Recognize a Suitable Employment Offer

Physician's Money Digest, May 15 2004, Volume 11, Issue 9

According to industry experts,it's becoming more difficult torecruit qualified physicianstoday, due in part to intensecompetition. As a result, a variety ofincentives are common in most doctor employmentoffers.

According to Pinnacle Health Group(PHG), a physician recruitment firm,physician recruiting laws aren't alwaysclear. In fact, they can sometimes be verydifficult to interpret.

How does a doctor determine agood offer of employment? Accordingto PHG, in general, physicians shouldnot agree to refer patients to a facility inexchange for money or other benefits.They should also not accept financialincentives significantly higher than currentnorms.

However, according to the new rules,hospitals can offer the following:

  1. A one-time signing bonus that physicians may spend as they want
  2. Tail coverage, or physicians being paid by recruiting entities
  3. Practice liability coverage for a limited period of time
  4. Below-fair-market-value office rent, which is highly frowned upon bythe Department of Health and Human Services, but approved by the IRS for a set number of years
  5. Start-up financial assistance if the aid is documented, reasonable, and for a limited period
  6. Moving expenses, including reimbursement for meals and house-hunting trip expenses
  7. A new income guarantee for a limited number of years, with a reasonablecap, and with the terms negotiated on paper well in advance
  8. An incentive compensation or signing bonus, which is more permissibleif the physician becomes a hospital employee and is capped at a reasonable salary level
  9. A loan guarantee and inducement. Note: If the physician stays in the community,loans can be forgiven; however, the terms should be documented and the payback terms indicated.
  10. An office space guarantee if all the compensation, including below-market rent, is reasonable

According to PHG, it is usually easierfor tax-exempt hospitals to justifyincentives provided to a physician whobecomes a hospital employee. Whilenot specifically prohibited, recruitingincentives provided to physicians enteringprivate practice should be more limitedas they invite closer IRS observation.

Note:

The information from PHG was adaptedfrom its article "Pushing the Envelope: How FarCan We Go to Get That Physician?" by MichaelBroxterman and Jacques Couvillon. For moreinformation on PHG, call 800-492-7771 or visitwww.phg.com.