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Physician Contracting 101: Buy-In and Professional Liability Insurance Provisions, by Paul Drey - YouTube
Channel: Brick Gentry
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Welcome back to Part 4 of our 6-part series,
Physician Contracting 101.
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In today's part, we will look at the Buy-In
provisions as well as Professional Liability
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Insurance.
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What is significant about Buy-In provisions?
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Typically you will not see these provisions
in an employment contract with a hospital
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or a large physician group.
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Where you will typically see these types of
provisions is in groups of two to perhaps
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ten physicians.
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What happens in those cases, in addition to
the compensation that you are receiving, is
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you will actually have an opportunity to buy
into the physician group and become part of
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the ownership of that physician group.
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What is key and instrumental in regard to
the decisions concerning this, is that you
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make sure you understand the stability of
the physician group and how it actually operates.
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Typically you will receive an employment agreement
that outlines whether it will be automatic,
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whether you will be up for review after three,
or five, or seven years, and what actual qualifications
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or requirements you need to meet in order
to be considered to become a partner, or owner,
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of the physician group.
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What is unusual about some of these situations,
however, is that you never see the By-Laws,
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or the Operating Agreement, or the Partnership
Agreement, into which you would be entering.
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When I advise my clients, I always like to
make sure that they have those documents to
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review, before they enter into the actual
contract.
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Unfortunately, a lot of times physicians will
enter employment agreements that have these
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types of provisions without having reviewed
those documents, and then when it comes time
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to become an owner, they don't fully understand
what that means, or what they are going to
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have to do in order to become an owner, or
what capital contribution they may have to
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make.
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Or whether they have to buy into part of a
building.
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I mention that because, in these smaller physician
groups when you are going to become a partner,
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typically these physician groups may own a
building.
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It is important for you to understand whether
you want to become a part of that ownership,
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not only of the practice, but of the building
in which the practice actually operates.
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Sometimes this can be beneficial, but sometimes
this can be a burden.
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Typically, what you need to make sure of is
the location of the building, and whether
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it has value standing on its own outside of
the practice.
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In my experience, I have worked with some
groups where their building is located right
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next to the hospital, and so long as the building
is used as a physician group office, it will
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be fine and have value.
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But in the instance that the physicians would
actually become employees of the hospital,
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or work at the hospital, or leave, the building
itself, without having its ties to the hospital,
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actually does not have a great amount of value.
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You need to make sure that you understand
what your buy-in is going to be in regard
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to the building, in regard to the practice,
and what it means to be an owner.
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So when you are considering the Buy-In Provision
and whether it is a positive or a negative
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in your contract, there's a number of things
you must consider.
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Similarly, a second important provision in
the contract that we are going to look at
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today deals with malpractice or professional
liability insurance.
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Again, there are a number of things to consider
when reviewing these types of provisions.
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The first is to look at whether the hospital
is providing it or whether you need to.
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In almost all instances, the hospital will
provide the coverage so long as you are working
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there.
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The question arises in regard to "tail" coverage,
or after you have left the practice, who is
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going to pick up the insurance at that point?
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A number of times, it can be negotiated, and
the hospital or your physician group will
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pick up the "tail" coverage, but many contracts
today provide, unless negotiated differently,
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that the "tail" coverage will be provided
and paid for by the physician upon their leaving.
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We need to make sure we understand what the
contract requires, and whether it is negotiable
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as to whether those terms can be changed.
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Similarly, you need to look at the limits
of the malpractice insurance.
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Many limits today are at one million per occurrence,
and three million dollar sort of overall coverage,
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and that is typical.
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I have recently seen some contracts moving
to a two million and a four million.
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Why is this important?
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Well, unfortunately in today's world, many
of the malpractice cases coming against doctors
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are for values higher than that.
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So you need to look at whether you are sufficiently
covered, whether your employer has additional
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coverage that is going to cover them, and
if not, making sure that you have insurance
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that is going to provide protection for you
against any and all malpractice cases.
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These are important provisions, and you must
understand how they play into your contract.
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A lot of times these provisions may not be
looked at that carefully, because you are
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thinking about, "I just want to start work,"
rather than how these play out.
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But again, you need to make sure you understand
these.
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My warning to you today is: Go through these
contracts, make sure your attorney explains
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them to you, and make sure you understand
what you are buying into.
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Thank you for joining.
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I hope you join us again for Part 5 of our
series.
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