a forgivable loan, with a certain percentage of the loan forgiven each year over a specified number of years. If you resign prior to completing the requisite number of years, you will be contractually obligated to repay a portion of the loan.
If taxes are not withheld from the bonus at the time of dispersal, you will be required to pay taxes at a later date. If the bonus is contractually structured as a loan, it will be considered taxable income as it is forgiven.
Lastly, beware of the pay advance disguised as a "signing bonus". Some opportunities offer an initial "signing bonus", which is later subtracted from your base salary upon commencement of employment. Read the fine print.
- Is student loan repayment offered?
Many orthopaedic opportunities include student loan repayment. This may be dispersed in one lump sum or in smaller increments over the course of the contract. In either circumstance, this will be considered taxable income. As with the income guarantee and signing bonus, you may be required to pay some or all of this money back if you resign prior to fulfilling the contract term.
- Are relocation expenses paid?
Most groups typically offer some sort of relocation assistance. This is relatively straightforward and should be included in the employment contract.
- What is the overhead of the group?
Gross productivity ("total billings" or "charges") is the amount a group bills or charges insurance companies and/or individuals for medical services performed. Net productivity ("collections") is the amount a group actually collects after write-offs. A write-off is the difference between what you charge for a service and what the insurance company pays. In the case of an uninsured patient who fails to pay, the entire charge would be considered a write-off.
Your collections are used to pay your overhead and income. Overhead is the cost of running your practice. It consists of office space and furnishings, technical equipment, orthopaedic supplies, malpractice insurance premiums, physician retirement benefits, as well as your employees' salaries and benefits (nurses, practice managers, receptionists, X-ray techs, etc). The goal is to minimize overhead costs in order to maximize income. A group should be able to tell you their overhead as a percentage of collections. Inability to quantify overhead may indicate questionable business operations.
It is difficult to define what constitutes a "good" overhead percentage. Overhead is dependent on many factors, including cost of living indices, payor mix, involvement in ancillary ventures, use of physician extenders, and productivity of the group. For example, utilization of physician assistants and ownership of MRI may increase both the overhead percentage as well as the net income. In this scenario, your total compensation could be very competitive despite a relatively high overhead percentage.
- When is partnership offered to new physicians and what is the amount of the buy-in?
Partnership is typically offered to new physicians after a specified period of time. The criteria to achieve partnership should not be vague. They must be explicitly stated in the employment contract.
Many partnership arrangements entail a "buy-in". A large buy-in may be reasonable if it provides ownership in ancillary ventures, such as an ASC or MRI. Maintain a high index of suspicion if you are buying into the "hard assets", "good will", or "reputation" of the group. "Hard assets" are commonly depreciated as a business strategy and have little actual value. The days of buying into the "good will" or "reputation" of a group are generally over.
- Does the group own ancillary services?
In order to offset decreasing professional reimbursement and increasing malpractice rates, many orthopaedic surgeons have invested in ancillary ventures. At present, 24% of orthopaedic surgeons receive income from ownership in a private facility, such as a specialty hospital, ASC, or imaging center.*
Although ancillary investments may provide the opportunity for increased income, financial risk does exist. A market analysis should be performed prior to engaging in such ventures. Additionally, ownership in ancillary ventures may be tightly regulated in some states.
If the group is already involved in this type of endeavor, you should clarify whether or not new partners will have the opportunity to become investors as well. You should also evaluate the cost of investment versus estimated revenue stream.
* AAOS Orthopaedic Medical Income in the US 2004-2005
- What happens to accounts receivable if I leave the group?
In the practice of medicine, you are not paid immediately upon provision of professional services. Your office will submit a bill to the insurance carrier, who will then disperse payment after approval of the charges. The amount of time between provision of services and receipt of payment is highly variable, but this may take several months. At any given point in your practice, there will be a number of accounts for which you have provided professional services but have not yet been compensated. These are known as "accounts receivable".
The account receivable may amount to a substantial sum of money. For example, if it takes 5 weeks to receive payment from insurance carriers on average, the accounts receivable will amount to approximately 10% of one's annual salary.
It is imperative to know the fate of your accounts receivable if you should leave the group; this should be included in the employment contract. It is not uncommon for accounts receivable to remain the property of the group upon your resignation. Ideally, you will receive payment for your accounts receivable after a reasonable amount is withheld by the group for your overhead costs.
- What is the group's policy on income received from sources outside of the practice? Is this subject to overhead?
Some physicians are involved in revenue-generating activities outside of their clinical practices. Specific examples include writing textbooks, providing medicolegal testimony, performing disability examinations, consultation with industry, and invention and/or development of orthopaedic devices.
Many groups maintain that income received from outside sources should be paid to the group and subject to normal overhead if it is in any way related to being a physician. This is reasonable if these outside activities are performed during the work day when the physician would otherwise be performing professional services and generating revenue for the group. For example, if the physician is performing IME's at an outside facility during a morning when he or she would normally have office hours, it is reasonable that this revenue be subject to overhead.
In contrast, if you have specific plans for revenue-generating activities which can be performed on your own time, you may wish to have these contractually protected. For example, if the physician authors a textbook exclusively on the weekends and otherwise maintains a full clinical practice, profits from this product should be paid directly to the physician and not subject to overhead. Additionally, you should always consider specific contractual language which protects your inventions and intellectual property.
- What is the malpractice situation in the state/region? Is tort reform in place or at least on the state's political agenda?
The medical professional liability environment is different in every state, and many states are presently considered to be "malpractice crisis" states.* You need to determine if the state you are considering has meaningful tort reform enacted or at least on the state's political agenda.
The cost of medical professional liability premiums for orthopaedic surgeons may vary considerably by state, depending on each state's malpractice climate.** The cost of your professional liability policy is a direct expense included in your overhead, and consequently has the potential to substantially affect your bottom line. You should clarify how much each of the partners pays for professional liability insurance per year, which will give you a general idea of your premiums if you were to join that group.
You also need to determine the exact amount of coverage the professional liability policy provides, and whether the policy is "occurrence" or "claims made". If the policy is claims made, keep in mind that a professional liability "tail policy" must be purchased upon relocation or retirement. This tail policy may be quite expensive. Some employers may agree to pay for the physician's tail policy.
*Source: AMA Medical Liability Crisis Map
**Many other factors may also affect malpractice premiums, including the local and national economy, number of years in practice, and prior history of malpractice claims, settlements, and decisions.
- What is the payor mix of the region?
The payor mix of a region will have a significant effect on a physician's income. Your practice or hospital administration should be able to provide you with this information. You should compare the distribution of patients by payor source to that of the average US orthopaedic surgeon.*
As a general rule, HMO reimbursement is poor. Thus, you should quantify the extent of HMO penetration in the region. Worker's Compensation tends to reimburse at a higher rate than most other insurance carriers. However, this is highly variable by state, as each state typically has its own fee schedule.
Many private insurance companies base their fee schedule off of Medicare. You should quantify the average reimbursement of the private insurance carriers in the region as a percentage of Medicare. If the average reimbursement in the region is substantially less than Medicare, then your financial prognosis is guarded.
Some orthopaedic groups do not accept self-pay patients and those with Medicaid for financial reasons. You should clarify your group's policy on this patient population.
*Reference: AAOS Orthopaedic Medical Income in the US 2004-2005
- Are there other groups in the area and what is relationship between the groups?
Depending on the size of your market, it is likely that there will be more than one group in your community. You should clarify the relationship between the various groups, as any undue hostility may contribute to an unpleasant work environment.
You should also investigate the reputation of each group in the community, the distribution of market share between the various groups, and the nature of referral patterns for orthopaedic patients in the community. Unfortunately, these factors may be difficult to fully assess prior to entering practice in a particular community.
- How many OR's are available and how accessible is OR time?
Before accepting a position, you need to first verify that you will have ample opportunity to schedule surgical cases. Some hospitals have "block time" for specific surgeons. You need to confirm that all of the block time is not already reserved for other surgeons.
You will want the opportunity to schedule at least 2 full days each week in the OR. Furthermore, you do not want to your OR days to begin at 2 PM, after the other surgeons have finished. If adequate OR time does not exist to accommodate a new surgeon, either your financial productivity or your lifestyle will be adversely affected.
- How supportive is the hospital in obtaining surgical instruments and supplies for the orthopaedic surgeons (i.e. arthroscopy sets, total joints implants)?
Some hospitals have exclusive contracts with specific orthopaedic vendors in an attempt to contain costs. Unfortunately, you may have used different orthopaedic systems, devices, or implants during your residency and fellowship training. You may or may not wish to transition to a new system upon starting your practice. However, you should retain the right to make this decision based on what will produce the best outcomes in your patients.
- Is there an adequate support network to provide multi-disciplinary care to orthopaedic inpatients?
You must confirm that an adequate support network exists for care of orthopaedic inpatients at your hospital. Ideally, there will be a hospitalist program for medical management of elderly orthopaedic patients, as management of complex medical problems is beyond the training of the orthopaedic surgeon. Infectious disease specialists play an important role in the treatment of difficult orthopaedic infections. Vascular surgeons are critical in the care of patients with co-existent orthopaedic and vascular problems.
There are numerous factors to consider when evaluating orthopaedic employment opportunities. There is no such thing as a "perfect job", thus it is important to identify and prioritize what is most important to you and your family.
In addition to the factors discussed in this article, it is equally important to consider the social and cultural environment of the community, as well as the quality of the local school systems. Above all, keep in mind that your family must be happy for the situation to work out, regardless of the details of the professional opportunity.
Ryan Dopirak, MD is a fellow in Orthopedic Sports Medicine at the Southern California Orthopedic Institute. He welcomes questions and comments via email at firstname.lastname@example.org.