Episode 64: Doctor Dan interviews Kasey Gahler, an independent financial adviser with experience in physicians’ financial concerns. Learn how contacts can possibly affect your financial planning decisions in the future.

Contract Reviews For Physicians


Disclaimer: this is NOT legal advice; always review contracts for legal aspects with your lawyer.

Physician Salary

  • Is the offer competitive with other offers in your geographic area?
  • Can be determined by:
  • Yearly American Medical Association book with general ranges per specialty and area; Also the Medical Group Management Association.
  • Simply talking with others going in to practice
  • Hospitals/practices using a past/recent contract and replacing the name can be commonplace
  • The practice may not know your fair market value
  • Discussion point for later on in the interview process
  • If too low, can usually be remedied by simply letting the practice know your fair market value

Physician Benefits

  • Health insurance and group Disability Insurance (DI)
  • Most are pretty standard.
  • Typically not a “negotiation” point
  • Remember your group DI is taxable since the practice/hospital is paying the premiums


  • Also fairly straightforward
  • Most practices will help you get to the full amount of pre-tax savings. This can be done through 401K and profit sharing, SEP IRA’s, 457 plans, etc.
  • Some practices allow you to put more away than the pre-tax maximum through deferred compensation, etc.
  • Most practices and hospitals now have Roth IRA availability. Something to keep in mind for the future. Might have another pod cast on taxation and retirement issues in the future, etc.

Physician Concerns About Leaving Their First Practice

  • About 40% of physicians stay at first practice less than four years
  • Non Compete/Liquidated Damages –
  • This is a very often overlooked area of contracts that can affect your family.
  • Importance depends on whether you plan to practice in this specific area long term. If all of your family are from this area, might be a determining factor in your decision to practice there, if you would leave the area anyway this is most-likely a non-issue and not a point of negotiation.
  • Can be geographic in nature, monetary in nature but typically a combination of the two
  • In the past contracts typically stated: “If you leave our practice, you cannot practice within a 50 mile radius, etc. of one of our hospitals”. Since this has been difficult to enforce at times, most contracts have moved to the following: “If you leave our practice, and  choose to practice within a 50 mile radius, etc. of one of our hospitals, you will owe us $200,000 or two times your annual salary, etc.” These tend to be enforceable by the law.

Tail Coverage

  • Covers your malpractice claims after you leave the practice.
  • Two different kinds: Occurrence based and claims based (Claims based way more expensive)
  • Can amount to as much as 2 – 3 times your yearly malpractice premium
  • Not as big of an issue as in the past as many new employers will help you buy purchasing a “nose” policy at the new practice/hospital
  • Something to be aware of as it would be financial funds out of pocket if you change practices and most young physicians might not be sitting on that amount of money right away. (Don’t want to take out even more loans to leave first employer)

Demographics of the Medical Practice Group

  • Too old — Could change the way business is done once those partners begin to retire. Force many business decisions in the future with younger partners. Much bigger deal now than it was before the health care bill. Many older physicians starting to retire and sell off practices
  • Too young  — Could change the amount of partnership income in the future. More “hands in the cookie jar”.

Medical Practice Partnership Guidelines

  • Unmet expectations at partnership is the biggest reasons we see people leave.
  • Two typical ways to make partner:
  • “Sweat Equity” – Start at a lower pay out than partners and your payout gradually increases over time, more year by year
  • “Lump Sum” – Typically taking out a large, six-figure, loan at partnership which is then paid back gradually over time (typically 3 – 5 years) to bank/lender, etc.
  • Get as much information as you can in writing regarding partnership.
  • Most practices do not want to put a “value” on their practice in 2 – 5 years.
  • Good hint: During the interview process, take the doc who just recently made partner out for coffee or lunch and ask them how the transition went from non-partner to partner.

Ancillary Income

  • This will obviously vary a great deal from specialty to specialty
  • Again, try to get as much information as possible from the practice if you can
  • Have an expert review it… Most docs, by the time that you are getting involved in these opportunities will have decent enough discernment to know if it is a good opportunity or not.
  • Not typically mandatory

Other Concerns For New Doctor Contracts

  • Amount of Call –
  • Low priority, mainly pretty straightforward, will obviously be more in smaller geographic locations and smaller practices
  • CME/Vacation/etc. –
  • Fairly straightforward
  • Most practices pick up the cost of CME in early years of practice
  • Vacation – Anywhere between 2 – 6 weeks for most newcomers, more in outlying areas of nation

Registered Representative

Securities offered through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC

Investment Advisor Representative

Cambridge Investment Research Advisors, Inc., a Registered

Investment Advisor

Cambridge and Gahler Financial are not affiliated

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