Ophthalmology Business

APR 2013

Ophthalmology Business is focused on business topics relevant to the entrepreneurial ophthalmologist. It offers editorial, opinion, and practical tips for physicians running an ophthalmic practice. It is a companion publication of EyeWorld.

Issue link: http://digital.ophthalmologybusiness.org/i/115526

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Page 8 of 27

Checking the employment contract by Vanessa Caceres Contributing Writer Make sure your agreement is reasonable A re you reviewing your employment contract close enough? In the excitement to take a new job offer, physicians may fall prey to employment contract provisions that are not the best arrangement in terms of compensation, bonuses, or what happens if they have to leave the practice. Here are some common areas you'll want to review closely in an employment contract, according to several healthcare attorneys. Compensation Naturally, compensation is an area of the contract that physicians examine closely. However, "there are a lot of nuances to it," said attorney Andrew S. Bogen, Arnold & Porter LLP, New York. Physicians want fair compensation for the work that they will do, and the practice wants to incentivize the new employee to be productive, but at the same time does not want to overpay, Mr. Bogen said. When reviewing the salary, physicians should make sure they compare the dollar amount to colleagues in similar geographical areas, said Daniel M. Bernick, vice president and principal attorney, The Health Care Group and Health Care Law Associates PC, Plymouth Meeting, Pa. For instance, an oph- thalmologist in a rural area may have a high salary, but he also may be paid more because he works in an area where it's hard to recruit physicians, Mr. Bernick said. Ophthalmologists in popular urban areas may make less. Mr. Bogen pointed out that when comparing compensation, benefits and costs, such as whether the physician or practice will pay for professional liability insurance, should be factored in. Ophthalmologists often receive a base salary with a bonus or incentive. One kind of bonus is tied to actual collections made—not just money that the practice is slated to receive. "You don't want to tie compensation to money you don't actually collect," Mr. Bogen said. A common formula spelled out in contracts related to this may be a percentage of collections received that are in excess of three times the physician's base salary. For example, if the base salary is $200,000, the physician receives a bonus based on the collections that are greater than $600,000. Attorney Matthew Keiser, Arnold & Porter LLP, Washington, D.C., also sees bonuses tied to certain procedures performed. He finds this especially common at concierge practices. The contract should make clear all specifics related to bonuses, such as what percentage the physician gets when collections of a certain amount are achieved, Mr. Bernick said. Another common area to review under compensation is when the ophthalmologist will acquire equity in the practice, Mr. Bogen said. For a new physician coming to a practice, particularly someone who is new to medicine, "there's usually a romance period where they will get to know each other for one to three years," Mr. Bogen said. The employment contract may state that after that initial period, some sort of equity in the practice is possible. Ophthalmologists reviewing their contract can ask if, after that initial trial period, an ownership interest in any ancillary businesses is possible, Mr. Bogen said. This could be something like an optical shop or a clinic. Physicians can also request that their salary or bonus be increased sooner if the practice does particularly well financially, Mr. Keiser said. Termination and restrictive covenants Mr. Bernick sees contracts that state the physician can be terminated without cause by either party with 30- to 90-day notice. A newer physician will want to aim for 90-day notice so there is more leeway time to find another job, Mr. Bernick said. When employment contracts specify termination with cause, healthcare attorneys can help review any related language to make sure it is not too ambiguous, Mr. Bernick said. continued on page 10 April 2013 • Ophthalmology Business 9

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