Jon Appino’s firm, Contract Diagnostics is one of my long term advertisers. I thought an interview with him about physician contract reviews would be interesting to readers. This is a rough transcript of the interview.
Tell me about your background, your business, and how you got into it.
I’ve been an entrepreneur since I was young. I started a company when I was 17, another at 20. After college and an MBA I worked in numerous locations for a major pharmaceutical company in various roles, one being contracting and negotiating major reimbursement contracts with oncologists. During my work there I made many physician friends and found there was a significant need for a better physician contracting process.
I put together focus groups with residents, fellows, staff physicians, program directors, and established private practice physicians to build the Contract Diagnostics model. I put together a great team of lawyers and benefit advisors to provide a great deal of value to our physician clients. So, the process is really what physicians wanted – we just administer it. We really enjoy what we do and the physicians we help. The appreciation and excitement they have after what is usually a stressful process makes us continuously want to serve more physicians.
We believe there is a better way to do physician contract reviews. That is why it’s all we do. Contract reviews are 100% of the business here at Contract Diagnostics.
Who is your typical client?
All of our clients are physicians, the majority, probably 65-70%, are soon to graduate residents and fellows within 2-18 months of finishing. They are looking for answers to questions about their contract and want to make sure there aren’t any red flags in it. We do academics and private practice from subspecialty pediatrics to neurosurgery. We also do reviews for attending physicians renegotiating contracts or changing jobs. Three months ago I had a 68 year old family doctor integrating into the hospital. We’ve also looked at contracts for large practice hospital integrations and partnership agreements. Many of our reviews are just quick “check the box” reviews. It’s 100% physicians for now although we may branch out soon to start doing mid-level contracts in the future. But we don’t do any divorce or trial work or any type of law.
Tell me about your pricing and packages and what they include?
Our most popular package is the “Advanced Review.” About 76% of our clients choose this option because they think it is a good value and gives them all the information they need. We basically do a “triple review”- from a legal, a benefit, and a compensation perspective. We redraft the entire contract and condense it into a two page easy to understand version so the doctor can understand all the important aspects of the contract. We then attach our thoughts about what should be deleted, added, or modified and then typically spend an hour to an hour and a half educating them on the phone. We also [provide current salary data] for their specialty and state. This includes benefits, RVUs, collections, retirement contributions, and salary differences between men and women, and US and international grads. Since all we do are physician contract reviews, our internal database is very robust as well. Physicians can call us as much as they want with questions for 12 months. This package currently costs $700, but if you’re still in training, you can pay $200 now and $500 (flex-pay plan) once you start getting your attending salary. [Update 11/2017: The flex pay is now $200 now and $100 a month until everything is paid off.]
Our most comprehensive package is the “negotiation review.” You get all the same stuff as in the advanced review, except we’ll do all the negotiations.
We also offer a “basic review.” This is similar to the advanced packages, except we spend less time on the phone with you, about a one hour call without the ability to call us with questions down the road. We still rewrite the contract for you and do all the education except we don’t address the compensation data. This is $400 and we don’t allow the “flex pay” option on the basic review.
Finally, we offer a “quick review.” We don’t rewrite the contract, we just look at the highlights and go over them with you in a 30 minute call. That runs $200. Most people use this one when they have multiple contracts or academic contracts. We do a quick review on all of them, then do an advanced review at a discounted price on the selected contract.
I have a friend who is an attorney. What benefits can you provide that he cannot?
This is all we do, so we’re better at it. We’re up to date on all the nuances in medical contracts. We understand the fee structures, so it is more than just a legal perspective. You’re going to get a much better review than you’re going to get from a malpractice or divorce attorney. We do a lot more education, which is much different from what others are doing.
Isn’t all this state specific? Do I need an attorney licensed in my state?
There are not many nuances between different states, but we keep track of them. We’re comfortable doing contract reviews for all 50 states. Some of the more important specifics vary by specialty. The differences between a private practice nephrologist, a hospitalis, and a hospital employed pulmonologist can be just as important as any difference between states. Since 100% of our work is physician contracts, we are well versed in answering questions on these topics.
What happens if you negotiate too hard with a potential employer? Is there a downside to having an attorney represent you in contract negotiations?
The pluses of having us do the negotiating is that we’re good at it. We’re used to asking for things. We can say “This is standard, this is what we’re seeing across the country” because we do this every day. And we can walk people (both employee and employer) through the process. It may save you time and get you more because of the way we ask. Of course, we hope you can do this yourself after an advanced review, but if you prefer, we’re willing to do it for you.
We don’t scare them off by hammering them. Our role is to find common ground, rather than have an adversarial confrontation with an “us vs them” mentality. We’re very friendly and reasonable and don’t ask for outlandish things. We’ve never had an employer get frustrated or upset or pull an offer because we did the negotiating for the physician. Our calls are typically very well received.
Does the doc get more money if you do the negotiating?
Sometimes. Our negotiation for a cardiologist recently got the physician an extra $127,000 over 5 years. Sometimes we are able to get you more money, but more typically, the additional benefits we get for you are non-monetary- improvements in call schedule, more vacation, changes in the termination clause, the non compete, the tail insurance etc.
Chances that we’ll get you something extra are pretty good, but it’s also the time savings. It also depends on what kind of a job it is. I had an academic emergency physician taking a job in the Northeast recently that I told I didn’t think we could do much to improve his contract if we did the negotiating. However, with a private practice nephrologist in Texas, we can get an awful lot. So it depends. It’s almost always worth the $1000, but every situation is different. We do let people upgrade from the advanced review” to the “negotiated review”, but not from the other packages.
What are some common mistakes doctors make with contracts?
The biggest error is that they don’t have anyone look at it and don’t understand what it actually says. They just figure, “Well, if it’s the standard contract I might as well sign it.” The next most common error is not understanding what I call the “what-ifs.” What happens when things don’t work out? 46% of doctors leave their job after their first contract is up. There is an awfully good chance a new residency grad isn’t going to be in the same job 3-5 years out of residency. So they need to look at termination issues, being let go with or without cause. What happens if you leave on your own? What happens to the signing bonus, relocation bonus, tail insurance etc.
Another pitfall is complex payment structures like RVUs are very useful to understand and compare. Most doctors have reasonable compensation expectations, but don’t really know what a fair RVU arrangement looks like. Women especially benefit from seeing the male/female compensation data. Like in every profession, women aren’t necessarily paid as much as men. Many doctors just can’t tell if their offer is a generous offer, an average offer, or a particularly subpar offer, and we can help with that.
Anything else we should know about your firm or contracts in general?
We do everything in house and don’t outsource anything, so the quality is high. This service isn’t a commodity due to our unique process. You shouldn’t go to the lowest bidder.
Thank you Jon Appino and Contract Diagnostics for your time and support of The White Coat Investor. Did you have your contract reviewed? Who did you have do it? Were you happy with the process? If you did it again what would you do differently? Any contract horror stories? Sound off below in the comments section!
The issue I would like to see go away is Non -compete clauses. Some states have outlawed them, but I don’t think we can wait for that to happen nationwide. DOCTORS! stop giving up your freedom and your patients’ freedom. These non compete clauses are a powerful weapon that can only be used to control and threaten you. I doubt most of the public realize many doctors are restricted in this way. I have even seen some fellows forced to accept non compete clauses in their fellowships! Frankly I think they are immoral. If enough people refuse to accept this stuff it will go away, but it is up to us.
Thank you Paul for your reply. Non-competes are viable in most states and the enforceability varies from state to state and practice to practice. Litigating a non-compete can cost upwards of $60,000. This is why some practices are including ‘liquidated damages’ sections that state you will pay them a certain amount if you violate the non-compete.
It is best to not only understand them but try to modify them to your situation. Most employers will not do away with them but may be open to modification (distance, time frame, invalid depending on termination clause, etc). – Jon
I haven’t had huge issues with my contract but it was also pretty straight forward to read.
I to an not in love my “non-compete” clause but frankly its non-negotiable with most groups. I see the reasoning for it too. If you are a young physician starting out and they help you build a patient base and then you cut and run taking most of the patients….well that would be pretty upsetting to them. Now if you were not getting assistance in your practice from them then I don’t know if I would agree to a non-compete personally. My non-compete is 10 miles and 2 years. Given I live in a major metroplex it would just mean my commute goes from 3 minutes to about 20 minutes.
Still if I would known more I probably would have fought for a non-compete exception should I open up a concierge/direct pay practice as we wouldn’t be competing for the same patients.
That being said I don’t see myself leaving anytime soon unless my pay were to drop.
One other issue we had was in relation to contract language. My contract was negotiated as a 2 year salary with option to extend 6 more months if needed. The actual contract stated 1 year salary with one year physician option and then extension beyond that could be negotiated with board. Not quite the same and when it came to the end of the year they were discussing only extending me 6 months on salary. They apparently thought the contract wording meant something else. Thankfully the board read the contract and listened to what I remembered us discussing when I was hired and agreed with me. I really wanted the security of 2 years before moving to an RVU or cash model.
P.S. – Really nice Q&A. Wish I had known about this before I signed up. Incidentally just as an aside to Mr. Appino: I think you should also consider offering your “Flex Pay” plan to those leaving the military and consider marketing to them as well.
Most military physicians have zero experiences in contracts. In the military the contracts are very simple. You sign it or you don’t get paid. Mind you, your still going to work, but if you want the bonus you sign the contract. The only time they are negotiable is when you first sign up and even that is hard.
When I left the military a $700 hit to the wallet would have been tough to swallow given all the other expenses I had but the Flex Plan would have been doable. Many military physicians go through a period of minimal or no employment during transition (I was unemployed for about 7 weeks)
Beau – I forgot to mention the military and payments. We would (and have) extend the Flex pay to those getting out of the military. If you know of a specific site or journal we should look into getting in front of please let us know. – Jon
I would consider Army Times, Air Force Times, and Navy Times in the months of April, May, June, July, Aug, Sept. Most doctors separate from the military in June/July or Sept/Oct
Thanks Beau for your reply. Non-competes do make sense from an employers perspective in many situations. Our goal is to make that section of the contract a little more fair to both parties. We seek to understand their perspective, then request something reasonable in the middle that benefits the physician. We have had great success with our strategies in this area.
It sounds like your salary issue was easily remedied. Often this is not the case which is why it’s important to understand the nuances of the language, even if it is straight forward. Straight forward language doesn’t mean that something isn’t missing or there is an expectation that is unclear. Our process clarifies these points and provides a list of questions for you to ask the employer around compensation, guarantees, and such. – Jon
I don’t buy this notion of non-competes because I seriously question how much patient loyalty or practice build up is the accomplishment of the hospital or the hospital system. In my experience the patients want to stay with the doctor because of what the doctor brings to the table, ot anything the hospital did. They canmlead the horses to your water, but to keep the horses coming back is the doctor’s accomplishment. Non competes assume waaaaaaaaaaay too much credit to the employer for your hard work and success. They need to go away…especially the lo ger you are around the less the hospital or employer has to domwith your success but the more they are determined to lock you out from capitalizing on it. Ridiculous that we just accept this as the way things are done…like nonsensical AUM financial advising fees that linger from the way they have always done it long past any logic, non co petes need to be forced out of the market…
I completely agree Paul. Especially with hospital based employees such as hospitalists or intensivists. Patients would not follow an ER physician from account to account nor a hospitalist so the ‘damages’ that many accounts state they WILL have is not accurate. In those instances we feel they are doing it to prevent wage increases in what would be considered a ‘free market’ – the hospital across the street wants to hire hospitalists and pays an additional $10 per hour/$10k per year/$100 per shift may be enough to get some physicians to quit and change accounts. With non-competes, it prevents this type of situation. Some states have outlawed them all together while others are famous for not enforcing them.
If we can answer any questions on non-competes never hesitate to reach out to us at [email protected]
I think your keyboard’s “m” key is broken. 🙂
Do they offer advice on different types of partnerships to make money in a surgery center, hospital, ambulatory care facility, or urgent care?
Hi M – we do all types of physician contracts. While most of our work is standard physician employment agreements, we are also skilled in partnership negotiations, group purchases by hospitals, and ASC/ancillary buy-ins. We typically quote these different from our traditional packages since each one is different. We’ve done partnership agreements of one page and $0 buy-in to an 87 page $3.4MM buy-in. – Jon
Interesting… I am a terrible negotiator I might have to take advantage of this on my renegotiation.
Thanks Dan – don’t feel bad! Physicians are not trained nor skilled in business or negotiations. That’s our job. If we can help in the future please reach out anytime. – Jon
I had a local physician/health system lawyer review my contract. I was worried about an indemnity clause. I understood the non-compete. They wereextremely well priced and went through the contract paragraph by paragraph with me over the phone. My contract is the same that all physicians in the system receive, with the compensation altered to reflect my specialty.
They stated that non-competes are still around unfortunately, and the most important thing is to understand them. The indemnity clause is also starting to creep into more hospital-employed contracts, and despite a lot of doom/gloom scenarios on the internet (mostly by Sullivan), I shouldn’t be worried. I still am, but couldn’t negotiate around it.
Their fee, which I doubt anyone can replicate, was $75 an hour (for residents). They did not provide direct negotiation, but informed me of questions to ask and options to propose.
One thing that I had eyebrows raised about was when a financial planning seminar/dinner for a group of residents offered to review contracts. I was very intrigued when they started to mention it, and they were crafty to mention that they couldn’t provide legal interpretation, only benefit interpretation. But the way it was said, one had to be paying attention. Most of the other attendees did not pick up on it, but only understood that the financial people would “review contracts”
Toz – Thank you for your reply. There are many firms/places you can have a contract reviewed. Prices are all over the place from hourly (I have physician friends that have paid upwards of $10,000) to a flat-fee.
What we do here is much different than any other firm. Our educational approach, coupled with our 100% dedication to physician contracts means you exit the review process with a different appreciation and level of understanding than through a different process.
Some firms only want to review your contract to sell you products such as disability insurance or financial products/investments. We do neither here. We conduct all work in-house (we never outsource you to the lowest bidder).
If we can help in the future please let us know. – Jon
I didn’t realize non-competes were still so prevalent. I’ve been at 4 facilities with no mention of them. The biggest difficulty has been reworking indemnity clauses that I restructure every time.
I think it likely depends a lot on your specialty. If you don’t have a regular patient pool then I imagine a non-compete isn’t that important. For instance ER docs don’t have “their own” patients. They take what comes in, so I think a Hospital would be much less insistent on a non-compete with them as they are say a Cardiologist or Family doc.
It all depends on the situation and state. We agree with Beau that they do not make sense for certain hospital based physicians as patients do not follow them practice to practice. We do still see iron-clad non-competes in nearly all hospitalist,. intensivist, and other hospital-based physician contracts. We do our best to eliminate them but often times we are forced to modify them and leave them in.
In my contract.. I have specifically placed in the contract that my salary be renegotiated based on the mgma after 3 years into practice. How do I enforced that clause? Every time I bring it up.. I get excuses?
It’s hard to negotiate when you’re not willing to walk away. I’m not getting the impression that anyone thinks you’re serious.
I used this service after seeing a link on this webpage a few months ago. I compared their pricing plans with those of a local lawyer who specializes in healthcare contracts and who gave a discount to the residents at our hospital, as well as to other firms online. I felt that contract diagnostics was a much better value. I went with the advanced review with flex-pay option.
They very thoroughly went through the contract and the 2 page summary is great. Most of the contract you can understand but there are certain sections that are just confusing and the summary breaks down each one separately into bullet points. Also, they were very good about pointing out the specific wording used in the contract and how in some cases it can mean something very different than what a regular person(non lawyer) would infer from it. The turn around time was 4 days, but this was because I sent them the contract over a holiday weekend. Normally its about 2 days.
During the phone conversation, they spent time trying to get to know me (family, location preferences, more pay vs more time off preference, etc) and what I was looking for before even talking about the contract. Then we went through the contract section by section. They do offer the negotiation service, but after this phone call I felt it wasn’t necessary because they told me exactly what to ask for and how to ask for it. It was also nice to have the MGMA data available. I had old MGMA reports but its always good to have the most up to date information and that MGMA report alone would cost you $700.
They were able to get me some changes to the contract and I was able to get a signing bonus that originally wasn’t offered, but more importantly, I felt comfortable that I knew what I was signing up for. I have read way too many horror stories of people who took jobs with salaries that were too good to be true only to get screwed in the end because of the “small print”. I will definitely use them for my next contract review.
Renegotiated just means you will talk. They listened and ignored your concerns…
Any chance you will branch out into the dental field?
Hi Richard. Thank you for your message. In the past we haven’t found a large need but if there is demand we would be interested in branching into the market. It currently is not our expertise so we’d need some significant training on the industry, reimbursement, payors, etc but again if the demand is there we’d be interested. feel free to email me at [email protected] and we can discuss. I’d love to catch your ear.
Thanks – Jon
I actually was looking at this from the employer end. I have one associate that get paid very well for what he does. I want him to have a good contract, get paid well etc., and I think we do, but it’s one of those things that has evolved over time. We used to never have a non-compete, until one left and set up just down the road and started soliciting previous patients. Same with some of the other things that were talked about. I’m not sure if there is a huge demand in dental, or if there is someone already filling this niche, but if you still want more info, reply to this and I’ll email you.
Is your pricing per contract or per job cycle? (ie if you are considering several positions do u charge for each contract?)
Hi AG – Our pricing is per contract as we put quite a bit of time and effort into the process. However, if you are considering multiple offers (as many physicians do) we are able to put each through a “Quick Review” for $200 to check for major red flags. Usually after our discussion on the 2 or 3 you are considering one specific offer stands out. Most physicians elect to take that contract and put it through our Advanced Review which we discount to make the Quick Review on that contract free. So you get 3 Quick Reviews and an Advanced Review for $1100 or 2 Quick Reviews and an Advanced Review for $900. It is a very cost effective way to obtain quite a bit of data.
If we can help in any way just let us know. -Jon
Jon,
I am a financial planner who works with residents and fellows. I saw that you offer discounts to clients who refer business to you. Would that also go for my clients? What kind of referral discount would you give to my clients in Florida?
Thanks,
JT, thank you for your interest in Contract Diagnostics. I would love to learn more about your firm and how we could assist your clients. We do work with other financial advisors and have provided value to a number of their clients. Please email me at [email protected] and we can discuss our processes and programs. – Thanks.
JT, thanks for your interest in Contract Diagnostics. I entered a comment already but I think it was deleted based on my email address being included (spam filter from WCI site). Yes, we would enjoy working with your clients and do work with other advisors across the country in a variety of roles. Please hit our website and complete our form so I have your information. I will reach out to you and set a time to discuss. Thanks and looking forward to it. – Jon
I was wondering if anyone has statements/info regarding tail coverage in their contract. I am going to start moonlighting for a group (as a resident) and will potentially join on as an attending after residency. I asked the group about tail coverage (they have a 2M/4M claims-made policy) and got the run around and I ultimately requested for it to be explicitly stated in my contract that if and when tail is required, that it will be covered by the group. They informally stated that “dont worry, its covered” (and the other local physicians seem to trust the guys in this group) but the group states they have never explicitly written in a contract that they will cover the tail. This seems kind of odd to me, but obviously, this is all new to me and I don’t know how it works. Don’t most EPs (moonlighting or otherwise) have this written into the contract? Am I overreacting by persisting on this issue. They did say they will put it in the contract for me. Is there any specific I should look for regarding this issue?
If they’ll put it in the contract, great! If they won’t, I’d be hesitant to go there for moonlighting. Maybe for a main job, but not a moonlighting gig. A fully mature EM tail is about $50K.
So the group sent me the contract and everything looks tidy, I just want to make sure the language on the malpractice looks appropriate. Does this look ok? Or do you recommend a good company that does a quick review (I don’t need negotiation or anything fancy… really I just need this statement to be verified that it is apporopriate)
This is the language they put in the contract:
1.4. MALPRACTICE INSURANCE: During the Term of this Agreement,
the Company shall provide malpractice insurance. The Company’s malpractice insurance policy covering Contractor may change from time to time at the Company’s sole discretion. The Company’s current malpractice insurance covers all physicians while they work for the Company and after they stop working for the Company. The Company shall not be required to purchase a tail insurance policy just because a physician no longer works for the Company. The Company will purchase appropriate tail insurance, at its sole expense, in the event the Company no longer carries malpractice insurance that covers the past acts of its physicians that then work for the Company and the past acts of
physicians that previously worked for the Company.
I recommend a good company such as the one discussed in this post.
That paragraph looks fine to me, but I’m not that “good company” I recommend.
I’m not a lawyer, but I’d get that reviewed. The money spent now will be worth it if you decide to leave someday. The wording seems like a little hmmm and hawww to me. I like things simple, one sentence is enough to say that the company will purchase the tail.
Since we’re on the topic of non-competes. I joined a practice last year in FL. They offered me a contract. I got it reviewed by a very good attorney. We both noticed no restrictive covenant clause. In the interest of transparency I mentioned this to the practice COO. She said they don’t feel like I need one. So I signed the job contract. Two weeks later they sent me a separate restrictive covenant contract (10 miles/1 year). She apologized for telling me otherwise earlier. I didn’t make a big deal about it as it seemed reasonable. So I signed it.
Fast forward one year later. I’m now thinking of leaving this practice. I’ll probably move out of the area since I have no roots here. I’m wondering though can they enforce a restrictive covenant contract that was given to me AFTER the original? Can that really hold up in court??
First off, I’m not a lawyer, but from how I understand non-competes are state specific and even a little judge specific. Sadly, the only way to find out if it holds up would be to go to court, which can be expensive and time consuming for both sides.
Hindsight is 20/20, but I would have used that second signing as a negotiation time. “I’ll sign the new contract, but I would like “X.” If they said no, then I always have the first contract that is still in force.
What was the benefit to you to sign that? I wouldn’t have, not without a raise or another benefit. But yes, I don’t see why that wouldn’t be enforceable.
We have many very interesting stories regarding non-competes and groups. At the end of the day, each situation is so specific and unique it’s hard to blanket what should/could be done. I agree with the others signing it without consideration or additional benefit would not be recommended.
I have utilized Contract Diagnostics and found it to be of little help. For $700 I received a cursory review of my contract. I was told it was reasonable. Ultimately no changes were made to my contract. But I still received a $700 bill.
I would argue that you got a pretty reasonable benefit. They are there to make sure you aren’t getting screwed over. The is more of a problem with private practice situations, most hospital contracts are pretty standard and little will be able to change. If you had a decent contract to start, there isn’t much that is going to change. I was in pretty much the same situation. They mentioned a few things I could ask to change / clarify and I had those things changed. The biggest benefit is the price. I shopped around with several lawyers for the same service, even the ones that our program set up “special offers for residents” with, still would have cost about $2000 for the same service. Also having them explain each section of the contract in layman terms for me gave me incredible peace of mind that I actually knew what I was signing. I have plenty of friends now regretting what they signed because they didn’t know what they were getting into.
Spoke with Jon Appino. Very nice, friendly guy. He confirmed that they do not offer flex pay where you pay ~$200 as a resident and then the remaining when you become an attending for their advanced review plan. They have a flex pay plan where you pay an initial ~$200 upfront followed by $100 monthly payments until the remaining amount is pay off. You’ll find this out when you go to pay for the contract review on their website. If WCI has time, maybe he can update that bit in the article. Thanks!