A Great Book On Contracts
As a physician you'll be entering into a number of contracts during your career. The most important one is probably your employment contract. Physicians are poor negotiators in general for a number of reasons outlined in books such as The Successful Physician Negotiator. One of the reasons is that despite knowing an awful lot about medicine, they know very little about law, even those parts that affect them directly, such as contracting law. Just as knowing that everything is negotiable is helpful when entering into a contract, knowing what a good contract looks like (and naturally, a bad one) is invaluable.
There are not many “good guys” in the financial world. When you meet one, you would do well to listen to what he has to say. One of these good guys is Thomas Crawford. He isn't a doctor, a lawyer, a financial planner, or even an accountant. He is a hospital executive. Yep, the enemy. (just joking…kind of.)
He stated in a recent email to me “As a previous Hospital CEO, I am driven to ensure no physician ever signs a lopsided contract.” I didn't really understand why he would say that until I read the book. Many of the examples he uses in it involve physicians he wanted to hire but couldn't because they had signed a contract that prevented them from leaving their previous job for a better one for various reasons. His book was recommended to me by a reader of the blog. He was gracious enough to send me a free copy.
The book is called Physician's Guide: Evaluating Employment Opportunities & Avoiding Contractual Pitfalls and sells on Amazon for $27.70 with free shipping. (Yes, I get 4% if you buy it through a link on this page.) It has narrow double-spaced columns and is only 88 pages long- to ensure it is an “easy read” even a busy resident can get through in a single sitting. Despite its brevity, it is jam-packed full of useful information that may save you thousands of dollars and years of frustration. I quote from the introduction:
During the course of my 17-year healthcare career, I've been privileged to meet and work with many talented physicians of all specialties. I've witnessed firsthand their unwavering dedication to their medical communities, and I've seen patients benefit from the physicians' years of training. Nevertheless, I've always found it ironic that world-class athletes with considerably less education always sought industry-specific representation when turning professional and, conversely, graduating resident physicians who successfully completed four years of undergraduate studies, four years of medical school, up to six years of residency, and potentially two years of fellowship were diving headlong into the business of realities of employment selection and contracting relatively unassisted.
As a senior healthcare executive in the positions of chief executive officer and chief operating officer, I've interviewed hundreds of physicians and, regrettably, I've seen the aftermath of unfulfilled recruiting promises as a result of situations including bankruptcy due to a lack of volume, unsustainable call, terminations without cause, and questionable business practices….Throughout my career, I've helped a relatively small number of physicians out of their untoward circumstances; however, a vast majority of the physicians were contractually bound to unacceptable covenants they simply did not read or comprehend. Thus, the premise for this guide is to provide resident physicians and early careerists with the basic tools required for evaluating employment opportunities and transforming recruiting promises into contractual covenants.
When I was a resident I was lucky enough to read a book put out by the Emergency Medicine Residents Association called Contract Issues for EM Physicians. It was awesome and enlightened me to many of the unique aspects of contracting in emergency medicine. It armed me against many of the errors frequently made by my colleagues and I referred to it throughout three separate job-hunting experiences. It is far better to learn from the mistakes of others than to make them all yourself. Unfortunately, I don't know of any other specialty-specific contracting books. Mr. Crawford's book is the best primer I've seen about contracting issues for all other specialties. I would have found it useful as well since despite having been through the process several times, and having read a book on it and discussed contracts with attorneys, there were still new pitfalls that I would not have known about without Mr. Crawford's book. I can recommend it to you without hesitation no matter what your specialty (but emergency docs should really get the EMRA book too.)
The Physician's Guide has five chapters that instruct you on how to evaluate employment opportunities followed by ten more chapters about specific contracting pitfalls. Each chapter is brief, is to the point, and contains multiple examples of real-life physician mistakes. Each chapter summarizes the lessons it teaches in a couple bullet points at the end. The bullet points from the entire book would fit on one page. Much like investing, contracting is simple when explained by someone who knows what they're talking about. For example, one point hammered on over and over again in the book is to ensure that all verbal promises and representations need to be written in the contract. Seems so simple, yet I'm sure every week in this country a physician realizes he is screwed over by not ensuring that occurred.
The book goes through the important parts of a contract such as calculating your pay, patient volume issues, malpractice insurance issues, call expectations, the perils of signing bonuses and other free money, termination covenants, and non-compete covenants. He explains rules of thumb for what is standard and fair in the industry and gives suggestions on how to negotiate a fair contract. He also includes a table of median salaries for each specialty in each region of the country. Obviously, as the years go by these figures will be out of date, but the point remains that if you don't know what you're worth, you're unlikely to ensure you're paid what you're worth. He also provides checklists to use when evaluating employment opportunities and looking through a contract.
There are few books on the market that are worth 10 times the cover price to you. This is one of them. Read the book. Have a knowledgeable professional review your contract with you. Many of the pitfalls on the road ahead of you are completely avoidable with a little education.