Negotiating with a New Associate
The terms of employment you offer to a new physician should be consistent with your practice's philosophy and culture.
BY AMIR ARBISSER, M.D.

In a previous article, I discussed in depth the recruiting techniques our group employs to successfully attract talented new associates to join our Iowa-based practice. In writing the article, I hoped to demonstrate how a thoughtful, systematic approach that leaves little to chance can help you identify potential associates who'll be productive additions to your practice while also fulfilling their own career ambitions.

In this article, I'll explain our philosophy in negotiating with those doctors who we ask to join our staff, and setting the terms for their employment. By having a fair, coherent plan to seamlessly integrate new physicians into the practice's culture, you'll avoid the kind of problems that can easily cause conflict within a practice.

Once we've met and identified a candidate we'd like to invite to join our practice, we begin actual negotiations. We reserve conducting negotiations until post-site-visit discussions because it's our belief that candidates who select site visits based primarily upon economic criteria should look elsewhere. We use site visits to get to know our candidates as people and physicians.

We'll discuss the philosophical basis of our compensation and equity arrangements prior to, and during, any candidate's visit, but we won't start talking dollars and cents until we believe there's a serious mutual interest with an individual who'll be a good fit within our practice.

Over the years, we've developed a compensation philosophy that we believe best serves the overall needs and goals of our physicians and patients. Any doctor who joins our practice must be comfortable with this philosophy.

"Team" Values Come First

Let me cite several pertinent examples of our compensation philosophy and how it developed.

Years ago, we observed that pure production-based compensation usually failed to produce behavior that benefited the overall group. The jungle forager who "eats what one kills" yielded doctors who competed with their own partners for cases. With that methodology, associates often were financially rewarded if they provided services more optimally delivered by another group member.

Rather than encouraging a practice of "lone wolf" physicians, we sought a compensation strategy through which all doctors benefited from the group's economic success.

But because equal income distribution discourages individual productivity and service, we included individual billings as one-third of our compensation formula. Other components of this formula include patients seen and days worked. This approach did result in internal referral to the optimal provider.

For example, with cataract reimbursements in Iowa declining toward the $600 level, many ophthalmologists realized their office practice might be more lucrative than performing occasional surgical procedures -- if rewards were in place to see office and emergency patients. This arrangement works as long as another group member is efficiently performing cataract surgery and the surgical income remains within the practice.

The compensation formula we used for this arrangement reduced, but didn't eliminate, the economic gap between medically oriented docs and proceduralists. Our approach did result in group stability, although we were unattractive to rare proceduralists. Within the group, it meant docs concentrated on procedures they enjoyed -- and performed well. For example, the orbit-plastic associate wasn't doing laser panretinal photocoagulation while the retinologist did blephs. This arrangement resulted in happier patients who required fewer office visits. The better outcomes enhanced positive word of mouth and led to increased patient volume.

We Strive for Fair Pay

Philosophically, our multispecialty group embraces its medical responsibility to the entire community. With traditional income distribution, specialists such as pediatric ophthalmologists are penalized for Medicaid production, and we didn't want welfare patients denied care for economic reasons. Adopting a Robin Hood approach, we credit Title XIX patients internally at the same rate as Medicare -- not generous but already acceptable in most ophthalmology practices nationally. A side benefit is "one-stop shopping" for those important referring docs. Perhaps this approach was prescient, as one of our catchment states indeed now compensates Title XIX services at Medicare rates.

Bringing Along a New Doc

We take all of the elements of our practice compensation philosophy into account when we make an offer to a potential new associate. We won't deviate from our philosophy for any individual physician, even if we believe the candidate has the right mix of skills and personality to become a "star."

In addition to basing a compensation offer on our fundamental calculation concepts, we have some additional core beliefs about paying new physicians.

We dislike offering economic incentives during the first calendar year of employment and strongly prefer to pay an appropriate salary. In our practice, a new associate is expected to see a reduced patient schedule to consciously enhance individual chair time and run close to schedule. This type of workload helps increase the likelihood of patient satisfaction, and usually results in patient-to-patient recruitment to the new doc. Internally, this arrangement facilitates patient acceptance of the new doc, and keeps his or her schedule relatively open to add new patients.

Beginning Jan. 1 of the subsequent calendar year, the new doc's salary guarantee is typically increased, with the possibility of instead receiving a percentage of the production formula employed for equity members -- whichever is greater. In recent years, this percentage has routinely exceeded the guarantee. By the next new year, we no longer provide a guarantee. At this point, equity ownership may be offered at the election of the group.

We've paid our docs to be "on call" for a decade. Psychologically, the compensated on-call doctor recognizes he or she is being valued, and those physicians who are paying should appreciate the alleviated responsibility. Creating a monetary value for on-call duty facilitates internal horse-trading. Those with more time than money have incentives to accept additional weeks of on-call from those with more money than perceived time.

Closing the Deal

Once we believe that a candidate can perform comfortably within our culture and can accept our compensation philosophy, our lead recruiting partner employs both phone calls and e-mail to conduct initial negotiations with the recruit. Our practice's executive director then follows up. The exec interfaces between the partners, the recruit, and the corporate attorney to produce a signed and non-binding letter of intent. The exec, the group president and the recruiting partner may slightly tweak the offer (for example, the start date or the moving budget) which frees us from the arduous task of assembling all the partners to weigh in on every tiny detail.

In general, our physician contracts are consistent and transparently written, with little need to alter any of the basic provisions. It's our goal that all parties, including recruiting group members and the recruits themselves, understand contract provisions. We've actively worked to eliminate contractual disparities among our docs, so essentially any of them can respond to detailed questions from recruits.

We've reluctantly but resolutely lost occasional excellent candidates over the years rather than substantially alter offers. I think that adherence to our compensation philosophy has resulted in more even satisfaction levels among the group's colleagues.

Amir Arbisser, M.D., is a pediatric and medical ophthalmologist and co-founder of Eye Surgeons Associates, PC, with main offices in Davenport, Iowa, and Rock Island and Silvis, Ill. The practice's long-term lead recruiting member is William Benevento, M.D. Dr. Arbisser may be reached at yayinmaven@aol.com.