You’re flipping through the classifieds section at the back of your specialty’s national journal, and you catch sight of a sign-on bonus package that makes your jaw drop to the floor. Before you start dreaming about around the world vacations, a summer home, or simply paying off your student loan debt, you’ll need to take a little time to research if that bonus is really too good to be true.
Is your bonus skimming off of other incentives?
Sign-on bonuses are standard practice but vary widely around the country. The average is around $20,000, but almost five percent of physicians receive more than $100,000. While this is a considerable incentive, it is vital that you look at the entire compensation package and don’t get blindsided by a hefty bonus. Double and triple check that your new job comes with standard benefits like a 401(k), profit sharing plan, disability and health insurance, CME allowances as well as a track to partnership for group practices. If the job does not provide these incentives, you’ll be spending a sizeable portion of your bonus— and more— on them in the long run. You’ll also want to make sure that your actual compensation is on par with Dr. Jones’ across town. To do this, look up reliable local and national compensation surveys in your specialty.
Are the trade-offs worth it?
If your bonus passes the test and isn’t siphoning away from your benefits package, you still have other things to consider:
- Relocation— moving your family across the country is challenging. Also, think about activities available during your downtime as well as factors like your children’s education and job opportunities for your spouse.
- Lack of access— to medical technologies and resources that will impact care. For example, in my surgical specialty, access to a Da Vinci robot to perform robotic surgery is a crucial factor in choosing a position. If you are away from the technology, you risk losing your skills.
- Autonomy—will you be part of a managed care system in which your care of patients will be standardized and evaluated based on specific metrics? While studies show the benefits of standardized and evidence-based medicine, you will want to know if there is any space for innovation in your practice, or if your employer will penalize you in the quest to meet predetermined metrics.
- Work culture— before you sign on the dotted line, make sure to talk frankly with several of the physicians you will be calling colleagues— and if possible, physicians who have left the practice. Workplace politics are universal, so you will want to make sure that there won’t be any surprises waiting for you on the first day.
Is your bonus tied to unrealistic production expectations?
While some physicians are salaried (most commonly in academic settings or large hospitals), compensation is often tied to your work output, especially after the first year or two on the job. Generally, your group will focus on productivity, quality and patient satisfaction. One of the most common metrics is the relative value units (RVU), which determines compensation based on the amount of work required to care for a patient. However, other models are coming to the forefront as health care costs continue to skyrocket and employers look to cut costs. Regardless of the metric, you’ll need to be diligent with your time, documentation, and provide quality patient care.
It’s a good idea to get details regarding the evaluation process, and if you will lose that bonus if your work doesn’t live up to your employer’s expectations. Some jobs will reduce your pay after one or two years (sometimes by the amount of bonus you initially received) to make up for perceived shortcomings. Talk to previous and current employees— if the physicians that came before you couldn’t manage the 40+ daily patients that comes with the job, chances are you will struggle as well. This competitive, productivity compensation package can fuel conflict between physician colleagues as they strive for more patients, procedures, and revenue.
Also, find out how your productivity is measured. There are two main options:
- Billings— compensation is based on the fee associated with a service
- Collections— compensation depends on what your group actually collects for a service— rather than bills— and is highly dependent on the types of insurances your practice accepts
As I found out a little too late, the collections are generally less than the billings, and this can translate into a sizable difference in earning potential. Moral of the story: do your research before accepting the job.
Does it replace a better offer for a fast track to partnership?
If you are joining a group with the option for buy-in, you may be better served by a fast track to partnership than a high initial bonus. An entrepreneurial spirit will see your income rise more over the long term as partners generally make more than employees. For example, partners often receive a more significant percentage of revenue from the group’s ancillary services. If those services include an ambulatory surgical center or radiological equipment, this can add up quickly. If your sign-on bonus comes with no option for partnership, reconsider if it is truly worth it.
Remember, bonuses are not free money. They usually come with a guarantee that you will remain loyal to your employer for at least a couple of years. If you leave early, you may need to repay all or more of the bonus. Be aware of this associated commitment if it is a determining factor in accepting the job. Twenty-five percent of physicians quit their position in the first three years, so paying back a bonus can become a reality.
Take a deep breath, pick your jaw off the floor, and thoroughly consider the pros and cons of the offered bonus. You’ll be glad you took the time to determine if it is just too good to be true.