WCI #373: Getting Paid Fairly

This is the White Coat Investor Podcast where we help those who wear the white coat get a fair shake on Wall Street. We've been helping doctors and other high income professionals stop doing dumb things with their money since 2011. This is White Coat Investor podcast number 373. Getting paid fairly. If you're like most doctors, nobody taught you anything about personal finance or investing during your undergrad, professional school or residency. Even though your family and perhaps even your business rely on you to be the Chief Financial Officer, you have never been given the tools to succeed. Enroll in WCI Financial Bootcamp, a free educational email series, and learn to convert your high income to wealth. You will learn the basics of investing, saving, insurance and more. Your high income alone will not lead to financial success, but as always, we want to help you on your financial journey. Go to whitecoatinvestor.com financialbootcamp to sign up today. You can do this and the White Coat Investor can help. All right, welcome back to the podcast. We're in the middle of summer here. It's smoking hot all over the country. I hope you're having a good time, those of you with kids, with the kids being out of school for the summer. And for the rest of you, I hope you're getting a chance to do at least one nice vacation. Go to the beach, go to the mountains, something cool this summer. I know we've had lots of fun fun this summer and we have more fun yet to come. By the time you hear this, I'll be back from our big middle fork of the salmon float trip and hopefully all went well there. But I'm certainly looking forward to that as I record this before that trip. Our quote of the day today comes from Sir John Templeton who said the four most dangerous words in investing are this time it's different. The more you learn about the history of finances, the history of the markets, the more you'll realize that while history doesn't repeat, it certainly rhymes. Thanks everybody out there for what you do. We've got a great guest today. I say guest, I mean he's a partner, right? This is somebody we work with. We have a financial relationship. If you hire resolve to help you review or negotiate your contract and you go through our links, we get paid. That helps support the mission of the White Coat Investor. But we've also negotiated a discount for all their services for you that you don't get if you go directly to them, right? You get 10% off if you go through our link, which is basically whitecoatinvestor.com resolve. And you use the code WHITECOAT10. You get 10% off all their services. So it's a win, win, win for everybody. By the way, don't forget, we are having a sale right now. This is our biggest summer sale. This is our biggest sale of the year, really. It's 20% off everything we sell. We're talking about our online courses. We're talking about the swag and books and the white coat investor stories. All that stuff's 20% off from June 24th through, what, July 3rd? Is that what it is, Megan? Through July 3rd. 20% off all our courses. You want the real estate course, you're gonna save hundreds of dollars on it, right? Cause it's our most expensive course. You save a whole bunch of money. You want one of the fire your financial advisor courses, the student version, the resident version, the attending version, the CME version, it's all 20% off. You want the continuing financial education courses, right? They're all 20% off. We've got one of those for every year, and those qualify for cme, just like the CME version of fire your financial advisor. So you can use your CME funds to buy those. But right now, they're 20% off through July 3rd. So go check those out right now. Is there a code they need to use for that, Megan? Summer 20. Put summer 20 in, and you get 20% off the course. So super awesome. You can go to the store, you can buy bulk books if you want to give them out to your students or residents or anything like that. You want to get some T shirts, you want to get some stickers, you want to get a WCI mug, whatever you want. It's 20% off from now through July 3rd. All right, let's get Kyle in line. I thought this interview went really well. I hope you enjoyed as much as I did, and I'll see you on the far side. My guest today on the White Coat Investor podcast is Kyle Claassen. Kyle is an expert in contracts, in particularly physician contracts, in negotiation and review of those. He is the CEO of Resolve, which is our partner, one of our most important partners in this space. And we work together to help physicians get their contracts reviewed, which I think is pretty much important for any physician contract, as well as making sure doctors are getting what they deserve, which is a real problem with doctors. I've talked before about the fact that the range of intraspecialty variation in income is way more wide than most doctors think it is. In fact, it's wider than the range between the inter specialty variation of the averages of physician compensation for the various specialties. And so it's important to make sure after these years and years of training to get paid what you're worth. And we're going to be talking with Kyle about that, as well as what you can do to maximize your income throughout your career. Kyle, welcome to the White Coat Investor podcast.

Appreciate you having me on.

Yeah, we've worked together for quite a while. We've done webinars together. There's a webinar in the Facebook group. If you spend time in there, you can check that out and learn more about Kyle and about Resolve. But we're going to be talking today with an even larger audience, with the podcast audience about some of these issues. Tell us a little bit about your experience. I mean, you're an attorney. You are originally from Minnesota is my understanding.

That's right.

How did you end up in this space?

Well, my wife is an ophthalmologist, and so I, you know, get to live some of this vicariously, you know, through her. And Resolve was actually founded by a physician who was giving kind of these business of medicine talks at the University of Missouri. And that's how I got my start in. It is, you know, they. They needed an attorney and obviously a high level of interest for me, you know, personally. And that was, you know, 10, 13 years ago now at this point. And, you know, the deeper you get into this, it's hard not to have a passion for it if you care about positions and you care about fairness and transparency, because there's just. There's not much of that in the market right now. And that's, that's really what we're striving to help with.

Why do you think there isn't much transparency here?

Well, I think healthcare is obviously a real big business, right, at this point. The shift in the market over the last five to 10 years, most physicians are now employed. Healthcare is almost 20% of our GDP. And like any business, labor is a cost that they would love to keep down. And so transparency doesn't necessarily help that, especially when physicians drive almost all of the revenue in healthcare. Right. I mean, it takes your license to do any tests, right, to drop any script. All of the revenue, not just physician services, comes back to that patient encounter. And so I think from a business standpoint, it behooves them not to have that transparency, but we think that's really important. And that's what our company and what our site is all about.

There's been a trend over the last Few decades, fewer and fewer doctors are self employed. We're becoming an employee profession. I think the latest numbers I saw were something like 77%, 80% of doctors essentially don't own their jobs. What do you see as the consequences of that trend over the last couple of decades?

Well, the physicians have certainly given up that control, right? I mean, the autonomy, the ability to own, you know, whether it's ancillary services or just have control of your schedule, who you're going to hire, who you're going to work with. You know, I think in theory it was healthcare got too complicated, right. And there was supposed to be efficiencies and we were gonna centralize some of this stuff and have employers come in and help with that. But I don't think that that has played out the best for physicians. I think there's a lot of burnout, right. I think there's some organizations that do it well, but most don't from where I sit. And I think you see that if you talk to enough physicians like we do, that there's becoming an increasing lack of trust, I think, in the systems to do the right things for them and to make sure that their careers are protected.

What advice do you have for a physician that wants to own their own business, that wants to be a partner, that wants to be in solo practice? They're coming out of training and they still want to have that kind of traditional thing. Is that an option? Should people consider that right off the bat? Or do you think they need some time as an employee first and then maybe go out on their own after that? What advice would you give to a young doc that thinks they may want an ownership position down the road at some point? What advice would you give them?

Well, I don't think private practice isn't dead, right? So I mean, Even if it's 77%, that still means that there should be at least one option in every market that is a traditional private practice. And in my experience, almost every practice is hiring right at all times because there's such a shortage. And so if you really have that want right to be in private practice, my suggestion would be to try to find a good private practice to join a mentor. There's not a lot of sole practitioners right out of training. I think for a lot of reasons. I think there's some just learning the business of medicine that has to happen. If you are going to go the employer out first, get your feet wet, maybe pay off some student loans and then come back and open a private practice. I think you just need to be really careful in your contract on things like non competes and you know, the, the tail coverage components and just kind of that transition point, if that's your plan, five years down the road to make sure you still have those options and you're not walking yourself out of a market. But it's certainly, it's certainly there. And I talked to a private practice yesterday in a negotiation. He framed it as we are an endangered species and we're also a hunted species where usually we protect things that are, that are in the minority position. But you know, private equity and health systems continue to gobble those up. So I think you can find them, but I think you're going to have to do your homework.

The general rule, I think people assume that when you have ownership, you're likely to make more money in the long run. Do you think that's still generally true?

I think that is generally true, yeah. And I think when we talk about, I know we're going to talk about salary and data and compensation here in a bit, but I think there's always been some skepticism on who's reporting to those surveys and whether or not the really high earning private practices are willing to kick their data into those pools or not. And so I think there's always some sample bias that happens there. But in our experience, yes, when we're evaluating partnership offers for people and you're seeing the PNLs and you're seeing the revenue that they're generating. Absolutely. There's really good revenue streams in being an owner.

Yeah. You may look at more physician compensation data than anybody in the country. What's your sense? If you had to pick a percentage, how much more do you make when you own the business versus when you're an employee as a doc, 30% more, 40% more, 20% more, what would you say on average?

I mean, I think there's probably a 20% ish is probably a good rule. But I think there also is a big variation by specialty. Right. Because if you're in a surgical specialty and you can own a surgery center, the number is probably larger than if it's family practice, that type of thing. But I do think, and this should be an expectation I think is that if a 4 organization can shave 10 to 20% off, I mean they need that profit. Right. If you're Optum or HCA to show to your shareholders or if you're non profit, at least in theory, you're utilizing that for other things. So I don't think that should be surprising that if you own the business, that there would be an extra 10 to 20% sitting there for you.

Yeah, that's been my experience in emergency medicine. I've looked at some of the contract management groups and essentially it looks to me like, you know, I use the word skim, it's kind of a negative word. But they skimming about a third of what the doctors generate to go to the business. It's not going to the doctors. You know, 2/3 of it is paid to the doctors and 1/3 of it is used elsewhere. And then I look at the overhead for my group, which is in the 4, 5, 6, 7% range for emergency medicine and I go, well shoot, there's, there's 25 to 30% there that is going somewhere else when you don't own your business. And I think most docs are willing to do at least some of the work of ownership in order to get that additional money. But I've been surprised. I've run into lots of people and they're like, I'm more than willing to give that up to not be an owner, to not have the risk of ownership, to not have the hassle of ownership, which is not insignificant, and just enjoy a relatively carefree life practicing medicine. But I think you're right, as you mentioned at the beginning about those issues with autonomy, with control, control over the practice, that that stuff starts mattering especially in mid career. You care more about having that control. And, and I think this does lead to significant burnout. Doctors not only being paid less than maybe they're generating, but not having the control over how much they work, how much they take, call who they're working with, so on and so forth. I think that's had a big impact on, on physician burnout rates over the years.

Yeah, I agree. Anytime you look at those burnout surveys and what factors are listed, it's almost always right lifestyle, right scheduling, who I work with first and then compensation being fairly comes down the wrong two or three. So I would agree with you on that.

Yeah, let's talk a little bit about compensation. And it's funny that we use this word compensation, right. In any other industry we call this salary or pay or something like that. In medicine, somehow that's taboo and we have to call it compensation. I don't know why, but you have any idea why that started, why we started calling it compensation?

Well, you know, the only distinction I would make is that a salary to me sounds like it's just a flat number. And most physicians are not just paid a flat rate. All year. It depends on work overuse or collections or something else. And so I do think there is a distinction between just a base salary versus what my W2 shows at the end of the year, right.

Although in tech we'd call it salary and bonus, right?

Yeah, that's right. Yeah, that's right.

At any rate, I often get pushback when I talk about salary surveys. You know, these surveys that you can get for free from, you know, Medscape or Doximity each year. And I have doctors tell me that as a profession we are underreporting what we're making, that this is not accurate data and we're under reporting it purposely. And so nobody should believe these surveys. What do you think of that? Do you think that's true? Do you think that's not true? How true is it, et cetera?

I think there's partial truth in it. I mean, I think anytime you look at those surveys, right, you know, any data set's only as good as the number of samples that are inside of it. And so a lot of those, if you actually dig into them, they're fairly small sample sizes. I think the other problem is it's unverified data, right? I mean, for the most part, it's just people submitting a Google form or something else, right? To say, hey, this is what I made. And that's true even of some of the large surveys, right? The MGMAs, the Sullivan Cotters, right? The things that are out there. And so I do think it's who's reporting, right? And I also think there may be some hesitation, right, on putting in full numbers. That's the one thing that we think is unique about what we do, is that everything, not everything, 99% of the information on our side is verified, right? We've looked at it, we've seen in the contract exactly what those terms are. And so I think there's always a question, if you look at those surveys, why the ranges are so large, right? You talked about intraspecialty fluctuation. You can look at a Doximity survey versus our data or MGMA's data, and there can be $100,000 difference between those. I mean, that's a big deal. And so I always say data, you kind of look at it as grain of salt, right? You get as much of it as you can and make a good decision from there.

Yeah, that's a good segue. Let's talk about these new tools. And we're hosting these tools at White Coat Investor. If you go to whitecoatinvestor.com salary we partnered with Resolve to bring these tools to you and they're super cool tools. The first one is a physician salary comparison. Right? I mean, this is what's happening in the WCI Facebook group, on the subreddit, in the forum, in the few, in all of our online communities. People are always like, you know, what are we getting paid? What can I get paid as a neurologist, as a gi Doc, whatever. We want to get that data to you. We think having this data makes it more likely that you will be paid fairly. You know, whether you're getting a new job, whether you're renegotiating your salary, whatever. We want to get this data into your hands. So if you go to whitecoatinvestor.com salary you can get started on these tools. But the first tool I want to talk about is this position salary comparison. And it can be useful even if you provide no information whatsoever. Right. This is what I call the base level of this tool. And if I put in my specialty of emergency medicine, I get three contracts, recent contracts that Resolve has seen that tell me what emergency doctors are getting paid. For example, I've got this one from Texas. This is for a contract I think starts in December, full time contract. The doc's getting paid $374,400, no signing bonus for a full time job. There's another one in Indiana, starts in August, $372,401 with a $75,000 signing bonus and a 14,000 relocation bonus. And another job in Texas that starts in August for 331, 200. That's full time with a $10,000 signing bonus and a $10,000 relocation bonus. So just for a very quick, what am I worth for a medical student or for a resident? You know, your first year resident, you're like, what am I going to be making when I get out of here? This is a fantastic tool even at this base level. All you got to do is put in your specialty into this thing and it'll kick it out. And I think this might be a useful tool even for medical students who are trying to decide what do I want to go into. Well, what does a neurologist make versus a neurosurgeon? You can put both those both in and get literally real data, current data of what these sorts of doctors are making. So it's a pretty cool tool. Thanks for making that, Kyle.

Yeah, no, we, we, we're glad you like it. We think it's really important. You know, I I think that's the question that comes up on every, like you said, Facebook group, you know, Reddit feeds, I mean, all over the place. It's, hey, what do you think about this, that or the other? We just think you shouldn't guess, right? You should just, you should just know, right. What's out there. Obviously this data is anonymous and de identified. You're not going to know that it's Dr. Smith's or whoever else. So we take that part pretty seriously. But, but having access to some baseline information we think is really important.

Yeah, I mean, this data is valuable, right? You can get a certain amount of data from a free Doximity or Medscape survey, but by the time you get it, it's a year old, you don't get the variety you see with this. And, and it's all, you know, self reported rather than being verified. And so this is, this is a lot more useful. All right, so if you go one step further, and I call this Level 2 for this data, and you give Kyle your email address, you get some more cool stuff here. You actually get a lot more data. Instead of just seeing three, you know, recent contracts in your specialty, you get to see pretty much everything in your database. Right. I mean, that's what you get to see with this tool, which I think is very cool. So you get to see dozens of contracts. I think when I tried it most recently, I got three or four pages of emergency medicine contracts all over the country. What they're getting paid, signing bonuses, et cetera. This is still totally free. All you've given up is your email address here. But you get way more data. You get the base salary, you get the sign, signing bonus. You can choose what states you want to look at. So if you want to, you know, zero down the data. Obviously, if you try to get data in Utah, it's hard. Utah is a very interesting emergency medicine market. You can almost get no data in Utah. But for most surrounding states, you know, I put in Nevada and Colorado and I got dozens of recent contracts, so I thought that was pretty cool. And so you get, you know, availability of some of your filters. Now there is a step three, of course, and this is actually a product you guys offer for sale. This data obviously has value. Tell us about this offering this kind of data only product that you offer to people.

Yeah, so we think that the best results of negotiation come when people have access to the information and really when they have multiple offers. Right. So they have some leverage. Well, we know that everybody doesn't always have Multiple offers. And so they don't know what they should be comparing. And so we feel like if you can see, like in emergency medicine, if you can get access to 200 plus contracts that we've looked at, right. If you can see the details of those things, not just the base, but if you can actually hop in and say, I want to know if there was a non compete, I want to know if they got offered tail coverage, I want to know all these various factors, CME, vacation, all that stuff. And then take the second step because your employer is likely going to cite some survey that says that's great, you've got other offers. But MGMA says this, we think that you should have access to both of those. Every single detail in the contracts that we have. Plus, plus the MGMA snapshot that'll show you what a work RVU number should look like at the 75th percentile versus the median. You can combine all that and be fully armed for less than $200. We think that's a pretty great ROI for you. I mean, if you can't get a $200 increase over a three year contract, I would be shocked.

If people want to go buy MGMA data, they can buy it. But last time I looked at the price, it was over three grand.

Yeah. And we think that that's one component of it, but we think you actually need more than that. Right. Because when we look at, you know, MGMA's starting salary. Right. For some specialties, I looked at cardiology before this meeting. It's 384,000. If you look at the contracts that we have, which is the equivalent, right. Starting salary is 451. So there's a $75,000 difference whether that's who's reporting, whether that's because it's in real time. There's a lot of factors on why those numbers are different. But if you're walking into a job and you say, okay, I'm willing to take the 380 when everybody else around you is earning 450, you're going to feel awfully disappointed. I mean, you can pay off a lot of student loans every year for $70,000. So again, that's why we think it's a tremendous value and we're really excited that you guys are highlighting it.

Okay, so with this first tool, with this salary comparison tool, this widget, when you have the data package, you pay the 199, you get the data package. What additional information do you get that you can't get just for giving you Your email address.

Yeah. So first of all you get the access to the MGMA snapshot. Right. So that's a data set that you don't get for just the email, which we think is really important. But also you're going to be able to drill down into each contract. And so we're showing you the base salary. Right. The signing bonus and relocation allowance if you want to see production bonuses. Right. Work RVU pay rates, quality bonuses, CME paid time off, whether they're paying for dues and licensing, malpractice information, non compete information. Right. It's kind of all the other things that have value, right. To you or should have value to you, you're gonna be able to see all that as well. So it's kind of the full behind the curtain, right. You get access to all of it for that paid feature.

Yeah. Okay. So there are a few no brainers in the physician personal finance space, right? There's a few no brainers. You know, most docs ought to be doing a backdoor Roth IRA each year. It's kind of a no brainer. You know, you ought to be getting disability insurance. It's a no brainer. Buying this is a no brainer. If you're actually negotiating a contract, it's 199. Right. It's 199 to have the data you need to make sure you're being paid fairly. This is a no brainer. Every white coat investor should be buying this package. Right. This is such an easy sale. I cannot make this any easier for you. Whitecoatinvestor.com Resolve. It's the 199 data package. Even if you don't want them to review your contract, Right. If you don't want them negotiate anything for you just to get the data. 199. No brainer. All right, so let's talk about the other widget. Right? This other widget's cool too. The position contract, scorecard. And this is cool too. And again like the other one, it's got three levels, right. If you don't want to give it, give your email address. Here's what you get, right? You can go there and you can put in your compensation. So I'm going to go there and I'm going to put in $400,000 for an emergency doc and I hit a button that says calculate rating and I get the rating and it says satisfactory. Right. If I put in 250 and calculate my rating, it says needs negotiating. If I put in, you know, I don't know, put in $100,000. It says, you know, still says needs negotiating but that's what you get for the base level. Right. It kind of gives you a one shot look of whether you're getting paid fairly. All right, but if you, if you give up your email address, again, you know, I know it's a huge ask here to give up your email address, but you can get some more data there in that respect. You get to put in a little bit more of your contract data and get some more detail there, which is pretty cool. All right, but let's talk about what you get if you actually buy the data package. This one 99, no brainer thing I've been telling you about. Here's what you get with this particular tool, this contract scorecard. Right. You get to learn about all this other stuff that's, that's part of your contract and it will rate each part of the contract so you know where to focus your negotiations. So, so what are all the things this scorecard goes over, Kyle?

Yeah, so we'll, we'll give you a, it's an ability for you to summarize data. So if you don't want to look through the, the 200 plus, right. Emergency medicine contracts. If you just want to say, hey, I've got a non compete that has 10 miles, right as a radius and you know, this is roughly where I live population wise. It'll let you get this quick overview to say, hey, if I need something to bring back to my employer, right. Of a snapshot that says, hey, I did this on my own but I'm looking at hundreds of contracts and I've got five areas that are red on this. Kind of like when you go to get your oil change and they're flagging these things for you. That's the idea. So it gives you that quick overview again. I think it's really good for folks early in their career as well who may just not know what, what should be in a contract and what shouldn't. The other thing that I would say on the data piece as well that we didn't talk about is because data refreshes on our site weekly, daily, you're going to get these updates that come out to you whenever new data points come in. But the surveys also come out once a year and they happen to be changing right now. So if you haven't looked at your contract in a year or two years, the new 2024 surveys are just coming out and are live and you're going to be able to see you know, the distinctions between last year and this year. So like if family medicine has gone up 10% in the last two years and you haven't renegotiated, that's something you ought to know. Right? And so that's again another reason why we think this information is so important.

Yeah, 199 is like the hourly rate for many physicians. We're talking about one hour. And of course if you're self employed, that's even deductible costs. So yeah, I mean it's just no brainer to get this information. I cannot emphasize that enough. But, but it's cool. This tool is really neat. I mean you go through your total compensation and signing bonus and you can calculate a rating on that and you can just look at your signing bonus. You can do look at your bonus rate and the bonus threshold. You look at the relocation bonus, you can look at your tail coverage. Right. You can look at your non compete time period and distance and see how that compares. You can look at your amount of paid time off, you can look at your CME time off and allowance. And basically this tells you which parts of your contract are fair and which parts aren't. Right. They either tell you that it needs negotiating, that it's average or that it's satisfactory, which means you're above average. And you actually probably aren't going to have much negotiating room on that point. So it's super helpful I think as you arm yourself for a negotiation with a current employer or prospective employer. I just think this is wonderful what you guys have put together. So thanks so much for doing that.

Appreciate that.

Let's talk about some stuff and some of this we talked about. If you saw the webinar Kyle and I did for the Facebook group, you probably heard some of this stuff. But the hottest topic right now in physician contracts is non competes. And as we record this, we should put the date on this because it may be different a month from now. Can you talk about the current state of Non competes on June 5, 2024?

Yeah, the current status is that sometimes they're allowed and sometimes they're not. And so that's not a great answer. Right. For anybody trying to review those and analyze those. But the FTC came out with this ruling and that's what's gotten a lot of attention from people. But it's not in place today, so it doesn't become effective until September. There are lawsuits and challenges that are happening to that. And so as of right now, it's just like it was in 2020. Two, where it's based on state law. Some states have banned non competes, but that's very few. Most states allow non competes on positions for, you know, reasonable terms. So if there's a reasonable time, reasonable distance, you know, that's, that's what a judge would look at in an enforcement of a non compete. And so it's, it's kind of a stay tuned status right now to see what happens with this. We're obviously very hopeful that they would leave the rule in place and that they wipe those out because we think it'll, it'll add tremendous flexibility and you know, movement in the physician market.

Yeah, and the vast majority of physicians want to see non competes gone. You know, there's a few physicians, most of which own a practice and hire doctors who think there may be a place for some sort of fair non compete in the marketplace. What's your response to owner doctors pushing back on that?

Yeah, I can understand that. I mean, if I'm a practice owner, I want to, especially in some specialties. Right. If I turn over a bunch of patients to you and all of a sudden you leave me and walk across the street. Right. Nothing can prevent those patients from following you. So I need to have some way to protect myself. I just think that there's a lot of ways to retain employees and I think the best practices will do that. And so I don't think that you have to have the non compete as the way to do it. I think you can just be a good employer. You can offer good fair comp and fair benefits and have good paths to partnership if you're in private practice. Because once they become a partner, they're obviously not likely to leave. And if they do, you can still place those restrictions from a non compete status on partners for the sale of a business. You know, that's, that's one of those things that even the FTC thinks is, is an exception and should be an exception to the rule.

What do you think are the tools that an employer ought to use instead of a non compete? For example, you know, you got to pay back your signing bonus or something if you leave within a year, that sort of thing. What kind of tools do you think they ought to be using in a fair contracting process?

Yeah, I think if you, if you're taking large incentives up front, I think it makes sense to, you know, stay for a certain amount of time to make sure that those are earned. I also think that if I'm an employer and I know that I have plenty of volume Right. There's a lot of patients that need to be seen on this that the way to keep people happy is to pay them fairly and to staff their practice the right way. Right. I don't think physicians are of the mindset where they want to bounce around. Most want to build a practice, they want to be stable as long as they're, they're being treated the right way. And so I think there's even non contractual ways are probably the best way to do that. But certainly we're going to see employers react to this. I mean if non competes are wiped out in the states that that's already happened, you do see liquidated damages or employers trying to lock people in for three, four, five years before they can leave without this financial penalty. So there will be adjustments by their legal teams on how to still try to put some handcuffs on people.

What do you think the economic value of a non compete ought to be? If somebody's willing to sign, you know that I won't open a practice within 10 miles for a year after I leave you. What's the value of that? Should they get paid 10% more for being willing to do something like that or is there any way to put a value on it?

Practices already put values on buying out of a non compete so they'll say that it's worth roughly one year's compensation. Right. So obviously it varies by specialty. So if that's the case. Right. If it's $250,000 for a family medicine physician, I would want to make sure I'm getting paid a little more each year to be able to turn around and pay that off to buy myself out of it. So Yeah, I think 10 to 15% maybe is the right rule.

All right. I want to scare White Coat investors into making sure they get their contracts reviewed. This is something doctors do once, twice, three times in their career. I think it's money well spent a few hundred dollars to have your contract reviewed. Know this is part of why we partner with Resolve. By the way, if you go to whitecoatinvestor.com resolve you get 10% off other services. You know that data package we Talked about for 199? It's actually 179.10. If you go through that link, it's even cheaper than that, but so are all the other services. So thanks for supporting the white coat investor by working with our partners in that respect. But what are some horror stories that you can share with doctors who didn't have their, you know, contracts reviewed and then ended up wanting to Leave or having to leave and didn't realize what their contract said.

Yeah, a couple of them. So the first one I'm going to go to is a compensation issue. So we do have clients that will sign contracts very early because they're going to, you know, kind of hometown. We've had organizations sign positions in med school, right. Even before they matched into a program. Anytime that people are signing that early, they're even usually less educated on this topic than, you know, people that are maybe listening to this, that are finishing training. And so, you know, we, we think that not knowing your value, we've seen people underpaid by 2, $300,000 a year. Right. And so that's, that's a huge, that's a huge problem when you are, you know, thinking that you're getting this huge raise and it's a number you've probably never seen before in your life, right? Let's say you're being offered 300,000. Well, if you're a dermatologist who's supposed to make 450 or 500, you know, that's, that's a major issue. So that's, that's number one is you're just going to lose out on a lot of what I'm going to call lifetime earnings and getting to those financial goals quicker. The second one is we have seen folks get locked up for periods of time with no out in the contract, meaning there's no without cause termination, no ability to terminate, you know, for two or three years. And when clients are completely unaware of that, a lot of physicians come in saying, I'm only going to be here for a year. Right. I have a spouse that's finishing training. We're going to move at that point in time or, you know, I just, I want to go do something different. And I'm already planning for that. To find out later that you're no longer able to leave. Right. And if you do leave, you're in breach of contract. There are some large penalties that are out there. The typical breach of contract remedy is to put the other party in the same position. Right. And so if the system has to go out and bring in locum coverage at a rate that's twice what they are paying you, that difference, that's your damage amount. And so it can be a six figure number very easily. Where we've, you know, we've had to try to work with organizations and find a settlement amount on the way out. So I just think to not understand, right, education is half of it, right? To not understand Your contract is a problem, but then to accept terms that are below market or that are really draconian for you, again, I think that the price point, at least that we're at shouldn't be an issue. I mean, I think it's probably, like you said, a no brainer from where we sit as far as making sure you understand what you're getting into. So you can accept that risk. Even if they won't make any changes on the contract. You have to know what you're signing.

Yeah. I feel like a lot of people get burned by the tail coverage issue as well. You know, they don't understand that the contract says they have to pay for tail coverage. Can you talk a little bit about occurrence versus claims made and the need for tail and who should pay for tail and all that when it comes to contracts?

Absolutely. So I think, you know, when you're in training. Right. You don't have to worry about that. Right. So nobody ever says you have to pay for tail on the way out of residency. What tail means is that if you're on a claims made policy. Right. So a policy that says we cover you for any lawsuits that come in while you're working here, but as soon as you end employment with us, you're kind of on your own. Right. Any claims that come in after the fact, you're. That's your exposure. Well, nobody wants that exposure. So you go out and you buy a tail policy to cover that. Those costs on tail are usually one to two times the annual premium. And so in certain specialties, like obgyn for example, tail can be a six figure number because the statute of limitations is really long. Right. The longer you have to insure for, the higher the dollar amount. And so to not understand that. Right. Especially in certain specialties, and then to all of a sudden get hit with a six figure bill when you transition is not obviously where you want to be. And most of your next employers are not going to want to pick up that coverage either. I think that's a misnomer. Right. It's not that you can't negotiate it, but it's going to take away from something, whether that's your base salary or a signing bonus or something else, you're ultimately going to pay it whether it's cash up front or not.

Yeah. What do you see as typical contract terms for tail coverage? Is it if you quit, you pay and if they fire you, they pay or what's typical?

Yeah. So there's about four options in my mind, or four ways that this is drafted. It's either one, you pay for it no matter what. Right. That's the worst case scenario. Best case scenario is they have an occurrence based policy which means you don't need tail or they cover tail 100% no matter what. In the middle, you'll see who walks away. Right. Kind of the. If you quit, you pay for it. If we let you go, we'll pay for it. Right. That's one way to meet in the middle. And then the other way is to vest into it. So you vest into this plan, kind of like a retirement plan where you get credit every year towards that cost. And the longer you're there, the more the employer will pay for. And so those vesting schedules can be anywhere from two years to 10 years. It really varies, but you know, obviously the quicker the better for the, for the position.

And you may find this is the experience I had, you may find your negotiating partner, opponent, whatever you want to call them, doesn't actually know this stuff. Like the contract that was first presented to me when I joined my group that I'm with a group of great people, great docs, been very happy there for many years. But when it was presented to me, it said that I was going to be paid, paying for the tail. So my first question was, well, how much is the tail? And the managing partner of my group didn't know the answer to this question. He had to go back and research it. It turned out it was something like 50 or $55,000 that was my tail. I think annual premiums back then were like $16,000 for a full time emergency doc in Utah. They're cheaper now, but that's what it was. It was 50 grand. And so we negotiated that they'd pay if they fired me and I'd pay if I quit. You know, that was the negotiation we came down to. But don't assume that the person you're negotiating with has all the answers. They don't always have all the answers. Sometimes they're just docs trying to make their way in the world just like you are. All right, so let's talk a little bit. If somebody decides they're going to come and hire you, Kyle, hire resolve to review their contract, tell us what that typically means in terms of finances and services delivered.

Yeah, so we try to have options for everybody. So anywhere from those free tools you talked about all the way up to if you need help from an attorney for multiple offers. So it's anywhere from free to a couple thousand dollars. That's the price range. All that's transparent. You can go on through the white coat link to resolve and see those numbers with the discount. So that part is fairly straightforward. The distinction between just doing it yourself, analyzing the data, taking a look at this thing, looking at the scorecard, and then handling that is if you actually want changes made in the document, you want to talk to an attorney, kind of have this conversation that you and I are having about what's normal, what's not normal, how hard should I push on certain things. You know, even though you're telling me this needs negotiating. Right. How high on the list should that be? For me, that's the service that I think most people value. Right. Is they want to talk to someone who's done this hundreds of times. Right. And having that negotiating partner with you. Right. And somebody to even handle some of those conversations is also what a lot of our clients value. Physicians aren't trained in negotiation. And so especially the first time, you know, our second time through that process and depending on employer, they like having an attorney to help interface. Right. To ask the questions, to be able to talk to legal on why the language around tail should be done better or to be able to justify why outside activities should be written this way. And so that's where we come in. We feel like we can be that good partner with you through that process and get you to a signed contract.

Yeah. So when someone gets to the $2,000 level with you, they're basically hiring you to negotiate for them. Most people, as I understand it, if they're still doing their own negotiating, which I think most docs do, if they're negotiating with doctors, they're looking at what, five, six, seven hundred dollars, something like that for the contract review service.

Yeah. Yeah. I mean, it's usually between that five hundred and thousand dollars range. Right. Is what they're after. I mean, a lot of people still want to have the implementation. Right. And the ability to come back and say, okay, Even though I handled the negotiation right. They made four or five changes. You know, what do we think about that? You know, if you have multiple offers. Right. Price point is there to, you know, make it cost effective for you to just have that full access where you can get to kind of pick and choose whatever you want to use.

Yeah. So $500 or $1,000 still sounds like a lot of money to lots of residents and fellows out there. But let's put this in perspective, right? $1,000 is half a shift for an emergency dock. You know, $500 is a quarter of a shift. For emergency dock. And you're talking about working for these guys for 10 years. You know, it doesn't take much to make up the cost of contract review. That's why I call it a no brainer. Kyle, what if you're not a physician, you know, can resolve, still help PAs, NPs, other healthcare professionals, non healthcare professionals?

We can, yeah. So our focus and you know, we were formed to help physicians. Right. Specifically. But we also, you know, understand that PAs NPs have very similar concerns. And so we do have data. Right. Available on the site for them. We'll help you with those contracts as well. Data sets are a little more limited. Right. So if they go on, they're going to see fewer numbers than they would if it was emergency medicine. But absolutely, there's MGMA data there for you. There's contracts that you can take a look at. We don't go outside of healthcare often. Occasionally we'll help with a spouse potentially if they have a contract issue or questions on that. But we really try to stay true to our core mission, which is empowering physicians and then other healthcare professionals alongside that.

All right, Kyle, our time's getting short. Is there anything that we haven't talked about that you think that 30 or 35,000 people that are going to hear this podcast really need to know about the contract review process and about physician compensation these days?

I think it's just important to understand that even though there's a lot of discussion around how difficult finances are in healthcare. Right. And how these systems are maybe not having a ton of profit, that when we look at comp, it's still going up for physicians. And you know, when you look at the new data sets that come out every year, when you look at the contracts on our site and see what people are negotiating, I think you should feel empowered despite all the static around that. And I think you just, you have to be, you know, somewhat aggressive and, you know, make this a priority for you. So we hope that your listeners find this helpful.

Yeah, that's a really good point. There's this idea out there that keeps getting passed around that doctors are getting paid less, especially after inflation. They're getting paid less as the years go on. The data doesn't really bear that out. No, you know, at worst, they're keeping up with inflation in general. If you go back to 1960, doctors are doing much better than they were 50 or 60 or 70 years ago. So that, don't, don't let anybody bamboozle you into underpaying you because they think you're not worth as much as you are. At any rate. If you want to hire Resolve to help you with contract review or just get the data service or hire someone to negotiate for you, go to whitecoatinvestor.com resolve. Well, Kyle, thank you so much for what you do. The entire physician community owes you great debt in helping to make this information more transparent and providing this very much needed service out there. And we appreciate all the time and effort you and your team have put into, you know, providing the tools, both the free ones as well as the paid ones that can help us to do that. So thank you very much.

Appreciate it. Thanks.

Okay. Always a pleasure to talk to Kyle. As I told him and told you while we're together doing this interview, this is kind of a no brainer, right? Don't make the mistake. I did. I didn't have my contract reviewed when I got it. Now I knew a thing or two. I was four years out and I'd been pretty financially savvy and so I knew what the basics of a contract were. I wasn't totally clueless, but I didn't actually have my contract reviewed by somebody knowledgeable. When I say somebody knowledgeable, I'm talking about one of two people. A national contract review firm like Resolve or a health care attorney in the state where the job is. I had my cousin who's an attorney, kind of an ambulance chasing type attorney that helps injured people, that sort of an attorney look at my contract and in retrospect that was a mistake. I didn't get burned because I'm in with a group of great people and it was a great job and I been there for 15 years. It didn't hurt me at all. I got away with it. But in retrospect, that was being penny wise and pound foolish. Don't make the mistake. I did get your contract reviewed. What's five or six hundred bucks? It's not that much money in the grand scheme of things and well worth it. If you're like most doctors, nobody taught you anything about personal finance or investing during your undergrad, professional school or residency. Even though your family and perhaps even your business rely on you to be the chief financial officer and you have never been given the tools to succeed. Enroll in WCI Financial Bootcamp, a free educational email series, and learn to convert your high income to wealth. You will learn the basics of investing, saving, insurance and more. Your high income alone will not lead to financial success, but as always, we want to help you on your financial journey. Go to whitecoatinvestor.com financialbootcamp to sign up today. You can do this and the White Coat investor can help. All right. Don't forget to check out those cool Resolve widgets I mentioned. You can find those whitecodinvestor.com salary you can go straight to resolve@whitecoatinvestor.com resolve if you want to sign up for their services, don't forget their code. It's on their page too if you go there. But it's white coat 10 gets you the 10% off deal right now you also get 20% off everything WCI is selling, right? Let's use code summer20 for June 24 through July 3. Everything we sell 20% off use code summer20. You can go to whitecoininvestor.com courses to buy our courses. You can go to whitecoinvestor.com store to buy our swag thanks. For those of you leaving a five star review and telling your friends about this podcast, it really does help us to spread the word about it. A recent one came in from N32728 said life changing. So grateful to Dr. Dali and WCI went through most of residency making the wrong choices but luckily discovered his book and then podcast. Now my wife and I are student loan free. Have a written financial plan. I recommend WCI to anyone that will listen. 5 stars. Awesome. Thanks for leaving that review and we're proud to have assisted you in changing your own life. Quite honestly, for the rest of you, if you're just starting to listen to this podcast and a lot of this is over your head, that's okay. You're going to catch up. This stuff's not that hard. It's way easier than dentistry, than nephrology, than cardiothoracic surgery. All this stuff you spent years learning. This stuff's way easier than that. Okay, you can learn what you need to know about personal finance, investing. You can become financially literate. You can become financially disciplined if you can acquire the combination of those two things in our modern society, it's like having a superpower. It's not only going to allow you to take all the financial stress out of your life and retire at a time of your choosing, but it's going to allow you to be a better physician, a better partner, a better parent. You're going to have resources you can use to help those around you. You'll be able to focus more on the things that matter most in life because money will cease to be a worry in your life. If you're sick of worrying if your investments are right or if your insurance is right, or if you're ever going to be able to retire. We can help you make those worries go away. Stick with us here at the White Coat Investor Participate in our White Coat Investor communities. Whether it's on Reddit or whether it's on Facebook or on our forum or in our financially empowered women's group, whatever. Just participate with us and you will quickly find that you will soon be helping more people than you are being helped. And it's a wonderful thing when the community helps each other and we all progress together. Keep your head up and your shoulders back. You've got this and we're all here to help you. See you next time on the White Coat Investor Podcast. The hosts of the White Coat Investor are not licensed accountants, attorneys or financial advisors. This podcast is for your entertainment and information only. It should not be considered professional or personalized financial advice. You should consult the appropriate professional for specific advice relating to your situation.